Legal / Contract

Procurement perspectives: corruption thrives on secrecy in government procurement

StephenBauld_100.jpgInconsistency in procurement processes is prevalent. In many published articles on a variety of topics, corruption is much like a mushroom, it thrives in the dark.

The benefit of competition is well-recognised by economists but, to a large extent, concern around public procurement processes is based more on the concerns of political science rather than on those of economics.

"The goal is to avoid corrupt practices", says Stephen Bauld, a government procurement expert.

The catch-22 of outsourcing relationships

KateVitasek_100.jpgCustomers and suppliers alike maintain that they value innovation. But, far too many outsourcing contracts are full of perverse incentives that inherently disincentivise suppliers from investing in innovation. The result? A catch-22 where outsourcing relationships become a race to the bottom, a situation where organisations think they are spurring on innovation but, in reality, they are fostering the status quo.

Kate Vitasek, Professor in Supply Chain Management at the University of Tennessee, unpacks how transaction-based sourcing models are preventing innovation and shares how to move away from them in supply relationships.

Sales perspective: 5 tips on how to deal with procurement

NegSkills_100.jpgEditors note: We thought it might be useful to procurement professionals to get some INSIDE INFORMATION FROM THE OTHER SIDE. This article is written by a consultancy specialising in advising sales people to deal with procurement. Enjoy!:

"It has been said over the past couple of years that procurement departments are becoming increasingly powerful. They dictate how negotiations unfold as value propositions are torn apart and prices lowered until vendors can hardly think straight. It sounds like a horror story, right? But it doesn't have to be that way. Dealing with procurement is always going to be a challenge, but if you understand their game, it will be much easier to play yours."

Mercuri International, a consulting and result-improvement company, has put down five insights into how to stay on track with your goals while negotiating with procurement.

Vendor database optimisation: Are you doing it right?

Schalk_vdMerwe_100.jpgOne of the primary components of any procurement function's strategy is, or should be, to ensure that the company has an optimised vendor base. This is aimed at achieving a more cost effective and high-quality supply chain.

Most companies therefore go through a vendor rationalisation process at some stage and continually review vendor categories to ensure that the selected set of vendors remains the best fit for the respective services or products they deliver to the business.

Optimising the vendor base is normally done by assessing various elements such as pricing, service delivery, contractual terms, internal stakeholder sentiment etc., which are, of course, all very important elements to consider. However, the important elements most often overlooked are the non-contextual ones, says Schalk van der Merwe, Executive Head: Supply Chain Governance at data powered risk solutions provider Inoxico.

High-performance procurement risk management

PerSegerberg_100.jpgWhat 'procurement masters' are doing and how they are benefitting

An Accenture study involving more than 125 chief procurement officers observed a profile of how high performers in risk management operate.

The study identified "procurement masters" in organisations that save at least ten times as much as it costs them to operate their procurement organisations. Organisations operating at a lower level save about four times as much.

Accenture identified 22% of the survey population as masters.

Taking this profile forward, Accenture sought to learn how masters' practices differ. Per Segerberg, Partner at Qvartz, a management consultancy in Supply Chain Management, Procurement Transformation and Global Sourcing, takes a look at the findings in five key areas of procurement.

Inconsistent laws a public-sector headache when recovering irregular expenditure

HelenVenter_100.jpgThe public sector's struggle to recover irregular expenditure is hamstrung by inconsistent laws. Public-sector specialist Helen Venter unpacks the problem in this month's SmartProcurement.

Vendor data and risk management: the next big question in the digitalisation of procurement

Schalk_vdMerwe_100.jpgIn order to optimise vendor ecosystems, companies consider various types of vendor-related information to determine which vendors are best suited to their supply chains. Companies, typically, limit this to information that is directly linked to quality, performance and price KPIs.

"However, an often-neglected, yet very important, element in the optimisation 'equation' is vendor company risk", says Schalk van der Merwe, Executive Head: Supply Chain Governance at data powered risk solutions provider Inoxico, in this month's SmartProcurement.

Leveraging effective contract management in procurement departments

EmanAbouzeid.jpgThe key processes and activities involved in contract management are fundamental to making sure you and your suppliers know your responsibilities under an agreement and that everyone meets those obligations.

Eman Abouzeid (CSCP, CIPS), a procurement and supply chain professional with global experience, explores the benefits of having effective contract management in your procurement department, in this month's SmartProcurement.

