LOCAL PURCHASING TOOLKIT - cityoflondon.gov.uk · London Corporation, ... through Small and Medium-sized Enterprises (SME) rather than through larger ... of scale and simple contract

LOCAL PURCHASING TOOLKITFOR CITY-BASED FIRMS

Thank you for showing an interest in theLocal Purchasing Toolkit. At the City ofLondon Corporation, we are aware of theenormous impact that local procurementhas in stimulating the economies ofneighbouring boroughs and creatingassociated job opportunities. The bulk of allfuture jobs growth is expected to bethrough Small and Medium-sizedEnterprises (SME) rather than through largerfirms. The development of a vibrant SMEeconomy must be the basis of anysustainable form of regeneration in the Cityand the rest of London. For this reason, theCity Corporation hosts its own LocalProcurement Project to encourage andfacilitate local purchasing both internallyand by City firms.

Within this toolkit you will find practicaladvice as to why and how you shouldincorporate local purchasing into yourprocurement decisions. Although much ofthe argumentation and advice containedwithin would prove valuable to anybusiness, the toolkit is designed for City-based firms, as much of the supplierdatabase and regeneration information isrelated to the boroughs in the immediatevicinity of the City. It is important torecognise that local purchasing cannot bea priority driver in every contract for mostbusinesses. However, at a minimum, we askthat City firms consider inviting localsuppliers to quote for relevant contracts.Better yet, City firms can actively look forways to integrate local suppliers into therelevant sections of their supply chain. This toolkit will assist all City firms – fromthose just beginning to trial localprocurement to those at more advancedstages of the process.

The City Corporation’s Local ProcurementProject is an active initiative where one-to-one advice is given to City firms onan ongoing basis. Consequently, this toolkitwill be continuously updated with newsupplier databases and legislativeinformation. The most recent version canalways be found on our website:www.cityoflondon.gov.uk/cityprocurement.Organisations that wish to contribute to or comment on the toolkit shouldcontact us [email protected].

Thank you for considering localprocurement as a way to not only improveyour business processes but also toimprove our local communities and sparknew relationships. Best of luck in the future.

Stuart Fraser, Chairman of the Policy &Resources Committee, City of LondonCorporation

Foreword – by Stuart Fraser


3

Page

1. What is a local purchasing strategy? 4

2. What is the business case? 5

3. How does local purchasing fit in with

Corporate Social Responsibility? 7

4. Does local procurement compete with

other procurement agendas? 9

5. Am I affected by local, national or EU law? 10

6. What are the first steps of forming a local

purchasing strategy? 11

7. How can I find local suppliers? 16

8. Case Studies 18

9. Who can I contact for help with my local

purchasing strategy? 20

10. Suggested further reading 20

11. Appendix A 21

12. Bibliography 25

Contents

4

A local purchasing strategy is a long-termplan of action designed to increasesourcing of personnel, services, supplies, orequipment from local suppliers. How youdefine ‘local’ depends on where you arebased, the composition of your supplychain and your business priorities. At theCity of London Corporation, we try toprocure from Camden, Hackney, Islington,Lambeth, Newham, Southwark, and TowerHamlets. These areas contain some of themost deprived neighbourhoods in thecountry and are priority areas ofregeneration for us. Recently, wediscovered that smaller suppliers located inneighbouring areas are much moredependent on sales to the City than Citybusinesses are on suppliers in neighbouringareas. In 2008, the City Corporationcommissioned the Centre for Economicand Business Research to produce aresearch report, The City of London’sSupply Chain and its Relationship with theCity Fringes which found the City ofLondon accounts for approximately 16 percent of City fringe sales while suppliers fromthe City fringe only account for five percent of City business purchases. Still, the

seven boroughs surrounding the Cityinclude some of the fastest growing andmost diverse areas in the United Kingdom.Procuring from local suppliers is animportant part of maintaining a healthylocal economy.

However, local procurement rarely willcover 100 per cent of even the first tier ofyour suppliers. In the beginning, you will bemost successful if you concentrate onspecific sectors within your supply chain.Your local purchasing strategy shouldideally fit in with your other procurementagendas, including Value for Money,Sustainable Procurement, GreenProcurement, Ethical Procurement, SupplierDiversity, and Fair-trade, amongst others.

Effective procurement can stimulateeconomic development by integratingsupply chain economics with CorporateSocial Responsibility to achievetremendous community benefits. We havefurther found that procuring locally makesgood business sense too!

1. What is a local purchasing strategy?


Deprivation in London1

� 1% most deprived

in England


in England


in England


in England

� Outside of the

20% most deprived

in England

1 Indices of Deprivation 2007, Department ofCommunities and Local Government

5

While there are clear Corporate SocialResponsibility (CSR) benefits to localpurchasing (covered in more detail inSection 3), there are also a numberbusiness benefits to purchasing from localsuppliers. These benefits will often dependon the type of goods or services beingbought. For example, a majority ofpurchasing managers surveyed in the Citybelieve it is advantageous to havecatering, cleaning, accommodation,courier, facility management andtransportation service providers basedlocally. Certain City fringes sectors, such asevents and seminars, perform particularlywell in supplying to City firms.

