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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

Strategic Procurement Influence on Poverty Reduction … · Strategic Procurement Influence on Poverty Reduction and Wealth ... (CPAR, 2003) Commesa ... poverty reduction and wealth

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Page 1: Strategic Procurement Influence on Poverty Reduction … · Strategic Procurement Influence on Poverty Reduction and Wealth ... (CPAR, 2003) Commesa ... poverty reduction and wealth

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

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Presentation Format

Strategic Procurement

Influence on Poverty Reduction & Wealth

Creation

Case for Swaziland

Conclusion

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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

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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)

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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.

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Strategic procurement aims

Value for money

Better service delivery

Improve the quality of goods and services

Increased profits

Good governance

Economic development

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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

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Implementation

Procurement Cycle

Procurement Plans

Use of Procurement Regulations/ Manuals

Qualified Staff

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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

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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

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Strategic Procurement

Policy

Strategy

Implementation

Monitoring and Evaluation

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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

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Eight Goals

Eradicate extreme poverty and hunger

proportion of population below $ 1 per day

employment rate

Underweight children under five years

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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

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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

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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

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MDG,s

Develop a global partnership for

development

Commitment to good governance

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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

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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

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Swazi continued

Is strategic procurement influencing poverty

reduction and wealth creation in Swaziland?

Is strategic procurement in existence?

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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.

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Thank you for your attention