Finding new savings for local government organisations
Local government entities are under serious financial pressure, and procurement is tasked with helping to reduce spend. Making use of online platforms and artificial intelligence means they can make inroads into previously untapped areas
Local government and councils in the UK are under pressure as never before, as a result of mounting debts, rising social care bills and growing demands on education provision. Around half of councils in England alone are at risk of bankruptcy, and many have already applied for section 114 notices, meaning they are unable to meet their spending commitments.
For organisations looking to accelerate a responsible purchasing strategy, there are three steps:
Identify and select suppliers: Assess your current suppliers and partners against sustainability and social responsibility criteria, and make this a key factor when selecting potential new providers
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"The rise of online marketplaces such as Amazon Business means items can be bought through pre-approved suppliers"
Measure and report impact: Use effective evaluation and key performance indicators, covering a range of economic, social and environmental impacts, and make use of third-party certifications
Define targets and procurement policies: Establish clear targets that suppliers must meet, and look at their contribution to and compliance with the organisation’s overall responsible purchasing strategy
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In the current climate, though, procurement teams have no choice. And the rise of online marketplaces such as Amazon Business means items can be bought through pre-approved suppliers, enabling internal customers to make purchases through a user-friendly platform with which they are already familiar. This can either be done directly through Amazon Business or using a punchout facility from existing procurement software, without the need for direct involvement from procurement.
To find out more about how Amazon Business could help your organisation get more control over spend, visit business.amazon.co.uk/en/work-with-us/government
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62 per cent of decision-maker see streamlining processes as an increasing priority
62%
Having dedicated reporting tools that can show savings – and what proportion of spend has been spent with small or local businesses – will be an important part of achieving this. Many already use analytics or tools to understand performance trends, data and insights, and to automate manual procurement processes.
In the next three years, 38 per cent plan to make use of artificial intelligence (AI) for demand forecasting, with the same figure doing so for both spend analysis and automated procurement processes.
Making use of new platforms and technologies means procurement teams in local government organisations can finally tackle the “tail-end” spend that has for so long been ignored. With the pressures local governments are under only likely to increase, it offers procurement a glimmer of hope in a tough climate.
"We activated the YPO framework as it gives us the peace of mind that we are getting best offer and value on the marketplace"
61%
sustainable practices
46% local businesses
44% certified small businesses
38 per cent plan to make use of artificial intelligence
38%
The most common goals are suppliers that follow
Many of these issues date back several years and are the result of longer-term, societal trends, such as a rising population and people living longer. But it means there’s increasing pressure on how such organisations operate, and there’s no doubt that all local government entities will face pressure to cut back on what they spend in years to come.
Procurement functions will play an important role in that, by bringing more spend under management and, crucially, identifying opportunities where this could be reduced or eliminated.
There is significant potential for procurement functions in local government departments to reduce spend in areas often known as “tail-end spend”, which are not critical to the delivery of the entity’s core service. Every organisation will purchase large amounts of items that are required to keep offices running, ranging from IT and other technology to stationery, furniture and toiletries, and this can amount to large amounts of money.
Traditionally, such items have often been bought by individual managers, who typically claim the money back through expenses. Procurement has often been reluctant or unable to tackle such spend categories, either because the business has been unwilling to engage or the perceived savings have been deemed insufficient to justify the effort when there are larger categories of spend to tackle.
The most common goals are suppliers that follow sustainable practices (61 per cent), local businesses (46 per cent) or certified small businesses (44 per cent). Using Amazon Business, procurement teams can choose which suppliers are presented to buyers, and can filter so these only include certain types of organisations.
Having better control of spend can also help organisations meet their wider objectives, something that is particularly important in local government and the public sector in general. According to Amazon Business’s 2025 State of Procurement Report, virtually every organisation reports having specific goals around environmental, social and governance (ESG) concerns, and 80 per cent have mandates to partner with certified sellers.
One customer is South Ayrshire Council. “We activated the YPO framework as it gives us the peace of mind that we are getting best offer and value on the marketplace,” says Andrew Kerr, Procurement Manager. “We have also consolidated our suppliers, as Amazon has become the single supplier of invoice for all our orders.”
There are also legislative issues of which procurement professionals in the local government sector must be aware. The Procurement Act came into force in February 2025, and aims to create a more efficient system for both councils and suppliers. It places a strong emphasis on opening up public procurement to small businesses and social enterprises, and encourages authorities to consider social value when making decisions.
There’s also a requirement to embed transparency throughout the procurement process so organisations can demonstrate that taxpayers’ money has been spent efficiently. It’s no surprise, then, that 34 per cent of senior procurement leaders see improving reporting and analysis as an area they want to see teams spending more time in, according to the State of Procurement report.