By Rob Cook
For some time now, budgetary pressures and efficiency drives have seen local governments sharpen their processes and improve their competitiveness. Most have shed their uneconomic activities by outsourcing them to more productive suppliers. This has resulted in lean operations which don’t do everything inhouse, but have significant professional and contextual expertise within those activities they have retained.
Some enterprising councils have recognised that they can turn cost centres into revenue generators by selling their services, skills and know-how. And this makes even more sense when budgets are being squeezed.
So, how does this work? A council with a long history of road maintenance activities has an extensive fleet of specialist equipment, skilled professional staff and favourable terms with its suppliers. It has geared up for its ongoing work load and has sufficient capacity to cope with periods of high demand.
But, like all businesses, there are peaks and troughs – and there are times when the resources are under-utilised or, worse still, sitting idle. Clearly, this represents an opportunity to put this surplus capacity to productive use.
In fact, if the work is out there, it wouldn’t be too hard to justify additional investment so that the council can actively pursue “outside activities”.
Provided there is a market, efficient council units could be turned into very successful businesses in their own right.
Similar opportunities exist across other council activities, especially cyclical ones with predictable downtime. For example, council engineering staff may find they have surplus capacity at various times of the year. Their downtime could be applied to the challenges of similar organisations – hired out on a consultancy basis.
While it’s clearly in a different league, German state rail company, DB, is a role model for all government-sector operations.
Besides running trains, the company has applied its expertise and resources in the private sector and, in the process, has created a global empire spanning courier operations like DHL and logistics leaders like DB Schenker.
How would a council move from meeting its own needs to commercial operations?
Every revenue-generating organisation faces the challenge of how to efficiently monitor the market for relevant contract opportunities. This can be a very time-consuming activity.
TenderLink’s tender notification service is a cost-effective way of tracking opportunities as they are published to the market. Every time a relevant tender, EOI or request for quote is published, subscribers receive an alert.
Simply put, TenderLink does the looking, so you don’t have to.
A subscription could be a valuable business development investment; initially, by helping councils determine the size of the market through the number of opportunities advertised.
Those insights will give an indication of the potential for their offerings. And then, when they decide to start offering their services, the notification subscription could generate real opportunities on an ongoing basis.
With costs rising and revenues constrained, councils need to look for cost-recovery and profit opportunities and, sometimes, it pays to examine what they currently do well.
With a bit of help, it is possible to turn cost centres into revenue streams – often, with little additional investment. In doing so, you’ll be helping your own bottom line, benefiting your ratepayers and better utilising your expertise and experience.
· Rob Cook is Marketing Manager of TenderLink (www.tenderlink.com), one of Australasia’s largest web-based procurement networks.
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