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Failure to implement effective compliance and accountability systems is costing the public sector dearly and making supply chains fertile ground for corruption

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If the South African government is serious about stopping the rot, strict measures need to be introduced in state departments and safeguards against cyberattacks significantly improved. 

It is hardly breaking news that South Africa’s public sector is in dire straits. 

While there was a slight improvement in audit outcomes for the 2019/20 financial year, auditor-general Tsakani Maluleke warned that there was little cause to break out the champagne and party hats.

Announcing the results in March, she revealed that 31% of auditees – or 118 entities – did not disclose irregular expenditure as they had doubts about the “completeness” of what they had declared.

Documentation required to support transactions worth billions of rand was missing, while departments’ supply chain systems – often cited as the root cause of corruption in South Africa – remained deeply problematic.

Manual filing systems are also wreaking havoc with accountability in the public sector.

In the Eastern Cape health department alone, it is anticipated that some R4.4-billion in medico-legal claims will be registered by the end of 2021 – a situation that as arisen out of fraudulent submissions by crooked lawyers who have taken advantage of a chaotic manual filing system that allows files to conveniently “disappear”.

The weaknesses within the public sector are being exacerbated by the external threat of cybercrime, estimated to cost South Africa R2.2-billion annually, according to the recently-released Accenture 2020 report.

Though the impact has been limited, the Institute for Security Studies says, the country has already seen attacks such as the one on the City of Johannesburg’s electricity system. More attacks can be expected as South Africa aligns with the 4th Industrial Revolution. 

If South Africa hopes to turn things around, there is no choice but to bite the bullet and accept that the public sector will need a complete overhaul. And that will necessitate strict controls and compliance with local and international regulations.

It will be expensive, but making the investment now will save the country hundreds of billions of rand down the line, says Muhammad Ali, managing director and lead auditor of South African ISO standards training and implementation specialist WWISE.

“For any public sector entity employing more than 1,000 people, the implementation of a compliance system that meets the criteria for quality standards and safeguarding against cyberattacks can be US$50-million (R688-million) at a bare minimum,” he says.

“Costs can go up to US$100-million (R1.3-billion) depending on the complexity, technology and scope. However, the costs of cyberattacks, poor governance and fines issued for not meeting government legislation can far outweigh the costs of implementing these processes.”

By way of example, state capture has cost South Africa anywhere between R500-billion and R1.5-trillion, depending on who you ask, and that is without factoring in the cost of the Zondo Commission of Inquiry which is fast approaching the R1-billion mark.

For the public sector to instill good compliance practices, it should take a leaf out of the book of private sector companies which have become accredited by the International Organisation for Standardisation (ISO).

Each standard within the ISO range indicates the tools required – policies, process flows, procedures, work instructions, forms reports and statistical analysis, for example – to guide the organisation to fulfill its goals, targets and objectives. 

Ali has identified several ISO standards he believes could prove extremely effective in government departments. These include:

  • ISO 9001:2015 – An organisation-wide Quality Management System that focuses on each activity in the process and quality controls like verification, validation, monitoring and measuring;
  • ISO/IEC 27001:2013 – An organisation-wide Information Security Management System that ensures systems are secure, with information being aligned with local information laws and general data protection regulation (GDPR).
  • ISO 22301:2019 – Business Continuity Management, which tests and verifies contingency management systems, such as the ability for employees to work from home, and the effectiveness of the technologies they use;
  • ISO 31000:2018 – Risk Management, which is the baseline of all the standards; and
  • SharePoint online – This assists in securing the flow of information, data and records by using a secure intranet solution.  

Ali points out that as the world places greater emphasis on reducing environmental impact, so public sector entities will need to step up their game to meet international requirements.

To this end, the ISO 14001 standard specifically addresses climate change developments and waste management programmes, while the ISO 50 001 standard focuses on energy management and how to reduce consumption through comprehensive data analysis.

