27 May 2010 | Neil Oelofse

The newest signing for CIPS was officially unveiled at the annual Pan-African conference. Neil Oelofse reports from Johannesburg

Like many recent events, Iceland’s volcanic ash cloud also threatened to disrupt the conference launch of CIPS Southern Africa in Johannesburg last month.

Flight cancellations prevented a number of scheduled speakers from attending, including David Noble, chief executive of CIPS. Noble, who was formally announcing  the opening of the office in Pretoria as the base of the new CIPS Southern Africa, said via video link that the reduced carbon footprint brought about by the lack of air travel probably made it CIPS’ “greenest conference yet”.

Institute unveiled

The launch of a new CIPS entity follows successful links between CIPS and the Institute of Purchasing and Supply South Africa (IPSA) over more than four years.

In his keynote, Noble said: “This is a huge move… offering a full service institute in what we consider a major market for ourselves moving forward.”

The office will offer local support services to members in Botswana, Angola, South Africa, Lesotho, Namibia, Swaziland and Mozambique.

In keeping with the excitement generated by the World Cup in South Africa from next month, the conference theme was “kick-off – playing the procurement game”, prompting  Noble to draw comparisons between football and purchasing.

He said both had evolved over the years, football from a game of the “survival of the fittest” to a contest played by highly paid sportsmen, and procurement from a clerical activity performed in service of the producer to the key strategic and independent role it had become today.

He also went on to tell delegates the South African Purchasing Manager's Index had grown in importance to become a key economic indicator and CIPS was delighted to be part of a triennial partnership for the index. This was “an absolutely fundamental step in being part of a full service institute,” he said.

Karen Beamish, acting managing director of CIPS Southern Africa, said, with 3,000 members, the region was the institute’s fastest growing chapter in the world.

The institute intended offering corporate organisations procurement representation and advocacy in the public and private sectors.

“It is our view that we can, with your help and support, put procurement where it needs to be here. There is so much opportunity. We must be able to work together to add value to Africa in terms of what we do,” Beamish told delegates.

Among other benefits for procurement professionals, she said, CIPS Southern Africa was developing a leadership agenda. “Later this year we’ll be working to provide mature levels of learning for CPOs and trying to engage with CEOs and CFOs to change the perception and perspective of procurement: to stop it hiding under the finance side and bring it out as a personality in its own right.”

The CIPS branch network will be extended to five of South Africa’s nine provinces in addition to the existing branches in Botswana and Lesotho, and member groups will be set up in other countries in the region.

A growing role

Impressively, the notion of a ‘procurement licence to practise’ has become prevalent in a number of African countries. There was also growing recognition that supply chain success “differentiates an organisation”.

Sebastian Musendo, CIPS board director and procurement GM for Eskom, South Africa’s state-owned power utility, said procurement heads were responsible for spending about 60 per cent of company revenue.

“What is it that gives us the right to say we can spend better than our other colleagues?” Many believed that procurement officers had a “slash and burn” mentality, or that they protected suppliers for personal gain, he said.

“There is a perception that procurement equals kickbacks, we only focus on price, we have to buy no matter what and we fudge numbers.”

In reality, procurement officers were becoming essential to most organisations.

“We are becoming a tool to compete. It is the companies with the best supply chains that are winning in the market. It’s how good you buy, not how good you sell,” said Musendo.

Procurement officers were not just “glorified clerks… who put stuff in warehouses and issue purchase orders,” he said. Rather, supply chain managers had to get involved in a wide variety of parts of the entire business operation, such as cost management, risk assessment, operating expenses, budgeting, estimating, market share and revenue growth. They also had to have the courage to write-off obsolete stock, or even warn their organisations against the launch of new products that were not viable, Musendo said. “Our supply objectives must be aligned with strategy.”

Karen van Vuuren, CPO at Absa, and a CIPS Southern Africa executive board director, spelled out what it takes to be “best in class” in procurement. First, companies expected their procurement officers to deliver savings by becoming “cost reduction czars”, she said.  The benchmark for a purchasing leader was to deliver benefits of at least 4.9 per cent per year, every year.

“So if you have strong procurement, that means you have very good profit,” she said.

She also made the point that procurement is required to play a vital strategic role in contract negotiations, risk management, sourcing and processing, and charting the future for the company as an “organisational direction setter”.

The growing need to pay attention to environmental concerns was a good example.

“If things really go south in terms of the environment, green procurement is no longer going to be something ‘cute’. We have to start thinking strategically what that means in our businesses and how we, as the overall czars of cost reduction, manage that situation.”

In conclusion, van Vuuren said procurement officers must manage both client and supplier relationships, and had to display the courage to assess their own performance.

“You can’t move forward if you can’t be honest,” she said.