Some companies may have consolidatedtheir purchasing contracts across the UKand possibly across Europe, Middle Eastand Africa. Others may face pressures tooutsource or off-shore some of theirservices. In order for any purchasingstrategy to be successful, you must identifywhat your priority drivers are.

If your company prioritises environmentalsustainability, community involvement andflexibility/innovation, you may wish to breakdown some of your regional contracts toallow more local or SME suppliers to bid.You should simultaneously recognise thatthis may entail more complex contractmanagement, as you will be dealing withmore suppliers.

If your company wishes to keep economiesof scale and simple contract managementthrough aggregating your purchasing, wewould suggest you identify areas of spendwhere local, SME suppliers could still beinvited to quote. This may be throughsmaller or specialised contracts or inpertinent local industries (such as catering,office cleaning, accommodation, courier,facilities management and repair, or localtransportation).

In Appendix A, you will find moreinformation about the City’s supply chain

(Tables A-1 and A-2) and a list of sectorswhich may have advantages if sourcedlocally (Figures 1-1 and 1-2).

Although challenges to local purchasingwill vary by firm, below are a few of thebusiness case arguments.

Generally, procuring locally can createsavings through:

4Lower costs over the life-cycle

of purchasing

Although local suppliers may not alwayscome back with the least expensive quote,over the life-cycle of purchasing they oftenoffer the best savings. Sourcing from a localsupplier has a number of hidden benefitsthat will reduce the overall cost ofpurchasing, including creative solutions,flexible delivery, better customer serviceand response time, and decreasedenvironmental impact.

Moreover, a vital feature of a competitiveeconomy is the ability to select yoursupplier on price, service and quality. Along-term reliance on dominant supplierswill decrease the number of players in asector which will lead to remaining supplierstaking advantage of a non-competitiveenvironment. Thus, in the long-term, allbuyers will be better off when more localbusinesses are able to supply to City firms.

Most Financial and Professional BusinessServices supply chains for City-based firmsare relatively dynamic and are constantlybeing improved and streamlined, whichpresents local suppliers with an opportunityto make their case. Financial institutionssuch as banks, mortgage originators andbrokerage houses are the fundamentalengines that drive financial services supplychains. With competition intensifying, theseinstitutions have come under increasingpressure to offer more desirable products atthe lowest possible price. Local supplierscan play a role in delivering qualityproducts at competitive prices.

2. What is the business case for local purchasing?

6

4Greater innovation and

creative solutions

Small and Medium-sized Enterprises (SMEs)can be early adapters of new technology,providing products or services in new orunderdeveloped markets. This helpsdifferentiate local SMEs from largercompetitors. Many SMEs fill small marketniches, which, when combined with theirability to innovate and be flexible, canproduce bespoke specialist services and goods.

4The reduction of transport and

logistical costs

Transportation of goods can increase costsand delivery times; it also adds to trafficcongestion and pollution. Localising thesupply chain can potentially reduce costs,delays and mileage associated with thedelivery of a product.

Moreover, due to their smaller size andlimited management chains, SMEs caninitiate change quickly. Local suppliers canliaise more regularly and effectively andcan therefore guarantee prompt delivery.

4Greater flexibility and compromise

A City-firm contract may form a moresignificant part of an SME’s client portfoliothan it would of a larger supplier. As such,an SME is likely to adjust its systems toaccommodate the customer rather thanrequire the customer to adjust its ownsystems. Successfully supplying to a highprofile business (such as a City firm) can becritical to an SME’s reputation.Consequently, an SME is likely to be moreaccommodating than a larger supplier.

4The reduction of the need to find

temporary accommodation for an

outside labour force

This will often hold true for the constructionand agriculture industries where a largerlabour force is needed.

4Risk management

Your reputation is at risk when it comes tothe working conditions in global supplychains, particularly when sourcing fromcountries where legislative enforcementmay not be strict. If there are weaknesses inyour supply chain, the Public Relationsfallout and impact on the bottom linecould be devastating. Companies such asNike or GAP have experienced this firsthand. Both experienced nearly a decadeof boycotts and poor PR coverage. Severalfinancial institutions have recently facedlegal action for their business actions inSouth Africa during the apartheid era.Many firms have experienced depressedshare prices due to involvement incontroversial countries.

Moreover, having more suppliers will helpyou to better manage your risk and willleave you less exposed to fluctuations insupply from only a few major sources.

4Compliance with proposed or

approved legislation

London’s social and business landscape ischanging rapidly. Black, Asian and MinorityEthnic (BAME) groups now make up almosta third of London’s population, while newlaws and campaigns encourage higherstandards with regards to gender, age,ethnicity, disability, religion or sexualorientation. Buying from diverse (i.e.minority-owned) suppliers is already a legalrequirement for public bodies in the US(and good practice for private companies)and is a growing trend in the UK. Firmsbased in the City should take advantageof their location next to boroughs hostingmany BAME suppliers (see Supplier Diversityin Section 3).

