Procurement and Supply Chain

Kamogelo MampaneCEO – SOEPF

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Procurement and Supply Chain

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Work on the £175 million Garden Bridge is due to start in January 2016 with a completion date in 2018. TfL and the government have contributed £60 million of the costs with more than 65% coming from the private sector.

There is no evidence that Transport for London’s (TfL) procurement for the Garden Bridge scheme in London will not provide value for money, an audit has concluded.

However, the internal investigation did say that TfL’s role in the project was unclear from the outset and that “this was a strong factor in there not being an agreed procurement strategy in place”.It also noted that some documentation supporting the evaluation of the bidders had been disposed of during a TfL office move.

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Element Detail

Founder Members :Denel, Telkom, PetroSA, SAPO, Eskom Additional Members:Transnet, SAA, SITA, SOEPF, IDC, SOEPF, National

Treasury, Metrorail, CSIR, Transnet, Rand Water, National Ports, South African Rail Commuter Corporation (SARCC) City Power; Umsobomvu Youth Fund, Armscor & NEF, PRASA, IDT, The Dti (also SOEPF Secretariat) ,

Guest Status; SMME Forum; SMME desk under BUSA;

Revolution SOEPF was formed in June 2004 A voluntary forum of Procurement/Supply Chain Management Heads of the State

Owned Entities Share best practices in Supply Chain Management within the SOEs

Members

Authority

Consensus Decision-making Each entity reserves the right to approve or reject any proposal made by the forum

or approve a proposal on such terms and conditions as it deems fit Dti provides Secretariat support Agree on Frameworks and Principles

Who Are We

Strategic Procurement Operating Model

A leading practice model addressing all core end-to-end Procurement related activities

STRATEGY

Procurement Strategy Sourcing StrategyProcurement Capability

PlanningAoP , 3yr Plan and

Target SettingStrategic Supplier

Management

GOVERNANCE

Compliance Strategy Balanced Scorecard Risk ManagementProcess, Policies & Standards setting

Roles & Responsibilities

INTERNAL CUSTOMER MANAGEMENT

Internal Customer Engagement

Project Procurement Management

Long Term Demand Planning

CATEGORY MANAGEMENT

Supply Market Analysis

Category StrategySpend Analysis Demand Management

Supplier Relationship Management

Supply Market Development

COMPLIANCE MGMT

Internal customer support and

administration

Compliance monitoring

SOURCING MGMT

Needs analysis

RFX Creation

Supplier Selection

Contract Negotiation

RFX analysis andRecommendation

Contract Preparation

Contract Execution

CONTRACTS MGMT

Supplier contract compliance

Company contract compliance

SUPPLIER MGMT

Contract cycle /monitoring

Supplier on-boarding

Supplier development

TRANSACTIONAL SUPPORT & REPORTING

Order placement

ReceivingSupplier Payment

Benefits Tracking & Realisation

Contract admin

Operational Reporting

T’s & C’s Contract Review

Str

ateg

ic

Op

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al

Tech

nolo

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Rig

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ools

and

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Cle

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oles

, R

espo

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ntab

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igh

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w

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MV

Mot

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ed r

esul

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rient

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SPM Supplier performance management

and SLA

Supplier segmentation

Internal customer satisfaction

Right P Communications Plan and execution …using a structured professional approach to target audience and message needed

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At heart of Sourcing

Current Progress

Sp

end

Co

vera

ge

Spend Compliance75%

60%

100%

100%

The average procurement organization can realize additional savings of $100 million.

Many Organisations leave more than $1 billion of spend currently out of Procurement’s perimeter of control.

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1.Intra-Company

Transactional

Turnover

Forecasting and Planning

Pricing

Sub- Tier

Logistic and Inventory

Concentration and

Dependence

Discretionary

Market

Data Storing

Consumer Data

Quality

Facility Continuity

Facility Safety

Supplier Reputation

Health and Safety

Ethics

Corruption Bribery and

Fraud

Brand

CRM and SRM ContractualCompliance IP Data Access

GeopoliticalSupplier

MistreatmentSupplier Financial

Diversity Environment

CPO Dashboard

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0 1 2 3 40

1

2

3

41234567891011121314151617181920212223242526272829

Impact

Likelihood

Medium

Medium

Medium

Low

Medium

Low

Low

LowLow Low

Critical

High

High

High

HighHighIntra-Company Customer-Supplier Compliance and Regulatory Contractual Intellectual Property Data Access Data Storing Customer Data Quality Facility Continuity Facility Safety Supplier Reputation Health and Safety Ethics Corruption, Bribery, and Fraud Brand Environment Diversity Supplier Mistreatment Supplier Financial Geopolitical Market Discretionary Concentration and Dependence Logistics and Inventory Sub-Tier Pricing

Procurement Risk Assessment Framework

Benefits of productivity & cost management

initiatives

The deal cannot be complied with (unworkable)

Non-compliance : Savings are dependant on buying

under the deal

Other costs are increasing

illegitimate consumption increase (poor usage/waste)

Unforeseen cost increasing event inside our control

(should have been foreseen)

Saving illegitimately passed on to

customer

Saving legitimately passed on to customer (e.g. to protect market share)

Unforeseen cost increasing event

outside our control

Legitimate consumption increase

Bad deals that cost us to fix or get out of

The deal cannot be complied with (not

competitive)

The Leaky bucket – “The sins of bad buying”

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Valu

e

Time

Sourcing

Efficiency Benefits

Demand & Sourcing

(5-15%)

Contract Award

Maverick buying & lack of contract management

quickly erode value

‘The Leaky Bucket effect’

(-10 – 50%)

Compliance & Supplier Management

Supplier Collaboration

(1-3%)

Delivered by

Sourcing and supplier management capability

P2P systems

Governance & operating model

P2P

Returns generated by modern procurement

Procurement Professionals

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It’s not just about price ... ► The modern day Procurement

professionals do more than cut costs and count benefits

► They deliver sustainable commercial

solutions across the business

► The best procurement teams align their goals specifically to the corporate strategy and policy agenda

► They work on what the business ‘needs’ …not what procurement likes to work on

And these outcomes...► Better Security of Supply► Lower risk profile ► Greater efficiency► Improved quality ► Increased speed► More sustainable options► Lower carbon costs ► Use of locked funds► Capture innovations ► Economic Development ► Spend Transformation and

diversity► Stronger governance► Improved cash flow► Clearer financial control

Helping you build a stronger business through better supply market management

Conclusion

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Thank You