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Enterprise And Supplier Development

  • Entrihub chats to Khanya Okumu, Enterprise, and Supplier Development Specialist. Khanya talks about Enterprise And Supplier Development.

     

    Question 1: What is Enterprise and Supplier Development?

    Khanya: With the new BE codes one of the elements in them is supplier development, and what this is trying to do is to say we have businesses that have huge procurement budgets buying and getting services from other corporates. The view that government and National and the Department of Trade and Industry is that there these small businesses that we are continuously talking about and would provide funding for them and the key problem is access to markets. You know how do I grow this business and make it sustainable. You don't do that by having one customer that's the biggest risk that they face and so enterprise and supplier development seeks to address that problem by having large businesses incubate small businesses as part of their supply chain. What that does from an enterprise development point of view is it capacities the businesses, so either giving them funding to grow and to be able to reach the requirements of a corporate. Where they then graduate from an Enterprise Development to supply development where they are registered and accredited suppliers of those corporates. It's to say that the market is wide, why is it that the contracts are held by five megastars when there are hundreds of businesses where that could be shared. The pot or the pie keeps growing but the number of players who are eating that pie should also grow and that's what supply development effectively is.

    Question 2: How can I get involved in an ESD initiative?

    Khanya: There are many different formats so it depends on what type of business you're in. Generally, they're more technical so some of them are actual enterprise and supply development programs. It would be a month or a two-year program where you are taken on by a corporate. There are training and mentorship and as the months roll on the business grows. Generally, it's through a normal application process so you know that company X procures flowers or stationery or IT services and being part of that is mainly linked to procurement but also to supply development. Those are two areas within a corporate that work very closely together to make this work. I don't know how they all work but generally, the information of the enterprise and supply development programs would be available online on most of the company's websites.

    Question 3: DO ESD programs focus on the quality or quantity of SMEs?

    Khanya: There are two schools of thought, the one is which is the one that I agree with is that it's not just about taking on 100 suppliers and then buying for them from one year, and then it's over. It's more developing them, so taking a business that could make 50 widgets in year one and then next year they can make 150 widgets because of the support from their company. It's also then for that business to not be dependent on the corporate. It's to enable them to be able to then tender out to other companies because now they have the skills and the ability to do the work. The other school of thought is we want to develop and assist as many businesses as we can. Where that is troublesome is that it's difficult to track the impact and so you could procure 20 widgets from this 115 from that one. In that case, you have you know you've spent your procurement in the right places but you're not making the right kind of impact and so that's what makes it a little bit difficult. My view is that you need to develop a group of suppliers and this can be anything from 50 to 200 depending on the size of the corporate but it needs to be targeted and focused support for them to enable them to then move on from company a which graduated them from enterprise development to supply development to Company B. That for me is true supply development because you're creating the business as opposed to someone who's just hoping and praying that they get the contract again from you next year.

    Question 4: Are there any qualifying criteria for ESD programs?

    Khanya: In order to qualify because remember this is linked to the BEE codes. All the businesses that would form part of enterprise and supply development have to have at least 51% black ownership so that's really the key criteria. It's also then linked to what is the procurement spend of this business so it doesn't make sense for me to go and say I want to be part of a business's PSD program but I don't do any of the things that they need. It needs to be linked to how they spend their money as a corporate.