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12.11.2008 Feature Article

Procurement, supply Chain Evolution in Ghana

The series on the procurement and supply chain evolution in Ghana and Africa in general continues this week with the emphasis on the Procedural stage which is a graduation from the chaotic stage we discussed last week.

The procedural stage within the procurement and supply chain segment proposes an orderly and structured system where the rules are set not according to particular individual wishes and their own standards with or without interest but according to contemporary business ethics, guidelines, requirements and challenged practices of the profession.

These also need to be continually modified, challenged and redefined to suit a particular business environment without compromising the core values and tested practices. We will therefore discuss how we can transform and transit our respective businesses and organisations from the current chaotic situation into well structured, disciplined, auditable and progressive systems which will be easy to manage and draw benefits to the organisation.

As our businesses and organisations experience growth and become complicated, we need to ask ourselves if we have solid foundations or capacity which can carry the load and prevent the system from crumpling under “growth pressure”. The life blood of every business or organisation is their finances and to guarantee a healthy financial environment is a function of income and expenditure.

A strong spend machinery evident from a sound and structured procurement and supply chain system can ensure control of that segment of expenditure since the others such as salaries, taxes, royalties and other statutory expenditures have little room for savings.

We cannot manage what we cannot control and until we are able to re-examine and restructure our business procurement and supply chain systems as well as transit them from the current chaotic into a procedural era, micro management, personal intervention, myopic supervision and pettiness will be our trusted alternative. This will result in much effort, suspicion, mistrust, trail verification and other form of micro approach which diverts time and energy from strategic issues whiles negatively driving our businesses backward into unproductive and wasteful personal involvement.

Real transformation from the chaotic to the procedural era will only happen if top management are positively concerned about the current situation and are willing and able to move their respective organisations forward not through speeches and wall hangings but by concrete, genuine support and encouragement to ensure true change come to their system.

In Ghana and Africa where the waste levels are very high, a simple migration from the chaotic to the procedural stage will usher the business into the first stages of achieving savings even though the real savings can be realised at the value chain era. How to achieve the above are as follows:

Every business or organisation needs a clear strategy, policies and procedures on how to manage their procurement and supply chain systems. A well thought about strategy will clearly outline what needs to be done from a broad perspective which then translates into a peculiar policy.

This policy then need to be “operationalised” into workable and system specific procedures which provides the frame work and direction on operational approach and methodology.

They need to be well drafted by adequately experienced professionals, signed and authenticated by the powers at the top and cascaded to all relevant stakeholders as well as ensure compliance by all. These should periodically and constantly be challenged and upgraded with very current and contemporary practices, and industry specifics, tested standards among others to keep the procedures alive to modern trends.

The systems also needs to be re-engineered, restructured and reorganised to clearly define roles, responsibilities and accountabilities in relation to the management of the procurement function. The strategic roles should be clearly distinct from operational/day to day activities since excessive operational work only adds pressure without real value to the business. The functional structures should be adequate and strong enough to carry the weight of the business currently as well as to contain the expected future growth.

Remember we need to define the clear structures before we recruit or shift people into the role. A value audit to most of our businesses and organisations both in the public and private sectors will reveal non existing procurement structures thus exposing the whole system to internal and external manipulations. Any system is as strong as the structures within and we all need to put burglar proofs around our finances to reduce the bleeding and restore health to our businesses.

The promulgation of the Public Procurement Act of 2003 (Act 663) is highly commendable and a step in the right direction to move our public spend machinery from the previous chaotic into the current procedural era. We however need to ensure the spirit behind the Act are invoked at all times and stand up and defend against its manipulation at all times.

The third ingredient is the human capital managing the procurement and supply chain responsibilities of our public and private organisations. A well drafted policy and procedures coupled with a well structured function without the right human capital might be an exercise in futility since the wrong people will always find ways of manipulating the system.

Procurement is a professional occupation and thus requires qualified people to manage the function instead of “pushing people there to fill the space”. A true professional will better understand the dynamics and can apply tactical solutions instead of try and error. The human capital also needs to be appropriately experienced as well as the natural willingness to demonstrate the right attitude which will uphold and preserve the ethics of the profession at all times.

Procurement and supply chain responsibility is not a job opportunity to make a living but an avenue to drive real value to the entire system by ensuring true value for money for all expenditures.

The procedural era of procurement and supply chain revolution in our part of the world will only be realised if it is initiated by the top team, healthy support and collaboration from internal and external stakeholders, opening up and embracing tested practices/standards as well as undergoing attitudinal and cultural changes required to complete the transition.

We can only control our expenditures if we have adequate control and these can only be realised if we move from the chaotic to the procedural stage and ultimately the value chain era which will be the discussion for next week.

Author: Sam Buabasah [[email protected]]

MyjoyOnline, © 2008

The author has 338 publications published on Modern Ghana. Column Page: myjoyonline

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