Keep Australia Working: Responding to the economic emergency
The looming challenge of post-COVID economic recovery is only now becoming clear.
So far, the focus has rightly been on the public health emergency. From building new PPE supply chains to supporting front-line workers, a lot of smart people have worked extraordinarily hard. The government has also stepped forward with short term stimulus packages for the may who have lost jobs and the businesses that have been crippled.
What we are now seeing is the emergency of a new focus, on the economic emergency and the long journey of recovery.
Procurement, economic recovery and job creation
As a business, we are working in four main ways with clients to minimise the crisis' impact. These range from immediate fixes to building long term resilience. For me personally, though, there is one obvious place to start - and it's getting nowhere near enough attention. That's the power of spending with local businesses and suppliers.
Local and State government, where operational spending is already budgeted, has a particular role to play.
When many people think procurement, they think of big, slow public tenders. But this is only part of the story. An enormous amount of procurement, especially in the public sector, is managed as operational spend. This is the very high volume of sourcing activity that is managed by operational staff as part of a "3 quotes" process. In line with policies, this typically aligns with procurement of goods and services between $2,500 and either $150,000 or $250,000 depending on the organisation.
In Australia, local government the value of procurement managed via "3 quotes" is significant and typically equates to over 90% of transactions and 40-60% of all procurement spend. There is a similar pattern in many State Government agencies and departments.
This lower value procurement is incredibly relevant to the rebuilding effort. The RFQs are of a size that SMEs can bid for directly, and decision-making can be fast. In short, these are the opportunities that SMEs really want. This money can be a lifeline for smaller or local businesses because deal sizes are usually a good match for their capabilities, and money spent locally sets off a multiplier effect in the region.
Remember that SMEs make up 99% of Australian businesses, contribute 57% of GDP and employ 40% of our workforce.
So, leveraging the long tail of high-volume, low-value sourcing activity can be a real driver of job creation and job protection.
Challenges & tested solutions
The first challenge, whether for Councils, state governments or even larger businesses, is to identify capable local suppliers in the spend categories they use. Then, they need to create a level playing field for suppliers to make it easy for them to bid for work. Finally, these organisations need to be able to report on how much spend is going into the local economy so they can measure success and value for money.
Procurement tech can make this a fast and seamless process at a time when speed is what matters. A platform like VendorPanel helps buyers identify and access local suppliers across hundreds of categories in the Local Supplier Marketplace.
Research has shown that organisations using VendorPanel Marketplace for sub-tender procurement select a local supplier 84% of the time. That's a lot of local opportunities and local jobs that are desperately needed, right now.
VendorPanel is an award-winning Source-to-Contract solution that makes it easy for staff to use the right suppliers, follow good process and to drive positive procurement outcomes. It brings all of your suppliers and associated data into one secure and configurable platform, with integrations that support real-time collaboration with people, process and systems across the enterprise.