Designing an Effective Enterprise and Supplier Development Strategy

As per the Revised Codes of Good Practice, the Enterprise and Supplier Development (ESD) element forms 40% of the revised B-BBEE scorecard. According to Petra Rees, Managing Director of Lean Enterprise Accelerated Programmes (LEAP), “The mind-set at many companies is shifting from historical arm-length relationships between Enterprise Development and procurement initiatives to ensuring that supply chain becomes optimally transformed through comprehensive ESD programmes.” When it comes to designing an effective Enterprise and Supplier Development strategy, Rees recommends the following:

1. Analyse your existing procurement initiatives

The purpose of a Procurement Analysis is to give you a clear picture of where and with whom you are currently spending money and where you are scoring B-BBEE points. You need to get a clear report on key indicators – amongst which are your procurement score against target score, a strategic view of your dependence on key suppliers (and exposure to them), spending patterns, possible “red flags” etc.

You further need to understand your relationships with your existing suppliers in terms of procurement strategies like risk vs spend, contract types, and supplier vs. buyer power.

2. Align your ESD strategy to your business needs

Remember ESD is not just about transforming your supply chain in terms of B-BBEE. You may wish to start procuring some of your key product components locally instead of purchasing them from overseas. However, it can take 2-5 years (or more) to develop new suppliers that can deliver on the required quality.

You may also wish to incorporate new services into your offering in order to be more competitive. Or you may wish to expand to new markets as you might have spotted a window of opportunity. Why not source and support quality black-owned companies to support your business growth with strategic imperatives?

3. Identify your ESD objectives

Your ESD objectives must be clearly mapped out so that all relevant stakeholders understand what KPIs are expected of them to achieve. You must have an ESD champion who is supported by the company’s executives, who has a clear mandate to manage the relevant stakeholders and can make changes to the ESD plan when changes to business needs (based on internal or external factors) occur.