Impact of strategic sourcing in public sector procurement : office of the premier, KwaZulu-Natal.

Abstract

The largest amount of monies budgeted in the Office of the Premier in KwaZulu-Natal, apart from salaries, is accounted for through procurement activities. In the public sector the procurement function can be seen as a strategic attempt to evaluate judicious financial management by government institutions. It is therefore, regarded as a value-added function in the Office of the Premier. Evidence points to that in the public sector rarely departments adopt strategic sourcing, though proper functional strategic sourcing has the ability to produce savings for government of up to twenty per cent of the cost of services and goods procured. In this regard, the Office of the Premier is experiencing a number of procurement challenges, such as ineffective utilisation of procurement plans for goods and services, long lead times when procuring items, high volume of deviations from Supply Chain Management processes and lack of understanding and employment of strategic sourcing when procuring goods and services. It is against this background that this study has focused on determining the impact of strategic sourcing in public sector procurement. The investigation of the problem was done in two stages. Stage one encompassed of the literature study, whereas the stage two involved an empirical investigation. Focus groups interviews, using semi-structured questions were used. Some participants pointed out that procurement plans are not followed; others noted that there are numerous deviations such as poor planning by departmental components, and a lack of clear processes in the supply chain management unit. The research addressed the hypothesis that effective strategic sourcing in the public sector procurement, particularly in the Office of the Premier could help improve service delivery to its internal clients, compliance with necessary regulations, policy and legislative frameworks that govern public financial management. Recommendations included implementing a strategic sourcing model and staff training linked to supply chain-public sector procurement aligned to performance plans. Unfunded mandates, ad hoc directives, poor planning and political effect makes it difficult for the organisation to accomplish a clean audit. The study concluded that strategic sourcing and compliance to procurement policies and legislation are prominent strategic platforms that play a vital role in ensuring that procurement in the public sector is effective and efficient, with improved and sustainable service delivery to internal clients resulting in prudent management of state funds.