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Procurement skills being developed as strategic importance recognised

12th September 2014

By: Schalk Burger

Creamer Media Senior Deputy Editor

  

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Procurement is recognised as an increasingly strategic function of organisations that can add significant value to the procurement spending of African countries and companies, but requires skills and knowledge, says advisory firm KPMG South Africa associate director Dr Dinesh Kumar.

Although strategic use of procurement to support local production and services is part of government policy in South Africa, the regulations are often unevenly and inexpertly applied, highlighting the need to develop specialist procurement skills in South Africa and Africa.

Further, companies and government departments can potentially transfer high-quality internal procurement skills and practices, if available, to less efficient divisions of the organisations to enable the rapid roll-out of procurement practices.

However, the value provided by best practice procurement extends to computing price fluctuations to determine future security of supply, strategic procurement to meet future business requirements, controlling supply risks, optimising costs and managing competitiveness, besides other strategic considerations.

This makes the development of detailed, specialised procurement knowledge strategically important for public and private organisations, Kumar emphasises.

“Best-practice procurement requires analytical knowledge and the use of technological tools to model different scenarios and enable procurement practitioners to determine the most effective sourcing model that integrates with and enables the execution of an organisation’s strategic goals.”

KPMG’s Power of Procurement 2.0 Survey showed that 51% of organisations regard a lack of qualified personnel as a “moderate to severe” risk, while 40% of organisations are unable to monitor procurement compliance, which also increases the risks of irregular expenditure, fraudulent activities and corruption, inflating costs, limiting investor confidence and reducing efficiency.

Spending by governments constitute between 40% and 60% of their gross domestic product and sub-Saharan Africa loses $24.9-billion a year in value owing to inefficient procurement practices, which highlight the critical need to ensure value is gained through robust procurement practices.

KPMG has opened an African Procurement Centre of Excellence (PCoE) using KPMG’s local representatives from South Africa, Kenya and Nigeria, who understand local regulations and practices, to provide best practice and high-quality localised procurement training.

The centre, the fifth PCoE to be opened worldwide, is an independent training organisation that draws on KPMG’s global knowledge of procurement practices, says Kumar.

The centre also leverages private sector, nongovernmental organisations and public institutions procurement practitioners to provide training suited to an organisation’s needs by using comparative examples of similar organisations’ procurement practices.

“Organisations, public and private, are at different points in their procurement maturity curves and should use procurement best practices that are appropriate to their level of procurement complexity. Regular training is also required to develop and improve procurement skills in organisations as their procurement needs evolve.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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