When procuring goods and services, price comparison is essential. But it may not be everything – to every buying organisation.Take the Indian government for instance. According to web site Purcon, the furniture giant IKEA is holding off on plans to enter India’s burgeoning retail market because of the country’s procurement policy.
The site says that when India recently allowed foreign companies to have full ownership of stores selling a single brand – there was a condition. Single-brand stores must source 30% of their materials from local firms.
There’s an obvious logic at work. The Indian government wants local businesses to share in the success of overseas-based firms. A potential win/win.
Back in the UK, local/regional public sector organisations may feel a desire to support their local economies at one level or another.
Businesses may also be more inclined to ‘think local’. On one hand, they need to cut costs in the current economic climate but, on the other, there’s the company brand and reputation to think about. Should ‘social responsibility’ extend beyond global environmental concerns to supporting local businesses? After all, many companies already support local schools, hospitals and other good causes.
But favouritism with contracts can equal unfair competition – and fall foul of legislation.
So perhaps the onus is on local suppliers?
They need to prove why being local is of value. When responding to tenders, perhaps their close proximity or local knowledge may result in a better service? They may also team up with national organisations, adding value by being local. Points like these could make a more compelling submission.
That way, buying organisations could be justified in choosing a local submission over any other – but only if strong business reasons make this possible.
NB: If buying organisations have the right e-procurement system, then local, regional and national suppliers of all shapes and sizes can offer their goods and services on a level playing field.
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