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Localizing Procurement

November 22, 2013

There is an increasing number of examples of Government driving more localized procurement. It is a natural step in revitalizing local economies and, of course, in improving the tax base. Just one of those examples is illustrated by the apparent success story of Plymouth council, in the UK. IACCM’s recent edition of Contracting Excellence contained another, based on initiatives by the Scottish Government.

But the trend is not limited to the public sector. A growing number of private sector firms have learnt that the global supply chain is not all it is cracked up to be. Yes, it may yield short-term price reductions, but at what longer term cost? It is not just that there are incremental risks to consider, it is also the overall cost of building and maintaining long distance relationships. Supply consolidation faces similar challenges. For all that suppliers would like to deliver equivalent levels of service and support in every location, they frequently do not. The fact that they may be a wonderful supplier in Texas does not necessarily mean they are so great in Kazakhstan – or even in New Jersey, if it comes to that.

Quiet what the eventual local / global balance turns out to be is far from clear, but I suspect we are only at the beginning of a re-balancing, where both globalization and centralization will diminish and more sophisticated technologies will enable central controls and insight, without requiring central mandates and single-source buying.

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