Totting up business value chain


Why is it worth discussing purchasing and supply at this moment? Firstly, the country is recovering from an economic meltdown that requires all facets of business to fire on all cylinders.

Before the implementation of the Government of National Unity, the social, economic, and political situation had created an environment that ignored ethics in all sectors to the detriment of the ordinary Zimbabwean.

We are recovering from a period that was characterised by shortages of products, national currency and forex and price controls.

Secondly, the procument profession is responsible for spending a huge proportion of companies’ revenues or the national budget.

Organisation’s profitability, industry and country competitiveness, organisations’ responsiveness to customer needs now depend on how well the purchasing and supply is organised. T

he subject is critical for the well being of ordinary citizens, profitability of organisations and prosperity of Zimbabwe.

Of late, there have been reports of unprofessional and unethical purchasing practices, corruption and bribery. The diamonds in Chiadzwa fairly contribute to the subject.

There have been issues related to irregularities in the engagement of partners or contractors to mine precious minerals.

The Harare Airport road dualisation made headlines centred on procurement irregularities.

This raises questions to the ordinary citizen of Zimbabwe. Is it that the legislation that regulates purchasing is weak or is is about ignorance of rules?

Are the laws dealing with perpetrators so weak, or is the punishment not tough enough to deter perpetrators responsible for such actions?

The role of purchasing and supply function in organisations is to provide the interface between customers and suppliers in order to plan, obtain, distribute as necessary, supplies of goods and services to enable organisations to satisfy their external and international customers.

The role of the function brings about responsibilities to formulate, communicate and implement policies, strategies and plans, the establishment and improvement of purchasing related systems and acquiring supplies.

Some of the roles include the establishment and maintenance of a database of purchasing related issues, establishment and development of sources of supply and providing goods and materials to internal and external customers through storage, movement, distribution and transport.

It also entails monitoring and controlling the purchasing, supply, storage, distribution and transport chain and contributing to effective working.

Given the above, it is evident that the profession cannot be treated as second order function anymore.

At a micro level, business requirements are becoming more complex, the business environment is constantly changing, and globalisation is making acquisition of materials and services more complex.

In the years ahead, those organisations and nations who do not recognise procurement as a profession will not be competitive.

Businesses need to take a holistic approach and make reference to McKinsey 7 “S” model in reorganising their purchasing and supply activities:

Organisational “structures” in procurement must be consistent with the environment so that businesses are able to relate to each other effectively.

Organisational “strategy”, the plan for allocation of resources must take cognisance of the importance of the procurement function.

Organisational “systems” for procurement must allow for procedures, processes and routines that characterise how important work is executed.

Management “style” and the general culture in the procurement function must relate to structure, strategy and shared values.

Procurement “staff” need to reflect professionalism.

The procurement “skill”, the distinctive capabilities and core competencies of staff should reflect bias and understanding of procurement fundamentals.

Organisational “shared values” reflect and stand for what the organisation believes including procurement activities.

Most purchasing and supply functions are in the periphery of the organisational hierarchy. The majority of buyers do not have the requisite qualifications.

It complicates and compromises professionalism, accountability, responsibility and ethics in purchasing departments.

At a macro level, the laws need to embrace professionalism in order to manage corruption in purchasing activities. Critical professions in Zimbabwe are regulated using a two-pronged approach.

There is an Act that regulates the practice and another for the profession. Doctors, nurses, lawyers, engineers and architects fall in this domain.

What excuse does the profession responsible for managing massive expenditure of tax payers’ money and shareholders’ investments have not to be regulated?

The effects of their inefficiencies can be the same as those from the medical fraternity and life can also be lost.

The inefficiencies affect the public directly, services are delayed or costs are increased at the detriment of citizens.

It is therefore urgent that purchasing and supply profession is regulated in sequence with world trends.
Nyasha Chizu is the chairman of the Chartered Institute of Purchasing and Supply