Private sector service providers looking to enter the public sphere should be willing to move beyond simply meeting the basic requirements of a project as defined by the public sector Terms of Reference (TOR).
This is according to Gill Jones, Director of Client Solutions at UTi. Jones, in her presentation during the recent 37th SAPICS conference, validated how effective public-private partnership engagements can be in improving the lives and futures of ordinary South Africans.
Jones advises that private sector be willing to learn lessons at risk and at cost to the business for a period of time, but should work on building a trust relationship while learning those lessons. “The risks taken and profit sacrificed might not make traditional business sense, but it has a bigger goal – the heart of the supply chain – that of providing services of a high quality to South Africans.”
South Africa’s future, its success, rests upon the upliftment and education of her youngsters. While more than 20% of state expenditure is allotted for the purpose, the timely delivery of resources to around 11 million learners, more than half of whom are in rural schools, is testing.
A partnership that does more than ‘just’ work
Private courier and logistics firm UTi and the Lebone Litho Paarl Media Joint Venture (JV) were tasked by the public Department of Basic Education (DBE) with the distribution for the WorkBook Project. The state-funded initiative delivers nearly 60-million of the books throughout South Africa.
Unlike textbooks, workbooks are provided for learners to practice their language and numeracy skills – those already taught in the classroom. The UTi-JV-DBE partnership saw workbook deliveries to learners improve from below 95% in 2011 to a staggering 99.9% in 2014. Learners not only had their workbooks on time, but six months prior the start of classes.
A lack of accurate data prompted UTi to recommend that a database cleansing process be followed, allowing the company to streamline distribution.
“Although database cleansing and maintenance was not in the TOR of this project, it delivered immense value in terms of meeting and exceeding project deliverables, and in the end achieving the truly important objective of getting the right textbooks to the right schools at the right time,” Jones explains.
How to make Public-Private Partnerships work
“Working in the public sector, you are bound to very strict Terms of Reference. As a private sector provider, working on that size of project with public sector for the first time, you have to remember that you are dealing with public funds that need to be regulated according to the upfront-agreed TORs”,” says Jones. “Once you’ve won the project, and you start setting up Service Level Agreements (SLAs), you are bound to the rigid TORs, with no room for negotiation on either time or price.”
Jones doesn’t want these facts to put off private sector providers from engaging with public sector and ultimately achieving the best possible service delivery for South African citizens. “Just keep in mind that with limited information you have to cost a responsible risk factor to it,” she explains. “From there on it is up to you to stay focused on the end goal, and let your experience guide you in building trust relationships that will allow innovation to be to the benefit of the greater good.”
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ABOUT SAPICS – your supply chain network
SAPICS is a professional knowledge-based association that enables individuals and organisations to improve business performance. SAPICS builds operations management excellence in individuals and enterprises through superior education and training, internationally recognised certifications, comprehensive resources and a countrywide network of accomplished industry professionals. This network is ever expanding and now includes associates in other African countries.
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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