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www.kism.or.

ke | Issue 007 - June 2014

A quarterly Issue | 007 - June 2014

Procurement News
Inside this Issue;
1 Procurement News
2 KISM Programs
3 KISM Interview
4 Notice Board
5 Articles from Professionals
6 Articles from around the
World

Supply Chain Management Dictionary


KISM is in the process of compiling a glossary of commonly used procurement and supply chain
management terms. This will serve as a useful guide for practitioners across all sectors and as a
learning tool for aspiring professionals. To achieve this objective, the institute engaged a consultant on short-term basis to develop the dictionary. A committee comprised of four practitioners who
are members of the Institute was also formed/appointed to steer this process. The glossary will be
distributed to practitioners in the form of a pocket book for easy reference and as a learning tool.

Annual procurement Stakeholders Forum


Public Procurement Oversight Authority (PPOA) convened its 7th annual stakeholders forum on 30th
May 2014, at KICC, with participation from National Treasury and KISM. Focus of the forum was
on how to improve the public procurement system in Kenya, given the ongoing efforts to publish
a procurement Bill that is aligned to the Constitution. PPOA observed that the greatest challenge
affecting public procurement is preparation and submission of procurement plans to PPOA. Also,
implementation of the Legal notice 114 that prescribes reservation of 30% of procurement opportunities to businesses owned by Youth, Women and people with disabilities remains a challenge.
KISM continues to advocate for strategic positioning of procurement functions and r ecruitment of
professionals to manage procurement units.

KISM partners with UN Women to train senior


county executives
In 2013, KISM partnered with UN Women to deliver three sensitization forums themed Role of supplies practitioners in implementing the preference and reservation Regulations in Nairobi, Kisumu
and Mombasa. A total of 294 participants were sensitized. This year, based on the findings and recommendations from past forums, the partnership is up-scaling the intervention by conducting a three
day intensive capacity building workshop in selected counties, targeting procurement practitioners
and executives in the counties and procurement entities within the counties. Focus of these workshops will be on implementation and monitoring of preferences and reservations for disadvantaged
groups. The first of these workshops will be held on 30th June 2nd July 2014 in Eldoret,

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www.kism.or.ke | Issue 007 - June 2014

ITC partners with KISM to Support SMEs in Food Processing Sector


International Trade Centre together with Bosch, a Germany based technology company, have partnered with KISM to train selected group of SMEs in the
food processing sector on adoption of Lean procurement methodology, to help these businesses improve process efficiencies and reduce wastage. The
primary objective of ITC intervention in developing countries is to promote trade, with a focus on SMEs. KISM partnership with ITC has been strengthening
year on year, with focus on strengthening competitiveness of SMEs through improved value chain. This year, our partnership with ITC is on assisting SMEs
to improve their process. These project is currently on pilot for six month with three SMEs; Greenforest Foods Ltd dealing in honey and peanut, Mace foods
Ltd dealing in chilli and dried traditional vegetables, and Stawi Foods Ltd who do value addition on a variety of flour. Bosch will transfer knowledge to
local SMEs and to ensure sustainability of the project, KISM will support the initiative for the life of the project ending in 2016, through consultancy and
monitoring application of the lean concepts. The impact of this project is for SMEs to increase their sales revenues, create jobs and support the economy
through taxes.

Project manager Mr. Georg Nicola from Bosch takes participants through a session at Stawi Foods ltd premises.

5th Annual Procurement Regional Conference


KISM in partnership with national procurement association of countries in East African Region and the International Federation of Purchasing and Supply
Management (IFPSM) have organized a regional conference from 8th 10th October 2014, at Lemigo Hotel in Kigali Rwanda. The conference will examine
the role of procurement in supporting short, medium and long-term development plans. Within these plans, public and private sector entities are poised
to play equally important roles. Scarcity of resources however, presents a major challenge in the pursuit of development. In addressing the challenge of
scarcity, procurement has emerged as one among several important functions and processes being relied upon to increase efficiency in resource utilization and implementation of development plans. This conference will provide opportunities for professionals to share experiences on building procurement
systems that support strategies, goals and objectives of organization in all sectors, with focus on overarching national development goals. The conference
will feature local, regional and global presenters from academia, consultancy, regulators and IFPSM. Registration is ongoing and members are encouraged
to register and attend.

