Supply warning for southern African firms

4 October 2010

4 October 2010 | Nick Martindale

Organisations in southern Africa need to put more emphasis on building long-term relationships with vendors to protect themselves against the threat of supply chain disruption, a report from PricewaterhouseCoopers (PwC) has warned.

The region has proved vulnerable to supply chain problems, as shown by May’s port and rail strike in South Africa.

In an interview with SM, Suresh Kana, PwC Southern Africa CEO, said: “Organisations [in southern Africa] need to take a longer-term view to procurement decisions and supplier service agreements.

“By being cognisant of the threats affecting suppliers, companies can better manage the direct impact to the sustainability of their own business. Being short-sighted and placing undue pressure on these relationships could have an adverse affect.”

PwC’s Global CEO survey found that only 17 per cent of South African CEOs are either “somewhat” or “very” concerned by the issue of supply chain security while only 20 per cent worry about the financial health of their vendors.

Buyers should analyse their own processes and the health of their supply chain, as well as building better relationships with key suppliers, Kana said.

He added that southern African companies are currently paying “a great deal of attention” to improving their procurement operations but warned that many sectors are still dogged by a lack of transparency in the tender process.

Kana also warned that poor procurement processes are hampering infrastructure projects that are vital to the long-term development of the region.

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