Blame for the growing water crises in South Africa has been shifted from corruption at municipal level, to lack of maintenance planning at water treatment facilities, to copper theft and electricity infrastructure failures, and most recently, to the unexpected hot weather. According to supply chain experts, the long term solution to the on-going service delivery problems of South Africa should begin by changing the public sector understanding of basic supply chain management principles.
“In acting on their mandate to deliver basic services to citizens, state officials tend to focus on the procurement of goods and services rather narrowly, whereas they should be looking at the supply chain as a whole, from the sources of raw materials to the end-user,” says Colin Seftel, a former director of SAPICS, the industry body for supply chain professionals in South Africa.
Procurement vs Supply Chain Management
Seftel explains that procurement refers to the specific function of purchasing goods and services from a direct supplier, and takes little account of the upstream suppliers and processes that go into the production of goods, maintenance of infrastructure and delivery of services. By contrast, supply chain management looks at the whole chain, which usually begins with the production of raw materials and ends with delivery to consumers.
Supply chain management attempts to balance supply with demand, and so its starting point is the consumer demand. In balancing supply and demand, it includes disciplines such as demand planning, quality management, capacity planning, maintenance planning, as well as increasing and upgrading infrastructure and resources in line with future growth.
Public vs Private Sector
The supply chain management way of thinking is better understood in the private sector, where companies have to compete for business. Oversupply represents a potential loss to a company, whereas undersupply results in unhappy customers who are likely to take their business elsewhere.
In industries with advanced supply chains, such as the automotive industry, companies understand that they exist—and are competitive—only insofar as the supply chain of which they form part is operating optimally. Thus all the companies within a particular supply chain collaborate as closely as possible. This means sharing the vital information flowing from the customer, and then optimising all activities along the supply chain in the light of that information.
“Government’s supply chain has somewhat different dynamics, but the principles are not dissimilar,” Seftel maintains. “The current problem however stems from the strong focus on procurement in government supply chains, instead of a focus on delivery.”
“What if government were to consider the supply chain in its entirety, and how to get it functioning optimally—and geared to supply what the customers or citizens want? That way you would start to get the various components of the supply chain working together to satisfy the citizen, rather than each one simply trying to optimise its own profit, and government could start to see its spend being more directly linked to benefits its citizens.”
“In other words, you wouldn’t be looking for the lowest tender for supplying replacement parts to a water treatment facility, but the most efficient way to supply clean running water to a thirsty community,” Seftel concludes.
PHOTO CAPTION: Colin Seftel, former director of SAPICS
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