Procurement strategy key to African businesses in coming year

18 August 2011

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18 August 2011 | Laura Chubb

Improving purchasing is an important focus for African businesses over the next 12 months, research has found.

A survey of more than 100 organisations – conducted by CIPS and Ernst & Young at the recent CIPS Pan-African Conference hosted by CIPS Southern Africa, found that almost two-thirds (65 per cent) intended to make improving procurement a high, or very high, priority over the next year.

André Coetzee, managing director of CIPS Southern Africa, said: “Companies are starting to realise the strategic value procurement can bring. We are definitely seeing a move away from an administrative remit [for procurement] to areas of strategic sourcing and supplier relationship management.”

The research, ‘Key Issues in the African Supply Chain Market’, also found better negotiation with suppliers proved a major area of planned development. A quarter of organisations profess to be implementing or planning to introduce such initiatives to enhance the efficiency of their supply chain.

Susan Keighley, international membership manager for CIPS, said: “Purchasing professionals in the West, East and Central Africa have been aware of the importance of professionalising procurement. This report raises awareness of the profession and its benefits and this is something that buyers have been calling for.”

Sian Browne, associate director – advisory at Ernst & Young’s Johannesburg office, told SM: “Because variety and capability of suppliers in Africa is not as big as [that on other continents], there is currently less opportunity for negotiation.” But this is changing, she said. State-owned enterprises, in particular, are thinking more about their supplier base and developing improved strategic relationships, she added.

Intentions to improve negotiation with suppliers is especially important considering more and more international vendors are unveiling plans to move into the African marketplace.

In May this year, Ernst & Young published a survey of 225 supply chain and corporate executives from global companies with annual revenues exceeding US$3 billion (£1.8 billion). The research found that 67 per cent of respondents are developing their supply chain to support growth in emerging markets such as Africa.

The CIPS and Ernst & Young ‘Key Issues’ survey also found that resources and the upskilling of staff remain major challenges in the African market.

Browne said: “It is going to take another generation to see the right mix [of professionals] coming through. But there is a big push in universities [across Africa] now as regards courses in supply and logistics.

“Companies shouldn’t bring global teams in to do things and then leave. They have to train and sustain.”

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