Procurement and Supply Chain
Kamogelo Mampane
CEO – SOEPF
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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Who Are We
Element
Revolution
Detail
 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
 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;
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
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4
Strategic Procurement Operating Model
A leading practice model addressing all core end-to-end Procurement related activities
Communications Plan and execution …using a structured professional approach to target audience and message needed
Right P
Sourcing Strategy
Procurement Capability
Planning
AoP , 3yr Plan and
Target Setting
Strategic Supplier
Management
Balanced Scorecard
Risk Management
Process, Policies &
Standards setting
Roles &
Responsibilities
INTERNAL CUSTOMER MANAGEMENT
CATEGORY MANAGEMENT
Internal Customer
Engagement
Long Term Demand
Planning
Spend Analysis
Demand Management
Category Strategy
Internal customer
satisfaction
Project Procurement
Management
Supply Market
Development
Supply Market
Analysis
Supplier Relationship
Management
COMPLIANCE MGMT
Internal customer
support and
administration
Compliance
monitoring
SOURCING MGMT
Needs analysis
CONTRACTS MGMT
Contract Negotiation
RFX analysis and
Recommendation
RFX Creation
Supplier Selection
Contract Preparation
Contract Execution
Supplier contract
compliance
Company contract
compliance
Contract cycle
/monitoring
SUPPLIER MGMT
Supplier segmentation
Supplier on-boarding
Supplier development
SPM Supplier
performance management
and SLA
TRANSACTIONAL SUPPORT & REPORTING
Order
placement
Receiving
Supplier
Payment
Benefits
Tracking &
Realisation
Contract
admin
Operational
Reporting
T’s & C’s
Contract
Review
Operational
Compliance Strategy
;<MVMotivated results orientated
Enablement – Right Tools and
Consistent Processes
GOVERNANCE
Technology
Governance – Clear Roles, Responsibilities and Accountability
Procurement Strategy
Strategic
STRATEGY
At heart of Sourcing
100%
 The average procurement
organization can realize
additional savings of
$100 million.
Spend Coverage
60%
 Many Organisations
leave more than $1 billion
of spend currently out of
Procurement’s perimeter
of control.
Current
Progress
75%
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Spend Compliance
100%
1.Intra-Company
CRM and SRM
Compliance
Contractual
IP
Data Access
Data Storing
Transactional
Consumer Data
Turnover
Quality
Forecasting and
Planning
Facility
Continuity
Pricing
Facility Safety
CPO Dashboard
Sub- Tier
Supplier
Reputation
Logistic and
Inventory
Health and
Safety
Concentration
and
Dependence
Ethics
Discretionary
Corruption
Bribery and
Fraud
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7
Market
Geopolitical
Supplier
Financial
Supplier
Mistreatment
Diversity
Environment
Brand
Procurement Risk Assessment Framework
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
4
Medium
High
High
Critical
Low
Medium
High
High
Low
Low
Medium
High
Low
Low
Low
Medium
3
Likelihood
2
1
0
0
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1
2
Impact
3
4
Intra-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
The Leaky bucket – “The sins of bad buying”
Benefits of productivity
& cost management
initiatives
The deal cannot be
complied with (not
competitive)
Saving legitimately passed
on to customer (e.g. to
protect market share)
The deal cannot be
complied with (unworkable)
Legitimate consumption
increase
Non-compliance : Savings
are dependant on buying
under the deal
Unforeseen cost
increasing event
outside our control
Other costs are
increasing
illegitimate consumption
increase (poor usage/waste)
Unforeseen cost increasing
event inside our control
(should have been foreseen)
Bad deals that cost us to
fix or get out of
Saving illegitimately
passed on to
customer
Value
Returns generated by modern procurement
Compliance & Supplier Management
Sourcing
Delivered by
Supplier Collaboration
(1-3%)
Contract
Award
P2P systems
Demand &
Sourcing
Maverick buying & lack of
contract management
quickly erode value
(5-15%)
‘The Leaky Bucket effect’
(-10 – 50%)
Efficiency Benefits
P2P
Time
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Sourcing and supplier
management
capability
Governance &
operating model
Procurement
Professionals
Conclusion
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
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Helping you build a stronger business through better supply market management
Thank You
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