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18.11.2008 Business & Finance

Procurement and supply Chain Evolution in Ghana (The Value Chain era)

By myjoyonline
Procurement and supply Chain Evolution in Ghana (The Value Chain era)

The series on the procurement and supply chain evolution in Ghana and Africa in general concludes this week with the hope and aspiration of transiting into the Value Chain era. This is the ultimate era where every business or organisation in both the public and private sectors must ensure that for every cedi, dollar, pounds, naira spent we can account for its real value, not only at the stage of procurement but all the prior planning and after delivery of the respective goods, services and works.

This is basically a tall order to achieve in our part of the world since most of our business and institutional spend machinery are comfortable with the chaotic environment due to obvious reasons and with some amount of pressure pretend to be embracing procedural stage features. Since the process of transition requires passing through the procedural era which is currently a straggle or non-existent. It requires a strong desire, commitment, resources and support from top management and the entire internal and external stakeholders to ensure a smooth transition.

In most advance countries, the emphasis of most organisations is how to strengthen their respective procurement, supply chain, inventory, warehouses and others components of the value chain to ensure they support the traditional contributors to the bottom line such as marketing, sales and finance. They have realised that the potential for growth both organic and inorganic has been exhausted by the traditional contributors and options have become increasingly challenging and thus need to look within their internal system for possible potential to improve profitability through value chain savings. However there are certain conditions which must exist to ensure a smooth transition:

The Board and the entire top team must lend their full support to the transition team and the process owners through genuine and sincere encouragement. Interferences from the powers that be to influence the process unfairly will rather draw the system backwards. Since true change management is difficult in our part of the world, the top team must fully back the change process even when things go wrong through lack of cooperation and resistance from the “traditional custodians of the inherited status quo”. Change can only be initiated from the top and any middle level initiative will amount to a revolution or a coup with its attendant consequences tantamount to treason which is a serious offence even in the corporate world.

The people who will manage the transition should be true professionals who are adequately qualified, possess the right experience and exhibit the right attitude at all times even at the peril of losing one's job. The “Nokofio” or job security posture cannot really make any meaningful impact and by the way the real history makers like Kwame Nkrumah and all members of the Big Six at one time of their struggle for independence had to endure hardship but the prize at the end is worth the effort. The procurement and supply chain profession needs professionals who will declare “positive action” on all stagnant and counterproductive practices, procedural ritual adherence without real value, undercover dealings among others which is an obstacle to real change. Organisations must engage good materials and pay them well to minimise the temptation as well as provide the resources and environment to ensure a transition to a value chain era.

Appropriate structures and contemporary procedures must be put in place and enforced to ensure discipline and uniformity. These must be authenticated and approved by the Board and management to drive some weight into the whole exercise whiles demanding accountability from the value chain core team. The structures must have situational relevance as well as flexibility to accommodate progressive and dynamic changes.

Just as the sales and marketing functions have sales and volume targets, top management must demand concrete results through system generated savings which will be benchmarked, recorded and reported with modern strategic value chain methodologies. This will be better understood and appreciated by the top team who are sponsoring the transition to the value chain era. The savings realised could be reinvested in the business, shared as bonus to the entire workforce, declare as more dividends to shareholders and improve the balance sheet among others. In most parts of the developed economies, savings from the value chain far outwits the gains from sales expansion and thus provides additional resources.

The journey to the value chain era begins with the first step of realising that the current “spending spree” or “enhanced transactional buying” only keeps the system busy without realising true value. This can only be realised if the system migrates to the Strategic Procurement and Value Chain Levels. Big fishes can mostly be caught in the deep waters and thus need to lift up our game to experience the real gains from value chain savings. However we must first ensure we have satisfied the requirements of the procedural era before we can transit into the value chain environment through complete restructuring and reorganisation. This will then initiate our businesses and organisations to the real benefits of the value chain era. If the companies and businesses in the developed countries that are within the value chain environment are even experiencing financial meltdown in the wave of the current global financial crises, we in the third world need to b extra careful.

Until we can account for the last Cedi spent in terms of value, we will hear of the value chain era but we might not get there.

Credit: Sam Buabasah [[email protected]]

Source: B&FT