Supplier Development (SD): You Can’t Ignore This

My experience within Corporate South Africa is the issue of interpretation: Is SD an issue of compliance or cost or an investment. Currently many business’ are more concerned of achieving the full points for a specific element to ensure that they maximize their BBBEE levels. If this is the case this is a short term view or very shortsighted.

Chief Procurement Officer’s worldwide hold a different view: They don’t need BBBEE codes when it comes to their supply bases – the reality is they cant ignore Supplier Development:

“As we transform or expand we need to ask ourselves who is our supplier of the future and how can we develop our supplier of the future to partner with us to be relevant with us in the future.”(TOYOTA)

“It is more than just been certified – innovation, to be relevant, able to strategically sell its value proposition and to grow with corporates as they expand. As our company grows so should our supplier as a partner grow too. Companies cannot afford that their suppliers are not growing with them. This shall undermine their future positioning, growth, expansion into new markets and more so contribute to successfully meeting customer needs. (Coca-Cola)

The key is INNOVATION through the a well-defined value offering that speaks to our needs and driving the CPO agenda (Macy’s)

Given how CPO’s are looking at supplier development and the opportunity presented by the Amended BBBEE Codes, this is the reason why your company cant ignore Supplier Development:

Your company’s current BBBEE Levels will drop for the following reasons: Supplier Development has been introduced as a BBBEE element; the alignment of SD with your procurement spend; procurement points have increased to include SD; mandatory and the elimination of some BBBEE elements. This will cause that company’s BBBEE performance is been impacted that will cause that scorecards & BBBEE Targets are not met. What aggravates the situation that Misrepresetnation of suppliers due to Fronting can cause damage to supplier relationships that can bring about harsh penalties and that companies not achieving their BBBEE targets. There will be now a Closer link between ED & SD that will cause that spend will be link to SD. Specialist knowledge to is now required from Procurement Specialists to develop a Supplier Development Plan to ensure that  targets and performance are met.

Here is one key action how companies can strategically position their businesses to ensure that SD is successfully implemented within their companies:

Clever businesses will start the process now of identifying black businesses who can supply substantial values of goods and services. If you would like to know more of how to develop and implement a SD plan please call our supply chain consultant, Joe Ruiters