Towards averting inconsistencies in Supply Chain Management Policy Implementation: Lessons from Literature and a Case Study
1. INTRODUCTION AND BACKGROUND
Organizations are doomed to failure without efficient SCM systems (Chary & Ladi, 2022). Universities need a strong supply chain management system to function effectively and efficiently and achieve their strategic plan objectives and aims. The purpose of the research is to examine the chosen institution's challenges when implementing its asset management and supply chain management policies to create modern models for solving the problems. Some higher education institutions in South Africa underwent a structural transformation that started in 2002 and ended in 2005. The institution where this study was conducted provides a wide range of academic options, including faculties of business administration, educational sciences, health sciences, humanities, social sciences, and law, as well as natural sciences. This university is situated in the Eastern Cape.
Any organization that wishes to function successfully and efficiently must have sound policies that support its Mission, Objective, and Vision. And this applies only to this institution but any academic setting that deals with the procurement of goods and services.
2. PROBLEM STATEMENT
Public organizations are guided by SCM policy regarding when it comes to logistics, disposal, and procurement-related concerns. It is unclear how the institution should handle the revaluation of its assets and how asset disposal should be handled. It is more challenging to decide whether assets should be sold or not, and if disposed of, what are the restrictions to the disposal value, because the policy is unclear about the lifespan of motor vehicles. Reinecke and Donaghey, (2021) postulates that companies with an efficient SCM architecture do quite well. It was observed that the institution was not operating properly over the years. Poor managing of Supply Chain Management led to the University being put under administration and having to temporarily shut down owing to a lack of resources in 2012. Additionally, policies were not followed, and an independent valuer was not hired to establish the value of assets in use prior to disposal.
It became clear that the organization only occasionally fully complies with section 2 of its basic procurement standards. Additionally, the WSU SCMP's core goals of bringing impact to Section 217 of the Constitution through the advancement of a structure that is fair, impartial, open, competitive, yet cost-effective, were not met because the database of prospective service providers was not updated. Suppliers that had not been used for ten years were not deleted from the database as of 2017.
3. OBJECTIVE AND SIGNIFICANCE
The research aims add to determine the elements that impede the availability of sound SCM in the institution while focusing on the following:
- The implementation of supply chain management policy.
- Asset management policy
- The disposal management policy
The best practices will be established by the research that should be applied by the institution. Benefits will include providing effective and effective policies that will lead to achieving the annual performance plan aligned with the institution’s strategic plan (2020-2030). It will also offer methods of eradicating deficits in the system. The study is envisaged to have a beneficial effect on the institution's financial control and the fair presentation of financial statements.
4. LITERATURE REVIEW
Supply Chain Management is a holistic approach to managing the entire flow of information, resources, and operations between raw materials producers and end customers (Sanders, 2020). Thus, monitoring logistics interactions with providers and customers is pivotal for any sound (SCM) (Langley, Novack, Gibson, & Coyle, 2020). Efficiency in SCM involves combining several organizational processes, such as demand analysis, acquisition, logistics management, allocation of resources, and user system integration.
SCM is approached from the perspectives of logistics, purchasing, transportation, information systems, advertising, and management of all aspects of procurement that must be done within the purview of SCM policy. It is essential for custodians of SCM to align demand, acquisition, and logistics, disposal with the Government’s preferential procurement policy management (Sibanda & Tshikovhi, 2022). The figure below demonstrates the process.
Figure 1: Higher Institutions’ SCM Source: National Treaty, 2005
A common and widely-accepted definition of SCM has not yet been found, and its meanings represent a variety of perspectives. The meanings of numerous SCM terms are compiled in "The coordinated action of an organization to financially feasible from resources," which is how asset management is defined (Norge, 2014). Asset management includes a few organizational tasks which must be examined through a quality system, and it's not just a bookkeeping exercise. Although it might assist in understanding how asset ages and subsequently depreciate, this managerial activity is important to everyone responsible for SCM in any organization.
Demand, acquisition, logistics. and disposal managements are element guided by the SCM policy. The SCM policy includes methods and procedures from acquiring to disposing of goods. These methods also include transferring the asset to another government agency at even a low cost or, if appropriate, at no cost, by selling an asset that is not in use through auction, or depletion of the asset in accordance with the SCM policy.
