Ineffective procurement, expressed as value leakage, is estimated to have cost the African continent $31.5-billion, revealed KPMG in a recent report. Sub-Saharan Africa contributed $24.9-billion to that amount.
While the report noted that the role of procurement in organisations was becoming increasingly strategic, 73% of C-level executives polled during KPMG’s Power of Procurement 2.0 Survey did not believe that procurement added real value.
Companies appeared to remain focused on traditional cost-optimisation initiatives, rather than value-add, said KPMG associate director and regional country leader for supply chain and procurement practices Dinesh Kumar.
“For today’s procurement functions, a single-minded focus on reducing input costs is not enough and evidence shows that investing in mature procurement facilities really pays off in terms of top-line growth,” noted Kumar.
Furthermore, he suggested that procurement organisations in Africa struggle with basic issues such as a low use of technology, inadequate skills and non-compliance.
“These issues are more evident in the public sector, though they still exist to different degrees in the private sector,” Kumar noted.
While procurement technologies had evolved significantly in the last 20 years, a lack of executive support and insufficient training drive a resistance by African organisations to adopt technology and achieve operational efficiency.
“For instance, 56% of organisations do not use tracking tools and some 66% do not track supplier performance.”
This is further compounded by a lack of appropriate procurement skills in Africa. Key skills, such as analytics, were not adequately incorporated into educational programmes and 51% of organisations believed their lack of qualified personnel posed a moderate to severe risk.
“One of the reasons for this is that procurement is not seen as the career of choice,” Kumar asserted.
Inefficient procurement cost Africa $31.5-billion – KPMG survey
Ineffective procurement, expressed as value leakage, is estimated to have cost the African continent $31.5-billion, revealed KPMG in a recent report. Sub-Saharan Africa contributed $24.9-billion to that amount.
While the report noted that the role of procurement in organisations was becoming increasingly strategic, 73% of C-level executives polled during KPMG’s Power of Procurement 2.0 Survey did not believe that procurement added real value.
Companies appeared to remain focused on traditional cost-optimisation initiatives, rather than value-add, said KPMG associate director and regional country leader for supply chain and procurement practices Dinesh Kumar.
“For today’s procurement functions, a single-minded focus on reducing input costs is not enough and evidence shows that investing in mature procurement facilities really pays off in terms of top-line growth,” noted Kumar.
Furthermore, he suggested that procurement organisations in Africa struggle with basic issues such as a low use of technology, inadequate skills and non-compliance.
“These issues are more evident in the public sector, though they still exist to different degrees in the private sector,” Kumar noted.
While procurement technologies had evolved significantly in the last 20 years, a lack of executive support and insufficient training drive a resistance by African organisations to adopt technology and achieve operational efficiency.
“For instance, 56% of organisations do not use tracking tools and some 66% do not track supplier performance.”
This is further compounded by a lack of appropriate procurement skills in Africa. Key skills, such as analytics, were not adequately incorporated into educational programmes and 51% of organisations believed their lack of qualified personnel posed a moderate to severe risk.
“One of the reasons for this is that procurement is not seen as the career of choice,” Kumar asserted.
Related Posts
The Transformative Power of AI in Corporate Travel Procurement
Interrupted Supply Chain Infrastructure: Global Supply Risk or Opportunity?
Navigating Port Challenges: The Path Forward for South Africa’s Port Infrastructure
A Comprehensive Guide to Overcoming Supply Chain Risks in 2024
Latest Jobs
Management Consultant
R 1.2 Mil – R 1 Mil
Senior Accountant
Confidential
Tax Practitioner
R 360 K – R 300 K
Technical Head – Infrastructure & Services
R 2.1 Mil – R 1.6 Mil
Supply Chain Manager
R 1.7 Mil – R 1.4 Mil
Regional Order Fulfilment Manager
R 1.5 Mil – R 1.3 Mil
Leaders Profile
The Incredible Power of Networking & Collaboration For Business Growth
Talking to Jothi David
Leadership Profile: Riccardo Benedetti
Procurement Leader: Colette Yende
Procurement Leader: Kamalasen Chetty, Visa
Movers and Shakers in Procurement
Sean Slabbert
Deon Mocke
Zunaid Rasdien MCIPS
Dr Khomotso Mhelembe
Sanet Shepperson MBA (CIPS), FCIPS, MCIPS
Upcoming Courses
Fundamentals of Stores and Stock Control Training Course
Procurement Contract Management and SLA Training Course
Ethics in Procurement and Supply Chain Management
Supervisory Skills for Procurement Managers
Preferential Procurement – B-BBEE (1 Day)
Introduction to Supplier Relationship Management
What you might have missed
Transforming Procurement and Business through Storytelling
An Analysis of Key Procurement Best Practices
A Strategic Guide to Navigating Legal Services Procurement
Difference Between Strategic Sourcing and Category Management
Navigating The Red Sea Crisis: What You Should Be Doing