Top Stories

Inefficient procurement cost Africa $31.5-billion - KPMG survey

 

ValueLeakage.pngIneffective 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.

Reducing supply chain costs through the circular economy

 

CircularEconomy.jpgToday, the linear ‘take, make, dispose’ economy that relies heavily on cheap resources for growth, is under threat from increasing commodity prices and growing consumer demand. The ‘circular economy’ offers a viable alternative, with cost savings estimated at over $1-trillion per annum by 2025. The supply chain has a key role to play in driving the transition to a circular economy, Tech-Pro tells SmartProcurement

The Kraljic Model can identify expenditure fit for P-cards

 

KraljicModel.pngAd hoc expenditure is a big headache for any organisation and procurement division: these low-value, high-volume purchases can erode budgets if processed through traditional P2P. While the solution is to introduce a purchasing card (P-card) programme, how does one determine which expenditure to put on a P-card?


A simple and effective way of segmenting your expenditure lies in the Kraljic Model, Tshipi Alexander, Head of Issuing Sales and Service at Nedbank Corporate Card, tells SmartProcurement.

BEE prepared and it will benefit all

 

Shanduka_JSE.jpgIt is not about the numbers.


For many South African companies, Broad-Based Economic Empowerment (B-BBEE) up until now may have been about tallying numbers on a scorecard to achieve compliance.


However this will no longer be enough, and amendments to the B-BBEE measurement codes published on 11 October 2013 by the Department of Trade and Industry and effective from 1 May 2015, should give pause for thought to South African businesses who will have to consider the imperative for enterprise and supplier development too.


There is a shift from enterprise development, where companies could just make a monetary contribution at arm’s length or settle supplier invoices early, to supplier development, where companies now have to have an active development relationship with the enterprises they support, says Nashika Singh, Supplier Development Manager for Shanduka Black Umbrellas (SBU).

Declining SMME index indicates narrowing entrepreneurial supply base

 

Closed.jpgThe Absa SMME index declined during Q1 2014, with a total quarterly decrease of 2.2% and a yearly decrease of 3.8%. The index declined to a two-year low in Q4 2013 (from 95.6 to 93.4).


Although South Africa has not yet entered a recession, the overall index clearly reflects slower growth over the last few years.

People fail, not suppliers...

 

DonPitsoe.JPGBeing an entrepreneurial supplier is exhilarating, but at times challenging. In fact, supply relationship managers involved in enterprise development may have sleepless nights wondering if their small or self-employed suppliers may be considering throwing in the towel because their businesses are not working.


Don Pitsoe, Business Mentor at The Hope Factory offers 10 words of wisdom that supply managers can pass on the next time they are approached by a supplier experiencing difficulties and looking for guidance from corporate procurement, in this month’s SmartProcurement

Procurement SA + Ed incubators = entrepreneurs accessing industry

 

ShawnTheunissen2.jpgOutside of their own organisations’ enterprise development initiatives, procurement departments across SA can offer numerous avenues for incubated entrepreneurs to access the country’s industry through agreements with various incubators.


An incubation model cannot stop once an entrepreneur’s skills gaps have been ‘treated’ – the model must give entrepreneurs a means of accessing industry at large, says Shawn Theunissen, of Property Point, Growth Point Property’s enterprise development arm.

Latest Research: Where does SA procurement face it biggest challenges?

 

BiggestChallenges.JPGBEE procurement, specifically implementing the New Codes, is considered the biggest challenge that South African procurement professionals currently face, said 481 respondents to a SmartProcurement survey.


The concern around The Codes is unsurprising, considering many organisations believe they stand to lose a BEE level or two. Concerns around the BEE Codes will be extensively debated at Smart Procurement World 2014.


Asked to choose their top-three challenges, 42% (202) of the 481 respondents said the BEE Codes keep them awake at night, with ‘contract management’ and ‘compliance’ sharing second place with 27%.

