We as Enterprise and Supplier Development (ESD) Practitioners frequently find ourselves at odds with Procurement when contracts involving tangible/strategic products are involved. ESD Practitioners are charged with increasing their companies’ overall BBBEE spend, but face a major obstacle in the form of little buy-in or participation from their Procurement Team visit. To surmount this obstacle, ESD Practitioners need to really understand the reasons why the Procurement Team seems to want little to do with Small Black Businesses and Enterprise and Supplier Development. To appreciate their perspective perhaps we need to put ourselves in the shoes of our procurement colleagues.
The procurement process for qualifying and on boarding a supplier providing a tangible/strategic product is arduous and very time consuming. In most cases Buying/Sourcing/Procurement managers have an extensive list of questions to ask and qualifications to run through, before a supplier can begin to do business with the company. If the supplier is providing a tangible/strategic product there may be even more questions related to quality, on-time delivery and material lead time that will impact whether or not they choose to do business with them. As a result, when a contract with a tangible/strategic product supplier is up for renewal, the last thing that procurement wants is to be sent an additional list of BBBEE qualifying suppliers that can provide the same product being supplied to be considered. This request from the ESD/BBBEE department requires them to run through the qualifying process all over again and multiple times when in fact they may have no issues with their current supplier. Procurement is also faced with the inherent risk involved in replacing a reliable supplier with a new, unproven one that may cause issues in the future. These issues are often the reason BBBEE suppliers are not selected – or even considered.
As a first step to address these challenges in dealing with procurement, ESD practitioners can begin to build trust and cooperation by submitting BBBEE suppliers for service and non-strategic related contracts or RFPs. The buying/sourcing/procurement process for qualifying and on boarding a service and non-strategic oriented supplier is much easier than that for a tangible/strategic product supplier. Because the process is easier, procurement tends to be more open to including BBBEE suppliers in their shortlist of vendors competing for this type of contracts. Once accepted and proven to be equal to their non-BBBEE competitors the ESD practitioner can then gradually move them up the supply chain continuum. As the procurement team becomes more familiar with dealing with BBBEE suppliers, their resistance to contract them for tangible/strategic products dwindles.
Most companies have vendor management systems in place. This is an advantage because a good supplier tracking system will enable ESD practitioners to more easily pull reports to see which service related commodities have the highest spend. By taking that overall figure and breaking it into BBBEE/non-BBBEE spend, ESD Practitioners will have a better idea of how to proceed in working with procurement. Wherever the greatest variance in BBBEE/non-BBBEE exists would be the first place to start to encourage transformation compliance.
If the ESD Practitioner still runs into resistance from Procurement when attempting to contract with service-oriented BBBEE suppliers, I would recommend the inclusion of an external Expert who is deemed to be impartial to guide and facilitate ESD dialogue with the Procurement team to ensure their processes and practices are aligned with company’s overall BBBEE strategy.
For Expert guidance and advice on improving the success of your ESD programmes contact me.