Fix the weak links in the supply chain with vetting

RudiKruger.jpgSuppliers play a huge role in the operational capacity of a business. With a mutually healthy relationship, trusted suppliers can help a business satisfy customer needs, even in a pinch. However, businesses that source goods or services from questionable suppliers run a great risk of failing to meet their own obligations to customers. Such weak links in the supply chain either present prominent or underlying risk and, while the one is evident, it is underlying risk that can only be identified through investigation.

In this month's SmartProcurement, Rudi Kruger, General Manager: Data Services, LexisNexis South Africa, contends that supplier vetting is the surest way to see the whole picture. "Working with the wrong supplier could cost you money and your customers' trust but, by vetting suppliers, many underlying risks can be identified."

Procurement in 7 memes

DistractedBoyfriend_small.jpgThey say a picture tells a thousand words. How about a procurement meme?

Okay, millennials. Strap yourselves in, because Hugo Britt, Content Manager at Procurious, is going to attempt to meme. Is meme even a verb? Perhaps not, but that isn't going to stop him.

For older readers who don't really know (or care) what memes are, don't worry - Britt's got you covered. Whether it's Bad Luck Brian, Kermit Sipping Tea, or King Leonidas screaming "SPARTA", Britt will attempt to add a bit of context around the meme before applying a Procurement gripe to each.

Join Britt at Smart Procurement World Gauteng in September, where he'll present procurement's "guide to blockchain technology and how it will change our world". He'll look at early applications of blockchain in supply chain, specifically automotive, freight and logistics.

When supplier-employee relationships cross the line

RudiKruger.jpgProcurement fraud can be committed by employees acting alone or in collusion with suppliers. Fraudulent activities between suppliers and employees create a host of challenges for the business if allowed to continue under the radar.

With this threat, the onus rests with organisations to create a culture where fraudulent activities are easily identified and dealt with.

In this month's SmartProcurement, Rudi Kruger, General Manager of Data Services, LexisNexis South Africa, explains some of the ways in which employees collude with vendors.

5 pillars - a procurement blueprint for accelerating inclusive growth

Prof_MarcusAmbe.jpgSibongile_Shongwe.jpgThe ambition of creating a developmental state to transform the Apartheid economy has been hamstrung by an inability to implement transformation policies; it is a situation exacerbated by a lack of skills, competencies and capacity; and the patronage of corrupt procurement practices.

Prof. Marcus Ambe, from the University of South Africa's School of Public and Operations Management, in collaboration with Sibongile Shongwe, Director of MtileniMazi Enterprises, unpacks a procurement blueprint to accelerate inclusive growth and socio-economic development, in this month's SmartProcurement.

What is the true cost of unethical conduct?

XavierGreyling.jpg'Procurement irregularities' has taken 3rd place on Corruption Watch SA's Corruption Report 2017 (CRW2017). Coming in at 12% of the reported types of corruption, procurement irregularities trails bribery as the most common form of reported corruption (27% of cases).

However, CRW2017 does not define 'procurement irregularities', which caused Xavier Greyling (MCIPS) to question if procurement irregularities do in fact account for only 12% of the reported cases, and, faced with the possibility of a far higher figure - what role does procurement play in what is lost to corruption every day?

Contracts: Paying for what works

SusanDeWitt.jpgAre performance clauses and outcomes-based contracts the answer?

Dr Susan de Witt from the Graduate School of Business at the University of Cape Town unpacks contract performance measurement in this month's SmartProcurement.

Hope in the face of rampant corruption and fraud in Procurement

RudiKruger_2017.jpgRampant corruption and fraud in the public and private sectors have plagued South Africa for many years. However, a glimmer of hope appears to have followed the State of the Nation Address (SONA) in February, after President Cyril Ramaphosa reassured South Africans that corruption, fraud and collusion in the public and private sectors will be fought with purpose and intensity.

"While the country waits to see significant change in addition to the recent cabinet reshuffle, the President's overall commitment to purge corruption is commendable", says Rudi Kruger, General Manager, LexisNexis Data Services.

4 tips to manage supplier risk

RudiKruger_2017.jpgSuppliers can fail you in many ways. Supplying inferior quality goods and services, missing deadlines or data breaches can affect the bottom line and reputation of a business.

However, while risks are ever-present, some are more avoidable than others - including the effects of mistakes and failures by suppliers" says Rudi Kruger, General Manager of LexisNexis Data Services.


 

 

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