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www.kism.or.ke | Issue 007 - June 2014

Our Products
Membership
Beginning of this year, KISM introduced half day membership forums
in each quarter featuring selected themes that address a topical issue
in procurement. On 30th may 2014, we organized a membership forum
themed, contract management: role of procurement and supply practitioner, facilitated by Mr. Alex Musungu of Kenya Forest Service. The objective of this forum was to raise levels of awareness and understanding
amongst supplies practitioners on Management of contracts with focus
on performance management and measurement, supplier relationships,
and resource planning. Membership renewal is encouraged to facilitate
similar sessions for membership.

CPD Training
In May, we held a workshop in Kisumu on international procurement. The
workshop addressed challenges faced in international procurement and
equipped participants with knowledge and skills for maximizing value
through international opportunities, risks and contractual issues in international procurement.

A section of participants during a membership forum on contract management on 30th may 2014 at Hilton Hotel Nairobi

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The next workshop is on 23 25th July 2014 at Merica Hotel in Nakuru.


The workshop has been designed to equip participants with techniques
for developing and managing supplier relationships that maximize value
for money in procurement.
Procurement and supply chain professionals are encouraged to attend the
CPD workshops and membership forums to keep up with contemporary
practices and to earn CPD points. Increasingly, employers are recruiting
from a pool of professionals who are in good standing, meaning they are
paid up and have attained minimum CPD points.

In Company and CIPS Program


From 23rd -24th April, 2014 KISM trained the staff of National Drought
Management Authority on the Public procurement and Disposal Act 2005
and Regulations. Staff of Tourism fund were also trained on evaluation of
tenders and development of specifications from 11th 13th June 2014.
Intake for the CIPS tuition program for the November 2014 exams is ongoing for the evening classes for, Advanced Diploma and Professional
Diploma level. Day classes are available for the advanced certificate and
Diploma level. Saturday classes are also available for Diploma and Advanced Diploma levels.

www.kism.or.ke | Issue 007 - June 2014

Notice Board
Membership

Theme: Legal Framework


Dates:
Venue:
CPD hrs:

11th September 2014


Nairobi
4

Professionals on the move


This segment traces where senior supplies practitioners are, particularly those that have changed jobs in the recent past. We shall be profiling other practitioners in our subsequent issue and encourage those
who have taken up new positions to notify the secretariat through
communication@kism.or.ke

Annual Membership Dinner


When:
Where:
Time:

Friday 14th November 2014


Sarova Panafric hotel, Nairobi
6:30pm 9:00pm

CPD Workshops
Theme: Supplier Management
Dates:
21st - 23rd May 2014
Venue:
Kisumu
CPD hrs:
24
Workshop Theme: Supplier Management
Dates:
23rd - 25th July 2014
Venue:
Nakuru
CPD hrs:
24
Workshop Theme: Procurement Course for Saccos,
Schools and small Procuring Entities
Dates:
20th 22nd August 2014
Venue:
Nairobi
CPD hrs:
24
Workshop Theme: Effective Contract Management
Dates:
17th - 19th September 2014
Venue:
Mombasa
CPD hrs:
24

Name:

Stephen Omondi Musewe

Current Employer: Kenya Sugar Research Foundation


Current Position: Supply Chain Manager
Former employer: Simlaw Seeds Ltd
Qualifications:

Bachelors degree in Purchasing and Supply


Management
Diploma Chartered Institute of Purchasing and
Supply (UK)

