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