Strategic sourcing can alleviate poverty, promote small enterprises and grow economies

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Africa.jpgStrategic sourcing can create jobs for small enterprises and ultimately achieve economic development, said SmartProcurement Editorial Board member Dr Douglas Boateng.

Strategic sourcing has helped organizations achieve quantifiable savings, often between 4% and 12% on procurement spend, and improve productivity and corporate social responsibility initiatives.

“As a concept it continues to assist governments to industrialise, develop and create long-term jobs in certain deprived localities and rural areas,” said Dr Boateng in a paper delivered at the 2012 CIPS Africa Distinguished Lecture series in Accra.

His paper highlighted the strategic importance of the procurement aspects of supply chain management towards African economic development.

Douglas Boateng.jpgA well-developed strategic sourcing strategy can strengthen economic capacity; increase demand for local suppliers, improve the investment environment; and ensure an increase in productivity, quality and competitiveness of local staff and businesses, noted Dr. Boateng.

Through developing SMEs and creating jobs in the vicinity, strategic sourcing is a route to increasing affordability levels; broadening the local tax base; and improving council services.

Furthermore, it links developed and underdeveloped areas and socio-economically empowers disadvantaged and marginalized communities, facilitating redistribution processes and improving quality of life locally.

“By strengthening the support of local businesses, public sector spending within locally-based companies increases and promotes business start-ups and encourages business to grow,” he said.

He posited that African Governments appoint an independent senior supply chain management and procurement expert in their respective Presidencies to further enlighten the leadership and various Ministers on the long-term economic developmental aspects of strategic sourcing and supply chain management as a whole.

Furthermore, “a new era has dawned for the procurement and supply chain management profession. I foresee within the next 24 months all practitioners being forced to sign a professional code of practice and conduct with the appropriate professional body,” noted Dr. Boateng

Financing projects

Strategic sourcing is not just about buying goods and services. Even the sourcing of finance for various projects must be strategically looked into in the interest of socio-economic development.

“There are major banks on stock exchanges on the continent,” noted Dr. Boateng. “Why should African banks not get a greater share of interest earned from these loans, which could be ploughed back into development financing on the continent?”

In terms of Foreign Direct Investment (FDI), he concluded that the majority of profits earned on relatively small capital amounts raised in Canada and the US for exploration initiatives in minerals and oil and capital intensive projects are owned by American, European and Chinese investors.

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