Government service delivery lies in supply chain management, not centralised procurement

protests Dec 2009.jpgA lack of understanding regarding the concept of supply chain management (SCM) and its inextricable link to long term quality service delivery, human capital development and associated socio economic growth, may be the root cause of problems beleaguering government and the people at large, says Dr. Douglas Boateng, founder, president and CEO of PanAvest International and SmartProcurement editorial board member.

Introduction

"Since 1994, South Africa has enjoyed unprecedented social and infrastructural development at a rate never before experienced in post-independence Africa. Yet, the majority of people who hoped freedom would bring with it relative socio-economic liberation and improvement are feeling increasingly bitter towards government over issues including a lack of perceived quality of governance, service delivery failure, corruption in some spheres of the economy and disillusionment with empowerment policies.

"Johannesburg newspaper The Star reported in September that the government had failed to deliver on its promise to the people and that massive investments in health, education, housing and other provincial initiatives had yielded below-par results.

"Applying careful thought to the zeitgeist of anger surrounding the service delivery problems besetting government, one has come to the conclusion that the country’s leaders genuinely mean well.

"Within the service delivery supply chain may lie some of the answers to improving efficiency and performance, thereby boosting perceived service delivery at the point of citizen consumption.

"Among the most pervasive paradoxes of the service delivery conundrum is the unfortunate desire to drive supply chain improvements via Procurement and the use of technological platforms.

"As a consequence, SCM officers are not given the latitude to develop and implement long-term strategies to drive sustainable supply chain performance.

Dr Douglas Boateng.gifSo what is Supply Chain Management?

"SCM is the seamless management of all the interlinked value-adding activities that goods and services encounter as they move through a value chain en route to the ultimate customer. In a broader context, a supply chain encompasses not only the internal value-adding processes, but also the various tangible and intangible inputs from external suppliers and customers. There is a supply chain associated with every product delivery, be it tangible or not: health or education delivery, waste collection, financial services, tourism - and even service delivery in local government.

What is the difference between Supply Chain Management and Procurement?

"In South Africa and the emerging world many practitioners still consider the terms to be interchangeable. However various academics and seasoned industry professionals have over the last twenty years succinctly distinguished between SCM and Procurement.

Based on extensive consultation within Europe, America and Africa, the preferred view is one which provides a clear distinction between SCM and Procurement management.
SCM involves the management of all the inter-linked activities within a value adding chain. These include, but are not limited to, Planning, Procurement, Manufacturing or Production Distribution and Customer Service. Also included are all the value adding linkages outside an organisation.

"Procurement management, on the other hand, is one of the elements within a supply chain primarily focusing on the sourcing and purchasing of goods and services within the supply value chain."

In line with the views of the Chartered Institute of Purchasing and Supply (CIPS) and Council of Supply Chain Management Professionals (CSCMP) , procurement can be described as one of the macro processes within a supply chain. It is the activity to plan, implement and control the sourcing and purchasing of tangible or intangible goods.

Technological platforms are not always the answer to service delivery issues

"While technological platforms which support effective SCM undoubtedly deliver essential value, they are not the answer to the supply chain shortfalls apparent in government service delivery. Rather, improvement depends on the implementation of a coherent supply chain strategy supported by a technological solution. This is considered a long term answer to effective service delivery Initiatives and potential achievement of more value for every Rand spent.

"However, there has to be a strategic supply chain blueprint which incorporates a clearly defined modus operandi for procurement and the leveraging of government spend for optimal cost efficiency. If this is not done, the efforts of National Treasury to leverage spend and increase accountability via a technology platform will remain a pipe dream.

Technological platforms already implemented in both the public and private sectors have relatively failed to deliver on their promises. Despite this, advisors and consultants continue to advance the case for technological platforms as the sole solution to the supply chain issues faced by government."

"Arguably, the delivery issues in health, education, national, provincial and local government are linked a lack of understanding of their respective interlinked value-adding activities as goods and services move through a value chain to the citizen. Technological platforms must be combined with expertise, strategic insight and planning if government is to achieve reasonable efficiency and put its spend to work better for the citizen.

Government supply chain strategy must incorporate procurement and service quality delivery
Effective procurement and service delivery performance is linked to a strategic supply chain management blueprint. The time has come for government leaders to be more strategic about:

1. How South Africa can use supply chain management as a tool to improve service delivery
2. Improve procurement practices to leverage spend and reduce corruption
3. Create long term employment
4. Sustainably empower SMMEs through supply chain-related services
5. Buy technology-powered solutions and not just technology platforms
6. Develop human capital to support the implementation of supply chain solutions

Until such time as there is a paradigm shift and the focus is set firmly on rationalising the supply chain before procuring a supporting technology solution, government faces the risk of throwing good money after bad. The implementation of technology alone will not solve service delivery problems or improve accountability. Rather, government needs to look to a supply chain strategy, supported by a technological solution, as the long term answer to effective procurement and service delivery."

Dr. Douglas Boateng is the Founder, President and CEO of PanAvest International a 5PSCM niche business advisory, education, training, coaching and mentoring company.

He is a project supervisor and an external examiner on supply chain management at UNISA’s SBL. Dr Boateng’s goal is to assist companies to profitably extend their market reach through the application of long term innovative, Business Development Logistics and Supply Chain Management solutions.

Dr. Boateng is a FELLOW of the (a) Institute of Directors-UK & Southern Africa (b) Chartered Management Institute -UK (c) Chartered Institute of Logistics and Transport-UK and the (d) Institute of Operations Management-UK.  he can be contacted here


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