The Sunday Mail
Dr Michael Musanzikwa
IT is crystal clear that global business competition is now the order of the day.
It has become survival of the fittest for an organisation to remain afloat — be it in the private sector, whose main objective is achieving success through profits and survival of the business, or the private sector, which strives to offer excellent service provision.
Procurement has become the competitive edge for achieving success in both sectors, as it is the heart that drives the engine of operations to create value.
Pursuant to the evolution of the best business practices, procurement is now a strategic function which is adopted by managements as an invisible instrument in committing organisational funds.
The realisation that more than 65 percent of organisational budgets both in the private and public sector are spent through procurement shows that it is a critical area that can impact negatively or positively on the entire organisational budget.
Therefore, it is imperative that every cent committed through procurement must have a resultant positive contribution to the profit and loss account of the organisation.
If it is in the public sector, every cent committed should lead to excellent service provision for the people in terms of infrastructure utilities such as water, sewer and good roads.
The importance of the procurement function as a competitive tool starts by being appreciated by the board of the organisation, then management and cascades down along the structures of the organisation.
This appreciation by the board means that it is a strategic function which must be led by a well-qualified and experienced person, who must be accountable for that portion that is more than 50 percent of the total budget.
This procurement practitioner is expected to obtain value for money on every cent which is committed through the procurement process, and which eventually puts the organisation in a competitive position.
The procurement process for competitiveness
- Identify the need in terms of priority — Check for specifications and the vote or budget for the item
- Determine the most appropriate sourcing strategy or method — This is based on the value or nature of the items or service, as well as the nature and value of the project
The adopted procurement method must be based on the basic principles, which are:
– Fairness
– Transparency
– Competitiveness and obtaining value for money
– Maintaining integrity
This is where the expertise and skill of the procurement practitioner plays its critical role in contributing to the competitiveness of the organisation.
This is mostly considered in the public sector, while the private sector considers the time element as very critical in meeting the customer service level.
In the public sector, the issue of bureaucracy can be tolerated as a control measure for safeguarding public funds.
- Managing the procurement contract
The practitioner must be in a position to manage the contract according to the agreed terms and conditions; that is, fulfilment of the contract deadlines without compromising on quality. Consequently, the issue of global business competitiveness remains a serious challenge for organisations and the procurement function offers the recipe for salvation by considering the following:
Digitalisation
The business world is now operating under the digital space and it is critical to modernise the procurement process so as to enhance the efficiency and effectiveness of the process. This eliminates human interface, which is prone to corruption and unnecessary bureaucracies.
Agility
The world is now very dynamic because consumers have many choices and alternatives. As result, organisations always make frantic efforts to make quick strategic decisions that respond to the needs of the market. Likewise, procurement has to avail the needed raw materials as fast as possible to facilitate production for the market. Which means that agility in the procurement process is paramount.
It must also be sensitive to internal and external factors, which need quick response without compromising on quality and value for money.
Procurement must have a ready, positive mindset and apply the necessary tools of trade in order to move with time.
Innovation
This is a critical element of competitiveness for organisations. Procurement practitioners must always think about how they can add value by being innovative in their processes.
It is assumed that this could be easy in the private sector, where there are no stringent rules and regulations to abide by as everything must be of quality and time -oriented in order satisfy demand. However, in the public sector, practitioners are expected to follow the straight jacket of rules and regulations of the Public Procurement & Disposal of Assets Act (PPDPA) [Chapter 22:23].
Not complying with these rules and regulations will be considered as an act of misconduct. But procurement best practices mean there is room for innovation in the public sector, because rules and regulations are designed by the Legislature, through parliament, for the benefit of the people. Consequently, any innovation for the benefit of the people can be accepted through the issuance of a Circular through the Procurement Regulatory of Zimbabwe (PRAZ). Therefore, all entities in Zimbabwe can be innovative but this has to be in consultation with the regulator for guidance.
Collaboration
Procurement, being the nerve centre for strategic and operational processes in organisations, must be in a position to manage the internal functions very well, as they are the first source of supply of information for the supply of goods and services. Collaborate and maintain good relationships with outside suppliers, always aim at developing supplier partnerships to have a seamless and continuous supply of materials, items and spares for the organisation.
Trust is the common denominator for sound relationships that enable the supplier to be part of the production process of the buying organisation and to be a key partner in business, thereby enabling both organisations to achieve a competitive position on the market.
Social responsibility and sustainability
Organisations, both in the public and private sector, are part of society and the environment. Their competitiveness is also measured by how they impact on the society and the environment and since procurement is mandated to commit organisational funds wisely for the benefit of the organisation.
The issue of observing societal issues such as human rights on labour laws and protecting the environment for future generations is an area of priority for consideration. This is because procurement is the interface of the buying organisation and external supply chain.
It has the power to influence suppliers to be compliant with standards which affect the society and the environment.
By doing so, this helps organisations to be competitive not only from the profitability point of view but to be a responsible stakeholder for the whole society and fauna.
The procurement practitioner of today must have the courage to influence where things are not moving in the right direction and provide the right inspiration against the commitment of the scarce financial resource.
It is also upon the practitioner to utilise every cent wisely through efficient and effective procurement.
Emphasise upon issues of maximum utilisation of resources, adapt innovative ways and overcome issues from resistant to change and bureaucracy.
Effective communication can also enhance procurement to be the best competitive tool in achieving business success both in the private and public sector.
*Dr Michael Musanzikwa is the chief director (procurement and disposal of public assets) in the Office of the President and Cabinet
