Welcome to IMFO

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Striving Towards Excellence in SCM

• There are key areas which are being addressed
  through various projects and initiatives in order
  to achieve excellence in SCM
• The projects and initiates being undertaken are
• Implementing a Quality Management System based on
  ISO 9001 standards
• Review of SCM Policy
• Improved Capital Expenditure
• Procurement Planning/Procurement Schedules
• Tracking Contract requests through the Bid
  Committee process
• Preventing/Reducing Irregular Expenditure
• Centralized contracts register
• Electronic procurement system (first phase
  addressing ltR200,000 procurement)

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ISO 9001
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What is ISO 9001

• ISO 9000 is the generic name given to a family of
  international standards developed to provide a
  framework around which an effective Quality
  Management System can be developed
• ISO 9001 is the auditable standard in the ISO
  9000 family
• ISO 9001 is based on eight quality management
  principles
• Focus on your customers
• Provide leadership
• Involve your people
• Use a process approach
• Systems approach to management
• Encourage continual improvement
• Factual approach to decision making
• Mutually beneficial supplier relationships

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What is ISO 9001

• Benefits of implementing a Quality Management
  System developed in accordance with ISO 9001
  requirements
• Motivate staff by defining key roles and
  responsibilities
• Cost savings can be made though improved
  efficiency and productivity
• Improvements can be developed which will assist
  reducing waste, rejected work and fewer
  complaints
• Customers satisfaction is improved

The sight of an achievement is the greatest gift
a human being could offer others Ayn Rand
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ISO 9001 - A Process Based Approach

• ISO 9001 does not specify the requirements for
  the goods and services being procured, ISO 9001
  is a set of requirements against which a Quality
  Management System can be developed
• ISO 9001 makes it very clear that organisations
  must identify and manage the process which make
  up their Quality Management Systems
• What is a Process?
• A process is an integrated set of activities that
  use resources to transform inputs into outputs
• A system exists whenever several processes are
  inter-connected using input-output relationships

To double your income, triple your rate of
learning Robin Sharma
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ISO 9001 - A Process Based Approach

• In effect processes are glued together by means
  of such input-output relationships
• As the output of one process becomes the input of
  another process inputs and outputs are in effect
  the same entity
• Inputs and outputs
• Inputs and outputs (from a process based
  perspective) can be grouped into four general
  categories
• Products
• Services
• Resources
• Information

Only the mediocre die always at their best. Real
leaders are always improving and raising their
bar on how superbly they can perform and how
quickly they can improve Jean Giraudoux
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A Quality Management System Illustrated
CUSTOMER and LEGISLATIVE REQUIREMENTS
Requirements
SCM
Service
Service
Service
Service
QUALITY MANGEMENT SYSTEM
Process
Process
Process
Process
Process
Process
Processes connect by input-output relationships.
Several interconnected processes form a system
A process takes inputs and though a set of
activities translates these into outputs
Required for each process
Work Instruction
Procedure
Document (s)
Record (data)

• Document what you do and do as is documented

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Contract Management
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Procurement Scheduling and Contract Request
Tracking
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Tracking Contract Requests Through Bid Committees

• An electronic tracking system has been
  implemented to track both procurement schedules
  and contract requests (created from procurement
  schedules)
• Each contract request is tracked through the
  various bid committees (Bid Specification, Bid
  Evaluation, Bid Adjudication and Award
  Finalisation)
• The information extracted from the electronic
  tracking assist in highlighting any
  blockages/delays in the process which allows for
  these to be addressed
• All Bid Committees convene on a weekly basis

The 5 Rules to being a great leader See
clearly, Health is wealth, Inspiration matters,
Neglect not your family, Elevate your lifestyle.
Robin Sharma (SHINE)
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Procurement Schedule for Top 150 Budget Line
Items

• SCM is complete for 62.98 of top 150 Capital
  Budget line items for 13/14 budget
• For 2014/2015 all procurement will be completed
  by June 2014

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Contract Register

• A centralized contracts register is being put in
  place to ensure all contracts awarded are
  recorded in the centralized register
• Weekly meetings between CFO and SCM Management
  review contract expiry dates to ensure new
  contracts are put in place timeously to avoid
  irregular expenditure
• Essential information being recorded in the
  register
• Contract number
• Contract Award Date
• Contract Start Date
• Contract End Date
• Contract Value
• Vendor details

Money, influence and position are nothing
compared with brains, principles, energy and
perseverance Orison Sweet Marden
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eProcurement
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SSS System

