Local supply chains are key to our economy
Townsville is sometimes described as a ‘supply chain’ town. Ever wondered what that meant? A supply chain is a network of businesses delivering goods and services to an industry. North Queensland has 19 industries, each with their own supply chains. While not every business in those supply chains is in Townsville, many are, and all have a connection to our city. In many cases, the supply chain employs more people than the industry itself, with many working in small businesses. Of course, some businesses supply to more than one industry. However, the high number of industries operating in the North does give a sense of the number of businesses that supports them.
It illustrates why supply chains are important to our local economy.
There is a direct relation between an industry, its suppliers and the local community. We witnessed what happened in Mackay during the mining downturn a few years back. When the Central Queensland resource industry slowed down, so did its extensive supply chain across the North. It had the knock-on effect of negatively impacting real estate prices, population number, and unemployment rates in unrelated industries like food services.
There are many ways an organisation in an industry selects suppliers. A common way is by asking for tenders. Tenders are invitations to bid for work. The organisation looking for suppliers will describe the scope of work, the criteria required to do the job and any other conditions. They will invite either a selection of businesses to tender or open it to anyone interested in submitting a response.
“A local business is one that is committed to tangible contributions to a locality now and into the future.”
The process of calling for tenders, judging them and awarding a contract is guided by the procurement policy of the organisation calling for tenders. The intent of any procurement policy is to demonstrate fairness and transparency. That is, however, where the theory ends. In reality, the process of selecting a tender can be subjective. Much improvement is needed for procurement processes across all industries to truly benefit their local supply chains, starting with a definition of what is a local business.
Is it an organisation that opens a local office when successful with a tender, only to close it once the work is done? Is it an organisation that originated from a locality close to the work? Is it an organisation that has a long-term commitment to a community and its local workforce, even though its head office is elsewhere? A local business is one that is committed to tangible contributions to a locality now and into the future.
To be “local”, most of the profits and wages a business creates need to remain in the locality where the work is performed, and the skills employed need to stay in that locality long after the project is finished.
That is how strong and healthy local supply chains are maintained in regional Queensland and why fair procurement policies and equitable processes are so important to that aim.