Strategic Procurement Influence on Poverty Reduction and Wealth
Creation
Presentation made to CIPS Swaziland Branch
BY
Sibeso. R.M.Nkwilimba
MBA, MSc,FCIPS,Dip Pharm
IDM, Swaziland
Presentation Format
Strategic Procurement
Influence on Poverty Reduction & Wealth
Creation
Case for Swaziland
Conclusion
Strategic Procurement
In 2001, the total volume of expenditure was estimated at 15% of gross domestic product (CPAR, 2003)
Commesa indicates that public procurement in the region accounts for 60% expenditure (Commesa Public procurement Initiative, 2003)
The value of purchased materials, components and systems in the private sector account for 50-80% of the total goods sold (Cammish and Keough, 1991)
Purchasing costs in both public and private sector constitute the majority of expenditure (Gadde and Hakansson, 2001)
According to the Organization for Economic Co-operation and Development (OECD), the value of government procurement markets worldwide is estimated at US$ 2 trillion (Transparency International,5/2010
Strategic Procurement
Strategic procurement importance can not be overemphasized as it is viewed as one of the key solutions to economic development and competitive advantage
Strategic Procurement could be defined as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." (APICS Dictionary)
The development of ways of approaching and interacting with the supply-market, taking account of not only the present situation but also how it might develop in the future. (Steele and Court, 1996)
The purchasing function has a formally written long-range plan which is reviewed and adjusted to match changes in the oganisation’s strategic plans on a regular basis and should include all goods, services and civil works to be procured. (Carr and Smelzer, 1997)
Strategic Procurement
Statement by Prime Minister David Cameron on Government Procurement “ We need to make our procurement system more open, competitive and transparent. This is important for getting into grips with our deficit- as it will help us tackle waste and control public spending” (number10.gov.uk/news/pm-speech-11/02/2011)
Statement by President Obama “ We need to fix Government Contracting by reducing expenditure by 10% thereby by save US$ 40 Billion a year. Proposed an end to abusive no bid contracts” (Report by By John Kamensky on Obama Reform Agenda)
Procurement professionals challenge of the time is to contribute to fixing the SCM issues.
Strategic procurement aims
Value for money
Better service delivery
Improve the quality of goods and services
Increased profits
Good governance
Economic development
Strategic Procurement requires
Procurement function should be at corporate /management level headed by qualified staff (MCIPS)
Procurement function should be integrated with other key functions of the organization in terms of planning for the corporate goals of the organization
The planning process accords the function to have an insight of the various needs and budget
Procurement should assume the role of evaluator, creator and manager of inter firm supply links. Analysis and management of the total cost forms part of this agenda
Adequate facilities such as computers, access to internet, telephone lines and motor vehicles
Implementation
Procurement Cycle
Procurement Plans
Use of Procurement Regulations/ Manuals
Qualified Staff
Spend analysis
To provide a structured approach for the
identification and selection of spend improvement
opportunities based on historical spend.
Understand the value and volume of purchases
Identify key commodities to action in phases
Streamlining supplier base
Spend analysis is critical in the strategic sourcing
process
Benefits of Spend Analysis
Improve the quality and ability of procurement staff
Understand cost of product and procurement cost
Improve documentation systems
Develop strategies for different procurement
segmentation
Align procurement plans to agreed budgets
Reduce risk, cost and improve efficiency
Engage capable suppliers
Strategic Procurement
Policy
Strategy
Implementation
Monitoring and Evaluation
Influence on Poverty Reduction & Wealth Creation
Poverty is the state of human beings who are
poor. They have no food, shelter, clothes,
healthcare, employment, education, safe
water & sanitation etc
Millennium Development Goals (MDGs)
outlines some of the issues that relate to
poverty reduction and wealth creation
Eight Goals
Eradicate extreme poverty and hunger
proportion of population below $ 1 per day
employment rate
Underweight children under five years
MDG,s continued
Achieve universal primary education
Everyone accorded an opportunity to get into
schools
Promote gender equality and empower
women
access top jobs, parliament etc
accord education to girls at all levels
MGG,s continued
Reduce Child Mortality
Under five mortality rate
Proportion of children immunized
Improve maternal health
Maternal mortality rate
Proportion of births attended by skilled health
personnel
Access to medicines
MDG,s continued
Combat HIV/AIDS, malaria and other
diseases
availability of antiretroviral drug
Availability of anti-malaria drugs
Availability of insecticide treated bed nets
Ensure environmental sustainability
Consumption of ozone depleting substances
Access to improved water source, urban and
rural
MDG,s
Develop a global partnership for
development
Commitment to good governance
Case for Swaziland
Procurement Reforms are in place
Procurement bill, 2010 was enacted by the
King and Parliament of Swaziland last year.
Swaziland Public Procurement Regulatory
Agency to be established
Swaziland
Population is at 1.2 million
Unemployment is at 40%
Inflation is at 4.5%
GDP is at $6.1 billion, 2.0% growth in 2010
Public debt is at 17.5% of GDP
2010 data, compiled September, 2011
Swazi continued
Is strategic procurement influencing poverty
reduction and wealth creation in Swaziland?
Is strategic procurement in existence?
Conclusion
Strategic procurement is a force in poverty reduction & wealth creation
Requires support from the highest level of Government and the private sector
Appropriate Procurement Structure that is well supported by top management
Skilled procurement workforce that is level headed.
Thank you for your attention