SUPPLY CHAIN MANAGEMENT POLICY
SUPPLY CHAIN MANAGEMENT POLICY . .MANYE MOROKAACCOUNTING OFFICER/DIRECTOR-GENERALDEPARTMENT OF PUBLIC WORKSDATE:
Table of ContentsDEFINITIONS AND ABBREVIATIONS . 1BACKGROUND . 3INTRODUCTION . 3POLICY OBJECTIVES . 6PRIMARY OBJECTIVES . 6EMPOWERMENT INITIATIVES . 8INTERIM MEASURES FOR AWARDING PREFERENCE POINTS (ALL ACQUISITIONS) . 8PREFERENCE POINTS FOR QUOTATIONS (ALL ACQUISITIONS). 8EMPOWERMENT IN CONSTRUCTION RELATED ACQUISITIONS. 9EMPOWERMENT IN PROPERTY RELATED ACQUISITIONS . 10FUTURE IMPLEMENTATION OF BROAD BASED BLACK ECONOMIC EMPOWERMENT . 11DEMAND MANAGEMENT . 11PURPOSE OF DEMAND MANAGEMENT. 11NEEDS ASSESSMENT . 12SPECIFICATIONS . 12BID SPECIFICATION COMMITTEES . 13SUPPLIER INDUSTRY ANALYSES . 13SUPPLIER MANAGEMENT AND REGISTER . 14PURPOSE OF THE SUPPLIER REGISTER . 14SUPPLIER POLICY PRINCIPLES . 14ACQUISITION MANAGEMENT . 16PURPOSE OF ACQUISITION MANAGEMENT . 16A UNIFORM ACQUISITION POLICY . 16STANDARD ACQUISITION PROCEDURES AND EVALUATION METHODS . 17SCORING OF BIDS AND VALUE FOR MONEY (EXCLUDING CONSTRUCTION BIDS) . 17DISCONTINUING QUALITY OR FUNCTIONAL SCORING ON CONSTRUCTION BIDS . 17BID EVALUATION AND ADJUDICATION COMMITTEES . 18DELEGATIONS . 18LOGISTICS MANAGEMENT . 19PURPOSE OF LOGISTICS MANAGEMENT . 19A UNIFORM LOGISTICS POLICY . 19DELEGATION AND ACCOUNTABILITY . 20CONTROL OVER REGULAR EXPENDITURE ITEMS . 20MOVABLE ASSET MANAGEMENT . 21
PURPOSE OF MOVABLE ASSET MANAGEMENT . 21LIFE CYCLE PLANNING AND FULL LIFE-CYCLE COSTS PRINCIPLE . 21CONTROL OVER MOVABLE ASSETS . 22DISPOSAL MANAGEMENT . 23RISK MANAGEMENT . 25PERFORMANCE MANAGEMENT . 26IMPLEMENTATION OF THIS POLICY . 27
Definitions and Abbreviations“Bid” means a written offer in a prescribed or stipulated form in response to an invitation by the Departmentfor the provision of goods, services or works with a value threshold above R500 000.00.“Bid Adjudication Committee / Bid Committee” means the committee at head office or in the RegionalOffices, that adjudicates over bids issued by the Department, adjudicate over the sourcing strategy andaward bids as per the recommendation of the Bid Evaluation Committee or reject the recommendations,where the value of the bid is above R500 000.00.“Bid documentation” means the standard documentation utilised by the Department when soliciting a bidor quote.“Bid evaluation committee” means the committee appointed to evaluate bids.“Bid specification committee” means the committee that is appointed to develop the sourcing strategy andapprove the bid specifications or terms of reference.“Bidder” means a vendor that submits a bid for contracts with a value threshold above R500 000.00.“Black people” is a generic term which means Africans, Coloureds and Indians as per the BBBEE Act“Broad-based black economic empowerment” (BBBEE) means the economic empowerment of all blackpeople including women, workers, youth, people with disabilities and people living in rural areas throughdiverse but integrated socio-economic strategies that include, but are not limited to:a.increasing the number of black people that manage, own and control enterprises and productiveassets;b.facilitating ownership and management of enterprises and productive assets by communities,workers, cooperatives and other collective enterprises;c.human resource and skills development; achieving equitable representation in all occupationalcategories and levels in the workforce;d.preferential procurement; ande.investment in enterprises that are owned or managed by black people.“CIDB” means the Construction Industry Development Board.“Contractors” means a contractor as per the CIDB Act.“Custodian Asset Management Plan” means a Custodian Asset Management Plan as defined by theGovernment-wide Immovable Asset Management Act.“Functionality criteria” means the suppliers ability to meet the service delivery requirements.“Generic scorecard or any relevant charter” means the scorecard that is promulgated in terms of theBBBEE Act.“Government” means the government of the Republic of South Africa."Historically Disadvantaged Individual" (HDI) means a South African citizen, who:a.Due to the apartheid policy that had been in place, had no franchise in national elections prior tothe introduction of the Constitution of the Republic of South Africa, 1983, (Act No. 110 of 1983)or the Constitution of the Republic of South Africa, 1993 (Act No. 200 of 1993: "the InterimConstitution), and / orb.Is a female, and / orc.Has a disability;provided that a person who obtained South African citizenship on or after the coming to effect of the InterimConstitution is deemed not to be an HDI.“Immovable asset” means an immovable asset as defined by the Government-wide Immovable AssetManagement Act.“Movable Asset register” means the register in which all the movable assets of the Department arerecorded.“National Bid Adjudication Committee (NBAC)” means the Bid Committee that sits at Head office.SCM PolicyPage1Vers 5