4.1 SUPPLY CHAIN MANAGEMENT IN THE SOUTH AFRICAN HIGHER EDUCATION ARENA
Universities in South Africa are governed by The Department of Higher Education and Training (DHET). There are 26 higher education institutions located across the various regions of the country. These public universities provide a variety of academic subjects that add value to the country’s economy.
Public institutions in South Africa are typically expected to have strong systems of governance as well as active, smart, and responsible management to fulfil the tertiary education goals defined by existing laws (De la Rey 2015).
Managing the acquisition of goods and services required by the different departments may be a significant SCM activity in the finance of public institutions (Hassan, Ramli, Roslan, and Jaafar 2015). Most South African public institutions have annual supply chain budgets. For instance, the budget for WSU's fiscal year 2019 was R1 123 286 675.56, whereas the budget for the fiscal year 2020 was R875 290 268.17. These budgets include both operational (a thorough projection of the institution's revenues and costs for the relevant financial year, which typically covers one financial year) and capital (which addresses increasing demands for capital expenditure purchases, identifying assets required, finance sources, and projected results) budgets. From here, it should be noted that the budget allocations are because of inconsistency in some academic programs. With these funds, further SCM activities such as supplier performance, demand management, inventory management, and client interaction/service control will be carried out (Poluha 2016).
In South African higher education institutions, procurement requires the participation and consideration of numerous interested parties, including parties with specific interests in the running of universities (KPMG South Africa 2016b). Various parties may be asked to participate in the decision-making processes, including evaluating of service providers who need to be awarded contracts in the bidding process at various stages. University procurement policies should specify the representatives of different parties with distinct interests and relevant individuals who must participate actively in such activities (Hassan et al., 2015).
5. METHODS, SAMPLING, AND DATA COLLECTION PROCESS
The quantitative data were analyzed using SPSS. For the qualitative data, the processing of the data includes understanding the data, turning it into text from verbatim audio recordings, organizing it, coding it, and creating a report that summarizes the results are all steps in the qualitative data analysis process in line with (Järvinen, & Mik-Meyer, 2020).
While the primary data are collected via observations and interviews in compliance to (Velardo, & Elliott, 2021), the secondary data for this study came from sources that have already been published, including books, conference proceedings, scientific journals, newspapers, bulletins, official documents, and the organizational websites.
The researcher of this study selected relevant stakeholders to participate. In this regard, the researcher employed the purposive sampling technique to ensure the qualities needed of the respondents, that either qualified them for participation in this research or excluded them. Forty of the researcher's anticipated 100 interview replies were successfully acquired for the study due to scheduling constraints. There have been twenty-two (22) members of the support staff and eighteen (18) Academic Staff.
The secondary data for this study came from sources that have already been published, including books, conference proceedings, scientific journals, newspapers, bulletins, official documents, and organizational websites. Primary data are collected via observations and interviews in compliance with (Velardo, & Elliott, 2021).
Most of the primary and secondary data used to support the study's main finding came from these two types of sources. Interviews were held to learn more about the key elements of the topic from the viewpoints of academic and support staff. Moreover, this idea that data is gathered from diverse sources makes it more difficult to triangulate the study (Leedy & Ormrod,2015)
5.1 THE DEMOGRAPHIC DETAILS
The following results represent the academic and support staff of the institution who participated in the study.
5.2 GENDER CLASSIFICATION
Figure: gender classification source: researcher
According to the figure above, 60% of the participants in the study were men and 40% were women. Ten (10) of the women were members of the support staff, and fourteen (14) were academics. Four (4) members of the academic faculty and twelve (12) support employees made up the male population. These numbers show that, in contrast to male participants, women were more in participation in this study
5.3 AGE CLASSIFICATION
(Diagram 184.108.40.206: Age-group. Source: Researcher)
According to the figure above, the age group from 40 to 49 formed most participants (15), followed by the 30-39 age group (10). In comparison, the youngest age group was six and up (1). At WSU, people between the ages of 40 and 49 make up the majority of the staff in the academic and support staff.
6. Opinions on enhancing transparency and accountability in SCM of the institution
Transparency and accountability opinions. Source: Author
The academic staff responded to this question responded by stating that the institution must organize regular stakeholder engagements, systematic communication, and updates on expenditures. The organization must perform auditing regularly and reports in order to enhance accountability in supply chain management. Furthermore, the organization also must familiarize the personnel regarding the budgets of the institution and the current SCM procedure and must also set up an SCM board where representatives from each department will sit.
