Company Announcement - Blame for the growing water  crises in South Africa has been shifted from corruption at municipal level, to  lack of maintenance planning at water treatment facilities, to copper theft and  electricity infrastructure failures, and most recently, to the unexpected hot  weather. According to supply chain experts, the long term solution to the  on-going service delivery problems of South Africa should begin by changing the  public sector understanding of basic supply chain management principles.

“In acting on their mandate to  deliver basic services to citizens, state officials tend to focus on the  procurement of goods and services rather narrowly, whereas they should be  looking at the supply chain as a whole, from the sources of raw materials to  the end-user,” says Colin Seftel, a former director of SAPICS www.sapics.org.za ,  the industry body for supply chain professionals in South Africa.

Procurement  vs Supply Chain Management

Seftel explains that  procurement refers to the specific function of purchasing goods and services  from a direct supplier, and takes little account of the upstream suppliers and  processes that go into the production of goods, maintenance of infrastructure  and delivery of services. By contrast, supply chain management looks at the  whole chain, which usually begins with the production of raw materials and ends  with delivery to consumers. Supply chain management  attempts to balance supply with demand, and so its starting point is the  consumer demand. In balancing supply and demand, it includes disciplines such  as demand planning, quality management, capacity planning, maintenance  planning, as well as increasing and upgrading infrastructure and resources in  line with future growth.

Public vs  Private Sector

The supply chain management way  of thinking is better understood in the private sector, where companies have to  compete for business. Oversupply represents a potential loss to a company,  whereas undersupply results in unhappy customers who are likely to take their  business elsewhere. In industries with advanced  supply chains, such as the automotive industry, companies understand that they  exist—and are competitive—only insofar as the supply chain of which they form  part is operating optimally. Thus all the companies within a particular supply  chain collaborate as closely as possible. This means sharing the vital information  flowing from the customer, and then optimising all activities along the supply  chain in the light of that information.

“Government’s supply chain has  somewhat different dynamics, but the principles are not dissimilar,” Seftel  maintains. “The current problem however stems from the strong focus on  procurement in government supply chains, instead of a focus on delivery.” “What if government were to  consider the supply chain in its entirety, and how to get it functioning  optimally—and geared to supply what the customers or citizens want? That way  you would start to get the various components of the supply chain working  together to satisfy the citizen, rather than each one simply trying to optimise  its own profit, and government could start to see its spend being more directly  linked to benefits its citizens.”

“In other words, you wouldn’t  be looking for the lowest tender for supplying replacement parts to a water  treatment facility, but the most efficient way to supply clean running water to  a thirsty community,” Seftel concludes.