Procurement lacks commercial awareness in Africa, says buying chief

25 January 2011

25 January 2011 | Nick Martindale

The procurement profession in southern Africa is maturing but still has some way to go before it can deliver maximum value, a leading practitioner has said.

In an exclusive interview with SM, Meshern Govender, director of procurement and logistics at Standard Bank of South Africa, said: “The function has grown but there’s still room for improvement.

“People in our environment are not commercially astute as yet, they still come with the mindset of buying and as a result costs can spiral out of control and they can produce unnecessary portfolios in their supply chains and elements of inflexibility.

“The way to go is education; people need to admit that in some cases they are out of their depth and need to pursue a higher learning in terms of procurement,” he said.

The economic downturn has been beneficial in raising the profile of procurement at Standard Bank, said Govender.

“Previously it was a very transactional function so all it focused on was best-buying and order fulfilment,” he said. “Now it’s deemed to be a value-enabler for business units within the franchise.”

This mindset change has created more pressures on the function to generate cost savings, one of a number of priorities for the organisation in 2011, he said.

“Some of the key considerations are reconfiguring our supply chain so we can get better value in terms of cost management and demand‑managing the various business units,” said Govender.

The focus on cost reduction has required working closely with suppliers in core categories such as consultancy, logistics and IT.

“We’ve segmented our supply base to the point that the relationships we believe to be key and strategic have been the solution to a lot of the cost initiatives we’ve embarked on.

“In some cases it’s been win-win and in others we’ve had to sever the relationship because we felt the vendor was not at the forefront. There were a lot of legacy-related processes built around some suppliers. We exited some of those relationships, which was for the better of the company,” he said.

Other core priorities for procurement are demonstrating a commitment to sustainability and broad-based black economic empowerment, while cutting costs, attracting and developing procurement talent and managing the risk posed by currency fluctuations when sourcing internationally, he said.

Based in Johannesburg, Standard Bank also operates in Zimbabwe, Mozambique, Namibia, Botswana, Lesotho and Swaziland.

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