The significance of supply chain management with regard to the attainment of value and strategic objectives for municipalities within South Africa : a case study

ENGLISH ABSTRACT: Supply chain management (SCM) in the public sector in general, as well as the municipal sphere in particular, has received increasing prominence over past few years. Although the focus is mainly due to the impact of fraud and corruption in public sector procurement, this author is of the opinion that SCM can also create value and aid in the attainment of strategic objectives. The study revealed that supply chain management is described as a process in literature, whilst it is described as a system by government. Of significance to this, is that both literature and government view SCM as a means to add value. The study also revealed that in order for SCM to add value and to contribute to the attainment of strategic objectives, it is important that SCM forms part of the performance management (PM) system of an organisation. Performance measurement tools, such as the balanced scorecard, benchmarking, improvement and other measurement tools, were introduced as tried and trusted methods for measuring SCM performance. The study was embarked upon because the author was of the opinion that municipalities in South Africa only implement SCM because it is required by legislation. Thus, this theory was tested at Hessequa Municipality and it was found that the current emphasis was on compliance at Hessequa Municipality. This was done by means of studying documentary evidence and through interviews conducted with various internal and external stakeholders either directly or indirectly affected by the SCM processes of Hessequa Municipality. The study tested Hessequa Municipality’s readiness to progress towards performance management and measurement by using the financial capability model for SCM as utilised by the Western Cape Government to ascertain the level of SCM implementation at municipalities. It was found that Hessequa Municipality meets almost all the compliance and control requirements, with only two areas that require slight attention before full compliance is achieved. Through the interviews conducted, the study also tested Hessequa Municipality’s willingness to progress to the next level and found that there was indeed a willingness to progress towards managing and measuring SCM activities. In conclusion, the study recommended that Hessequa Municipality uses a phased-in approach when it sets processes in place to progress towards performance managing SCM. That when developing performance indicators for SCM, it be aligned to the performance management system and targets of the municipality. It also recommended that a combination of the tried and trusted methods be used to measure SCM performance. Finally, it recommended that the municipality eradicates the silo approach to doing business and adopts a more integrated approach by firstly integrating its internal processes before embarking upon integrating the actions of all the agents within the supply chain.