Let’s talk Procurement: What’s happening in Africa?

Let’s talk Procurement: What’s happening in Africa?

What’s happening in Africa? – Dinesh Kumar

The impact of inefficient and ineffective procurement in Africa estimated at 31.5 billion US Dollars, or 24.9 billion US Dollars in Sub-Saharan Africa, in terms of value leak. With strong growth aspirations in infrastructure, finance, energy, mining and other sectors, the role of procurement in organisation is becoming very strategic.

However, the current procurement functions are struggling with basic issues on delivery front such as low use of technology, inadequate skills and compliance.

While the southern zone and the western zone of the continent are making progress to address these issues, the eastern zone is making a great headway.

There is still a long road for us to travel to achieve significant maturity in our procurement organisations.

Value of procurement: Johan Smith

Globally, markets have slowed down and commodity prices have increased. Organisations need to find a way to remain profitable and competitive.

In a recent survey conducted by KPMG, 73% of C-level executives do not think Procurement adds real value. Companies are still focused on yesterday’s cost oriented Procurement metrics rather than value add and engagement with Finance remains limited. There are 3 key ways to transform Value:

First one is to consistently measure qualitative and quantitative benefits. The second way is to link procurement benefits directly to corporate KPIs and corporate value and the third way is to establish credible, traceable return on Procurement metrics.

Skills: Zinhle Dube

There is currently a huge challenge with skills in the Procurement space in Africa.

This stems from various underlying issues. There is a limited exposure of Procurement related qualifications within academic institutions across Africa. There is currently no formal association within which procurement professionals are accountable to, therefore limiting skills prescription at different levels. Procurement professional’s roles are seen as more operational than strategic thus limited training budgets offered by organizations.

These issues need to be debated with CPO’s and CEO’s of companies and addressed accordingly to promote Procurement skills enhancement in Africa.

Technology – Vandan Modi

Procurement technologies have evolved significantly in the last 20 years. What started out with E-procurement has evolved into a sophisticated technology landscape that enables suppliers and customers to partner strategically to manage demand efficiently and reduce working capital.

There is no doubt that use of appropriate systems and technology will be a competitive differentiator. However, lack of executive support, insufficient training and complicated user interfaces are some of the major reasons that organisations struggle to adopt technology and achieve operational efficiency.

Public Sector – Himal Kanjee

Since the years have passed procurement has continuously evolved from being only a buying function to a critical strategy sourcing function throughout all industries that assists to realise best value for the stakeholders. Public sector procurement needs to adapt with this global trend of evolution.

That means procurement decisions need to be made on a strategic level rather than an operational level.

According to the most African public sector procurement legislation, the procurement system needs to be fair, equitable, transparent, competitive and cost effective. However, the lack of skills, capacity and the understanding of how demand planning is linked to proper budgeting is an issue.

Global Mega Trends – Hannah

Today, Procurement is managing 40-80% of the total cost of a company. In an increasingly connected and mutually dependent global supply chain, procurement is the interface to the external supplier market and is consequently not only reducing costs but managing quality, innovation and the flexibility to respond to market dynamics.

For procurement organizations, it is essential to develop and drive strategic plans designed to accelerate and use future market trends such as massive and fast relocation of procurement functions to emerging markets, managing value chain complexity and risks in a more and more uncertain environment and releasing total value contribution of procurement including tax & custom efficient solutions.

David Okwara

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