Local supply chain management poses a series of problems that need to be tackled to improve the sustainability of our cities
Last week I met a delegation from the Czech Republic, including the mayors of two cities. They were very interested in sustainable supply chain management but in particular their big priority was using their procurement power to direct more spend from their supply chain to their local economy.
I plan to visit Prague next spring to explore some ideas with them and to speak at a conference on the subject.
On Monday morning I had an email from our friends in Australia with a copy of the New South Wales local procurement policy.
The state plans to spend AUS$25bn (£14.9bn) on infrastructure in the next 10 years and is determined to recycle as much of that cash as possible into the local economy, creating jobs and prosperity.
This approach is common in the UK too: the London 2012 project placed a lot of emphasis on local supply and local employment. In the main this was a great success but only went part of the way to answering some difficult underlying questions.
This is all about how you define “local” supply and a “local” employee. A rail project in Sydney defines “local” as Australia and New Zealand. A huge area spanning three time zones!
The industry will need to develop better capability in measuring social and economic sustainability performance.
The Borough of Croydon has defined it as “within a 30 minute travel distance to Croydon”, in my experience it can take 30 minutes to get from Purley to Croydon on a bad day.
Most common in the UK is the borough in which the work takes place, or in the case of the Olympics, the five host boroughs. Interestingly this became six host boroughs towards the end of the programme, which was a bit bizarre because Barking and Dagenham did not host a single event and does not border the Olympic Park.
There is no right answer to this. The important thing is to be clear about the definition for a specific project and to communicate it clearly.
The next problem to face is “what is a local supplier”? Is it the local distribution company up the road delivering goods made in China? Or the local firm of bricklayers employing labour from Poland and buying bricks from India? Again there is no clear answer but we need to look at where the majority of value is being added.
The issue of local employment can be just as complex and become controversial. If a migrant worker has a local address during the course of their employment on a contract does that make them local? On the Olympic Park project the answer was “yes” because somebody with an address within the five (or six) host boroughs was deemed to be making a contribution to the local economy during their stay. This could be an acceptable definition for economic objectives but is it really contributing to sustainable communities.
Ultimately, the way in which “local” is defined needs to be the result of dialogue between stakeholders, usually the client, contractor, advisors and, most importantly, the planning authority.
This is a growing trend, not just in the UK but around the world, the industry will need to develop better capability in measuring social and economic sustainability performance.
Shaun McCarthy is an independent adviser, author and speaker in the field of sustainable business policy and practice