The application of the supply chain management in the Office of the Premier, Mpumalanga Province

Abstract

The public sector is faced with increased demands for public goods and services from communities. Public institutions have limited resources which should be managed effectively for effective and efficient service delivery. The South African government initiated and implemented financial management reforms since 1994 with the aim of improving public service delivery.

The Public Finance Management Act, 1999(Act 1 of 1999) was promulgated to regulate financial management. The object of Public Finance Management Act is to secure transparency, accountability and sound management of revenue, expenditure, assets and liabilities of the public sector. The aim of the Public Finance Management Act is to enable public sector managers to manage and be more accountable with the purpose of eliminating waste and corruption in the use of public resources.

A Supply Chain Management system was introduced by the South African government in 2003 to ensure effective procurement and improve financial management in the public sector. The introduction of Supply Chain Management led to procurement reforms which resulted in government decentralising and delegating authority for procurement to public institutions. Supply Chain Management forms an integral part of financial management. The process integrates general financial practices with budgeting, procurement and asset management.

Supply Chain Management is currently not correctly implemented by some public institutions and this lead to irregular, fruitless and wasteful expenditure. Accounting officers should recognise the importance of Supply Chain Management in order to ensure effective procurement, sound financial management and improve service delivery. The study highlights the important of implementing Supply Chain Management in an institution. The implementation of adequate Supply Chain Management practices will promote efficiency, effectiveness, transparency, openness, accountability and fairness in procurement and improve ethical conduct of officials.