KISM Interview

Interview with Mr. Jerome


Ochieng, Ag Director - IFMIS
Mr. Jerome Ochieng is the acting Director of IFMIS. Previously, he was
the ICT manager at the public procurement Oversight Authority in Kenya.
He had worked in the Authority for a period of 7 years since the inception
of the Authority. He has previously worked with the Directorate of E-government in Kenya as assistant Director of ICT. He has a wide experience
working in the public sector having worked in the Ministry of Finance for
the last 12 years in the field of ICT. Mr. Ochieng holds a masters degree
in information technology. He has a background in Computer programming, having graduated with a B sc. in Mathematics / Computer from the
University of Nairobi In 1994.
He has been instrumental in the development of the e-learning platform
for procurement professionals, currently being used to build capacity of
procurement professionals in Kenya. He has participated in several international conferences making presentations on emerging trends and
reforms in the public procurement systems, with a special emphasis on
the use of information and communication technologies.
Mr. Jerome Ochieng Ag. Director, IFMIS in his office during the interview

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Below is an excerpt of the interview.


Recently you held workshops in selected regions across
the country, what was the purpose?
The training was about sensitizing suppliers on the IFMIS process and
what is required of them to do business with Ministries Departments and
Agencies/County governments. The government is changing the way it
does business by adopting an electronic platform that facilitates online
transactions. Therefore, suppliers were trained on the registration process, what is required, how to submit bids electronically and the procurement cycle.
Broadly speaking, what are the critical steps that the
system has mapped?
The system basically maps the procurement process. A user places a
requisition online through to the head of department who approves and
forwards to procurement department who crosschecks the procurement
plan to confirm that the item is planned, then invite suppliers from the
prequalified list. Suppliers will then submit their bids electronically;
which-depending on the procurement method used-are evaluated online,
particularly those items that have straightforward criteria like price comparison. The relevant committee then approves and awards the tender
to the successful bidder, who makes the delivery and payment is made
directly to his/her bank account.
Who interfaces with the IFMIS system in a procuring
entity?
With specific focus on procurement process, the buying side will involve
the user department, procurement, the approving officer and finance department while the supplying side is the supplier who registers and also
submit a bid. However, it is important to note that IFMIS has many modules that support several functions and has multiple players interfacing
with the system, including auditors.
Which strategies are in place to support suppliers in rural areas who have no access to internet or a computer?
Lucky for us, the government has launched the Huduma centers across
the 47 counties which have a dedicated workstation where suppliers can
seat and access the internet and register or submit a bid. Also, we leverage on resources from other government agencies, including county governments where a dedicated desk with internet is available to suppliers.
However, we urge suppliers to invest in tools of trade like a computer
and modem when venturing into the business of supplying to procuring
entities given the expected returns from such investments.
Is there an inbuilt support system that facilitates the
work of procurement professionals?
Yes. For example during the procurement planning process, the system
has a template with notes on how to complete it. Further, it has a list of
common user items with indicative market prices which aid in the evaluation process. We will keep improving the system continuously to make it
as user friendly as possible and also do a lot of capacity building.
Does the system address challenges facing the procurement process like corruption, delayed payment among
others?
Yes it does for example, cases of disappearance of payment vouchers will
now be a thing of the past because the processes are automated and also
approvals for payment will be done online and also fast track the process
of payment. Also, note that some suppliers have in the past complained
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Mr. Jerome Ochieng (L) confers with Mr. Hedwig Nyalwal Head of Secretariat, KISM at his office

that tenders are awarded to a selected few while others are locked out.
Well the system sorts this out by sending out invitations to suppliers in
lots of say five, until everybody has a chance to bid. Further, the system
has a list of common user items with indicative market price which acts
as a guide and this minimizes incidences of price inflation.
Any challenges so far?
We can confidently say we are on course, however we cant lack challenges. There is some level of resistance from users, who are used to
the manual way of doing things. We are changing this through targeted
training on how to use the system and also culture change. Also, SMEs
have expressed their displeasure, indicating that the process is complex;
however we are also changing their perception in forums and workshops
that we have held around the country.

