Insight into Supply Chain Management in a Municipal Environment
Supply Chain Management has been developed in accordance and in conjunction with other pieces of legislation to develop and shape the SCM within the local government sphere. These include Section 217 of the Constitution, which compels all organs of state to implement a SCM system that is fair, transparent, equitable, competitive and cost-effective. Chapter 11 of the MFMA compels the municipalities to establish SCM units and implement the SCM Policy, which gives effect to all SCM functional areas.
The Preferential Procurement Policy Framework Act 5 of 2000 provides for the application of the points system when evaluating and adjudicating bids. Treasury Regulations 868 of 2005 (SCM Regulation) and SCM: A Guide for Accounting Officers of municipalities and municipal entities, provides a step by step illustration for the implementation of the SCM policies for the Accounting Officers.
The Supply Chain Management process contains various role players that influence the SCM processes which are:
- The National Treasury: Develops policy and oversees the implementation of the policy in all municipalities.
- The Provincial Treasury: Supports the municipalities in implementing the SCM Policy and further provides assistance to the municipalities in terms of capacity building.
- The Municipal Council: Approves the SCM structure of the municipality and ensures that the Accounting Officer executes the council's SCM Policy.
- The Accounting Officer: Establishes the SCM unit, which will be under the supervision of the CFO.
Each municipality in terms of section 165 of the MFMA, is required to establish an Internal Audit unit that must examine and report on the effectiveness, efficiency and economic use of the Supply Chain Management to achieve objectives of the municipality.
External Auditors examine and report the compliance of the municipalities with the SCM Policy to the Mayor of the municipality. The Audit Committee renders an advisory service to the Municipal Council, Political Office bearers, Accounting Officers and Management of the municipality on matters relating to section 2 (a) I - ix of the MFMA.
SCM Officials, who are the custodians of the SCM process, implement the policy and carry out the SCM operational activities. External role players are the suppliers and the community within the municipal jurisdiction.
Supply Chain Management is the under girdle for spending on capital projects and operational expenditure (day-to-day expenses), monitoring the manner in which the spending is undertaken, fostering spending that advances the RDP goals, LED initiatives, BBBEEA principles and ensuring value for money on each spending.
Supply Chain Management, as a financial management tool, seeks to reform and regulate the manner in which public funds are utilised when procuring goods and services whilst in pursuit of service delivery that is responsive to the needs of the society and to curtail any mal-administrative and fraudulent practices in the procurement front.