Strategic Sourcing

What is the cost to your business to process one purchase order (PO)? How many POs do you process with a value below that amount? Are you spending a lot of money processing invoices of a low value?

If you need to simplify your procurement of low-value items, then you are in the company of most South African organisations. The average cost of processing a PO in South Africa is more than R700.

Implementing a P-Card programme is one solution. The average cost of processing procurement card (P-Card) transactions is typically less than R200, says Ian Hendry of Nedbank Commercial Card.

CPO of VSP Global Greg Tennyson leads transformative change. He is the former VP and CPO (source-to-settle and expense-to-settle) at Salesforce and Oracle.

Greg sat down with ScoutRFP to discuss sourcing’s ever-evolving relationship with business - he talks culture, Moolah (the spend-it-like-its-yours monster) and how CPOs can work with the pace of change at an organisation to reach sourcing-stakeholder “utopia.”

Mluleki Ntlemeza, a supply chain consultant wonders if there is point at which labour should be procured by procurement, and not through traditional HR processes, in this month’s SmartProcurement.

Procurement-managed expenditure accounts for an average of 65-75% of many organisations’ outflows. Tough economic situations, therefore, require procurement professionals to continually implement and manage cost reduction programmes.

As many organisations continue to search for ways to reduce costs, there should be an agreed and well-defined programme for and by supply chain professionals to cut costs. Gibson Sibanda (MCIPS), general secretary of CIPS Zimbabwe branch, outlines eight initiatives and contributions that procurement practitioners can adopt to reduce and contain costs, in this month’s SmartProcurement.

Kraljic helped us pick the low hanging fruit, but the model is unlikely to drive the next wave of value, says Jonathan Hughes, Strategic Sourcing & Supply Chain Management Practice Leader at Vantage Partners, in this month's SmartProcurement.

Strategic sourcing rests largely upon a set of concepts and principles laid out by Peter Kraljic in his classic Harvard Business Review article "Purchasing must become supply management”, which was published in September 1983.

Market consolidation and the inclusion of extra services will be among the most significant trends driving the global procurement outsourcing market, according to research.

Market research company Technavio analysed emerging trends to find the biggest factors that will influence the sector up to 2019.

Modern procurement is about reaching out, collaborating and working together to allow innovation. Both the goverment and the business sectors, even suppliers, can achieve better results if they work together to drive and improve procurement process in their organisations.

Speaking at the 3rd Smart Procurement World Conference Western Cape, Tennesse University Professor in Supply Chain Management, Kate Vitasek addressed delegates. Her presentation emphasised stabilising economies and driving business growth strategies in South Africa.

Last years’ top priority, elevating the role of procurement to a trusted advisor, pushed to second place, reports Supply Management.

Procurement departments are facing a challenge to balance cost reduction with the desire to become better strategic partners because operating budgets and staffing will increase only slightly this year, according to research.

The Hackett Group said its study, The CPO Agenda, found that increased business uncertainty and risk are driving a resurgence in cost reduction strategies.

According to the study, which surveyed procurement executives from nearly 180 large companies in the US and globally, reducing and avoiding acquisition costs was the highest ranking priority in 2016, cited by 85% of respondents.

When local government is judged, the public evaluates the functioning of sanitation, water, collection of waste, traffic lights, solid waste and cleanliness, as those are the fundamental issues a local government ought to do.

However, behind the scenes, an area receiving a great deal of municipal attention is the need to develop the capability and capacity of suppliers, which is inextricably linked to a reliable and continual supply of municipal services.

SmartProcurement spoke to Xolile George, CEO of the South African Local Government Association (SALGA) to find out how the municipal sector can leverage its R340-billion annual spend to drive efficiencies and better empower SMEs.

Handled poorly, rationalising the design of goods or services to extract greater value or lower costs has the potential to sour internal and external relationships.

To prevent relationships from deteriorating ensure that you include everyone who can make a meaningful contribution to a value analysis (VA) and value engineering (VE) project, Grant Wall of Grayle Consulting told SmartProcurement.

As sourcing becomes increasingly responsible for supplier relationship and contract management, personnel are often stretched too thin across multiple categories and suppliers to effectively manage expenditure. Furthermore, headcount within procurement groups typically grows at a rate insufficient to meet those increasing demands.

Utilising the internal procurement organisation in collaboration with third-party support can lead to more innovative solutions, new technologies, optimised supply chain strategies and improved category management.

National Treasury is aware of the shortcomings of government’s existing public procurement processes, admitted National Treasury chief director of strategic procurement in the office of the chief procurement officer Estelle Setan in her address at the Smart Procurement World Conference in September.

She noted that her office had placed current public procurement realities under the microscope in response to increasing pressure from the public, the Finance Minister and the Auditor General.

With only a few days to go, 3000 attendees have confirmed – Smart Procurement World, Africa’s largest supply chain indaba, kicks off on Tuesday, 9 September.

More than 110 speakers will share their procurement and supply chain insights with delegates in 6 different conference streams.

Hear from supply chain heads from Absa, Coca-Cola, Anglo American Platinum, Sasol and Transnet. Technology enablers from SAP and Oracle will inform the technology panel discussion.