Is IFMIS anchored in any law?
Yes it is under the Kenya Communication Amendment Act 2009
which recognizes electronic transactions and also electronic documents.
Further, the IFMIS module is configured to comply with the PPDA 2005,
considering the procurement circle and various procurement methods in
the Act. Currently, the procurement law is under review and we have also
made recommendations to the drafters to incorporate electronic procurement.
How has the transition from PPOA to IFMIS been like
for you?
One word; exciting! Considering that it has been my passion to see the
procurement process being done electronically. These efforts were started while I was at PPOA and Im glad that I moved to IFMIS where Im well
placed to implement the process.

Away from serious issues, how do you unwind?
I take time off for work-outs at the gym, particularly in the morning, so
that Im ready for the day. I also enjoy watching soccer.

www.kism.or.ke | Issue 007 - June 2014

Articles from Professionals


Key challenges faced in setting
up an effective procurement
function in a newly established
government agency

ii. Setting structures to minimize risk and improve accountability to


ensure procurement complies with procurement policies and procedures will normally take long since staffs are just getting to know one
another in a new environment.
iii. This can be countered through role definition, identifying responsibilities, and providing necessary training for individuals to perform their
duties and/or hire staff from well-established government agencies.

A government agency is an entity overseeing and administering specific


functions, and can be established either by a national government or a
county government through their respective legislative powers with varying levels of autonomy, independence and accountability.

Segregation and Controls


Procurement processes require separation of duties i.e. purchase requisition, sourcing and order placement, receiving and issuing, payment and
budget review for purposes of ethical dealings. Emphasis to overcome
this should be moving fast to hire or second key staff to the new organization. The availability of enough staff will ensure no conflict of interest
exists.

The procurement law requires government agencies to appoint qualified


procurement staff, to carry out procurement functions in line with the public procurement and disposal Act 2005.
Responsibilities of procurement function may be summarized as follows:
i. Managing internal and external transactions for ordering and receipt
of goods, works and services, and handling procurement data to maximize the efficiency of transaction-flow and reporting thereof.
ii. Supporting supplier engagement and contracting processes; procurement is rooted in regular price negotiations for raw materials, packaging, tools, consumables, components and other purchases and is
largely a tactical and transaction-focused process.
iii. Enhancing value that can translate into bottom line improvements to
the organization - to ensure that the procurement strategy is aligned
with the overall corporate strategy.
The following are some of the key challenges and some suggested solutions likely to face new agencies:
Purchasing Authority - Centralized/Decentralized procurement:
Centralized procurement implies that purchasing decisions are made at
agency headquarters. A decentralized procurement function means that
the agencys activities are spread over a number of regions or locations
and can also refer to purchasing delegated to actual users.

Personnel
Roles and Responsibilities:
i. Identification of clear roles and responsibilities for individuals to be
involved in the procurement process is a key challenge. Re-definition
will be on-going as the agency evolves and increases in efficiency.
Most of the newly recruited staff will not be willing to take risk for
fear of being looked at as bringing bad habits to the new organization.

Procurement Committees
This is a major challenge due to the fact that certain committees require a
specific quorum and level of understanding of the organizations needs to
work effectively and efficiently. The solution is for the agency to consider
use of procurement agents as capacity is developed.
Technology:
New agencies are faced with the decision over what system will work for
the procurement function. This is based on the fact that the newly recruited staff might or might not have been using a formal integrated system.
A critical success factor is to hire staff with experience with working on
integrated systems. Learning will be easier and fast.
Political interference
This is a killer to take-off by newly created government agencies. All
politicians from across the country would love to have stake in the new
agency purposely to satisfy personal echoes. The leadership of the new
agencies should remind the politicians of our Political Pillar under Vision
2030. Further timely reports to regulatory authorities and/or commissions
will save the situation.
Recommendations and Conclusion:
Here are some of the recommendations aimed at alleviating the above
stated challenges:
i. Obtaining Management support in matters relating to procurement
authority and delegation.
ii. Obtaining Stakeholders support in matters incremental to the success of the procurement function.
iii. Communication process: part of enhancing effectiveness of the procurement function lies in continuous training of procurement staff.
iv. Embrace learning and/or benchmarking from peers in the government set-up.

