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, supply chain consultant and former director of SAPICS.
Procurement vs
Supply Chain Management
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 benefit 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.”
Colin Seftel, Supply Chain Consultant and former director of SAPICS
