SA procurement behind on digital upscaling
MANY South African companies are in a precarious position, because their procurement processes are not yet fully integrated into their basic operations, a survey has found.
The survey, “Post Covid-19: Procurement Key Priorities and Challenges in the Digital Era in South Africa”, established that since procurement was not at the centre of most companies’ strategies, 82 percent of the companies surveyed had experienced supply chain disruption and 72 percent had delayed projects due to the pandemic.
The survey, which was conducted last year, engaged 222 respondents who were procurement professionals and influencers, such as president, chief executive, general manager, chief information officer, chief financial officer, chief procurement officer, head of procurement, buyer, project manager, analyst and specialist.
The companies surveyed had between 50 and 1 000 employees and annual revenue ranging from under R1 billion to R10bn.
The survey was conducted by software development company Oxalys South Africa in partnership with the Chartered Institute of Procurement and Supply and Smart Procurement.
It found that procurement was receiving increased consideration as companies looked to gain from the inherent benefits, such as risk management and process optimisation.
Dimension Data Middle East and Africa’s head of supply chain, Stacy McTavish, said procurement processes within most South African organisations were not fully optimised.
“Before any of them even consider adding a digital solution to their existing model, they must ensure that they have taken care of the basics first,” said McTavish.
While there could be a lack of maturity in the South African procurement space, there was a real will to make it a strategic function, particularly in the wake of the challenges brought on by the pandemic, the survey found.
The global Covid-19 pandemic had changed almost every business process, and for procurement, it had exposed the need to improve existing processes and heightened the opportunity for companies to incorporate digital solutions, as remote working will be the norm for the foreseeable future, the study said.
The survey identified that South African organisations needed to focus on optimising their processes, and that digital procurement was an enabler.
About 43 percent of South African organisations had not yet started on their digital procurement journey, and 38 percent of the survey respondents still relied on Excel spreadsheets for automating their procurement processes.
However, 80 percent of the respondents who said they had implemented digital procurement solutions had reported improvements efficiencies, such as better visibility and transparency of processes, reduced cycle times and better cost control.
Anne-Emmanuelle Grené, the head of Oxalys South Africa, said with a number of large organisations still operating in silos, due to legacy issues that had created disparate processes within them, change management would play a critical role in making sure that the migration to digital procurement solutions was relatively seamless and all parties involved bought into the new way of executing procurement processes.
She said that even before the disruptions brought about by the pandemic, the move to the digital way of executing most business functions had been on the cards for a large number of South African companies, so the current circumstances have only increased the need to do it quicker.
According to Grené, 80 percent of the respondents to the survey estimated that their organisations would adopt a digital procurement solution in less than three years.
However, the survey found that 86 percent of the South African organisations were using local suppliers.