All of the above benefits should bereviewed as part of best value / value formoney criteria when selecting suppliers foreither discretionary spend or largercontracts. Nevertheless, the bottom line isthat there is never a downside to at least

inviting a local supplier to quote.


7

4Regeneration of the local economy

and creation of employment

While local procurement can make goodbusiness sense, it also can help regeneratethe local economy and createemployment, particularly if you aresourcing from deprived neighbourhoods(such as those boroughs surrounding theCity). In 2004, the DTI estimated that SMEsaccounted for 99.9 per cent of businessenterprises in the UK, more than half of theUK’s estimated business turnover and morethan half of all UK employment. Choosingto trade with businesses based in deprivedor poorer communities can complementany economic regeneration or socialinclusion initiatives already in place. Theseinitiatives help to develop businesses andcommunities, whilst trade encourageseconomic activity and stimulatessustainable growth (see investmentcascade below).

4Creation of an investment cascade

Your decision to procure locally will havesignificant multiplier effects onregenerating the local economy. Procuringfrom local SMEs is likely to generate aninvestment cascade between other localsuppliers within the local economy. Benefitsof local procurement accrue as moneyspent in the economy is circulated throughthe rest of the economy. For example, if aCity Corporation bought sandwiches for£1.50 each from a sandwich supplier inIslington, who in turn bought theingredients for £1 from a nearbybakery/grocer, the original £1.50 has infact contributed £2.50 to the localeconomy. This is known as the ‘multiplier’effect and is more likely to occur whentrading with small suppliers, as they alsotend to buy from other small, localsuppliers. Large multinationals on the otherhand, tend to trade with other large

multinationals and have centralised theirpurchasing either at a national orinternational level.

4Adoption of Supplier Diversity

Furthermore, in London, there is a higherchance that the local supplier may also bea BAME supplier – thus increasing yourSupplier Diversity. A supplier diversityprogramme is a purchasing initiative whichaims to offer under-represented businesses(including but not limited to thosecompanies owned by ethnic minoritiesand/or immigrants, women and disabledpeople) the same opportunity to competefor the supply of quality goods andservices as other suppliers. Under-represented, ethnic minority ownedbusinesses now account for seven per centof all UK businesses. Within London, over62,000 businesses are minority-owned (19 per cent of all London businesses). By creating opportunities for a morediverse pool of suppliers, Supplier Diversityassists minority ethnic-owned, women-owned, disabled people-owned and otherunder-represented businesses indeveloping and growing their businesses. It also strengthens the overall economicgrowth.

Moreover, by tapping the unique expertiseof under-represented businesses,companies may gain access to innovativeideas, a broader customer base and newavenues of opportunity. It is also seen as away to widen the candidate pool and tobetter align products and services with adiverse client and end-consumer base.

Working with diverse, local suppliers also fitsin with the EU public agenda and mayfurther help pre-empt new legislativerequirements on business. Nationalgovernments are actively working to

3. How does local procurement fit in with Corporate Social Responsibility?

Local purchasing strategies often fit in with Corporate Social Responsibility (CSR) policies in a number of ways. They include:

8

develop SMEs which help big businesses tobecome more innovative andcompetitive, thus supporting the LisbonAgenda and its goal of making “Europethe most dynamic and competitiveknowledge-based economy in the world”.By working cooperatively withGovernment, businesses can help pre-empt potential requirements around anti-discrimination by already ensuring equalopportunity and diversity.

4Decreased environmental impact

Local procurement may fit in well with yourenvironmental sustainability. By procuringlocally, you are reducing your transportmiles thus decreasing your overall carbonemissions and noise pollution. Additionally,because the goods you are procuringhave fewer miles to travel, your suppliermay not use as many packaging materials– which means less waste sent to thealready overcrowded landfills in Britain.

The Corporate Social Responsibility benefitsof sourcing locally are dependent on whatyour supply chain looks like and what yourinternal priorities are. Nevertheless, whenmaking purchasing decisions, it is importantto remember that 44 per cent of the Britishpublic believe it is very important that acompany has shown a high degree ofsocial responsibility when they buy thecompany’s product. This may meandemonstrating to your customer or clientthat you are looking after your localcommunity. 58 per cent of the generalpublic across Europe feel that industry andcommerce do not currently pay enoughattention to their social and environmentalresponsibilities. Local procurement is aninnovative way for your firm to addressthese concerns.


1 When compared against procuring non-locally on average.

9

4Environment

Local purchasing generally fits in well withthe environmental or ‘green’ agenda. By purchasing locally, your supplier istravelling fewer miles to deliver thegood/service – thus decreasing the overall carbon footprint, congestion andnoise pollution.