Creating a culture of spend optimisation

 

CultureOfSavings.jpgSpend management evolved from a technology perspective when it was realised that organisation-level purchasing required a separate and unique set of tools that could set it apart for improving efficiency and gaining deeper insight into spend.


While spend management has expanded into other areas of the supply chain, it is still focused on controlling spend related to operating costs and lacks an ability to promote procurement into a strategic role within organisations.


Consequently, an evolution of spend management is occurring - a new concept coined “spend optimisation”.

Managing supply risk - asking suppliers to share your supply risk

 

Supply_Bullwhip_effect.pngEvery business faces risks - the probability of events occurring - that can or will present challenges to their operations. Risk management is the practice of using processes, methods and tools to identify the level of probability, and then manage the ensuing risks.


In practice, this means identifying in advance what can go wrong in relationships between buyer and supplier. Failing to do this means you will be under-prepared and get some unwelcome surprises. A risk management strategy in procurement allows you to anticipate what may go wrong, thereby preventing disasters or serious financial losses.


Insuring is one way of mitigating risk. The question is who pays for this, the buyer or the supplier? Asks Elaine Porteous, in this month’s SmartProcurement.

Tricky procurement ethics questions and related answers

 

Triple_Bottom_Line.jpgUnethical behaviour begins with a choice. But, once begun it is a downhill slide on a slippery slope. Some professionals justify their behaviour by judging themselves against their intentions rather than against their actions. However, a decisive litmus test is whether you would feel comfortable if the press spoke to your suppliers about your relationship with them.


In this month's SmartProcurement we provide some solutions to a few tricky situations in which procurement professionals will likely find themselves at some point in their careers.

2014 Trends in South African logistics

 

Logistics.jpgThe CSIR’s 10th Annual State of Logistics Survey for South Africa¹, released in May 2014, highlights progress made and areas for improvement in South African logistics. The survey’s results mirror Tech-Pro’s experiences in this increasingly specialised area of supply chain management, Tech-Pro tells SmartProcurement.

Moving Localised Procurement into a Global System

 

Kala_Sivasubramanian.jpgInternational organisations committed to continuing operation in South Africa have likely tasked their procurement departments with supporting SA’s drive to increase local production within the economy through increased local procurement. But, when operating on an international scale, how can an organisation’s global procurement system support local procurement while still giving visibility into aggregate spend volumes? Furthermore, if they work with SA’s public sector, how do they build compliance with local content regulations into their global procurement systems at the same time?


Kala Sivasubramanian, a procurement manager from Global Services at Ariba, an SAP Company, discusses the level to which cloud-based procurement solutions can be customised to support country-specific requirements, in this month’s SmartProcurement.

Why 'green building' is vital to your supply chain

 

Green-Building-Initiatives.pngAs the world embraces ‘green’ initiatives, products and services, South Africa is implementing renewable energy, green building practises and environmental regulation to lessen the impact on our environment and precious resources. This opens doors for suppliers to turn their operations “green” and provide services that comply with current standards and that enhance corporate responsibility, says Shawn Theunissen, head of CSR at Growthpoint Properties and Property Point (Growthpoint Properties’ enterprise development programme) in this month’s SmartProcurement.

PMI continues to signal manufacturing sector's subpar performance

 

AbdulDavids2.jpgThe seasonally adjusted Kagiso Purchasing Managers’ Index™ (PMI™) fell to 45.9 index points in July from 46.6 in June.


“The decline in July was expected given that the labour strike by the National Union of Metalworkers of South Africa (Numsa) lasted almost the full month and directly affected many manufacturing subsectors,” says Abdul Davids, Head of Research at Kagiso Asset Management.

2014 SCM salary trends: Men earn 29% more than women!

 

BullishSupplyChainSalaries.jpgTech-Pro’s Salary Survey 2014 highlights how growing demand for skilled Supply Chain practitioners is improving career and earnings prospects for procurement, logistics, planning, supply chain and consulting staff, in this month's SmartProcurement.

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