According to the support staff responders, the institution requires an online platform that will enable budget and supplier database reviews. There must also be continuing communication, SCM policy revisions, and frequent seminars or training to raise knowledge of the policy. The organization must also maintain training sessions about the roles, processes, and processes (to avoid duplication of duties). A feature that enables users to track bids or Requests for Proposal (RFP) used to open requests for bids to finish a new project presented by the business or other organization that issues it must be included in SCM activities.
One of five pillars of the South African Public Finance Management Act (PFMA) (Act No. 1 of 1999) is supported by these findings, especially pillar four, which deals with accountability and reporting because individuals and organizations are held accountable for their plans, actions, and outcomes and are required to practice more transparent governance as a result of external scrutiny via reporting requirements. Mothupi, Mukonza, and Khalo, (2022) emphasize that for the SCM processes at public institutions to function more efficiently, numerous stakeholders' involvement and voices are required at all levels as well as making sure that their crucial responsibilities are clearly outlined to avoid ambiguity. Birou and Van Hoek, (2021). Stressed that stakeholder participation must be at the center of management strategic effort in guiding the SCM operations, and stakeholders' behaviors are necessary to ensure that they carry out their SCM tasks appropriately (Birou & Van Hoek, 2021).
The Auditor General of South Africa (AGSA) had recently incorporated SCM as a specific analysis area in each financial audit of public tertiary education facilities (AGSA 2011). This change transformed the system in-to one that promotes the development and application of efficient internal standards and SCM processes. Organizations must go above and beyond by creating standards, conducting frequent audits, and requiring documentation to support vendors' compliance practices (Gomez‐Mejia, Martin, Villena & Wiseman, 2021).
Gomez-Mejia, et, al (2021) also alluded that as a result, working with trustworthy providers, for instance, not only leads to fewer disruptions and content customers, but also improves financial position by assisting organizations in auditing (and being reimbursed over) products more quickly. It is possible to build a balanced financial system by finding more affordable ways to reduce wasteful spending and overhead costs (Gomez, 2019).
The Treasury Regulations (2005) state that Section 76 of the PFMA, Act 1 of 1999, gives the Treasury the power to make regulations that extend the law in order to strengthen fund monitoring and guarantee proper fiscal discipline. Any regulations must be published for public review in the Government Gazette. Meaning that WSU is also expected to create asset management plans that incorporate efficient communication, service levels, quality requirements, and budget control in coordination with the relevant department (Phathela and Cloete, 2017).
According to Ruzic-Dimitrijevic (2014), institutions must understand SCM, and this includes actors being aware of what SCM implies and what the system would expect of them. Last but not least, the management must have a thorough understanding of the SCM process in order to communicate and inspire people about the value of SCM for the university (Ruzic-Dimitrijevic 2014). According to the National Treasury Review of Supply Chain Management, one of the main obstacles to the successful implementation of SCM is the important stakeholders' lack of knowledge of its broad applicability.
In order to reduce the risk of adopting SCM policy incorrectly, proper communication with important stakeholders on the necessity of adherence to policy is required (Gopalakrishnan & Haleem, 2015). This suggests that the institution needs to create SCM administration plans that take effective communication, service levels, quality standards, and budget control into account in partnership with the appropriate parties.
The lack of coordinated planning and even the inability to identify SCM methods and systems to govern both internal and market-related changes are the root causes of the discrepancies regarding role ambiguity among the personnel. When there is a general lack of understanding of roles and duties, this situation becomes reality. If people do not understand the purpose of SCM, it will become difficult for them to embrace it within the organization.
Understandably, similar to any organization WSU is still learning how to effectively use supply chain management principles, but this can improve if the institution and its relevant stakeholders cooperate toward a shared objective that is consistent with the university's overall vision.
