In terms of B-BBEE the consolidation of the Preferential Procurement (PP) and Enterprise Development (ED) elements of the scorecard to create a single element called Enterprise Supplier Development (ESD) is a strategic move by government to facilitate and support national development goals. The overall objective is to strengthen the capacity and capabilities of black-owned enterprises in order for them to be integrated into the mainstream supply chain of larger corporates and ensure symbiotic relations. The end result is the creation of more effective black-owned enterprises that strengthen local procurement and a more inclusive and representative South African economy. Read More
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.
ESD is a combination of Preferential Procurement, Supplier Diversity, Supplier Development and Enterprise Development programs to service business needs. It is part of the Broad-Based Black Economic Empowerment policy to advance economic transformation in South Africa. The aforesaid can be defined as follows:
- Preferential Procurement is a national policy that encourages government departments and agencies to buy goods and services from previously disadvantaged individuals or businesses.
- Supplier Diversity is the proactive business process of sourcing products and services from previously under-used suppliers. This process helps to sustain and progressively transform a company’s supply chain thus quantitatively reflecting the demographics of the community in which it operates by recording transactions with diverse suppliers.
- Supplier Development is the process of working with certain suppliers on a one-to-one basis to improve their performance for the benefit of the buying organisation, leading to improvements in the total added value from the supplier in question in terms of B-BBEE rating, product or service offering, business processes and performance, improvements in lead times and delivery.
- Enterprise Development is a strategy for promoting economic growth and reducing poverty by building SMMEs, membership organisations to represent them and competitive markets that are stronger and more inclusive. It consists of monetary and non-monetary, recoverable and non-recoverable contributions actually initiated in favour of a beneficiary entity by a measured entity with the specific objective of assisting or accelerating the development, sustainability and ultimate financial independence of the beneficiary ansök om lån.