Global supply chain woes show value of buying locally

FROM cardboard boxes, to concrete, to computer chips, the products currently in short supply thanks to global supply chain problems are as many and varied as the industries affected.

Equally diverse are the causes: the Suez Canal blockage in March, world economies at different stages of Covid lockdown or reopening, capacity in the shipping industry and more.

It all serves to remind us just how complicated and interconnected worldwide logistics can be – and the value of sourcing, where possible, goods locally or from a number of smaller suppliers.

Not that we really needed a reminder. For the last year and a half, lockdowns and restrictions have shown us as consumers the advantages of using reliable, local suppliers when we can. And I now detect a greater acceptance from government and politicians of the benefits of shorter, more sustainable supply chains.

When it comes to how we supply our public sector, the argument is not simply that it builds resilience (vital as that is). If you increase the money that circulates around local economies, our communities get closer to the economic critical mass they need to remain viable.

The awkward question, though, is, if we all back boosting local procurement, why isn’t it happening?

In theory, since the passing of the Procurement Reform Act in 2014, there has been a legal duty on local bodies to design their procurement practices so that they give local smaller firms a fair chance.

In practice, however, the numbers are, if anything, going from bad to worse.

Small firms, with fewer than 50 employees, comprise 98 per cent of all Scottish businesses. But, between 2016/17 and 2018/19, the share of Scottish public procurement spending they won fell from 14 to 13 per cent. Micro businesses, with under 10 employees, saw their share fall from seven to five per cent.

Indeed, a 2018 Improvement Service report suggests that, between 2008 and 2017, the number of local suppliers to local authorities almost halved.

Some clues to what’s going wrong can be found in the Scottish Government’s recent survey of over 1,500 suppliers’ experiences. Nearly two-thirds said they find at least some questions in tenders difficult to understand. Three in five have difficulties with tender timescales. And, worryingly, over half of sub-contractors said they weren’t always paid within the expected 30 days. These are practical barriers that must be overcome if the Scottish Government is to deliver on its commitment to community wealth building. You can’t enact an approach to economic development that “redirects wealth back into the local economy, and places control and benefits into the hands of local people” if the taxpayers’ money you spend in an area simply flows back out to far-off multinationals.

The promised legislation on community wealth building offers a perfect opportunity to set binding local and small business procurement targets for public bodies. But, as the Procurement Reform Act shows, legislation on its own won’t shift the dial.

Alongside a proper statutory basis for the necessary culture shift, we need a readiness to try new things and a determination to drive them through.

That might mean a whole new approach, where goods and services are purchased for all different parts of the public sector in a particular geographic area, as opposed to contracts being brokered for entire agencies nationwide. It will also mean leaders backing procurement managers who take innovative decisions. And it means reflecting on what bidding for a public contract is actually like for a small, local business.

It’s more important than ever that the country gets the maximum economic impact for the £12 billion the devolved public sector spends annually. And there’s never been a better time to get the buy-in we need to make it happen.