STREAMLINE PROCUREMENT FOR DEVELOPMENT (PAGE 29, SEPT 18, 2010)

A PROCUREMENT expert has called on the government to harness its buying power for job creation and long-term national development.
Dr Douglas Boateng, the President of Institute of Operations Management Africa, a South Africa based non-governmental organisation, said the government could set aside a portion of the procurement budget to strategically source from local suppliers whose total acquisition costs were relatively higher but within reason.
“From a long-term developmental perspective, there is nothing wrong in governments setting aside a portion of the procurement budget to strategically source from local suppliers whose total acquisition costs are relatively higher but within reason.
“In the short-term, smaller local suppliers (owed to lack of economy of scale) may not be able to compete on total acquisition cost, however, in the long-term, with volume growth, they may”.
In a paper on “Strategic Sourcing in Africa” copied to the Daily Graphic in Kumasi, Dr Boateng, said unfortunately, such initiatives continue to be hijacked by “politically-driven box-ticking initiatives and short-term self interest, stifling government efforts to create and support a new generation of local and indigenous suppliers - the undoubted engine for sustainable long-term growth and job creation”.
He said success stories from other parts of the world had proven that strategic sourcing could support small and medium enterprise (SME) development, long-term creation of new industries and empowerment of indigenous suppliers with real jobs.
He noted that for every 10 SMEs created out of strategic sourcing, two or three may survive to become major industrial conglomerates.
Dr Boateng expressed regret that there was more politically driven pontificating from business executives and policy makers than was real actionable policies for SMEs development.
He said in countries where strategic sourcing had been successfully applied in various public and private sector organisations, it continues could achieve quantifiable savings on procurement spend.
Regrettably, he said, in many of the African continent, there were still a general focus on price rather than a holistic product lifecycle management view of sourcing and long-term supplier development.
He noted that to date, the return on investment from enterprise-wide systems continues to be sketchy, especially within the public sector.
“Yet, organisations and governments continue to invest in more systems without undertaking some reflective stock taking to understand why the existing and previous systems failed to produce the desired outcome”.
He called for creative but legitimate ways to address the chronic unemployment in Ghana and other countries in Africa.
Dr Boateng called on companies and governments to leverage the potential for bulk procurement and associated total acquisition gain share.
He said governments in Africa must look at sourcing from an economic development agenda point of view, and not just in terms of competitive pricing, while business leaders must view strategic sourcing as a means to sustainably increase shareholder value.
He noted that innovative strategic sourcing by government could encourage service providers to relocate to certain regions to service local needs at a reasonable price, thereby, spreading economic activity and creating jobs.