Moreover, by working closely with localsuppliers, you can help influence theirsupply chains. For example, Nike hasworked with six of its material suppliers tocollect 100 per cent of their scrap andrecycle it to the next round of products.Working with and monitoring your supplierscan be easier if they are located nearby.

4Fair-trade

Local purchasing generally sits easilyalongside fair-trade initiatives. Productswhich carry fair-trade certification comefrom sources with agreed environmental,labour and developmental standardsusually within developing countries. At themoment, the range of fair-trade goodsavailable are relatively limited. Most of theproducts (tea, coffee, bananas, etc.)could not be sourced within Londonanyway, so it would be rare for your fair-trade purchasing to conflict with yourlocal purchasing.

Remember, local procurement rarely willcover 100 per cent of even the first tier ofyour supply chain. In the beginning, you willbe most successful if you concentrate onspecific sectors within your supply chain.

4Internal Requirements

At times, your local purchasing policy mayconflict with internal requirements (e.g.working with pre-approved suppliers). We would urge you as much as possible to try

to align the two, in order to ensure thesustainability and success of the localpurchasing strategy. If you need helpdoing this, please contact the CityCorporation’s Local Procurement team on 020 7332 1563.

4Supplier Diversity

Businesses that are based in the City have an advantage when procuringlocally. Many local suppliers happen to beBlack, Asian or Minority-Ethnic Owned,which fits in well with BAME and SupplierDiversity initiatives.

4Sustainability

Sustainable procurement involves makingpurchasing decisions not solely based oncost-benefit analysis but with a view tomaximising benefits for the company and for the wider community. As isdemonstrated throughout this toolkit, your local purchasing policy is onecomponent of a broader sustainableprocurement agenda.

4Value for Money

There is a strong business case for localprocurement that shows that there is noneed to compromise on cost/quality. If you look at life cycle costing, local

procurement is usually cheaper.

Some argue that by procuring from small,local suppliers, buyers will lose theireconomies of scale. However, this is notalways true. Particularly when yoursuppliers deal in human capital(recruitment, cleaning services, caterers,designers, consultants, lawyers, etc.) thecost of employment does not decreaseper unit. Procuring from a larger suppliertherefore will not necessarily be cheaper.

4. Does Local Procurement compete with otherprocurement agendas?

Depending on how you introduce and integrate your local purchasing strategy, it shouldnot conflict with any of the other procurement agendas you face.

Below is a list of other procurement agendas and how local purchasing fits in.

10

If you are a private sector company, it isunlikely that your local purchasing strategywill be restricted by legislation (other thanthat which would apply to any financial orcontractual arrangement). There is norequirement for contract opportunities tobe advertised, as is the case withpurchasing strategies for some publicsector contracts. As a buyer, you maychoose your own formal or informalprocedures for choosing suppliers.

If the contract in question is connected toa public/private regeneration project, e.g. a power station, city planning orOlympic-related opportunity, then youmay face some constraints. The publicsector development body with which youare working will most likely need to uselocal labour and local suppliers as part oftheir supply chains. As a result, there will bea need for an open, transparentprocurement process. Your contractmanager should be able to give you more information.

5. Am I affected by national or EU law?


11

6. What are the first steps of forming a local purchasing strategy?

1. Establish the Fit

The first step in forming your localpurchasing strategy is to establish ‘the fit’ –why is local procurement important to yourcompany? Where does the localpurchasing strategy sit (with yourProcurement team or with your CorporateSocial Responsibility team)?

The principles of local procurement shouldbe embedded in your overarchingprocurement business plan. If you havealready built up a supplier diversity orsustainability programme, local purchasingcan often be built in as an addeddimension of the existing programme.

You should assess the potential foradopting the local purchasing strategyacross departments and establish whatcurrent infrastructure is in place to supportit. Some questions you may wish toconsider include: � Do you have access to a local supplier

database? � Are there internal policies which might

aid or prohibit procurement officers fromsourcing locally?

� What are the barriers for SMEs supplyingto your firm?

2. Consult Stakeholders

It can be helpful to form a LocalProcurement Advisory Group at the outsetto help collect information from key partiesor to seek strategic guidance as youdesign and roll out your company’s localpurchasing strategy.

Once you have mapped out the currentprocurement landscape within yourcompany, you should present the bothbusiness case and the CSR case to yourkey stakeholders (e.g. procurementcolleagues, CSR colleagues, HRcolleagues, etc.) to ensure theirengagement and support. Try to alignbuying practices to strategic and brandvalue properties by reviewing: � Roles and responsibilities of all involved in

the purchasing process.� Current buying practices and potential

impacts – positive and negative.� Supplier selection and assessment

procedures.� Buyer performance and evaluation

processes.� Management information to report

performance to the Local ProcurementAdvisory Group or Board.

Your stakeholders will play a key part in thenext phase of establishing the localpurchasing strategy – drafting a plan of action.