“Official” means an employee of the Department.“PFMA” means the Public Finance Management Act, 1 of 1999.“Potentially emerging contractor” means a contractor that is registered as a potentially emergingcontractor in terms of the Emerging Contractor Development Programme of the government (ECDP).“Preference points” means points allocated to preference in terms of the Preferential Procurement PolicyFramework Act 5 of 2000.“Quote” means a written offer in a prescribed or stipulated form in response to an invitation by theDepartment for the provision of goods, services or works with a value threshold below R500 000.00.“RDP goals” means the socio-economic goals of the government of the Republic of South Africa.“Regional Bid Adjudication Committee (RBAC):” means the Bid Committee that sits at the RegionalOffice.“Relevant Bid Adjudication Committee” means the National Bid Adjudication Committee or the RegionalBid Adjudication Committee as the case may be.“Responsiveness (eligibility) criteria” means the criteria or requirements that are stipulated in the biddocuments which the suppliers must achieve in order to qualify to be evaluated.“Supplier / Service provider” means a vendor that provides goods or services to the Department.“Supplier register” means a register of all suppliers or service providers that intend doing business with theDepartment.“Supply Chain Management Regulations” means the regulations in terms of Regulation 16A of theregulations to the PFMA.“Term contractor” means a supplier that has been awarded a contract with the Department to supplyspecified goods or perform specified services or works for a specified period.“The Department / DPW” means The National Department of Public Works and its regional offices.“The State” means the government of the Republic of South Africa and any of its Departments orinstitutions.“Vendor” means an enterprise that provides a bid or quote with the intention of entering into a contract withthe Department to supply the Department with goods, services or works.SCM PolicyPage2Vers 5
Background1.Since the inception of the procurement reform process in 1995 the Department of Public Works (theDepartment) has been actively involved in conceptualising and implementing procurement reform.The White Paper on Public Works beyond 2000 called for a Ten Point Plan to advance individuals andbusinesses that were disenfranchised before 1994.This was the Department’s first attempt toimplement procurement reform and advance previously disadvantaged individuals.2.In 1996, Targeted Procurement (TP) was developed by a Procurement Task Team and adopted by theDepartment as a means of implementing procurement reform. TP was primarily aimed at constructionenterprises and excluded other procurement environments. Unfortunately, this approach fragmentedthe Department’s procurement policies between TP, and the policies adopted to support theappointment of consultants and provisioning administration.3.In September 2003 Cabinet adopted the Supply Chain Management (SCM) policy to replace outdatedprocurement practices. The SCM framework is characterised by a number of key differences fromprocurement including:a.moving away from central control by National Treasury and the State Tender Board towardsincreased responsibility and accountability by the accounting officer of each department;b.introducing a preference point system to address socio-economic issues, value for money andthe scoring of bids thereby facilitating the move away from relying solely on the traditionalpractice of only accepting the lowest price bid;c.linking procurement practices to the planning and budgetary process through the introduction ofdemand management practices;d.assessing the value of assets based on its contribution to service delivery and return of publicfunds invested;4.e.introducing uniformity in bid documentation to reduce the uncertainty amongst bidders; andf.improving the uniformity in government’s preferential procurement policies and processes.The most significant change brought about by the SCM regulations (16 A) was abolishing the NationalState Tender Board and the implementation of bid adjudication committees accountable to theaccounting officer.5.THIS POLICY WILL BE IMPLEMENTED WITH EFFECT FROM 01 MAY 2008.Introduction6.The SCM Regulations are intended to modernise public sector procurement, provisioning and relatedfunctions. The implementation of an integrated SCM system will contribute significantly towards theimprovement of financial management in the public sector. At the same time, SCM aims to create aconsistent framework for achieving good governance and the Government’s preferential procurementobjectives.SCM PolicyA basic principle is that managers should be given the flexibility to manage within aPage3Vers 5