Ali says the process for an effective ISO implementation can take up to between two and five years, depending on the scope, complexity of processes and commitment of top management.

“The most challenging aspect after implementation and certification is maintenance. The system  needs to be installed in the fabric of the organisation, which means a shift in the culture of the organisation is required.”

The key milestones in the implementation process are:

  • Phase 1: Gap assessment;
  • Phase 2: Awareness and information gathering;
  • Phase 3: Documentation and systems development;
  • Phase 4: Implementation, risk assessments and on-the-job training;
  • Phase 5: Certification; and
  • Phase 6: Continuous support and maintenance

Of course, if government departments are to implement these strategies, there can be no short cuts, and that includes who is appointed to guide them through the process and get them up to the required standards.

“They should choose consultants who assist in the journey, not consultants who tell them what to do and then they have to do everything. They should be wary of consultants who say they are competent, have no experience with large organisations and are not credible themselves,” he says.

Consultants should be registered as lead auditors and linked to the Chartered Quality Institute and  IRCA Global. They should also be able to call on the expertise of lawyers, engineers and IT network specialists.

“Public sector organisations should not be relying on one-man bands or consultants who adopt a one-size-fits-all approach. Each department is different, and accordingly requires tailor-made solutions.”

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Supply Chain

Greening your Supply Chain

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Businesses of all sizes, both new and old, are increasingly adopting more sustainable practices in response to the worldwide environmental issue.

Greener methods decrease waste, improve the environment, and satisfy environmentally concerned clients. It can also increase efficiency and lower operational expenses, resulting in more earnings.

Reduced environmental impact, reduced costs

According to the World Trade Organization, global product and commercial services trade have expanded by around 7% per year over the previous 30 years. This entails that businesses are utilising more energy, packaging materials, and warehouse space year after year.

Fortunately, many organisations are implementing strategies to reduce emissions and waste throughout their supply chains. This not only improves the environment, but it may also save operational expenses. Optimising transportation routes, for example, saves CO2 emissions and fuel costs. Packaging optimization minimises waste and packing material costs.

All while these practices are effective, they stem from informed decision-making. How would you know where there is extra logistical expenditure if you are lacking the data to understand where you’re overspending?

Public Image considerations

Adopting green supply chain efforts may improve your public image, which is vital given current consumers’ high rise in environmental awareness.

The growing pressure to hold various governments and companies responsible cannot be overlooked. Customers who care about the environment want businesses to respond to the need to manage our planet’s finite resources responsibly and sustainably.

Where to start?

To green your supply chain, consider all parts of your organisation. Everything from production and storage to shipping and waste disposal is evaluated with the objective of selecting goods, services, and procedures with the least environmental effect.

Understanding your company’s spending, supply chain, and consumption trends is critical for enhancing sustainability.

Below are a few ideas for reducing your environmental footprint, cutting expenses, and increasing efficiency:

  • Sourcing locally = Reduce waste, CO2 emissions, and fuel expenses by obtaining supplies locally.
  • Down-size warehousing = Reduce shipping distances and expenses by employing smaller regional warehouses.
  • Ship materials directly to the point of use = Ship raw materials for manufacturing directly to the site of use to save gasoline and perhaps minimise the requirement for protective packaging.
  • Conserve energy = by employing low-voltage lighting and motion sensors or timers on lighting systems in your warehouse.
  • Go electric = Reduce your paper use by switching to electronic technologies.
  • Consolidate shipments = Shipments should be aligned and consolidated to decrease carbon emissions and perhaps reduce labour and fuel expenses.

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Supply Chain

RFA calls for 5l water donations and community drop-off points

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The Road Freight Association (RFA) is calling on its members and all industry stakeholders to support the call to provide desperately needed water and other essentials to communities devastated by the floods in KwaZulu-Natal. “Whether you are a large trucking operator or operate bakkies, vans, motorcycles – or someone who would simply like to support our ‘Truckers Making a Difference’ campaign – you too can help those who have been devastated by the floods,” says Gavin Kelly, Chief Executive Officer of the Road Freight Association.

