ESD Best Practices
One of the main aims of Enterprise Supplier development (ESD) is to proactive provide historically disadvantaged suppliers equal access to opportunities and promote supplier participation reflective of a company’s diverse customer base and the diverse business community and country.
The business case for a company to have a quality ESD program includes the following:
- Any company that expects to do business in this millennium has to understand the demographics of its customer base, supplier base, employee base;
- The historically disadvantaged population is the fastest growing earning segment in South Africa — projected to be over 60 percent by as early as 2020.
- Historically disadvantaged consumers are also the fastest growing segment in the marketplace and they are loyal customers;
- Historically disadvantaged Enterprises represent a significant and growing proportion of the economic pie;
- Companies that embrace ESD and establish early successes in this area will have a competitive advantage in the future marketplace.
For the last 2 years, I have been involved in many ESD efforts and have seen what works well. Based on my experience and in depth knowledge of the ESD space I recommend the following when building your ESD programs;
- Corporate commitment — the only way any ESD program is going to succeed for the long term is to have a written commitment from the CEO all the way down to those in the procurement and transformation departments. A company’s ESD/Transformation/BBBEE policy should be put into place that reflects the commitment of the organisation to work on having a qualified diverse supplier base.
- Analysing the current situation and setting goals for improvement — before a company implements its ESD plan, it should analyse where the company stands in doing business with SMMEs. A set of reachable goals should be established that allows the company visible and increased improvements in its Procurement spend particularly with Black-owned businesses. The company should communicate its ESD goals both internally and externally;
- Involvement of business development support organisations — most areas have organizations that work closely with SMMEs. These organisations provide training, networking opportunities and financial education/assistance and can assist corporates connect with qualified Black-owned vendors.
- Creating mentor/mentee training programs — many successful ESD programs have developed adopt through outsourcing agreement mentor programs for both qualifying SMMEs and those that are one or two steps away from qualifying. These programs can be designed to help the SMME with coaching, guidance and training to better position the SMME for new business opportunities and overall growth.
- Monitoring progress — this is an important part in any ESD program that is trying to achieve real goals. A designated individual should report on a regular basis (quarterly) the actual usage of ESD resources and their impact on major projects. The report should cover activity in the different departments regarding contracts being sent to and won by ESD beneficiaries.These 5 best practices combined with a strategic view that looks into business benefits and goes beyond compliance will lead to sustainable and successful ESD programs.