The development of a supply chain management policy for Lukhanji Municipality

Wilcock, Christopher Norman (2005-03)

Thesis (MBA)--Stellenbosch University, 2005.

Thesis

ENGLISH ABSTRACT: Local authorities, being at the coalface of government service delivery, have a statutory duty to deliver a wide range of services to their communities. Having limited resources themselves, and due to the poverty in their communities, municipalities aim to maximise the efficiency of their operations in order to be able to deliver appropriate quality services at the lowest possible cost. Municipalities are subject to a variety oflaws, regulations and policies which regulate the way in which they go about their business. In the context of supply chain management, the recently promulgated Municipal Finance Management Act and its associated Regulations and Guidelines is the most important of these. Supply chain management, defined by the MFMA to include procurement, disposal of assets and contract management, is an important issue in Lukhanji Municipality due to the amounts of money allocated to capital projects as well as to operations. Municipalities, as organs of State, are also required to implement policies which are aligned with other provincial and national polices and, in the context of supply chain management, which do not prejudice national economic policy. Municipalities, in addition to their service delivery role, have a mandate, conferred by the Constitution of the Republic of South Africa, to play a developmental role in their communities. They are required, in their procurement of goods and services, to apply preferential procurement processes in order to promote the use of: enterprises owned and managed by previously disadvantaged individuals; Small- Medium- and Micro-enterprises (SMMEs); local resources; and other marginalised individuals and groups. Municipalities are thus required to comply with statutory requirements and to strive for the achievement of social and economic objectives. The purpose of this study is to: describe all the current legislation, regulations and policies affecting municipal supply chain management; examine the conflicts arising from the different perspectives of the various statutory and policy requirements; describe the factors which constrain the municipality in its efforts to maximise the benefits arising from supply chain management activities; develop objectives for the supply chain management policy m terms of statutory compliance, social aspects and economic goals and which are not in conflict with each other; analyse the draft Supply Chain Management policy developed for Lukhanji Municipality to determine its efficacy in supporting the objectives developed; make recommendations regarding the final Supply Chain Management policy for Lukhanji; and propose further research arising out of the findings of this study. The main findings of the study are: some of the requirements of legislation and applicable policies are mutually exclusive and some compromises have to be made; the Supply Chain Management policy can be used as a tool to achieve socio-economic objectives while still complying with the statutory requirements; in particular, the Supply Chain Management policy can be used for the promotion of SMMEs, black economic empowerment, local economic development and job creation; a comprehensive set of socio-economic objectives and statutory requirements have been developed for Lukhanji Municipality's Supply Chain Management policy; the current high levels of provincial and national government spending on infrastructure development represent an opportunity for local economic development; the promotion of local SMMEs is an important element in increasing the multiplier effect, on the local economy, of the economic injection of the extensive infrastructure development currently in progress in the Lukhanji municipal area; the potential benefits are reduced by the capacity constraints and scarcity of resources within local government; and the draft policy prepared for Lukhanji will ensure compliance with the statutory requirements for supply chain management but needs to be amended to increase its efficacy in achieving Council's socio-economic objectives. The study highlighted several deficiencies in current knowledge especially in industries other than the construction industry. Research to test the hypothesis that the principles applicable to the construction industry can be applied to other industries is proposed. More research is also recommended to be done on establishing the link between spending on infrastructure and local economic benefits and how to maximise the benefits especially to increase local economic development, job creation and poverty.