framework that satisfies the Constitutional requirements of transparency and accountability. The fourmajor objectives of SCM are to:a.transform government procurement and provisioning practices into a SCM function;b.introduce a systematic approach to the appointment of consultants;c.create a common understanding of the preferential procurement policy; andd.promote the consistent application of ‘best practices’ throughout government’s supply chainwhilst embracing the “value for money” principle.e.Supply Chain Management is a critical function in achieving the overall objectives of DPW. Invirtually all aspects of its core business DPW depends on suppliers of different kinds to:7.f.deliver goods and services to DPW;g.increase its own capacity by sourcing in private sector capacity;h.supply accommodation to its clients; andi.deliver services to DPW and its clients.Supply Chain Management differs from procurement in that it requires DPW to better understand itsneeds for goods and services. As well as land, property leases, engineering, construction works andbuilt environment professional services by linking the needs back to the strategic planning andbudgetary processes. This places an obligation on DPW to manage the demand for these goods andservices in a proactive manner so as to allow the SCM Unit to ensure that the required suppliercapacity is available to the department.8.It also affords DPW the opportunity to manage its relationship with suppliers in a more proactive andconsistent manner by minimising volatility in demand (the so called hockey stick effect in acquisitionstowards the end of the financial year) and to build longer term relationships with suppliers through termcontracts. These longer term relationships, if well managed, should allow DPW to obtain improvedprices from its suppliers and manage the overall quality of goods and services, land, property leases,engineering and construction works and built environment professional services.9.The Supply Chain Management Regulations establishes a SCM system consisting of the following sixelements:10.a.Demand Managementb.Acquisition Managementc.Logistics Managementd.Disposal Managemente.Risk Managementf.SCM Performance & MonitoringThese six elements are essential in managing the supply chain proactively to ensure delivery.SCM PolicyPage4Vers 5
11.This Supply Chain Management Policy addresses some of the critical gaps in the old policies of theDepartment and sets a consistent framework for managing, monitoring and reporting Supply ChainManagement activities that provide the basis for the improvement of SCM operations and services.12.This policy is aimed at providing a framework to achieve and sustain a strategically focussed SupplyChain Management operation. This framework is required to continuously improve planning processesand the overall business performance of DPW as a key client to the construction and propertyeconomy in South Africa thereby maximising the impact of DPW on transforming these sectors andbuilding a sustainable empowerment component. It provides the basis for simplifying the Department’sSupply Chain Management operation and accelerating the delivery of services to clients. Compliancewith this policy is essential to achieve the socio economic objectives of Government, as well asbuilding the credibility of the Department.13.Most importantly this policy complies with the strategic aim of good governance, and establishes aCode of Conduct both for staff of the Department and suppliers to the Department. By monitoringcompliance the Department aims to improve financial governance and eliminate fraud and corruption.14.The purpose of this document is to formalise the Department’s supply chain management policy withinthe context of the Supply Chain Management Regulation 16A which will be brought into effect throughthe policy framework consisting of the following three components:a.Directives, which provide specific direction on supply chain management and key decisionpoints.b.Delegations, which assign specific responsibilities to DPW role-players in terms of section38(1)(4) of the PFMA.c.Business processes, which align the department’s day-to-day procedures with the overallrequirements of the policy, directives and delegations.SCM PolicyPage5Vers 5
