PanAvest and Sasol publish African supply chain series14/10/2014
Long-term value suffers when bargaining is confused with negotiating06/05/2015
The Chartered Institute for Procurement and Supply (CIPS), in partnership with Professor Douglas Boateng and the PanAvest Foundation, has held its 2015 Pan African Supply Chain Public Lecture Series in Accra, Ghana.
The event was held under the theme, “Were We Ever on the Same Page: Negotiate, Agree in Specificities, and then Contract”, and addressed Professor Douglas Boateng, Africa’s first Professor Extraordinaire in Supply and Value Chain Management, and chairman of CIPS’s African Advisory Board.
The event was part of his Pan African quasi-academic and industrial social responsibility initiative.
In his lecture, he shed light on some of the reasons why a relative lack of negotiation on the continent is hampering, amongst other things, region-wide service delivery, organizational value chain performance and competitiveness, and a broader socio-economic development.
Dr Boateng averred that negotiation is not about chasing money but adding value and that businesses much always be on the same page so as to negotiate for the growth and betterment of their respective organizations, since negotiation is an integral part of procurement process.
He mentioned that one of the most important but often misunderstood aspects of supply chain management is Negotiations and that it is not about haggling and price chiseling for self-gain, but rather a catalyst for building long term mutually beneficial relationships.
“Appreciating its strategic importance and involving the right professionals from the outset can assist with achieving win-win value chain agreements and subsequent contracts,” he stated.
He said as professionals, they need to analyse and appreciate some of the reasons why the developing world is experiencing challenges with national and regional wide development, company bottom line performance, value chain performance, service delivery quality and increasingly expensive legal contract disputes.
He indicated that one of the most important aspects of supply chain management is negotiation, and that people fail in supply chain management because they lose sight of good negotiation and pay more attention to bargaining.
He said, “negotiation is not about price chiseling, rather it is the catalyst for building long term win-win relationships.”
“…… Appreciating negotiation’s strategic importance, and involving the right professionals from the outset can assist with achieving win-win value chain agreements and subsequent contracts,” he said.
According to him, the overall global outlook of countries in Africa especially, remains very patchy and uncertain due to budgetary cutbacks.
He averred that public, government departments, state owned enterprises and private sector organisations have experienced the distressing effects of the global meltdown, while they showed very little sign of a major upswing in the economic fortunes of the world economy.
, the downward trend is expected to continue into the foreseeable future. At the same time, there are increasing demands from shareholders and society at large for higher performance and significant improvements in service delivery.
He said, there has been relatively good progress made in implementing policies and structural reforms to reduce the comparatively high unusual purchases and sometimes easily avoidable squandering within selected government departments and state owned entities.
He also indicated that the value chain improvements and savings can be achieved if organisations strategically source and manage their tangible and intangible products adding that strategic sourcing has been successfully applied in various public and private sector organisations: Defence, Automotive, Aviation, Banking and financial services, Healthcare, Media, Agriculture, Pharmaceuticals, Utilities, building and construction, ICT and Transport services etc.
“Today, it continues to help organisations achieve quantifiable savings, often between 4% and 12% on procurement spend.”
He added that the supply chain or procurement professional must note that, strategic sourcing does not only apply to the purchasing of products, but also equally relevant in the sourcing of consulting services, packaging components.
He however indicated that Ghana’s Public Procurement Act (663) is relatively still non total acquisition costs based and cumbersome coupled with an unfortunate of misunderstanding of its strategic intent.
Dr Boateng said, in spite of the rlative improvements, the current Procurement Acts/Laws and associated policies in most African countries there is the need to strategically source from a supply chain and total acquisition costs perspective and not just on price and immediate short term need.
” Ghana’s Public Procurement Act 663 S59 “sermonises that a successful bidder shall be the one with the lowest evaluated tender price. It is a well known fact that that too much emphasis on price other than total acquisition cost is counterproductive to strategic sourcing, supply chain management, long term value for money, empowerment of indigenous suppliers and more importantly sustainable socio economic growth and development”.
Boateng also believes that our policy makers must be careful and not be deceived into believing that single sourcing always represents value for money.
He however indicated that within the spheres of government and state owned enterprises, a well-conceived strategic sourcing programme can assist in achieving quantifiable savings and productivity improvements.