By Simon ANNAN (Dr)
The government’s introduction of a 24-hour economy policy represents a bold initiative aimed at stimulating economic growth and enhancing productivity, but its success relies heavily on several factors, including effective implementation, robust infrastructure support, and a favorable business environment.
However, an equally critical element that must not be overlooked is procurement and supply chain management.
If the principles of procurement and supply chain management such as transparency, accountability, value for money, risk management, total cost ownership, fairness and effective competition are not thoughtfully considered and integrated into the policy framework, this credible economic initiative may encounter significant challenges, potentially jeopardizing its overall success.
Procurement and supply chain management are essential for the seamless operation of businesses, especially in a 24-hour economy: from sourcing goods and services and negotiating contracts, to managing relationships with suppliers. Conversely, supply chain management refers to the flow of goods, services, and information from raw materials to the end customer.
It is trite to say therefore that in an economy where production and commercial activities will be running round the clock, these processes must be agile, responsive, and efficient to meet the demands of businesses that operate continuously in such an ecosystem.
From the procurement perspective, one of the primary concerns with the 24-hour economy policy is the potential strain on supply chain activities – inbound and outbound logistics because with businesses operating extended hours, the demand for goods and services will likely increase, thereby putting pressure on suppliers to deliver promptly. If procurement and supply chain management principles are not prioritized, businesses may face delays, increased costs, and reduced productivity.
For instance, if suppliers are not equipped to handle increased demand or operate during extended hours, businesses may need to seek alternative, potentially more expensive, sources, leading to increased costs and reduced competitiveness.
Another vital element is inventory management: in a 24-hour economy, businesses will need efficient inventory management systems to guarantee that goods are available as and when required.
In such an environment, inadequate procurement and supply chain management can hinder a business’s ability to maintain optimal inventory levels, resulting in stockouts or overstocking. Such issues can lead to lost sales, wasted resources, and diminished customer satisfaction.
Strains on logistics and transportation costs and its impact on commercial value chain actors cannot be downplayed. The operationalization of the policy may lead to increased logistics and transportation costs.
With businesses operating extended hours, there will be a greater need for transportation services, potentially leading to increased congestion and costs.
If procurement and supply chain management principles are not considered, businesses may not be able to negotiate favorable transportation rates or ensure timely delivery of goods, further increasing costs and reducing efficiency.
The 24-hour economy will also demand skilled procurement and supply chain professionals who can manage the complexities of the policy. Businesses will require professionals who can navigate the challenges of extended hours, including managing supplier relationships, negotiating contracts, and ensuring compliance with regulations.
To avoid these challenges and ensure the success of the policy, the government should consider the following:
- Develop guidelines and frameworks for procurement and supply chain management that align with the broader socio-economic objectives of the 24-hour economy policy.
- Amend the Public Procurement Act 663 as amended to allow for the procurement of goods and services that are locally manufactured as a result of the implementation of the policy. This amendment will support the policy objective of enhancing and capacitating suppliers through effective implementation of supplier development programs.
- Invest in infrastructure, including transportation systems and logistics facilities, to facilitate extended business hours.
- Offer training and development programs for procurement and supply chain professionals to enhance their skills and expertise.
- Encourage businesses to implement digital procurement and supply chain management systems to enhance efficiency and responsiveness.
In conclusion, while the 24-hour economy policy has the potential to boost economic growth and increase productivity, its success hinges on careful consideration of procurement and supply chain management principles.
Without proper procurement and supply chain management, the policy may face significant challenges, leading to increased costs, reduced productivity, and potential, failure.
By prioritizing the sound tenets of procurement and supply chain management, the government can ensure that businesses operate efficiently, effectively, and competitively, ultimately drive economic growth and national development.
>>>The writer is an astute procurement practitioner with over two in procurement and supply chain management. He is the current president of the Ghana Institute of Procurement and Supply (GIPS) and Chief Executive Officer of the procurement consultancy firm, SourceOne Management Services, Ghana. Dr. Annan is a fellow of the Chartered Institute of Procurement and Supply (CIPS), Institute of Project Management Professionals (IPMP), and the Ghana Institute of Procurement and Supply (GIPS). He is also a member of the Chartered Institute of Logistics and Transport (CILT).
