An analysis of state-owned water utilities supply management to support organisational strategy

Abstract

The Supply Chain Management (henceforth SCM) function in the public sector is highly regulated by the South African Government, with more than 80 different legal instruments and instruction notes governing public SCM. The Auditor-General has reported regression in audit outcomes of water utilities, with a corresponding increase in irregular expenditure. Irregular expenditure constitutes spending that was incurred, other than the method as mandated by legislation. Strategic Management is an important subject for the public sector, with its focus on service delivery, and not financial gain – as with the private sector. The provision of infrastructure, and the upkeep and maintenance thereof, is important to the strategic choices available in South Africa. Actual strategy implementation focuses on the achievement of the results or goals, as set out in the formulated organisational strategy. Apart from the achievement of organisational strategy, the goal of the Department of Water and Sanitation is to restructure water boards into Regional Water Utilities, to manage bulk water services infrastructure and supply bulk water to water service providers, manage bulk sanitation infrastructure, and develop new water resource infrastructure. This strategic intent implies major capital projects that will have to be initiated by water utilities, which need to be supported by SCM to achieve the strategic direction. The objective of this study was to investigate factors and challenges affecting SCM process inefficiencies within Water Utilities, as well as the impact that they have on strategy and strategic direction. A mixed-method research approach was adopted for the execution of the study. Two self-administered questionnaires were used for data collection. The focus of the research was collecting data from the largest water utility in South Africa, as all water utilities are governed by the same legislation, making the research representative. Non-probability convenience sampling was implemented to form the study population, which consisted of SCM staff and Senior Managers. Ethical considerations were taken into account, and confidentiality was assured to all participants. Data were analysed using the Statistical Consultation Services of the North-West University, with the goal to answer the research question. Based on the literature review and findings, as per the survey used in the empirical research, conclusions and recommendations were made to enhance SCM effectiveness to support the achievement of organisational strategy and strategic direction. The goal of this study was to establish a framework for collaboration between water utilities and their stakeholders.