Prepared by: Alex L. Musungu Msc. (Proc. & Logistics), Bsc, MCIPS,
MKISM Supply Chain Manager - Kenya Forest Service

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www.kism.or.ke | Issue 007 - June 2014

Supply Chain Partnerships


As a bachelor vets all his potential mates for the wife material commonly
known as THE ONE so should we as the procurement professionals subject all our supplier/contractors through a similar vigorous vetting process
so as to reveal any flaws that may be detrimental to our survival.
Supply chain partnerships refers to a well-tailored business relationship
built on transparency, shared risk and rewards resulting to greater performance (ingredients also found in a good marriage)
The worlds changing economic dynamics has led to the need for organizations to build partnerships or working relationships in general. Increased
competition, changing consumer needs, financial pressures and the need
to grow markets have been the main drivers of this trend.
My example of this is well demonstrated through the company HewlettPackard laptops that run on Microsofts Windows Operating System,
contains audio features from Beats by Dre while still containing Intels
core processors. Output from the four companies have resulted to a final
product thats not only competitive within the market but one that offers
the best consumer satisfaction as the partners have leveraged on their
unique skills and expertise to deliver as per market expectations.

As professionals in our field, ask; who we can partner with to improve


the scope of what we are doing? Who can we partner with to deliver
significant cost reductions that can be traced to the bottom line? Who can
we partner with to improve quality or gain the elusive competitive advantage? Whether we ask these questions individually or as a company, the
heart of the matter is that we all agree that innovative partnerships are
key to growth. We must build value, creativity and innovation before we
can identify partners that will help us multiply the effect and efficiency of
value already created.
In cases of projects, modern best practices such as Early Supplier Involvement may help us avoid the common project pitfalls such as unclear specification, designs and project deliverables, Appropriate linkages between
supply chain members should be made as partnering tends to be costly,
time consuming as well as requiring a lot of effort to ensure goal congruence. Toxic dependencies that inhibit competition should be avoided.
Food for thought: No matter how good an organization is, no matter how
good your systems are, no matter how aligned you are, no matter your
teams level of expertise, if you partner with the wrong supplier/contractor, you will have difficulty achieving your overall supply chain goals and
objectives.

By Kennedy Muchiri KISM Student Member


Kennedy_muchiri@yahoo.co.uk

Articles From Around the World


(Courtesy of IFPSM)

Below is an extract of a paper submitted to


the 2013 IFPSM summer school. The complete
paper may be downloaded on IPFSM website;
www.ifpsm.org

but from a novel perspective. Whereas most of the literature on sustainable sourcing tend to be concerned with buying company issues, such as
drivers/barriers and effects on buying company performance, this review
tries to provide an overview and analysis of how the mechanisms adopted
by the buying company to influence suppliers to live up to sustainability,
actually affect supplier sustainability performance.

What are Buying Companies Doing to Influence Suppliers to Act Sustainable?

The review reveals that there is limited or mixed evidence in the literature
of the effects of various adopted mechanisms on supplier sustainability
performance. We highlight the needs and possibilities for future research,
including research on the suppliers point of view, which has been limited
in previous empirical studies and articles.

By Ulla Normann, Aalborg University/VIAUC.


18th IFPSM Summer School, 2013

Abstract
Several literature reviews about sustainable sourcing can be found in the
literature, adopting related terms such as sustainable/green supply chain
management, corporate social responsibility in purchasing, sustainable
purchasing etc. This article represents another review of this literature,
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Introduction
Sustainable sourcing has been on the purchasing and supply management research agenda for more than a decade and is among the most
popular topics in the field today. Meanwhile, companies have developed
a range of methods and tools for managing sustainable sourcing, which
has grown to be an integrated part of purchasing strategy. However, at

