By Anton Ressel, Senior Consultant, and Director
The inaugural ABSA Supplier Development Awards held earlier this year was illuminating for a number of reasons. Often a misunderstood section of the B-BBEE Codes of Good Practice (and an increasingly important component of the BEE scorecard), supplier development (SD) involves corporate and public sector supply chains providing varying levels of support and access to emerging black-owned businesses and suppliers, with a view to transforming the economy and redressing past inequalities.
To say that many companies approach supplier development as a compliance exercise or a make-it-up-as-we-go-along process would not be an overstatement. Despite billions of Rands invested in the space, this is why we’ve not yet seen much traction or real return on investment in the form of sustainable economic growth.
The good news is that there are some entities that are getting it right. The result is not just Awards are anything to go by. I was fortunate enough to attend the Awards in my role as Senior help transform a supplier development programme from a money pit into a smart investment.
1. It needs to make business sense
For SD to be sustainable, it needs to make business sense. The most successful programmes start with looking at the existing gaps in their supply chain and working with their SD team to fill those by developing local suppliers for those goods or services. The net result is a win-win.
2. If you want to buy in, make it mandatory
Many SD programmes suffer due to the gap between the procurement and transformation agendas. Simply put, if transforming the supply chain and giving new entrants a shot is not a KPI, it won’t be emPosibraced. So make it a KPI – everyone from legal to finance to procurement should be measured on their efforts towards making SD work.
3. Be selfish
SD should be designed to benefit the buying organisation. It is not charity and should not be viewed that way. If it supports the company strategy and the bottom line and also makes a positive impact, it is doing what it should be doing. There is no place for ‘ag shame’ in a sustainable SD strategy.
4. Be bold
Any savvy company knows that there is no reward without risk. A lot of CEOs, and especially procurement managers, are wary about SD because it is risky to entrust the uninterrupted flow of procurement channels to untested and potentially unreliable new entrants in the supply chain. However, unless you give people a chance to prove themselves, they never will. So be bold.
5. Don’t be afraid to share
A very interesting outcome of the SD Awards was the sense that many of the corporates recognise the value of collaboration in the SD space in achieving collectively greater outcomes. Every business can benefit from a more
effective SD strategy, while our country really needs SD to work if we are to turn our economy around and address a dramatically widening poverty gap. If it means working together and sharing best practices, so be it.
So there you have it. Supplier development needs to be done, both from a compliance and national duty perspective, so let’s do it properly and wholeheartedly. Every Rand invested should realise a return – whether in the form of more capable and transformed and growing economy. Invest wisely.