Like Singapore, Malaysia, South Korea, India, China, Brazil and others, South Africa’s industrialization and economic development can be further shaped through strategic sourcing, Dr. Douglas Boateng, chairman of the Chartered Instituted of Purchasing and Supply’s (CIPS) Africa Strategic Advisory Board has said in Johannesburg.
Delivering a paper to procurement practitioners and other professionals at the UNISA Graduate School of Business Leadership, Dr. Boateng called for South Africa to creatively adapt strategic sourcing for her long term socio-economic developmental programs.
The occasion was the second 2012 CIPS Africa Distinguished Lecture series with the theme: “Accelerating Economic Development – SMME growth and job creation through Strategic sourcing”. Dr Boateng further called for a collective effort to support the South African government’ ongoing journey to further move away from pure extractive industries to more local value adding and beneficiation activities to boost industrial activity, especially among small to medium sized enterprises.
Dr. Boateng strongly posited strategic sourcing as one of the proven ways through which sustainable economic development could be achieved. “Strategic sourcing” a concept which allows professional procurers to carefully consider the total cost of ownership elements he noted “can provide policy makers with a creative and sustainable route to address joblessness, youth unemployment and skills development by giving potential local suppliers the opportunity to demonstrate their long term value adding capabilities”.
He affirmed that the long term success of Messers Patel, Davis and Manuel policy programs will be largely dependent on strategic sourcing. “For South Africa to further industrialize, the selection criteria for local suppliers in the short to medium term must look well beyond price. It must include cost elements such as supplier relationship development, supplier capacitation and ongoing supplier management. This will inevitably push up total acquisition costs. However the long term benefits will far outweigh the short to medium term increase in costs.” He said.
According to Dr. Boateng, a well-crafted and all inclusive strategic sourcing policy can assist with local entrepreneurship, supplier development, strengthen targeted capacity building; increase demand for local goods, improve the investment environment, ensure an increase in long term productivity, service and product quality, industrial competitiveness, to name but a few. He also stressed the need for the Treasury, all sectors of government, Chief Financial officers and the captains of industry to recognize the ever growing importance of social value, which includes wider considerations “that now extend beyond the total cost of ownership” He remarked.
“In the current environment, though, conventional “western” sourcing methodologies will be major challenge for local supplier development”. Said Boateng. He therefore urged private and public sector procurement professionals to up skill themselves to be: (a)more Afrocentric in their thinking (b) able to creatively harness the enormous potential of strategic sourcing to business and society and (c) more confident to challenge conventional wisdom associated with procurement within decision making corridors. He further emphasized the critical need for the government and private sector leaders to recognize plus create an enabling environment for professional procurers to ethically apply their skills which will in turn encourage the much needed long term local supplier selection, relationship development and management. “This paradigm shift is the only way to further unlock South Africa’s potential and can only be effected by the Government and captains of industry”. He remarked
In his closing remarks, Dr. Boateng called for procurers to strategically give priority to sourcing South African made goods, and products from countries in Africa before looking beyond the shores of the continent for alternative suppliers. “This collective but strategic move will give a major boost to intra country and regional trade plus much needed liquidity for local and continental wide infrastructural development”. He said.