Economic clusters: How they impact your community and how Procurement Search can help

Brookings recently published a report, “Rethinking Cluster Initiatives.”  In it, they talk about cluster initiatives:  groups of firms that gain a competitive advantage through local proximity and interdependence.  Intuitively, we see these effects anywhere where a city is “known” for a particular good or service.  Silicon Valley is a well-known example of a region defined by its dominant industry, but far from the only one — performing arts in New York City, beer in Portland,  and podcasting in Brooklyn all fit the bill.

Three advantages to clustering

Economic clusters have tended to emerge naturally, but they have several common ways they bring a benefit to their industries and businesses.  Brookings identified three advantages firms in a regional cluster gain through that proximity:

  • sharing infrastructure, like buildings, equipment, supply chains, and access to materials;
  • matching workers, in the sense that workers capable of doing specialized work for one firm can move more easily to another firm, reducing the need for job-specific training;
  • learning  and sharing knowledge and information, such as industry-specific manufacturing know-how.

Silicon Valley is the classic example to see how these factors interrelate to create a multiplier effect and strengthen all of the businesses in the regional industry cluster.  The name itself came from the chip fabrication plants that filled the area, filled with workers who would be able to move from plant to plant with relative ease, and operated by owners and entrepreneurs who knew how to sell the new technology to the world.

How does clustering apply to local government?

It’s rare that regional leaders will be able to create, from whole cloth, new economic clusters.  But every metropolitan area has a variety of local government agencies, all providing interrelated goods and services to their communities.  In every region, you can find parks departments, transportation bureaux, health and human services, offices, and special districts serving their residents.

These create a natural economic cluster, one of the local, interrelated government agencies in any given region.  In the Portland, Oregon metropolitan area, there are tens of city governments, several transit districts, a port authority, several higher-ed facilities, and more; they’re all buying many of the same goods and services as one another.

When it comes to procurement, agencies in a region often share the same goals:  work with local and/or certified firms, or firms with prior experience working with government, in pursuit of best value for the contracting dollars.

Buyers work toward these goals by hosting outreach events, handing out flyers, sending out promotional emails, trying to connect with new businesses, but the problem with this approach is that, in working independently, the agencies compete with one another for the attention of their suppliers.

This brings us to Procurement Search.

Collaborating instead of competing

Local government agencies have shared goals and create a natural economic cluster, especially where they engage with the business community.  But when they compete with one another — working independently from one another — they duplicate their efforts in engaging with the local business community.  Much of that benefit of the natural economic cluster is lost.

Procurement Search helps them tell a different story:  collaborating with one another rather than competing, pooling their resources in connecting with their business communities, and unlocking the benefits of their cluster.

How do we do that?  We create a one-stop business resource, a single portal that any business in the region can visit to access the solicitations for any agency in their region.  Even though different agencies have their own solicitation platforms, guidelines, licensing requirements, and so on, we make it possible for businesses to find out everything they need to work with any local government agency, all in one spot.

How Procurement Search supports regional clusters

Procurement Search is a powerful tool to unlock the potential clustering brings to a region.  In creating our regional portals that are easy to use, we’re changing how businesses and their local government agencies interact.

For business owners, the value in the Procurement Search platform is immediate — as soon as they see that there can be an alternative to navigating a patchwork of different e-procurement systems, they’re in love.

For agency buyers, the value can be immediate — some agencies find an immediate benefit in offering their suppliers a sophisticated search platform for their solicitations — but in time, the impact is measurable and significant.

Procurement Search helps every agency in a metropolitan area tap into their natural economic cluster, to shift the supplier status quo.  In time, with Procurement Search, agencies find that the supplier community more closely reflects their business community.

Agency buyers, if you’re not a part of Procurement Search, we’d like to talk with you about how you can join.  And if you are, we appreciate the opportunity to work with you and provide a resource to your community.

And if you have any questions or would like to know more, please feel free to contact us at info@procurementsearch.com.

Sources:

Donahue, Ryan, et al. “Rethinking Cluster Initiatives.” Brookings, Brookings, 26 Sept. 2018, www.brookings.edu/research/rethinking-cluster-initiatives/.