How assurance processes using RISQS supports buyers and suppliers of all sizes win contracts

Too much paperwork! Too many forms! Cut the red tape, the green tape, the sky-blue-pink tape! Let SMEs focus on their core operations while they ignore those unnecessary assurance processes…

These are frustrations we’ve all heard, and experienced, many times. However, sometimes assurance schemes are designed to help an industry as a whole improve, including SMEs. RISQS is committed to using its assurance processes to help drive improvements throughout the rail industry, including its SME suppliers as well as large rail industry buyers, such as Network Rail and TfL.

Network Rail’s efforts to increase the contribution of SMEs to its supply chain are having impactful results. Over a third of its contracts are now with SMEs, exceeding the government target for the financial year 2021/22 by 7%. Network Rail’s direct spend with SMEs has increased from 12.77% of its total spend in the 2017/18 financial year to 21.52% in the 2020/21 financial year. The actual amount of direct spend with SMEs in 2020/21 was £1.573bn, while combined direct and indirect spend was £2.96bn. Similarly, the numbers of SMEs with Network Rail contracts have also increased from 2611 SMEs in 2017/18 to 3206 SMEs in 2021/22.

The take-home message from these figures is that the commercial opportunity for SMEs to gain contracts with Network Rail is real, increasing and sizeable. This shows how procurement contracts can be used to enable SMEs to have greater access to the market, provided SMEs meet the tender criteria. This shows the value of SMEs being audited by RISQS’ industry-wide quality assurance scheme as part of that tender process, even if that means some more paperwork.

SMEs can also benefit from being part of an assurance scheme in other ways. Assurance schemes can expose SMEs to new areas of business competence and offer an opportunity to demonstrate competence in them. This is particularly helpful for SMEs when it relates to issues whose importance will increase over time, such as greenhouse gas emissions (GHGs). According to the Greenhouse Gas Protocol, the world’s most widely used carbon reporting protocol, 80%+ of a company’s entire emissions come from ‘indirect emissions along the value chain’. This means that SMEs have a very large role to play here. But deciding which frameworks and KPIs to use can take up valuable time and resources that they simply don’t have.

Using KPIs recommended by large potential buyers could resolve this problem, provided that SMEs trust the way those buyers want the KPIs used. For instance, Network Rail uses the Science Based Targets initiative (SBTi) to reduce their carbon emissions, and in just 13 (four week) periods has persuaded 67% of its suppliers by emissions to commit to their own SBTi targets too. This is a truly excellent start, but the identification of the value chain as the largest contributor to GHGs potentially puts SMEs at a strong disadvantage. SMEs are at risk of having large GHG reductions unfairly included in their contracts with large buyers if there is no intermediary organisation.

RISQS membership helps here.

RISQS knows the details of how individual SMEs navigate the assurance process, can notice when issues arise repeatedly in multiple suppliers and can understand why. Having over 3000 supplier members really helps in this process! Similarly, RISQS understands buyers’ needs and their tender processes. Understanding both suppliers and buyers means that RISQS can, and does, identify ways in which its assurance processes can be improved to benefit both.

The size and geographical spread of RISQS’ membership also means that RISQS can notice potential matches for suppliers based on geographical location, provided an SME supplier meets some additional criteria within their reach. This is another issue that will become more important over time, because using suppliers geographically close to a project can result in large GHG reductions.

Despite sometimes-justified fears about unnecessary and costly paperwork, membership of RISQS really does help SMEs increase the number of business opportunities for which they are eligible. To find out more about RISQS visit www.risqs.org.