12

3. Draft a Plan of Action

Below are a few considerations you maywant to take into account when draftingyour local purchasing plan of action orwhen revising your procurement policies.

A. Advertise Opportunities Locally

Make sure prospective suppliers can easilyfind out about your commercialrequirements. Advertise contracts that youbelieve could be serviced by localbusinesses in the local press or smallbusiness networks. Consider contacting:Business Link for London, local Chambers ofCommerce or local authorities and socialenterprise networks.

In many cases, you may wish to advertisevia an intermediary or third party, toprotect your anonymity or any businesssensitive information. Many intermediaries,such as Supply Cross River, Supplier DiversityEurope, East London Business Place orSupply London, will confidentially scout forsuppliers for you.

B. Where possible and sensible, break-down

larger contracts into smaller ones.

Larger contracts tend to exclude smaller,local firms. If potential suppliers are limitedto a handful of large companies, you maylose the benefit of competition &innovation. Splitting large contracts intoseveral smaller contracts may bringadditional administrative costs, but pastexperience has shown that such costs areoutweighed by the benefits of working withsmall, flexible and specialised suppliers.

C. Ensure tendering is as simple as possible

Extensive tendering processes can bedaunting for a small supplier. Keep the pre-qualification questionnaire and the tenderdocuments simple; it may increase yourchances of receiving competitive tenderreturns.

D. If possible, tell suppliers the

approximate value of the contract for

which they are tendering

If a supplier does not know theapproximate value of the work, they maybe tempted to use that time on moreprofitable business development.

In many cases, you may wish to advertisevia an intermediary or third party, toprotect your anonymity or any businesssensitive information. Many intermediaries,such as Supplier Diversity Europe or SupplyLondon, will confidentially scout forsuppliers for you.

E. Keep core criteria proportionate to risks of

individual contracts

Do not ask the supplier to provideexcessive or unnecessary information.Ensure that insurance, financial and legalrequirements are reasonable andproportionate to the size and specificationsof the contract. Excessive requirements canplace too much burden on small suppliersand discourage them from tendering.

F. Ensure that contracts are assessed on Best

Value not just price alone

Best Value refers to a legal frameworkdeveloped under the Local GovernmentAct 1999 and defined under GovernmentAccounting as “the optimum combinationof whole-life cost and quality (or fitness forpurpose) to meet the user’s requirement”.Within the private sector, this may beknown as ‘Value for Money’ or ‘Cost-Benefit Analysis’. Using local suppliers mayyield hidden savings – not apparent in thecost quote – such as better knowledge ofthe City and its needs, decreasedenvironmental impacts and bettercustomer relations.

G. Consider working in partnership with Social

Enterprises to deliver contracts

Social Enterprises are businesses with social


13

aims, and they can provide a diverserange of goods and services. Socialenterprises are an effective method ofdelivering a service with additional short-and long-term benefits to the community.For further information:

� Social Enterprise London: www.sel.org.uk

� Social entrepreneurship:www.socialenterprisemag.co.uk

� Contact the City Corporation LocalProcurement Project team for furtherinformation.

H. Locate suitable local companies and

advise them of the tender opportunity

For more information on how to sourcelocal suppliers, please see Section 7.

I. Seek feedback from suppliers on the

tender process

Providing feedback on unsuccessfultenders is important. Constructive criticismexplaining why a tender pack has notbeen successful and comparison to thewinning contract may help the supplier towin their next contract.

J. Champion local suppliers

Word of mouth is the most common wayof sourcing suppliers for ad hoc,discretionary purchases. When you find alocal supplier who exceeds yourexpectations, share your experience and knowledge with colleagues and theCity Corporation’s Local ProcurementProject team.

K. Host Meet the Buyer events and related

procurement events

The research City of London Procurementfrom the City Fringes showed that manylocal businesses felt they were unable tosell to City-type businesses because theydid not have the right contacts. There aremany organisations in London which will

help you host or attend Meet the Buyerevents so you can meet local suppliersrelevant to your firm. For more information,please contact the City Corporation’sLocal Procurement Project team.

L. Make use of local supplier databases

Many City businesses have voiced a desireto access central supplier databaseavailable online. In Section 7 of this toolkit,you will find many (often free) online localsupplier databases. Make use of them andencourage other procurement officers todo so as well.

M. Encourage your suppliers or outsourced

contracts to use local suppliers

Very often companies consolidate theirpurchasing across countries or regions.However, that shouldn’t prohibit yourcompany from requiring that yourcontract manager or outsourcedcontractor try to use local suppliers wherepossible.

As part of your action plan, you may wantto set targets for yourself to be able tomeasure the success of the initiative. Ifyou’ve formed a Local ProcurementAdvisory Group, they may be helpful insetting realistic, achievable targets.

You should also request that localpurchasing is a standing point on theagenda for your main Procurement Boardmeetings. This will help ensure the projectremains a priority for your business.

