Local vs central delivery – what’s the difference?Posted: September 13, 2010
One of the ever-present tensions in planning is the desire for accessibility on the one hand and the advantages of economies of scale on the other. This is an age-old debate about localised delivery versus centralised delivery.
Here’s an example from everyday life. For years, I took my son on Saturday mornings to play basketball in the “local” comp – local in this case meaning the North East sector of Melbourne. Every second Saturday he played a home game about 3 km away. On alternate Saturdays we travelled to away games, from Collingwood out to relatively “remote” places like Park Orchards, Templestowe and Eltham.
When my daughter started playing netball last year I encountered a very different model. There’s a single netball centre in Macleod with multiple indoor and outdoor courts serving the region. All games in her age competition are played at the centre each Saturday at the same time.
There are real advantages in the Macleod approach compared with the decentralised model that my son experienced. He sometimes had to play in sub standard venues and on more than one occasion there was no volunteer there to open up the court. Just navigating to some of the more far-flung venues seemed like a substantial achievement!
Macleod on the other hand has electronic scoreboards, a coffee shop with chairs and tables, a PA system and most importantly, a fully staffed office. It generates large crowds so there’s a sense of occasion and sociability. The predictability of a single venue means parents can more easily schedule car pooling and after-game plays. It is likely that there are financial and managerial economies of scale too, but that’s clouded by the higher voluntary contribution that I’d expect to find with local facilities (although that might manifest as inferior service).
On the other hand, a disadvantage of Macleod is that local netball courts required for mid-week training might be neglected. It also entails more travel, although that disadvantage should not be over-stated. Provided the multi-court centre is in the geographic middle of the catchment and given that the suburban population is distributed more or less evenly, the difference in aggregate travel compared with a decentralised model won’t be that large.
A familiar example of the tension between localised versus centralised delivery is shopping. You can go to the corner store for milk and the paper but if you go to the regional hard top shopping centre you can get almost anything. Shopping centres enable “comparison” shopping where customers can compare prices for the same class of goods, and “complementary” shopping, where they can save on travel costs (particularly time) by buying multiple classes of goods and services on the one trip.
I can go to my local shopping centre and benefit from (what passes for) competition between Coles and Safeway and I can compare the supermarkets’ prices with those offered by the local green grocer, butcher and bakers. I can visit the doctor, get the pharmacist to fill a script, browse in the bookshop while I’m waiting, have coffee or lunch at any number of cafes, and duck into Coles for provisions, all on the one trip.
Or say I go to one of the regional hard-top shopping centre with the family. While I’m off checking out (say) electronic goods at the four electrical stores, my wife might be inspecting furniture at six stores or gardening paraphernalia at Bunnings, my daughter would typically be browsing clothes stores and my son might be at the ten-cinema multiplex or one of three games shop. We’d all meet up for coffee. All this on a single trip.
Another example of the local versus central delivery tension is the call by Coburg residents for a local high school. This is an issue I posted about a few weeks ago – parents are concerned (in part) about how far their children have to travel out of the area to get to junior high school. On the other hand, the Department says it requires a minimum enrolment to offer an acceptable range of subjects and, presumably, apply its physical and human assets most efficiently.
Bigger schools can usually offer a wider range of subjects, more co-curricula activities and more specialised services like student counselling. For some children they offer a greater likelihood of meeting like-minded students. The disadvantages include longer average travel times for the student body and lower likelihood that individual students will be known to the staff. Parents are probably more likely to live closer on average to a small high school so it might help promote a sense of local community.
There are enormous benefits in scale but it depends on the activity – some activities gain more from economies of scale than others. The advantage also depends critically, of course, on the cost of transport, especially in terms of travel time. If it takes too long to travel to a large scale centre or facility then it won’t be worth it and users will settle for something smaller but closer.
From a public policy point of view, the benefit also depends on the social cost of the transport mode used e.g. emissions, pollutions, noise. There may also be benefits from local delivery. If you don’t support your corner store it might not be there the next time you run out of milk.