Local procurement – does it have a future?
In 2006, I decided to get out of corporate life and develop a “portfolio career”. Now I am a sustainability adviser, an official “watchdog”, a small business owner, trustee of two charities and a few other things too trivial to mention. Some of these roles are well paid, some aren’t paid at all. The recession seems to be throwing up fewer of the former and more of the latter, but I get by. I don’t regret the decision and I could not contemplate going back to a “proper job”. No calls from recruitment agencies, thanks.
However, it is not as glamorous as it appears. Probably 80 per cent of my work is in London and as I live in Berkshire I can be seen at about 6.30am most days walking down to my local railway station. I can usually be seen trudging back (uphill) at around 7.30pm having spent another weary day saving the planet.
On this journey, I pass a small guesthouse. It seems to be two nice large semi-detached houses combined to create a thriving small business. During the week, there are many vans parked outside belonging to tradespeople working in the area. The selection of logos on the vans is interesting: plasterers from Powys, groundworks contractor from Bradford, heating engineers from South Shields.
I have just built an extension on my own modest semi and the tradespeople I used were competent, local – and short of work. Having people travel long distances to work does not make sense on any level of sustainability. First, the emissions involved are substantial, both in terms of global warming and poor air quality, which is affecting the health of our families.
It does not make much sense from the social and health impact on the workers, either. Although the guesthouse is doubtless comfortable, surely most of these people would rather be closer to their families and friends. I complain about trudging a mile uphill but these people need to drive several hundred miles home at weekends on congested roads. Not healthy. From a social and economic point of view, communities can thrive when money is earned locally and spent locally.
Procurement contributes to this. It is perfectly understandable to chase the money. If a plasterer from Powys is cheaper than a plasterer from Pangbourne and can do a good job, then why not? The problem lies with the availability of local knowledge or willingness to use it. If you don’t know there is a plasterer in Pangbourne, there is no opportunity to find out whether he is competitive. Bigger companies operating nationally tend to employ firms they know and don’t worry too much if they have to travel. They don’t have the time or the inclination to research the local market.
Planners and developers have a role too. Planning requirements can be used to encourage local supply but the powers are often not used or enforced.
There are a number of ways to broker relationships with suppliers further down your supply chain (not always first tier, which is subject to EU rules in the public sector). Meet the Buyers events have been around for ages in all parts of the country. I have been using them successfully since 1996; if they are well managed with careful attention to the match between buyer and seller they work well. The London Olympics went several stages further by establishing CompeteFor, an online brokerage system that is being widely adopted in both public and private sector purchasers. In Croydon, south London, proactive brokerage between buyers and sellers is proving very successful and demonstrating cost savings as well as local economic benefits.
The same thing happens at an international level. In a desperate effort to remain competitive, we scour the world for cheap labour and we are sometimes not too fussy about the ethics of the companies we use. I am old enough to remember cheap products coming from Japan, then Hong Kong, then China, now India and South America. This form of capital colonialism leads eventually to economic convergence. Workers in the developing world start demanding better conditions; prices rise, so off we go to the next colony.
Procurement professionals have a duty to ensure the most competitive conditions in order to deliver value for money. It is not always the case that local suppliers are the most competitive but if we don’t give them an opportunity to compete we will never know.
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I don’t believe in ‘procurement by postcode’ – if I had a business based in Leicester but a public buyer in Nottingham refused to deal with me because I wasn’t ‘local’ to Nottingham I would feel angry about that, especially if my goods or services would have been better VfM. And then you start getting into nonsense about whether suppliers are SMEs, etc – as if having 249 employees is good but 250 is bad! However, I do think it is legitimate for public procurers to build the capacity of local/regional/sub-national (take your pick) suppliers to compete on a proper level playing field for public contracts, wherever they are. As long as it’s a fair, open and transparent award process, with all suppliers treated equally, the best deal all round should emerge.
I work for NGO that strives to up lift living standards of people,mostly in the rural area.At first procurement was done centrally, meaning suppliers were enged from a central place and had to travel miles to delivery to the place were need was required.
In 2004 i was transfered to one of the program office i proposed to the management that “I think we will achieving double if we decentralized procurement.” this will mean money brough close to the community we are working with period. Of course bearing in mind the principles of purchasing and supply. no comprising quality, level of service. Am proud today to say the lifes of most suppliers in Mazabuka town in Zambia has changed and they look forward for more challenging contracts in the public procurement. I will also take the responsibility ensuring that local suppliers do compete fairly as one way of social responsibility.
DC
On the face of it, it’s about drawing up a realistic tender list, and deciding who offers the best value for money. If people are willing to bid for work a long way away, win the work against competition on a fair and objective basis, and can deliver it to an acceptable standard, should we exclude them and pay more to use a local suppler? The sustainability arguments are wide ranging and important, but are often in conflict with value for money considerations. Public sector guidance exists, but doesn’t solve the problem. But at least a proportion of what is paid to the plasterer from Powys goes towards supporting the local hospitality industry in Pangbourne????