Policy ObjectivesPrimary objectives15.The primary objective of this policy is to create an environment that enables the Department tomanage the supply of goods, services and works in a manner that is fair, equitable, transparent,competitive and cost effective, by:a.adherence to the relevant legislative and regulatory requirements within the framework ofbroader contemporary government priorities;b.implementing enhanced supply chain management functions to improve the role of SCM inservice delivery by DPW through:i.demand management to link SCM practices to the strategic planning and budgetingprocesses and to improve strategies and planning for acquisition, maintenance anddisposal;ii.uniform acquisition and disposal approaches to goods and services, land, property leases,engineering and construction works and built environment professional services to simplifyDPW’s interaction with its supplier base;iii.improving contract management practices and monitoring the adherence of suppliers toconditions of contracts;iv.including practises that promote single point of responsibility with contractors
Supply Chain Management is a critical function in achieving the overall objectives of DPW. In virtually all aspects of its core business DPW depends on suppliers of different kinds to: f. deliver goods and services to DPW; g. increase its own capacity by sourcing in private sector capacity; h. supply accommodation to its clients; and i. deliver services to DPW and its clients. 7. Supply Chain .
Supply chain management 1.1.2.1. Supply chain processes: the integrated supply chain point of view To describe supply chains from a process point of view, we refer to the supply chain operations reference (SCOR) model. SCOR is a cross-industry standard for supply chain management and has been developed and endorsed by the supply-chain council .
companies. In this case, supply chain management mainly focuses on cooperation between the supply chain actors. 1.1.2. Supply chain management 1.1.2.1. Supply chain processes: the integrated supply chain point of view To describe supply chains from a process point of view, we refer to the supply chain operations reference (SCOR) model.
Accenture reports how a microchip company created a more resilient and sustainable supply chain to respond in almost real-time to disruptions. Read more. Keywords: sustainable supply chain, supply chain resilience, advanced supply chain, maturity assessment, proactive risk management, supply chain digital twin, supply chain stress test Created Date
Qlik for supply chain: forecasting and planning 6 Qlik for supply chain: sourcing and supplier performance 8 Qlik for supply chain: production insights 10 Qlik for supply chain: warehousing and distribution 12 Qlik for supply chain: transportation, storage and logistics 14 Qlik for supply chain: fleet management 16
green supply chain management. Supply Chain in the Environmental Life Cycle Raw Material Extraction Transport ManufactureTransport Retail/ Consumer Use Transport Disposal Concept Design Typical Supply Chain Scope Designing the supply chain concurrently with the product is a supply chain management best practice.
supply chain resilience. One of those strategic enablers is cyber posture. Making Cybersecurity-Supply Chain Risk Management (C-SCRM) a priority was identified as key to enhancing supply chain cyber resilience. Cybersecurity-Supply Chain Risk Management (C-SCRM) efforts manage supply chain risk by identifying susceptibilities and vulnerabilities to
Having examined 'supply chain' concept, let us now briefly examine aspects related to Supply Chain Management. Supply Chain Management (SCM) As supply chains have become more complex and crucial for businesses dependent economies, we need to clearly differentiate supply chain management from logistics management (Ballou, 2006a).
rounding supply chain vs. supply chain competition, the Integrated Supply Chain Management (ISCM) Program at the Massachusetts Institute of Technology (MIT) conducted a Delphi study with more than 30 supply chain experts from industry, academia, and consulting. The study found that the gr