14

4. Launch the Strategy

Once your action plan has been agreed,you will need to launch the project. Yourtarget audience will be those makingpurchasing decisions, so tailor anevent/launch to suit their needs. Sampleideas could include a drinks reception withformal endorsement from your CEO orHead of Supply Chains or hosting a Meetthe Buyer event and inviting local suppliersto attend. For help with ideas, feel free tocontact the Local Procurement Projectteam at the City Corporation.

With internal support for the localpurchasing plan of action, you can beginworking with your first tier suppliers to reachmore local suppliers within your supplychain. It will be important to measure yourprogress and report back on successfulcases and any savings to the business.

Remember, even after your localpurchasing strategy has been adopted,you should continue to build relationshipswith local suppliers to ensure a reliable andsuccessful supply chain relationship. Youmay wish to network with like-mindedorganisations or within appropriate fora toidentify further best practice and gainadvice from more experienced businesses.


15

Embedding Local Purchasing in Your Business

Engage leadership at start and throughout

Engage relevant business and procurement stakeholders

Engage those with an influence in your company’s supply chain

and purchasing strategy

Assess current situation / potential contracts where local suppliers

could meet your demand

Form core taskforce/advisory group comprising procurement

officers and business heads

Memorable launch of initiative

Survey staff to raise awareness of intentions

e.g. drinks reception or Meet the Buyer event

Punchy communications & activities to maintain momentum

Manage expectations

Continuous review of supplier performance – penalties

for non performance

Monitor & evaluate

Measure – and understand movements

Build supplier engagement

Review targets

Share best practice with other companies

Reward success and great ideas

Communicate externally

Communicate & share your programme successes and failures

Continuous

review

LP Database

Provide procurement officers with

resources to find local suppliers –

this may be an internal database

of known suppliers or links to

external databases/business groups

Establish contact point

Let procurement officers know who

to contact if they want more

information on local purchasing.

Know Your Procurement Board

Most companies will have a

Procurement/Supply Chain Board

or oversight committee to deal with

new procurement issues. Make sure

local procurement becomes a

permanent point on their agenda

to maintain awareness.

Develop Action Plan

Agree strategy and targets

Develop policies

16

Below are a few local supplier databasesources in London, many of which arefreely available for public use. If you areinterested in a procuring from a particulararea in London, please contact the CityCorporation team for tailored advice.

7. How can I find local suppliers?


London-wide

London’s Business Guidehttp://www.capitaldirectories.co.uk/

A free directory of approximately 130,000businesses. The directory can be searchedby business category, business name orarea/post code.

London Chamber of CommerceB2B Platformwww.londonchamberb2b.co.uk

B2B is an online business marketplaceservice, which can be used as a businessdirectory. The service matches businessopportunities with companies registered onthe database. Access to B2B is free forLondon Chamber of Commerce membersand non-members can register for a free 3-month trial.

Supplier Diversity Europe (NB Not all suppliers will be local) www.supplierdiversityeurope.eu

Supplier Diversity Europe (SDE) hasrelationships with 750 ‘diverse’, SMEbusinesses (at least 51 per cent owned bya person from a minority ethnicbackground and/or a woman or a personwith a disability). SDE can accessthousands more via their partners whenlooking for suppliers for their members. SDEalso offers confidential, tailored support forcorporations building supplier diversityprogrammes, including access to theirsupplier diversity toolkit and benchmarkingtool. The database is free for SupplierDiversity Europe members.

Supply Londonhttp://www.supplylondon.com/

Supply London hosts a database over 3000businesses across London. The database isfree for use. Buyers can receive tailoredsupport if they have specific requirements.Please email the requirement [email protected] and contact willbe made to refine the requirement andsource suppliers.

17

North

Islington and Camden Directory ofConstruction Consultants,Contractors and Suppliers

http://www.islington.gov.uk/Business/

opportunities/ibet/company_directory/

company_lists2.asp

This is a directory of companies that havequalified to get involved with the Arsenaland other developments in Islington.Companies are sorted by category.

South

Southwark Business Directory

http://www.southwark.gov.uk/YourServices/R

egenerationSection/ecodev/

Businessdirectory.html

The Southwark Business Directory is a database of more than 6,000 localbusinesses and is free of charge. Thedirectory is available in hard copy oronline. You can also upgrade for help withmail merge, email and report writing.

West

Westminster Business Directory

http://westminster.gov.uk/business/

businesssupportandadvice/

The City of Westminster Business Directory isa searchable database of 6,000 businessesin Westminster and is free of charge.

East

East London Business Place (ELBP)In partnership with the LondonDevelopment Agency, East LondonBusiness Alliance, the five Olympic HostBorough Board and the Thames GatewayLondon Partnership, Canary Wharf Groupplc is leading on a project to expand itsLocal Business Liaison Office across the 10Thames Gateway boroughs in aprivate/public local procurement projectcalled the East London Business Place(ELBP).