6.2 Challenges encountered in implementing supply chain management policies in the institution
Challenges encountered in implementing SCM policy. Source: Researcher
The institution experiences challenges in putting its very own SCM Policy into practice, even though it acts as a guideline for all supply chain-related activities. Accordingly, the respondents said that there is still non-compliance, non-adherence, and incompetence among the employees when putting the policy into practice, and that this easily leads to corruption activities as other people use their positions to go around and overrule judgments. Others have noted that the SCM procedures lack user friendliness and that staff members lack knowledge of how they function in areas like quoting, specifications, signatories/approval of stages, which causes them to be resistant to the online system and results in short, staffed personnel in the use of the online system. Additionally, the respondents emphasized how time-consuming the SCM is when centralized. Because there is a problem with supplier management and asset management, the SCM is viewed poorly by the appropriate stakeholders because the policy is ambiguous with regard to specific allocated and segregated roles as well as powers.
These results are consistent with those of the National Treasury (2015) and the Parliamentary Monitoring Group (2013), which state that it is anticipated that State universities will succeed in adhering to the law, lowering the possibility of fraud, favoritism, and other unethical or irregular activities in these universities. There is also no readily adaptable risk matrix that considers adherence to current policies, staff member training to be "Fit for Purpose," risk-based asset management activities to identify challenges and important issues staff are facing and using appropriate communication with pertinent stakeholders about the significance of adherence to policy (Gopalakrishnan, 2015). Additionally, this goes against the Preferential Procurement Policy Framework Act of 2000, which mandates that all government universities abide by additional laws governing the South African framework.
The root of the problem is a lingering lack of monitoring, fraud, and dishonesty that has led to poor delivery of services across the country. As a result, those involved in South Africa's public service are tasked with creating and implementing plans that can upset the status quo and ensure that the SCM contributes value to the State's objectives for policy reform (Universities South Africa 2015). Fragmented procurement can lead to inconsistent and insufficient data flow, which can lead to poor supply chain integration interactions and high costs of procuring goods and services.
Institutions must acknowledge a lack of awareness of the use of SCM approaches. This occurs when top management lacks the confidence necessary to engage stakeholders, preventing the effective execution of crucial strategic initiatives (Dlamini, 2013). This may be explained by the fact that the institution's top effective governance mechanisms lacks sufficient knowledge of SCM, and that no effort is made to inform participants of the value of SCM to the university. The institution as a whole lack adequate SCM competence because of this circumstance. For instance, in South Africa, the term "SCM" is now frequently misused (Ruzic-Dimitrijevic 2014).
In addition, transition to change should be implemented where staff members are assisted with all facets of SCM, enabling the university to endorse the concept. The institution must emphasize the importance of learning and development for students to accept change. Thus, it would ensure that people go to workshops to learn about SCM relevant legislation and the repercussions of obeying or disobeying them.
Online systems are anticipated to improve operational flow and guarantee that time is the primary criterion for assessing the efficiency of the supply chain. The shorter time required for the items to finally reach the user, the less efficient the logistics management of the institution is. By giving full insight into items as they move from source to client, SCM also reduces inefficiency. SCM makes it possible to work in a faster, more efficient manner while still providing quality service. To manage the supply chain effectively, data flow assimilation is as important as the fusion of material flows. Staff at the institution are accustomed to traditional systems like the Integrated Tertiary System (ITS). SCM also permits an accurate, timely, complete, and meaningful flow of information, which reduces the risk of lost opportunities.
Activities such as supplier performance, demand management, inventory management, and client interaction/service control policies must be adhered to by relevant stakeholders to enhance the supply chain management. Traditional approaches and creating a centralized supplier database will lead to consistency in daily operations, which will promote effectiveness and efficiency in the system. Furthermore, the lack of a centralized supplier database will hinder compliance with the SCM policy leading a flaw in the system.
According to the study's findings, the institution in question does experience challenges implementing SCM and asset management policies currently in place. The challenge in implementing the policies arises from the custodians of these systems due to a lack of awareness and the lack of education or training provided to them regarding what is expected of them, which makes compliance and adherence very challenging. Regarding these regulations, other challenges are related to the complexity of disposal management. It is evident that the staff is perplexed by who is authorized to communicate these policies to them because these regulations are specific about how roles and responsibilities should be divided. The challenges of these policies' complexity impact the process since it is unclear who is responsible for reviewing and supervising the implementation of the policies. The findings of the study also revealed that once a policy statement gets complicated in outlining and directing objectives, it readily fails since the stakeholders will struggle to comprehend what is expected of them. As a recommendation, other researchers can explore the topic using a bigger sample in traditional universities to validate the findings that emerged.
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Author: Lonwabo Luklhanyo Vikilahle
Approved by: Minh Nguyen