Your Enterprise and Supplier Development (E&SD) strategy may come from your compliance with B-BBEE codes, but a good E&SD strategy should also be seen as a way to grow your own business.
Supplier Development (SD) is not a new concept, nor is it exclusive to South Africa. Many companies internationally choose to run SD strategies because they can be an effective tool to improve service to clients, whether through enhancing an existing supply chain or strategically adding to it. At Lean Enterprise Acceleration Programmes (LEAP) we strive to unlock this same value for you, by providing the tools, strategies and programmes you need to make E&SD an instrument to improve both your scorecard and your business.
The Procurement Analysis Toolkit in particular can be used to align your SD investment with a meaningful output. This tool is one of the most important elements of designing a relevant SD programme for your business and it focusses largely on refining and improving your current supply chain. This is why it’s vital for procurement managers and their teams, who have the complex job of transforming their supply chain.
The purpose of the tool is to give you a clear picture of where and with whom you are currently spending money. This allows you to see the changes you can make to improve your procurement scorecard and also where (and with whom) E&SD investments will return a benefit to you.
In order to complete an accurate analysis you will need to assess your full supply chain information, including who you procure from, how much money is spent and on what products or services. LEAP is able to help you by:
– Collecting up-to-date B-BBEE certificates from your suppliers
– Capturing all the information onto a central database
– Preparing a procurement analysis report (see example below)
– Flagging key relationships (the good, bad and the ugly)
– Identifying shortfalls and designing high level strategies to improve client’s procurement rating
– Outlining qualifying companies that you already buy from that you may consider supporting as part of your E&SD programme, or alternatively sourcing new beneficiaries based on the outcomes of the report.
The analysis produces a comprehensive and clear report that highlights the key statistics which are of interest to your business. These include your procurement score against target score, a strategic view of your dependence on key suppliers (and exposure to them), spending patterns, and possible “red flags”.
In this example you can immediately see that the company is not scoring maximum points on the procurement scorecard, and it gives valuable insight of where the shortfalls are (spend with QSEs, EMEs and black women-owned business) and what the financial cost would be to get full points (based on current spending).
The toolkit also points out who the most important contributors are (positive and negative) to your procurement recognition. This allows the company to see whether they need to nurture the relationship, pressure the supplier for improved transformation or, in a serious case, change the supplier altogether. But while the tool provides business owners with a vital service, it’s only as good as the information that you input, and for this reason it’s essential that the tool is used in conjunction with strategic consulting.
For many companies the procurement analysis, followed by a high-level strategy review, is enough to create a relevant and beneficial E&SD programme. Typically this could include anything from helping improve the B-BBEE levels of existing suppliers, to sourcing completely new suppliers.
LEAP consultants understand the complexities and constraints that businesses (and procurement managers in particular) have to source and use new, quality suppliers. LEAP has the systems and personnel to help transform your supply chain, with maximum effect and little risk. So whether you are a small business or a large corporate, you’ll get a tailor-made solution that addresses your specific situation. The LEAP team will assist you with a strategy for how you can use your E&SD spend to improve the way you deal with your clients, and ultimately grow your business.
Speak to LEAP today about a robust E&SD strategy. Call us on 011 449 7074 or visit www.leapco.co.za for more information.