The ELBP is a local business supportinitiative targeted at meeting buyers’ andsuppliers’ needs through sourcing andmatching, helping small to mediumenterprises to become ‘fit to supply’ andcascading opportunities gained throughtargeted buyer engagement across allsectors.

Hackney Enterprise Network (HEN)http://www.hackneyenterprise.net/

Business_Dir/index.php

The Hackney Enterprise Network isproducing a series of sector specificBusiness Directories.

Tower Hamlets Business Directoryhttp://www.thebestof.co.uk/

tower%20hamlets

Launched in January 2008, the guide listslocal businesses in Tower Hamlets whichcan be searched by category. Tailoredsupport can be provided.

18

8. Case Studies


Case Study 1

In 2007, the Canary Wharf plc – LocalBusiness Liaison Office (LBLO) wascontacted by a Canary Wharf businesslooking for a catering company to supplybiscuits in the shape of the iconic CanaryWharf tower, One Canada Square. TheLBLO contacted one of their localsuppliers, the Perfectly Delicious Company,to see if this were possible. The PerfectlyDelicious Company makes completelynatural biscuits, with no preservatives,artificial colouring or flavouring. They alsoproduce gluten-free biscuits, shortbreadand traditional vanilla fudge. As a smallbusiness, the company was keen to beflexible and work with the needs of theirbuyers. Although the company did nothave a tower mould to hand, they werewilling to come up with a solution. TheLBLO was able to put the PerfectlyDelicious Company in touch with anotherlocal supplier, Penatube, which makescustomised products for companies,ranging from lift manufacturers to massmanufacturing for office and warehousingcompanies.

Penatube produced a 3D ComputerAided Design model on its workstation andhad it reviewed by Perfectly Delicious.Together, they can now supply tailoredbiscuits to large organisations, staffcafeterias and meeting rooms, andcompanies wanting unique corporate giftsfor promotions and seasonal events.Moreover, companies purchasing fromPerfectly Delicious as part of the LocalPurchasing or Corporate SocialResponsibility strategies are contributing tothe ‘multiplier effect’ (see pg. 6 for moredetails) – resulting in great local economicregeneration and sustained localemployment.

Both Perfectly Delicious and Penatube feelthat, as local suppliers, their attitude is: giveus a problem and together they can comeup with a solution!

This case study has been supplied withpermission from the Canary Wharf Groupplc – Local Business Liaison Office.

19

Cast Study 2

Rich Visions, located in East London, is theonly UK communications agency thatspecialises in helping clients target ethnicgroups. It provides ethnic marketingservices, recruitment, training, and eventservices to organisations wishing to reachethnic groups, as well as assisting smallbusinesses to utilise PR. Established in 2002,the company was struggling to survive. Itdid not have enough contracts coming into sustain the business financially. It facedthe same problems many small businessesface in London – a lack of understandingof the tendering and pre-qualificationprocesses needed to win larger contracts.

To address its challenges, Rich Visionsjoined Supply London, where it wasassigned a supply chain advisor whodeveloped a plan of action and who heldone-to-one sessions with the company toimprove its financial and businessdevelopment.

The company is now successfully supplyingto high-profile clients from the public andprivate sector, including Defra, the HomeOffice, COI Cultural Diversity Division, andLloyds TSB.

This case study has been supplied withpermission from Supply London

New Economics Foundation’s lm3

lm3 is a measuring tool that enablesanyone to assess how a particular businessor initiative impacts on the local economyand how to improve that impact.

Supply London’ Building London’s

Supply Chain

Building London’s Supply Chain is usefultool for SME suppliers looking to learn moreabout how to supply to larger public andprivate-sector bodies.

Business Support Services

www.businesslink.orgwww.barclays.co.uk/businesswww.fsb.org.ukwww.tuc.org.ukwww.cbi.org.ukhttp://www.supplylondon.com/

Environmental Issues

www.londonremade.comwww.actionergy.org.ukwww.eca.gov.ukwww.envirowise.gov.uk

Health and Safety

www.hse.gov.ukwww.safestartup.org

Equal Opportunities

www.cre.gov.ukwww.eoc.org.ukwww.acas.org.ukwww.agepositive.gov.ukwww.efa.org.ukwww.equalitydirector.org.ukwww.stonewall.org.ukwww.multfaithnet.org

20

Contact the Local Procurement ProjectTeam at the City of London Corporation on020 7332 1563 [email protected]

You can also visit us at:www.cityoflondon.gov.uk/cityprocurement

9. Who can I contact for help with my local purchasing strategy?

10. Suggested further reading and helpful web links


21

Appendix A

Table A1: Value of goods and services procured by City firms by Borough of City fringes

City fringes borough Annual value (£ million)

Camden £131

Hackney £48

Islington £64

Lambeth £41

Newham £34

Southwark £82

Tower Hamlets £64

Source: Office for National Statistics, cebr analysis, sample data from City firms

Table A2: Top fifteen types of goods and services procured by City firms, by value, 2005

Sector from which goods/services are purchased Annual value (£ million)

