Smart procurement could cut firms’ costs
Former Finance minister Friday Jumbe says procurement receives much attention in many companies because of the highest percentage of firm’s costs incurred through its activities.
He said if procurement is properly managed, it creates the largest opportunity to control and reduce costs and, thus, maximise returns.
“In the case of Malawi budget, about 70 percent of its expenditure is on its operations. This means that proper supply chain management would bring about significant savings,†said Jumbe, in a presentation at the second annual procurement and supply chain management conference over the weekend in Mangochi.
His presentation was titled ‘An economic perspective of procurement and supply chain management’.
Procurement or sometimes called purchasing is the process of obtaining materials, parts, supplies and services needed to produce a product or provide a service.
Jumbe said supply chains have to be managed and that current trends stress the need to run them professionally.
He observed that experts involved in supply chain management use different skills and knowledge adapted from their requirements to achieve maximum results.
“Today’s management of organisations has to be customer focused as competition for the ever scarce factors of production become intense,†he said.
Jumbe noted that recent trends show that the procurement process can be centralised or decentralised, adding that centralised purchasing enjoys economies of scale, thus obtaining lower prices.
On the other hand, decentralised procurement has the advantage of recognising local needs and quicker response, he said.
The two-day conference attracted presenters from within Malawi and outside.
Malawi Bureau of Standards (MBS) director general Davlin Chokazinga, in a presentation titled ‘Quality management, an essential tool for business success’, advised procurement personnel to ensure that the process is done in accordance with set standards.
“Ensure that all procurement is made from suppliers who have been assessed as being able to deliver according to requirements and that acceptable quality goods and services are procured,†he said.
On his part, Professor Benon Basheka from Uganda said the procurement profession faces a number of challenges, including a lack of needed legal frameworks, financing, abuse of the profession by some members and negative perception about the profession.
