SCM - Demand Management Eliminating Wasteful Exp Presented by:Lucas Raphela Date: 08 October 2019

Objective of SCM Managing the institution Benefits for all citizens from the services rendered Enhanced accountability Greater transparency, and Value for money

Different Levels of Planning TOP MANAGEMENT VISION, MISSION AND LONG TERM OBJECTIVES SUPPLY CHAIN MANAGEMENT INTEGRATED OBJECTIVES COST CENTRE MANAGEMENT/PROGRAM MANAGEMENT OPERATIONAL OBJECTIVES   LONG –TERM OR STRATEGIC PLANNING MEDIUM-TERM OR INTEGRATED FUNCTIONAL PLANNING SHORT TERM OR TACTICAL PLANNING

Supply Chain Management Pillars Elements of SCM Model Supply Chain Management Pillars Record keeping Distribution Inventory Transport Needs analysis Database IDP Disposal Committee Record keeping Transferring Adjudication Evaluation Invitation Evaluation of SCMU Achieving objectives Acquisition Management Logistics Management Demand Management Performance Management Disposal Management Specifications/TOR Risk Management Risk Management Risk Management Risk Management

Role Players in the Demand Process Accounting Officer / Authority Chief Financial Officer Cost centre managers End-users Information Technology (IT) Component Suppliers SCM practitioners Bid Specification Committee Bid Evaluation Committee Bid Adjudication Committee

Bid Committees Specification Committee. Drafting TOR/RFP Specifications must be SMART Evaluation Committee Evaluated in terms of the bid criteria Prepare a summary evaluation report on its findings Adjudication Committee Final award, recommend to AO

Considerations for SCM Plan Decision processes for make vs. buy Make or buy calculations? Is the component / assembly strategy important / core business? Have we design capability? Have we manufacturing capability? Are we competitive? * May consider buy-in design capability * May consider buy-in manufacturing capability * May consider total cost of acquisition. Must accurately establish in-house costs Yes No Make Make vs. Buy

Demand Management A supply chain management policy must provide for an effective system of demand management in order to ensure that the resources required to support the strategic and operational commitments of the municipality or municipal entity are delivered at the correct time, at the right price and at the right location, and that the quantity and quality satisfy the needs of the municipality or municipal entity.

Factorsensuri for money Factors ensuring value for money What will the benefits be if the need is satisfied? What positive results will be forthcoming with regards to service delivery? What was the position (what was used) prior to the need being identified? Why is what was used no longer feasible?

Factors ensuring value for money PURCHASE COST Purchase price Cost of purchasing eg. Advertisement, documents etc. OPERATIONAL COST Running cost eg. Licencing, consumables etc. Repairs and maintenance DISPOSAL COST Cost of disposal eg. Advertisement, auctionering etc. Revenue from disposal eg. Selling price, trade in etc.

Expenditure and Price Analysis The expenditure can be gathered in terms of the following expenditure patterns: per division per department/institution within a province/district/region per site per supplier per item/commodity, and per market.

Understand Expenditure Analysis In terms of the expenditure analysis the focus will be on: What the municipality buys How the municipality buys Who the municipality buys from When is the peak and low of needs relative to expenditure?

Commodity Analysis Elements may include: Price Inventory costs Transportation costs Availability of spare parts Period in the market After sales support Maintenance costs Supply costs Other relevant costs

Bid Specification Committee should ensure that: Procurement obligations are adequately analysed, and identified The potential risks that may be associated with the requirement or need Possible transversal or other ad hoc agreements targeting the same requirements or needs has been identified and taken into account The requirement or need is aligned to the department’s procurement activities, budget and strategic plans

Drafting of Specifications Must allow for: Fairness Transparency Competitiveness Equity Cost-effectiveness

Thank you