Other business services £1,340

Computer services £960

Telecommunications £840

Auxiliary financial services £780

Insurance & pension funds £740

Postal & courier services £700

Owning & dealing in real estate £660

Market research, management consultancy £600

Legal activities £570

Ancillary transport services £500

Construction £480

Banking & finance £470

Advertising £460

Architectural activities & technical consultancy £420

Printing & publishing £400

Source: Office for National Statistics, cebr estimates

22


Figure 1-1: Advantage of having suppliers of different goods and services being located within five miles of respondents’ Central London offices, (1 = unimportant, 5 = very important)

It can be seen that catering, office cleaning and accommodation services (whichincludes hotels, hostels and travel agents) were the three services where proximity wasranked most highly by City firms.

0 1 2 3 4 5

Catering

Office cleaning

Accommodation

Postage and courier

Facilities management and repair

Local transportation

Entertainment

Office supplies

Recruitment and labour relations

Printing and publishing

Security and investigation

Legal services

Events and seminars

Transport

Property advisors

Secretarial, translation and administration

Audit, tax and consultancy

Architecture and engineering

Telecoms

Management consultancy

IT consultancy

Construction

Furniture and fittings

Public relations and affairs

Data management and storage

Market services

Finance and insurance

Internet site construction

Advertising

Market research

Source: cebr survey of City firms, question sample 48

23

Figure 1-2: Measure of potential for SMEs located within the City fringes in successfully winning contracts from City firms, (1 = high potential, 0 = low potential)

In this diagram, the further to the top and right, the greater the opportunity for (SME) firmsin the City fringes while the further to the bottom and left, the less opportunity there is likelyto be available.

The analysis therefore suggests that the key opportunities for (SME) firms in the City fringesare likely to be in the following sectors:

� Local transportation (although this is a somewhat trivial result)� Office supplies� Entertainment� Printing and publishing� Events and seminars� Legal services� Property advice

0.0 0.2 0.4 0.6 0.8 1.00.0

0.2

0.4

0.6

0.8

1.0

Telecoms

Printing and publishing

Management consultancy

Audit, tax and consultancy

Public relations

Advertising

Entertainment

Events and seminars

Local transportation

Construction

Property advisors

Office cleaning

Catering

Postage and courier Facilities

managementOffice supplies

Recruitment

Security and investigation

National transport

Adminsupport

Legal

Architecturaland engineering

Data mangementand storage

Financeand insurance Market

Research

IT consultancy

Marketing

Furniture

Website design & maintenance

Source: Cebr analysis

Pro

xim

ity m

att

ers

SME acceptability

24

Figure 1-3: Views on support needed to help supply City type firms, share of respondents

The response of firms in the City fringes to the question of what additional business supportmeasures could be implemented to improve their ability to supply City firms are presentedin figure 1-3. By far the most popular measure was the implementation of a centralsupplier database on the internet, cited by 41 per cent of respondents.

0 10% 20% 30% 40% 50%

Other

A central supplier database available on the internet, sorted by goods and services

A central supplier database available on the internet, but with third party accreditation

Assistance in responding to bids

Local supplier trade fare

Assistance in getting accredited

Lower tax rates

Management advice

No support should be given

Business model advice, eg pricing and long term strategy

Skills training and development

Ad hoc support for resourcing constraints when needed

Bespoke/cheap loans

Assistance in improving the quality of product

Assistance from family members

Assistance from the Federation of Small Business

Source: cebr survey of City fringe SMEs, question sample 183


25

Centre for Economic and BusinessResearch, City of London Procurement from

the City Fringes, May 2008

Kowellewe, Julia, “Barclays facesapartheid court action”, The Independent,21 January, 2006,http://www.independent.co.uk/news/business/news/barclays-faces-apartheid-court-action-523883.html

Office for National Statistics (ONS),Statistical Press Release URN 05/92, 2005

European Network for SME Research(ENSAR), Survey Entrepreneur

Characteristics, 2003

MORI, European Study on CSR (Survey of12,162 members of the general publicacross Europe). Quoted in BitC’s The

Business Case for Corporate Responsibility.

Senge, P.M & Carstedt, G, Innovating Our

way to the Next Industrial Revolution, MITSloan Management Review, Vol 42, No. 2,2001

Business in the Community/Haymarket, The

Responsible Business Yearbook, 2007

Bibliography


This has been produced by the City ofLondon Corporation in partnership with:

This publication is available inlarge print, Braille, tape andcomputer on request from theCity of London EconomicDevelopment Office

Economic Development Office (EDO)City of London CorporationGuildhallPO Box 270LondonEC2P 2EJ

Telephone: 020 7332 1563Website: www.cityoflondon.gov.uk

Published September 2008

Documents

LOCAL PURCHASING TOOLKIT - cityoflondon.gov.uk · London Corporation, ... through Small and Medium-sized Enterprises (SME) rather than through larger ... of scale and simple contract