Smart, connected cities could transform how we live and work – and our supply chains. Fresh thinking in procurement is required
By 2050, 68% of the world’s population will live in cities, according to UN data projections. And as urban populations expand, the race is on to leverage technology to improve the lives of city dwellers, as well as taking advantage of the opportunities that come with having so many people concentrated in one, though often sprawling, area. Around the world governments, tech giants (Google parent company Alphabet recently launched its first smart city project in Toronto, via subsidiary Sidewalk Lab) and smaller social enterprises are collaborating to make cities better places to live, work and play.
The term ‘smart city’ has been knocking around since the early 2000s and is fairly loosely defined. ‘Smart’ is a bit of a blanket – and some cynics might argue, meaningless – term. Generically, it represents using information and communication technologies to improve urban services, with the internet of things (connected devices communicating with each other) playing a large role.
Ignoring the more technical implications, “it’s helpful to think about it in terms of the benefits smart solutions can bring to cities, such as increasing convenience and liveability for citizens,” says Dominique Bonte, VP of ABI Research. “It’s whatever can be done to make life in a city more enjoyable.”
Examples include the electrification of vehicles to improve air quality (Bonte predicts only electric vehicles will be allowed in cities in 10 years’ time) and ‘dynamic’ street lighting that uses sensors to react to citizens, monitors street disturbances using noise detectors and even provides WiFi. Bonte also cites Tokyo’s emergency WiFi network, to be triggered in the event of a disaster, and Dubai’s pledge to become the first blockchain-powered government by 2020, a move that would save 25.1m man hours and $1.5bn a year.
Tony Mulhall, associate director at the Royal Institute for Chartered Surveyors (RICS), adds that much smart city technology involves retrofitting rather than starting from scratch, increasing the capacity of existing infrastructure. The next step, he says, will be “sentient cities”: “All these sensors picking up what’s going on and monitoring it. You could imagine a whole stream of information coming in and being able to respond in real-time.”
The potential for supply chains from access to so much real-time data is clear. Bonte predicts a “changing up of the supply chain”, with goods delivered almost in real-time and a need for more on-demand, just-in-time management. But the shifting vendor ecosystem presents other opportunities, believes Chris Bell, commercial director at the City of London Corporation.
“For smart city initiatives to be sustainable opportunities, technology vendors must develop their strategies and solutions in the context of the specific smart cities agenda and the systems within them,” he says.
“This means that smart city strategies are developing new engagement and business models that start with the dynamics of a city administration and service provision, rather than with the capabilities of technology systems. It brings together all elements of the sector to [come up with] solutions, developing long-lasting relationships and the formation of trusted and mature supply chains. Emerging from such a catalyst are potentially smarter, more resilient and solutions-focused supply chains.”
Issues exist, however, with how government and local authorities go about investing in the technology required to upgrade their cities, which has a knock-on effect on procurement. For a start, “it still remains hard for a city to understand what technology they should buy and there’s a degree of uncertainty around technology lifecycles,” says Bonte.
The risk, adds Mulhall, is “getting a technology that is going to be out-dated next week, or so far forward that no-one is able to interact with it.” Plus, he says, “there’s quite a bit of boosterism”, with suppliers “talking up the potential of the technology”.
Market engagement by procurement is critical, says Catherine Wolfenden, partner at law firm Osborne Clarke. She advises using public procurement rules – the fact you have to have competition – to drive innovation, actively engaging with a range of private sector companies to see what solutions are available, before issuing a specification.
Procurement needs to be “more lightweight and faster” to support this agenda, says Bonte. The important thing is identifying what you want to achieve, rather than over-specifying, as the solution might be something you don’t even know exists. “What happens too often is procurement says ‘we know what we need’,” believes Wolfenden. “You are not experts.”
Agility in this space means thinking little and often, rather than going big bang and then moving onto the next project. “Start small, deploy, add use cases,” advises Bonte. “And that’s also how the supplier ecosystem should work. Cities want to invest in infrastructure that can last for a long time and suppliers need to be mindful of this. [Solutions] need to be modular.”
“Smart isn’t a goal in itself”, says Wolfenden. “It’s the means of improving places for people and society.” This is an evolving and exciting space for procurement to get involved with. After all, as Bonte says: “A city is where the action is.”
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