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Procurement and Supply Chain
Kamogelo MampaneCEO – SOEPF
Page 2
Procurement and Supply Chain
Page 3
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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4
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
erat
ion
al
Tech
nolo
gy E
na
ble
me
nt –
Rig
ht T
ools
and
C
onsi
sten
t P
roce
sses
Go
vern
an
ce –
Cle
ar R
oles
, R
espo
nsib
ilitie
s an
d A
ccou
ntab
ility
Rig
ht P
H
igh
ly S
kille
d a
nd
co
mp
ete
nt
–
w
ewer
q’;<
MV
Mot
ivat
ed r
esul
ts o
rient
ated
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