• Clause 18 of SCM policy requires the accounting
  officer to develop a system for procuring goods
  or services through written or verbal quotations
  and formal written price quotations
• Policy requirement that all procurement in excess
  of R30 000 (VAT included) that are to be procured
  by means of formal written price quotations must,
  in addition to the requirements of paragraph 17,
  be advertised for at least seven days on the
  website and an official notice board of the
  municipality
• Supplier Self Service (SSS)
• RFQs are being advertised on the internet All
  Suppliers will be able to view all advertised
  RFQs
• Suppliers are required to logon to the new
  Quotations System in order to view the RFQs
  advertised by eThekwini
• All supplier quote responses must be Captured
  On-Line

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SSS System

• Launched supplier self-service (SSS) system on
  JDE - went live on 1 July 2013
• It caters for the procurement of stock and
  non-stock goods ltR200 000
• Caters for the following transactions
• - management of requisitions
• - online quote gathering with the option to
  re-publish
• - automated supplier selection, override
  available with approval
• - standard JDE approval routing
• - conversion to purchase order
• - reselection available on non-performance of
  supplier

Take care of your relationships the money will
take care of itself- Sharma
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SSS System - Benefits

• Directly transforms JDE system information into a
  web interface
• Guarantees accuracy due to no integration being
  required
• Improves security protocol using Secure Socket
  Layer
• Provides reliable iSeries technology
• Easier and faster to use
• Automated adjudication of preferred supplier
  response
• Built-in approval route processing
• Familiar JDE business processes
• Added value to suppliers order information
  account information automated supplier
  communication

Lift your teammates up versus tear your
teammates down. Anyone can be a critic. What
takes guts is to see the best in people. Robin
Sharma
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SSS System

• Some Statistics
• Supplier Responses since 1st July 2013 34,455
• No of Suppliers Registered on SSS 1,882
• RFQs Currently on the Web 13,143
• Purchase Orders Converted since 1st July 2013
  6,527

Life begins at the end of your comfort zone.
Neale Donald Walsch
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SCM Policy
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SCM Policy Review
Continual Review
New Policy
Current Policy
Revised Policy
Start
Future
Phase 1
Phase 2

• Continual Review
• Continual review of policy on an annual basis

• Phase II
• Review structure and format of Policy
• Develop Policy guidelines, tools, templates and
  procedures
• Release new policy that is ground breaking in
  both format and application
• Input and Consultation with line departments, and
  review of external policies
• Timeline is highly dependant on resources

• Immediate Steps
• Project Charter
• Project Plan
• Project Objectives
• Project Milestones
• Project Phases

• Phase I
• Identify operational issues
• Identify legislative gaps
• Identify supplementary guidelines/ circular/
  legislation gaps
• Release revised interim Policy
• Consultation with Policy users
• Presentation to Committees for approval

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SCM Policy Improvements

• Definitions that have been the cause for some
  concern and confusion have also been added to
  increase consistency in application
• Amendment to contracts has been defined in
  keeping with MFMA Circular 62.
• The definition for persons in the service of the
  state has been amended to include for exemptions
  provided for non-executive board members of
  municipal entities. Also, employees are taken to
  be full-time employees, and part-time employees,
  etc. need to be specifically cleared via the
  conflict of interest task team.

You get the best of others when you give the
best of yourself- Harry Firestone
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SCM Policy Improvements (Cont.)

• System of Demand Management
• The requirement for the submission of procurement
  plans during the budget approval process has now
  been included in keeping with MFMA Circular 62.
• The procurement methods for all budget line items
  are to be approved by the bid Specification
  Committee to ensure that inappropriate unbundling
  of contracts is avoided.
• All contracts exceeding R10 million are to be
  accompanied by project-specific procurement BEE
  strategies developed by multi-disciplinary teams.

If everyone was satisfied with themselves, there
would be no heroes. Mark Twain
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SCM Policy Improvements (Cont.)

• Section 36 Deviations from, and ratification of
  minor breaches of, procurement processes
• Report to EXCO for noting only
• Report to BAC for support
• Final approval via Accounting Officer
• Monthly reporting to Finance Procurement
  Committee (further oversight by Audit Committee
  and Municipal Public Accounts Committee)
• (Emergencies require AO's prior approval,
  formalised by a report within 24 hours, and
  report to next possible EXCO)

This day and every one that follows for the
rest of your life offers a platform of
possibility. Every day is your life in
miniature. Robin Sharma
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SCM Policy Improvements (Cont.)

