Strategic Sourcing and Industrialisation insights with Prof Douglas Boateng
Over the past 11 weeks I have shared several insights into the power of strategic sourcing to dramatically change the socio-economic development path of Ghana and Africa at large. I have drawn attention to the ongoing need to embrace the opportunities of strategic sourcing practices to facilitate industrialisation, trade, economic growth and poverty reduction.
As this series comes to a close, I would like to leave you with some final food for thought on how strategic sourcing practices can be used to change the economic fortunes of Africa, and what both the public and private sector should keep in mind as they continue down the path of strategic sourcing.
While there is poverty in Africa, the continent is certainly not poor. It is only Africans themselves that can accelerate intra-African trade, industrialisation, stimulate SMME growth and job creation through supply chain management, procurement and, in particular, strategic sourcing. Collectively, poverty levels can be significantly reduced through changing industrial and personal sourcing behaviours.
- Consumer sourcing
The regions’ nationals must bear in mind that the way they source or buy an item for personal or public use today has immediate and sometimes unintended medium- to long-term consequences for a community, an industry, a country, a region, a family, an individual, the current and next generation and the African child.
- Buying local
It is now an accepted fact that strategic industrial and consumer sourcing by citizens and companies have a direct impact on sustainable national and regional development. Hence, governments are encouraging nationals to buy locally and from locally owned companies to minimise the reliance on imports which has decimated local industries and helped to de-industrialise some sectors.
Today, strategic sourcing is accepted by policy makers and C-suite executives to be inextricably linked to both Agenda 2063 and the 17 UNSDGs. As proven in other regions of the world, a sourcing mindset and behavioral change will make Africans part of the solution to unlocking the economic transformation potential for the African child and future generations.
- Avoiding silo thinking
Public sector sourcing was previously one-dimensional and focused purely on value for money. Today, it is being used to support other objectives such as small business, community development and industrialisation. To ensure sustainability it is essential that governments depart from short-term gain and silo thinking.
- Skills development
Human capital and associated skills development must be at the core of any procurement transformation programme. As proven in various developed economies, skills development is the key to progressively transform the supply chain function in support of long-term socio-economic development.
- Sourcing approaches
There continues to be a lot of debate surrounding the sometimes misguided use and application of competitive (esp. restricted/closed), single or sole sourcing for the acquisition of a need. The confusion has been further exacerbated by the unfortunate terminological confusion and sometimes the ill-advised use of each by some past and present government officials, public and civil servants, procurement practitioners, commentators and C-suite executives.
While each are globally acceptable methods, they are technically different with distinct underlying principles, associated risks, benefits and goals. As such, C-suite executives and policy makers must carefully consider the merits and demerits of each before it is selected.
- Communication is key
C-suite executives and policy makers must not underestimate the importance of focused communication, outreach and ongoing awareness campaigns to both internal and external role players and citizens around strategic sourcing. Without a well-structured communication plan about the implication of strategic sourcing, the risks and potential benefits may be misinterpreted with unintended consequences.
- African trading ecosystem
African organisations and governments need to work together to create a Pan African electronic supplier database which will enable the development of an African trading ecosystem through which member organisations can promote and market their products. Such a supplier database will improve individual country’s access to procurement related information from across the continent and will facilitate ‘local and regional wide first’ sourcing practices.
- Public procurement must be independent
In countries where there is a public procurement authority, the authority must over time become truly independent (and not under any ministry) with an executive chairperson supported by qualified operational executives. Its independence must be fully guaranteed by various Acts of Parliament so that bold decisions can be taken in the interest of business and society with minimum political interference.
To ensure accountability and governance, experienced civil society persons can be co-opted to join as purely supervisory members. There must be full separation of powers between the executive of the authority and the non-executive supervisory members.
- Collaboration and consultation needed
In addition to government crafted sourcing developmental frameworks and laws, it is imperative that, in consultation with industry associations, there are clear sectorial implementation guidelines to assist C-suite executives roll out the framework requirements within their respective sectors. Without such consultations, there is the danger that there will be passive resistance to the developmental aspects of strategic sourcing from these decision makers.
- Africanist vs. National viewpoint
Policy makers, academics and business leaders must have a long-term value driven Africanist view, rather than a nationalist view on procurement, industrialisation and economic development. In so doing, they will have a broader understanding of strategic sourcing from a long-term shareholder wealth creation and developmental perspective.
- Open up markets
A successful development-oriented integration goal will require carefully coordinated efforts from African governments to open up their markets to their neighbours on the continent, build human capital, infrastructure and industrial capacity as well as invest in cross-border infrastructure to advance industrialisation.
- Strategic sourcing education
A further mindset change is required through focused programmes of Afro-centric leadership development and organisational, industry and societal risk management via credible institutions of higher learning, instilling the benefits of purposive programmes for strategic sourcing. Such a move must be long-term, must focus more on the positives of the approach, and should work to break down the policy and infrastructural barriers which hold the region back.
- Elevate SCM to director level
In state owned corporations and subvented agencies, government must encourage the elevation of a qualified and experienced chief procurement or supply officer (CPO/CSO) to a director level role reporting directly to the managing director. Unless governments are bold and prepared to tackle this issue head on, there shall be major challenges in implementing the 17 United Nations Sustainable Development Goals (SDG), various national development plans and Agenda 2063.
- Code of conduct
Procurement must be professionalized through an Act of parliament. Such a move will compel Procurement practitioners to sign and be regulated by an ethical code of conduct. This code of ethics which includes legal and governance standards should require practitioners to abide by rules whether expressed or implied. Such a move will lay out the rules for behaviour and provide the groundwork for a pre-emptive warning, and force practitioners to ethically perform their functions or risk losing their license to practice.
- Proudly African
Large political and socio-economic issues need to be tackled as a collective to break down artificial trade barriers. In time, African economies can move away from country specific initiatives to ‘Proudly African’ initiatives – for example, a product might be labelled ‘Made in Africa, produced in Ghana or South Africa or kenya etc’. Through this, the definition of “buying local” automatically changes to procuring continental wide produced goods and services. Such a move has positive implications for AfCFTA.
- Continent-wide networking
For strategic sourcing to change the economic fortunes of the continent, it is crucial that Africans educate and encourage individuals and organisations to think beyond their own community and national boundaries, and to use enabling information systems to promote continent-wide networking.
Douglas Boateng, Africa’s first ever appointed Professor Extraordinaire for supply and value chain management (SBL UNISA), is an International Professional Certified Chartered Director and an adjunct academic. Independently recognised as one of the vertical specific global strategic thinkers on industrialization, supply and value chain governance and development, he continues to play leading academic and industrial roles in sectorial reforms both in Africa, and around the world.
He has received independent recognitions and numerous lifetime achievement awards for his extraordinary contribution to the academic and industrial advancement of supply chain management from various international organisations including the Chartered Institute of Procurement and Supply, the Commonwealth Business Council and American multi-national Hewlett Packard (HP). For more information visit www.douglasboateng.com and www.panavest.com. He can also be reached at [email protected]