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the same time, extreme examples of non-sustainable sourcing persist,


most horribly exemplified by the recent loss of more than 1100 lives in
Bangladesh due to a collapsed clothing manufacturing facility. From this
and many other continuously emerging examples, it appears that despite
years of development in the area, buying company efforts at managing
sustainability with suppliers are often unsuccessful. Hence, this article
asks the simple question: What are buying companies doing to get suppliers to act in a sustainable manner and does it work? In theoretical terms
we seek to investigate the following research question: What mechanisms do buying companies adopt to manage supplier sustainability and
how do they affect supplier sustainability performance? Supplier sustainability performance refers to the suppliers performance in living up
to both people and environment (planet) concerns.
We are interested in the suppliers performance, because this external
performance constitutes the basis for buying company sustainability performance. Mechanisms refer to the means adopted by the buying company to influence suppliers to act in a sustainable way. A mechanism is
created by the buying company and implemented in exchange with the
supplier to actively attempt to influence supplier practices.
The paper relies on a rigorous literature review methodology attempting
to uncover all those papers on sustainable sourcing that deal specifically
with the mechanisms applied by buying companies to influence suppliers.
The aim is to generate an overview of the mechanisms emphasized in
the sustainable sourcing literature in order to understand why some of
these mechanisms, and frequently those most prevalent among buying
companies, are ineffective and lay the grounds for pinpointing valuable
future research areas. The paper is structured as follows. First, the review methodology is described, followed by a description of four of the
most widespread mechanisms and accounts of how they affect supplier
sustainability performance. Next, we discuss the findings and identify
various weaknesses of the extant literature connected to the mechanismperformance link. Finally, we devise future research opportunities and
conclude on the paper.

Discussion
14 mechanisms have been found in the 53 reviewed articles and the four
most dominant mechanisms have been analyzed in this review. But only
21 of the reviewed articles mention performance effects caused by the 14
mechanisms. Actual sustainable performance factors found in the analysis of the four mechanisms Codes of Conduct, certifications, audits/monitoring and collaboration/supplier involvement were mainly connected to
green sustainability; such as reduced packaging, recycling, reduction of

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hazardous materials, waste reduction, reuse assets, cleaner production,


green product development (Klassen and Vachon, 2003; Hoejmose et al.
2012; Theyel, 2001; Lee and Kim, 2011).
And only a few articles discussed effects on social sustainability such as
higher working commitment, improved working conditions, better communication, increased productivity, employer motivation, and lower labor
turnover (Frenkel and Scott, 2002; Stigzelius10 and Mark-Herbert, 2009;
Baden et al., 2009). These performance factors mentioned are a result of
only a part of the demands and conditions set by the codes of conduct,
certifications, and audits respectively. Whether or not these performance
effects are actually achieved from these three mechanisms alone, or
because they have been used together with other mechanisms such as
collaboration, is uncertain. 49 articles mentions at least one of the three
mechanisms and in 38 of the articles one or more of the remaining 11
mechanisms are also mentioned.
This indicates that the above mentioned three dominant mechanisms may
to some extent not cause direct sustainability performance effects without applying other mechanisms as well. Most focus in the articles is on
the 6 mechanisms Codes of Conduct, audits/monitoring, collaboration/
supplier involvement, certificates, education/training, and relationships
(see figure 1), but still there seems to be an overlap in the articles and
actually only one article (Hoejmose and Brammer, 2012) refers to only one
mechanism relationships. Furthermore, the mechanisms relationships
and education/training both always occur together with one or more of
the four analyzed mechanisms which can be described as best practice
judged on the literature coverage. A few articles mention performance in
the form of product development and quality improvement, but not necessarily sustainability related.
In total, only a few articles mention supplier sustainability performance in
general 21 out of 53 (out of 172) deal specifically with supplier sustainability performance where it is explicit how efforts work on supplier
performance. Also, few articles show how buying companies are actually carrying out the activities. For instance, in connection to auditing we
may hear how often and who is interviewed and in rare cases about the
interaction challenges when actually carrying out the audits but apart
from this, insights into the actual interaction are scarce. Auditing can be
carried out in a variety of ways with different effects on supplier performance and the fact that suppliers may have several audits a year carried
out by different auditors may affect the performance but the literature
has so far not revealed much about these details and therefore it can be
difficult to understand how the audits affect performance.

www.kism.or.ke | Issue 007 - June 2014