Practical View Of Supply Chain Management
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PRACTICAL VIEW OF SUPPLY CHAIN Management
This book will inform the everyday layman about what you need to know before you bid for a government tender. It gives the reader a comprehensive idea of the internal processes that a bid will go through as well as how to prepare bid documents.
The book however also applies to Supply Chain Practitioners as it delves deeper into understanding the client’s needs when advertising for the bid and ensuring that the public knows exactly what is expected from the bid documents. It helps practitioners to further understand the processes and legal prescripts applicable for the tendering process to be fair.
The book is also beneficial as a reference to students and lecturers at educational institutions.
About the author:
Morris Sebenzile Mntoninzi holds a B.Com(hons) from University of South Africa (UNISA) as well as a National Diploma IT from TechnikonSA. His field of working experience includes: Finance, Supply Chain Management, Auditing and Credit Management.
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Book preview
Practical View Of Supply Chain Management - Morris Sebenzile Mntoninzi
PRACTICAL VIEW OF SUPPLY CHAIN MANAGEMENT
PRACTICAL VIEW OF SUPPLY CHAIN MANAGEMENT
Morris Mntoninzi
Copyright © 2018 Morris Mntoninzi
Published by Morris Mntoninzi Publishing at Smashwords
First edition 2018
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage or retrieval system without permission from the copyright holder.
The Author has made every effort to trace and acknowledge sources/resources/individuals. In the event that any images/information have been incorrectly attributed or credited, the Author will be pleased to rectify these omissions at the earliest opportunity.
Published by Morris Mntoninzi using Reach Publishers’ services,
1726 NU 13, Mdantsane, Eastern Cape, 5219
+27437631947
Edited by Vanessa Finaughty for Reach Publishers
P O Box 1384, Wandsbeck, South Africa, 3631
Cover designed by Reach Publishers
Website: www.reachpublishers.co.za
E-mail: [email protected]
Contents
Foreword
1. Preface
2. Public Sector Supply Chain Perspective
3. Supply Chain Management Operations
4. Procurement Thresholds
5. Alternative Bidding Processes
6. Categories of Suppliers or Service Providers
7. PROS and CONS of Outsourcing Institutions’ Responsibilities
8. Importance of Bid Specification
9. Other Aspects of the Supply Chain in Public Service
10. Private and Global Perspective – Supply Chain
11. Technology in Supply Chain Management
Foreword
This book is about supply chain or procurement in the public service or government, and is written based on my experience as the supply chain manager for six years in the government department, and on my observations on how the public sector handles government procurement. Some private perspective is touched on towards the end of the book just to complete the picture. Government published national guidelines and legal prescripts to guide the procurement in public service. It would be interesting to observe application of these guidelines and legal prescript in actual practice. The following is my perspective of what is taking place and what should take place in this very important environment, which is where the government budget is spent, as procurement is driven by this section.
1
Preface
Procurement of goods and services has always been there in both businesses and in the government or public service. The term ‘supply chain management’ came about to highlight the need to manage sourcing of goods and services, managing the quality of these goods and managing movement of these goods and services between the supplier and the customer. During this process, goods travel in one direction and money travels in the opposite direction. The supply chain processes arise from the growing amounts of procurement by business and by the government and growing distances between the supplier and the customer.
While it may be possible to pick up the phone and order goods from any supplier in small consumption quantities, this is not always advisable and possible when talking large procurement. Careful selection of supplier is necessary, taking into account aspects of reliability, quality and availability of goods. Different types of goods require specified handling during transport between supplier and customer. This is so as movement of goods needs to take longer routes and spend time on the routes and, therefore, needs more stations before arriving on the customer’s premises. Handling of goods by different agents in specified warehouses and containers is most important to ensure goods reach the customer in an acceptable state.
Procurement, both in public service and in private, have sets of processes in place that must be followed in sourcing supplier services, in selling of goods, in manufacturing and production of goods and in distribution of goods. The difference is in handling these processes by public sector and by private sector or business. Either sector will have more focus on one or more aspect of the processes, while the other will focus on different aspects and very little on some aspects.
Business or private sector processes focus almost equally on the following:
• Availability
• Quality
• Efficiencies
• Time
• Performance of suppliers
• Lowering costs
• Profitability
All of the above are governed by internally established policies that will not stifle the flow of business. The owners and management of the organisation set these policies and processes.
You will already see a difference when looking at the above areas of focus and what you came to understand in the public sector supply chain management.
We can, therefore, define the supply chain as a circular movement of goods and services in exchange for cash between the suppliers and customers. This chain has four pillars: customer, cash, supplier and goods (services).
2
Public Sector Supply Chain Perspective
Let us now look at each of the sectors separately by starting with the public sector perspective.
Preview/Background
At some stage, the government issued guidelines on handling all government procurement. There are various reasons the government decided to do so. The government is concerned about the processes that must be followed in ensuring that government procurement is fair and transparent and benefits all deserving citizens of the country.
It is a different story if this is achieved or not. If this is not achieved, the reason will surely be in application of the guidelines and how crafters of policies and regulations interpret the guidelines. In the South African context, these guidelines and procurement regulations are based on the Public Finance Management Act. One of the important reasons that this piece of legislation was enacted was to assist managers to manage rather than to blindly follow a rule-driven approach, where a manager needs not apply his mind, but blindly applies the set rules. This means whoever compiles the rules and regulations must keep this principle in mind so as not to stifle the business of the day, which is service delivery in the case of the public sector. The managers, on the other hand, must interpret this statement with full application of mind when carrying out any service of the government. Sometimes the legacy of ‘rule-driven’ culture will stick with us to the extent that we read them even from regulations and rules that are democratically drawn or built on the new thinking. The rules and regulations must be practical and applicable. The rules themselves must be possible to apply.
One would observe the following on the government’s new approach to procurement: that the government requires that, in carrying out government procurement, the following standard of behaviour is applied:
• A uniform procurement process across all government departments and public institutions;
• Ethics, fairness, transparency and equity be observed in carrying out government procurement;
• The procurement system must enable the emergence of sustainable small, medium and micro businesses, which will ultimately add to the growth of the country’s economy and improve employment, and, therefore, social standing of all;
• Ensure value for money when procuring; price alone is often not a reliable indicator and departments will not necessarily obtain the best value for money by accepting the lowest price offer;
• Open and effective competition for all to participate in government procurement;
• More than anything, the government wanted the departments’ accounting officers to be accountable for their procurement activities.
The government focussed on regulating procurement, as large sums of taxpayers’ money is spent on procuring goods and service to improve the lives of society. Further, government sees a