Time for Government & Industry Leaders to address organisational structural anomaly with supply chain management.

CIPS 8 July 2013

Time for Government & Industry Leaders to address organisational structural anomaly with supply chain management.

SINCE 2007, there has been a positive shift in the way the procurement aspects of supply chain management is perceived by various Executive Board Committee members  and policy makers.
Unfortunately the rhetoric from both government and captains of industry, advocating the need to accept value driven procurement  and supply chain management executives (increasingly via the chief supply chain offer) into the Executive Board Committee(i.e. “the real decision making chambers”), has really not been matched by real corrective structural adjustments within their respective organizations. 

Today, most publicly quoted companies on the United Kingdom’s FTSE, South Africa’s  JSE, and United States’ NYSE, Nigeria, Ghana  and Kenya and many more still have  “ the value adding procurement professional” receiving lesser recognition and comparatively lower remuneration than  their counterparts in functional areas like information system, marketing, law, finance etc. This disparity is even direr within public and private sector entities in Africa and the emerging world.

Numerous local and international studies have clearly demonstrated that low remuneration is not the only incentive for individuals to act unethically. However, it is an accepted fact that official recognition, coupled with competitive compensation, can play a key role in attracting the talented value adding skilled professional to an organization.
In a measured move to curtail waste and increasing unethical behavioural practices, it was recently reported that a department within an African government had appointed an executive to oversee billions of annual public procurement spend.

To fit the role into existing government structures, the salary for the role was pegged at an associate (deputy) director level.  The big question is whether a deputy director ranking (and the associated package) is the right level for someone tasked to:-

1. To make strategic procurement decisions associated with BILLIONS of RANDS or USD SPEND.

2. Initiate supplier development programs that will result in the creation of future indigenous multi-millionaires.

3. Promote SMME growth and enterprise development.

4. Create long term wealth for others whilst getting no recognition and associated benefits.

5. Make decisions in support of local industrialization and value add.

6. Foster local value chain innovation.

Interestingly, the same challenges are in the private sector where various appointments are also pegged at a relatively junior level to report into other Executive Board Committee members who may not have a real understanding of the strategic importance of procurement and supply chain management within and beyond organisational boundaries.

Skirting around issues creates more complicated challenges for employers, employees, industry and society at large. 

1. Firstly, demoralised and unethical actions often thrive in an environment where policies and processes, including recognition, incentive schemes, have not kept pace with required structural changes, organisational and societal demands.

2. Secondly, dishonest conduct is largely driven by, among other things, cupidity, short term gains and a lack of professional pride and recognition. With comparatively lesser remuneration for procurement and a lack of real authority and recognition, the chances of an individual getting tempted to engage in fraudulent deeds with potential suppliers, other high ranking officials/executives or politically connected individuals and later resigning to enjoy their dishonourable returns, are on the increase.

3. Thirdly, it is an accepted fact that both in personal life and in business, one usually gets what he or she is prepared to pay for. The same applies to the sourcing of skilled human capital. Today the comparatively low salaries for procurement and supply chain management experts have resulted in governments and the private sector not attracting the right value adding professionals but rather opportunistic individuals, with their own and sometimes unethical self-serving short term agendas.

4. Fourthly, because of the on-going confusion between purchasing, procurement and supply chain management, coupled with the lack of a recognised statutory regulatory body, there are lots of practitioners masquerading as professionals. These opportunistic practitioners “strategically” accept any supply chain management related role and associated remuneration, knowing perfectly well that through their deceitful means, they will make up for any perceived shortfall to keep up with their often inflated lifestyles.

5. Fifthly, it is currently an accepted fact that a number of practitioners both in government and the private sector are really not professionals but wily personalities who have taken up positions for short term vested interests.

6. Finally the unfortunate end result of all the above  is that true public and private sector professionals get caught up in this unfortunate quagmire.

The time has come for industry leaders and government policy makers to take the “bull by the horns” and address objectively these inherited and often outdated policies and structural anomalies that continue to fail to accept and/or recognise the true supply chain professional for their value add, consequently causing more harm than good to businesses, government and society as a whole. 

In so doing, various institutions, be they public or private, will be able to define the appropriate strategic functional and associated remuneration levels which will help to avoid opportunistic narcissistic individuals.  Such a move will assist in attracting the right value adding professionals to contribute quantifiably to the much needed medium-to-long term:

1. Organisational bottom-line performance requirements
2. Government service delivery programmes and waste minimisation initiatives
3. Shareholder wealth creation and protection
4. Local economic development
5. Reduction in unethical self-serving unethical behaviours
6. Responsible corporate citizenry
7. Home grown supplier and enterprise development projects,
8. Various local economic development and industrialisation programmes.
*Professor Douglas Boateng is Africa’ first ever Extraordinary Professor for supply chain management at SBLUNISA,  UK Institute of Operations Management (IOM) first ever Extraordinary Chair in Operations and Supply Chain Management Professional Development for Africa and the Chairman of the KNUST’ West African Institute for Supply Chain Leadership.

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