AFRIKAANSE OPSOMMING: Plaaslike owerhede staan op die voorpunt van die regenng se dienslewering aan die gemeenskap. Gekonfronteer deur hul eie gebrek aan hulpbronne, en die armoede van hul gemeenskappe word munisipaliteite genoodsaak om dienste van gepaste gehalte teen minimum koste te lewer deur om hul doeltreffendheid te maximiseer. Munisipaliteite is onderhewig aan 'n magdom wette, regulasies en beleide wat op hulle aktiwiteite van toepassing is. In die geval van voorsieningskettingbestuur is die Munisipale Finansiëlebestuurswet en gepaardgaande Regulasies en Riglyne die belangrikste wetstuk. Voorsieningsketting aktiwiteite, soos deur die Munisipale Finansiëlebestuurswet gedefineer om aankope, verkoop van bates en kontrakbestuur in te sluit, word as belangrik geag as gevolg van die hoeveelhede geld wat betrokke is. Die bedrae sluit in die allokasies aan kapitaalprojekte asook die lopende begroting. Munisipaliteite, in hul hoedanighede as Staatsinstansies, word verplig om alleenlik beleide wat provinsiale en nasionale beleid ondersteun toe te pas en, verder, om te verhoed dat hul beleide met nasionale ekonomiesebeleid teenstrydig is. Afgesien van hul diensleweringsrol word munisipaliteite, deur die Grondwet van die Republiek van Suid Afrika, ook belas met die plig om hul gemeenskappe te ontwikkel. Deur middel van hul aankope van goedere en dienste word munisipaliteite gelas om voorkeur aan die volgende te gee: Besighede wat deur voorheen benadeelde individieë besit en bestuur word; Klein- Middelmatige- en Micro-sakeondernemings; Plaaslike hulpbronne; en ander benadeelde individieë en groepe. Opsommend, moet munisipaliteite aan alle wetgewing voldoen terwyl hulle ook streef om sosiale en ekonomiese doelwitte te bereik. Die doel van hierdie studie is om: al die huidige wetgewing, regulasies en beleid wat van toepassing is te beskryf; die konflikte voortspruitend uit die verskillende oogpunte van die wetgewing en beleidstukke te ondersoek; die faktore wat die munisipaliteit strem in sy strewe om sy doelwitte te bereik; die formulering van die doelwitte van sy voorsieningskettingbestuursbeleid ten opsigte van die wetlike vereistes asook die sosiale en ekonomiese doele wat nie teenstrydig met mekaar mag wees nie; die ontleding van Lukhanji se voorgestelde voorsieningskettingbestuursbeleid om sy doeltreffendheid ten opsigte van die ondersteuning van sy doelwitte te bepaal; die formuleering van voorstelle rakende die finale beleid; en verdere navorsing aan te beveel. Die belangrikste bevindinge is: van die wetgewing en beleide wat van toepassing is het uiteenlopende vereistes wat sekere kompromieë noodsaak; die Raad se voorsieningskettingbestuursbeleid kan gebruik word om sy sosiale en ekonomiese doelwitte te bereik sonder om enige wetgewing te oortree; in besonder, kan die beleid die gebruik van Klein- Middelmatige- en Mikrosakeondernemings, swart bemagtiging, plaaslike ekonomiese ontwikkeling en werkskepping bevorder; 'n volledige stel doelwitte vir voorsienings ketting bestuur is geformuleer; die plaaslike ekonomie kan voordeel trek uit die omvattende infrastruktuur ontwikkeling wat huidiglik in Lukhanji deur provinsiale en sentrale regering befonds word; die betrokkenheid van Klein- Middelmatige- en Micro-sakeondernemings kan die positiewe effek, op die plaaslike ekonomie, van bogenoemde ekonomiese inspuiting vermenigvuldig; die omvang van die voordele word egter deur die gebreke aan menslike en finansiele hulpbronne beperk; en Lukhanji se voorgestelde beleid sal verseker dat die munisipaliteit aan die wetlike vereistes voldoen maar sal moet aangepas word om sy sosiale en ekonomiese doelwitte te bereik. Die studie het uitgewys dat sekere kennis van voorsieningskettingbestuur in gebreke bly, veral in nywerhede anders as die konstruksie bedryf. Navorsing om die hipotese, dat die beginsels van die konstruksie bedryf ook in ander nywerhede toegepas kan word, te toets word voorgestel. Verder navorsing om die verwantskap tussen besteding aan infrastruktuur en plaaslike ekonomiese ontwikkeling beter te verstaan word ook aanbeveel. Die gebruik van staatsbesteding om plaaslike ekonomiese ontwikkeling en werkskepping te bevorder om armoede te bekamp is van kardinale belang.

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