Problem: There has been a limited amount of study in procurement within SMEs (Quayle, 2002). In general, for all sizes of organizations, the procurement function has often been regarded as a transactional based function and plays a supporting department to the value-adding process. These organizations view procurement as a simple function of the entire firm (Hutchins, 1992). It is more commonly found that procurement in SMEs tend to be fragmented and non-strategic (Zheng et al., 2007).

Purpose: The purpose of this thesis is to investigate innovation in procurement in small and medium-sized enterprises

Method: A qualitative research method with an abductive approach was used to conduct this research. A primary and secondary material was gathered from Sensys Traffic AB which was used as a case study in investigating into the innovation in procurement within small and medium-sized enterprises.

Theories: The theoretical framework that was utilized in this investigation consisted of procurement processes, strategies, roles, and innovation.

Conclusion: An organization can compete for the present and the future by placing more emphasis and priority within procurement in SMEs, developing the procurement department and employment skills, coordinating and collaborating within both internal and external members, forming 'win-win' relationships with suppliers, and proactively looking for ways to innovate. Furthermore, by specifically looking to innovate within these areas the procurement function can leverage itself and its firm to be able to achieve reduced total cost of ownership and higher quality products/services. These special areas which were outlined by Spray (2009) are new sourcing ideas, new insights, new partnerships and new technologies.