• Special Deviations from SCM Policy
• Allows for certain contracts, for which following
  any SCM process is not prudent.
• Prior approval from the CFO, Head SCM or
  designated official, and annual reports are to be
  produced for the Accounting Officer on
  expenditure incurred, and/or to be incurred.
• It covers areas like computer software systems
  licensing and approved maintenance contracts -
  where these systems have appropriate authority
  via the normal SCM policy.

You tell the world what you believe via how you
behave. Complain all day and you reveal a deeply
in grained set of beliefs that you are powerless
and apathetic. Present work that has typos and
poor wording and you express a belief that
average is cool with you. Robin Sharma
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SCM Policy Improvements (Cont.)

• Additional areas receiving special focus (and
  discussion with NT and CFOs Forum)
• Conflict of Interest Task Team
• Blacklisting Committee
• Appeals
• Extension and amendments to contracts MFMA
  Section 116(3)
• Validity and timing of certificates (Tax
  Clearance, BEE, etc.)
• MFMA Circular 68 - Unauthorised, Irregular,
  Fruitless and Wasteful Expenditure

Remember that genius is much less about natural
talent and much more about out-studying, out
preparing, out-practicing, and out-learning
everyone around you. Robin Sharma
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Irregular Expenditure
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Unauthorised, Irregular, Fruitless and Wasteful
Expenditure

• Key Highlights of MFMA Circular 68 Issued on 10th
  May 2013
• Register of irregular expenditure to be kept with
  effect from 01 July 2013
• All irregular expenditure must be recovered from
  liable official unless the expenditure is
  certified by Council, after investigation, as
  irrecoverable
• No distinction made in terms of unauthorised,
  fruitless and irregular expenditure
• All expenditure that is non-compliant needs to be
  regularised
• In particular, the irregular expenditure reports
  must be considered by MPAC prior to submission to
  Council
• In discussion with National Treasurys SCM Unit
  to reconsider meeting on 9 October 2013

Brilliant things happen when you go the extra
mile for the customer Robin Sharma
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Unauthorised, Irregular, Fruitless and Wasteful
Expenditure
IRREGULAR EXPENDITURE STATS IRREGULAR EXPENDITURE STATS IRREGULAR EXPENDITURE STATS
2011 (R'000) 2012 (R'000) 2013 (R'000)
1 313 362 782 547 324 925

• Outstanding irregular expenditure in the AFS is
  only R60 M
• This relates to employees in the service of the
  State due to lack of accessibility to Persal
  database
• All other expenditure has been regularised and
  condonement sought

Leaderships no longer about position. Now its
about passion. And having an impact through the
genius-level work that you do. Robin Sharma
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Service Level Agreement
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Service Level Agreement

• An SCM service level agreement has been
  introduced so that customers know the level of
  service they can expect from the SCM Unit
• Bid Committee (BAC, BEC and BSC) decision
  circulars will be posted on the intranet within
  48 hours
• Bids over R10 Million will also be posted on the
  intranet within 48 hours
• All letters of awards will be released within 48
  hours

Ill be blunt. If you are not building leaders,
then you are not leading, youre following. Your
job is to help people do work they never dreamed
they could.- Robin Sharma
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Service Level Agreement

• All verification and auditing of tender
  documentation will be done within 21 days also
  looking to reduce this further by doing
  pre-screening and doing checks in parallel with
  evaluation undertaken by line department
• Delays between BEC and BAC are strictly monitored
  and will be kept to a minimum
• Templates will be provided by SCM to ease the
  work of line departments

A title, position and a large office do not
guarantee people will respect you. Nope. Youve
got to earn that gift. And the quickest way to
earn respect is to give it. No need to say much
more. Robin Sharma
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Conclusion

• Special thanks and appreciation to National
  Treasury for continued support to Local
  Government
• Kenneth Brown as Chief Procurement officer, and
  the commitment of his team under the leadership
  of the Chief Director Henry Malinga
• Remember that it is our duty, however, to
• Plan appropriately
• Be proactive
• Have zero tolerance for non compliance

Victims make excuses while leaders drive
exceptional results. You can spot a victim a mile
away. They blame and complain and are negative
and cynical. You are not a victim Robin Sharma
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Conclusion

• Confident that these SCM initiatives will attest
  to be fair, transparent, equitable, competitive
  and cost- effective
• Especially the revised processes for contract
  management, ISO 9001 and the SSS System
• Is the foundation for monitoring spending on
  capital projects and operational expenditure,
  fostering spending that advances service
  delivery, economic development initiatives, and
  ensuring value for money

According to the Financial Times we collectively
spend 100 000 000 minutes a day playing Angry
Birds on smartphones. Most people in business are
spending the absolute best hours of their days
being busy being busy. Robin Sharma
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The End