R3 600 - the cost of a purchase order in government

| 0 Comments

 

NhlanhlaNene.jpgThe central procurement office (CPO) created by Treasury to leverage volumes in the government has already led to savings amounting to billions of rand, says Finance Minister Nhlanhla Nene.


"The cost of a purchase order will be reduced from approximately R3 600… to between R500 and R750 using the new technology platforms,” said Nene, in a written reply to a parliamentary question by Democratic Alliance MP Malcolm Figg.


The savings are attributed to the creation of a central supplier database, a commerce centre and implementation of an e-procurement system for the government - developments that will all reduce the administrative cost of transacting for suppliers and departments.


“Future administrative auditing costs will be reduced. Where the auditor-general was auditing administrative compliance in over 1 000 procuring entities, their auditing will focus on auditing one central supplier database. This alone should save the state R500 per order in auditing costs," he added.


"The current CPO modernisation programme is steadily starting to bear fruit," said Nene.


Savings would result in lower prices paid by the government, whose annual procurement budget for goods and services totals more than R600-billion.


Ultimately the office was expected gradually to decrease the cost of doing business with the state, said Mr Nene
An extra R39-million was allocated to the procurement office budget in the adjustments budget, bringing the total for the financial year to R94.7-million. The extra funds would enable the procurement office to accelerate reforms in supply change management.


Another advantage of the procurement office would be the ability to negotiate competitive prices for goods and services required by several government departments.


"A total of 39 transversal contracts valued at approximately R28-billion were facilitated by the office of the central procurement officer and it is estimated that the centre-led procurement resulted in a R5-billion saving compared with market value of the commodities under these contracts."


Building plans for schools were now standardised and costed. Provinces had to adhere to this standard. This intervention is expected to reduce the average cost of building a new school from between R60-million and R70-million to just less than R35-million. Stationery contracts had been negotiated at an average cost of R100 per learner for total stationery per grade.


Nene added that a strategic sourcing framework was being work-shopped with all procuring entities to assist with demand management and supplier development.


"Departments are getting a better grasp of their commodities and markets. In the long run, this should reduce cost as prices of commodities are fully understood. Strategic sourcing initiatives for travel and accommodation and mobile and fixed line communication will result in projected savings of R1.2-billion and R300-million respectively during the 2016-17 financial year," the minister said.


Adapted from an article in Business Day
 

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Demand Planning Manager

  • <500 000 Gauteng Operations, Planning & Inventory Projects / Category Management
(Total Cost to Company R750k - R900K) excluding ...More

Global Category Manager: CONTRACTS

  • <500 000 Buyer Commodities Contract Gauteng
Total Cost to Company R1mil - R1.2mil excluding

Project Manager :12-18 MONTH CONTRACT

  • <500 000 Contract Procurement Officer / Specialist Projects / Category Management
Description:A well-known retail organization is looking for an ...More

Procurement Analyst

  • <500 000 Analyst Gauteng Permanent Procurement Management
Description:A leading infrastructure development group with strong presence ...More

Commodity Manager: Fuels and Lubes

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
Description:Ensuring continuity of supply in line with business ...More

Senior Facilities Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R800K - R900K) Description: ...More

Supply Chain Analyst

  • <500 000 Analyst Permanent Supply Chain Western Cape
(Total Cost to Company R350K - R550K) SOUTHERN ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
(Total Cost to Company R450k - R550k, dependent ...More

Procurement Specialis

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
(Total Cost to Company R700k - R800k including ...More

Solutions Architect

  • <500 000 Analyst Gauteng Operations, Planning & Inventory Permanent
(Total Cost to Company R1.3Mil - R1.1Mil including ...More

Engineering Manager

  • Gauteng Industrial Engineer Permanent Procurement Management
Total Cost to Company R850k - R950K including ...More

Country Head of Procurement

  • Permanent Procurement Management Procurement Officer / Specialist
https://careers.peopleclick.com/careerscp/client_gsk/external1931/gateway.dofunctionName=viewFromLink&jobPostId=359235&localeCode=en-us CBS Procurement,Hub Head of Procurement To lead, ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Planning/Demand%20Planner/TP2005490/MSe Category: PlanningPosition Title: Demand PlannerSalary: R600 000 ...More

Head of Procurement

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Procurement/Head%20of%20Procurement/TP2005488/ZBuCategory: ProcurementPosition Title: Head of ProcurementSalary: R1.3 million ...More

Warehouse and Distribution Manager

  • <500 000 Gauteng Logistics & Warehousing Permanent Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Logistics/Warehouse%20Distribution%20Manager/TP2005455/TMa Category: Supply ChainPosition Title: Warehouse and Distribution ...More

Supply Chain Manager

  • <500 000 Mpumalanga Permanent Procurement Officer / Specialist Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Mpumalanga/Supply%20Chain/Supply%20Chain%20Manager/TP2005448/LMa Category: Supply ChainPosition Title: Supply Chain Manager ...More

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Operations, Planning & Inventory Permanent
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Consulting/Continuous%20Improvement%20Manager/TP2005489/SNh Category: ConsultingPosition Title: Industrial EngineerSalary: R900 000 ...More

Operations Manager

  • >500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Our client within the FMCG industry with a ...More

Warehouse and Distribution Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
An exciting opportunity awaits for a Warehouse and ...More

Demand Planner

  • <500 000 Permanent
Get an opportunity to be part of one ...More