“There are a number of ways in which people and organisations can assist our ‘Truckers Making a Difference’ campaign,” explains Kelly. “Everyone can make a donation – even a 5-litre bottle of water will bring relief to those in need. Although food, blankets and shelter are also needed, water is the overwhelming need for communities right now. KwaZulu Natal Premier Sihle Zikalala indicated earlier today that it could take months to repair flood damage to the Tongaat Water Works – the RFA would like to do what we can to make even a small difference in making the lives of flood victims easier.” 

For those wishing to donate water or other essential items for flood victims, there are two drop-off points: Airport Lodge Guest House, 6-273 Koppie Ave, Kempton Park, 1619, and 309 Malcolm Str, Garsfontein, Pretoria.

More drop off points will be announced on rfa.co.za and @RFA on Facebook as they become available

The Association is also calling on its members – and any other stakeholder – who have depots and storage facilities, to open these facilities as community drop-off points.

The communities of Tongaat, Umdloti and The Bluff have appealed for urgent assistance and have been targeted as the initial priority areas.

Organisations and individuals wanting to make donations or facilities available to “Truckers Making a Difference” can contact Charlene on [email protected] or call 074 490 0974.

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Supply Chain

Durban port working to clear backlog of thousands of containers

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Durban port will, within days, clear the backlog of thousands of containers that came to a grinding halt during the disastrous floods that lashed KwaZulu-Natal’s road, rail and port infrastructure last week.

Minister of Public Enterprises Pravin Gordhan assured businesses and local manufacturers during a joint media briefing with Minister of Trade, Industry and Competition, Ebrahim Patel, at the city’s port on Tuesday afternoon that the backlog of between 8000 and 9000 containers would be cleared within the next six days. He said the port had moved from the emergency phase of the recovery process and was now “fully operational”.

Gordhan attended a meeting with Transnet, Eskom and eThekwini Municipality officials at the port where he was briefed on the status of its business recovery plan.

He said between 40 and 60 ships had been serviced – loaded and offloaded – in the port since Saturday (16 April) after a 72-hour clean-up operation to remove debris, including logs and appliances such as fridges that had washed into the port. Three rivers and at least 52 canals run into the port’s waters.

“That continues to improve with each day. Durban harbour is functional – ships bringing in imports are being serviced and ships taking out exports, food and fruit are being serviced,” he said.

“As a result of the impact on Bayhead Road, we had a situation where some 8000 to 9000 containers had accumulated because trucks could not reach the harbour area. Within the next six to eight days those containers will be cleared,” Gordhan said.

“The next work that is being done by the port authority is to ensure that the port remains in a state that it can be used. A dredger that was on its way to Cape Town is now on its way to Durban so it can clear the harbour.”

He said reinforcements had been placed in Bayhead Road which had been impacted by a 60m “crater”. This key port road was now accepting some truck and vehicle traffic, although a temporary route through the Bluff to Island View was also still in use, he said.

Gordhan estimated that extensive damage to Transnet’s rail network to Cato Ridge, which incurred the worst damage, and along the North and South Coast lines, would take from two to eight weeks to repair, depending on the severity of the damage to specific sections of track. He said the Transnet fuel line that transported fuel inland had been briefly impacted due to an electricity outage, however, it was operational within 24 hours and was currently working as normal.

“As far as fuel and KZN is concerned, there is no risk of fuel shortages and the pipeline is functioning as well,” he said.

Patel added that the government would be meeting with business leaders in the province to discuss the economic recovery plan. Businesses are concerned about interruptions to logistics services, the impact on their supply chain and manufacturing processes, and the physical damages caused to infrastructure which also impacts operations.

“The physical damage caused makes it difficult to continue operations for at least a period. eThekwini’s largest industrial plant, Toyota, has been severely affected in terms of the water damage caused and in terms of staff because of disruptions to transport systems, damage to homes, and loss of life.”

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