The future of procurement under the spotlight

10th April 2019

By: Kim Cloete

Creamer Media Correspondent

     

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Leaders and employees in supply chain management and procurement are hoping to ramp up their roles, achieve increased savings and become more influential players within their organisations.

The Smart Procurement World conference, in Cape Town, has brought together people from the public and private sectors with this in mind.

In a keynote address, international senior procurement and supply chain expert Stephen Wills said on Wednesday that the procurement landscape was changing globally, with innovation, market intelligence and technology set to change the way companies and governments procure goods and services.

Trends in procurement include the importance of being eco and sustainability champions, and understanding micro and macroeconomics. Wills said understanding forecasting and demand planning would be essential. He urged companies to harness technology to improve efficiency within procurement. 

“Often procurement gets done in a piecemeal way. We buy something when we are allowed to have the budget for it…when it is an absolutely essential item, yet it’s not part of an integrated solution,” said Wills.

He said procurement should be more than just cost-cutting, but provide real value.

“We need to improve profit, reduce total costs through productivity, minimise tail spend and boost operational excellence through supplier innovation and market intelligence.”

Wills advised companies, organisations and government departments to be more aware of what is happening globally.

“We should be using market intelligence to see what is happening in the world that is going to impact us and our businesses.”

Analytics was becoming increasingly important.

“I am astounded by the amount of big companies that do not know what they spend. Real time and accurate analytics will ensure that you are in a much stronger position.”

Wills said planning was pivotal to reduce urgent, last-minute demands.

“We need to be further upstream in the process, in the planning process, to avoid last minute urgent demands made to us to: ‘Just sign this’.

Transparency was also vital, while people in supply chain management needed to continually improve productivity.  They should also be included in decisions, so that they are proactive, rather than being reactive.

“New CEOs are disrupters. They come to facilitate change, but the procurement division is often not consulted on the impact of this change. All business is subject to constant change, so procurement must be ready to plan ahead.”

Globally, procurement is a massive business. According to the United Nations, public procurement systems represent a yearly expenditure of more than $10-trillion, an equivalent of 15% of global gross domestic product.

During panel debates, speakers suggested growing the supplier base in South Africa by including an increasing number of smaller suppliers.  

“To grow this economy, we must focus on the smaller suppliers as well. They’re a critical part of economic growth. Procurement should be at the forefront of driving economic growth,” suggested Oceana Group procurement manager Rafique Jassiem.

Banking firm Absa chief procurement officer Vusi Fele said the group had multiple corporate clients and was extending its supply chain to customer supply chains, in a drive to grow the economy.

“We are increasing the graduation of small and medium-sized enterprise (SME) suppliers to the mainstream. We have to ensure we raise the performance of the existing SMEs that we support and ensure they grow in terms of turnover and new clients, giving them further access to markets.” 

Absa online platforms link corporate buyers to suppliers through a secure online platform. Suppliers and small businesses get the opportunity to get accredited as suppliers and have their company documents verified.  This increases their potential to win business from corporate buyers.

A related SME event, the Black Suppliers Conference, has been built around creating access to markets for SMEs and supporting them in their journey to become mainstream players in the economy.

The theme of the three-day conference and expo has been ‘Walk the talk: High Impact Procurement’ and has looked at moving into an era of change following years of State capture.

 

 

Edited by Creamer Media Reporter

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