3 Ways To Improve Your BBBEE Enterprise Supplier Development (ESD) Initiatives...

It is not a secret that most South African companies are not only dedicated to doing business with black-owned suppliers, but are also committed to the sustained success of these suppliers. In light of the new BBBEE codes most of these companies are putting in place Enterprise Supplier Development (ESD) programs to help achieve and show this commitment. However, despite their well intentions I have found that the majority of internal ESD programs are missing some vital components.

 In my opinion, there are two main causes for most internal Enterprise Supplier Development (ESD) programs not being as effective or successful as they can be:

1.    companies leave the programs entirely in the hands of their internal staff without providing any training to upskill or reskill them;

2.    program components are not focused on the critical aspects of business development support that benefit the suppliers.

 
While these companies are dedicated to the development of their black-owned suppliers, supplier relationship management or supplier diversity management is not in their wheelhouse. In other words, Enterprise Supplier Development (ESD) is not their core business, nor should it be.

 Procurement and Transformation departments typically have a small staff count that is tasked with a huge amount of responsibility that leaves them with little time, resources or enthusiasm to dedicate to developing black-owned suppliers. Additionally, most professionals in these departments have not owned businesses themselves and are not skilled at training and developing business owners.

As a result many internal Enterprise Supplier Development (ESD) programs focus most of their attention only on operations management issues like process, quality and delivery improvement. Quite frankly, most small business owners are great at delivering a stellar product or service, but most are not great Innovators. If this critical business development support component is left untouched, operations management can become a moot point. So these imperative elements of business development that will make them more successful must be included in all Enterprise Supplier Development (ESD) programs.

Another way that internal Enterprise Supplier Development (ESD) programs fall short is that they develop all suppliers in the same fashion. Companies must have integrated programs that are specifically designed to engage with black-owned suppliers depending on the size of the supplier, how much business the company does with the supplier, how the supplier has performed in the past and many other criteria. This approach creates a community effect within the company leading to an environment that assists black-owned suppliers to become major strategic partners.

In my view there three key ways that internal Enterprise Supplier Development (ESD) programs can be improved significantly that will lead to increased BBBEE points, innovation, collaboration, profits, and draw maximum value from black-owned suppliers:

1.    Leave Supplier Development To The Pros. Entrepreneurial and small business support is a skilled profession and therefore Enterprise Supplier Development (ESD) programs should be developed and/or ran by qualified, experienced and competent persons that are employed for this purpose or outsourced to a reputable 3^rd party. This avoids adding “one more thing” to the plates of the procurement or transformation professionals that likely do not have the skill-set to empower black business owners to do something they themselves have never done (and no, assigning another supplier to be their mentor does not solve this and will not qualify for BBBEE points). This move will also put ESD programs in the hands of a qualified, experienced and competent expert that understands BBBEE, the needs of growing businesses and has the skills and knowledge to provide the adequate tools and resources that creates a sustainable and well-run enterprise.

2.    Have One Solid ESD Program For All Chosen Suppliers. It is far more effective to approach Enterprise Supplier Development (ESD) in a way that allows all suppliers to grow in relation to their capacity. The program must extend to potential suppliers (Enterprise Development) as well. This is the best path to a robust and diverse supply chain across the board.

3.    Focus On Critical Elements Of Business Development Support. The most frequently stated challenge that procurement and transformation professionals report in doing business with small black-owned business is that they do things that create more work for them or just flat out drives them crazy. These challenges include not approaching the decision-makers properly and not following up adequately, wasting their time on the phone or in emails, not having the proper systems in place in their business to execute the contract smoothly and the list continues for days….

 

Most small business owners do not realize that the magic happens around the edges—outside of smooth delivery and great quality of product or service. Enterprise Supplier Development programs should include components that empower black business owners to be stronger innovators, sellers and negotiators. For example, things like:

1.    How to align what they offer with what larger companies really need and want;

2.    How to add value so they can compete beyond BBBEE, product or price and are also viewed as strategic partners to larger companies;

3.    How they can create scalability and capacity beyond the typical strategy of tendering for large government business;

4.    How they can ensure their business is set up to thrive so they execute well once a large contract is awarded;

5.    How they can put a solid growth strategy in place so they can grow with larger companies and compete globally.

 An effective Enterprise Supplier Development (ESD) program is one that provides companies with strong, reliable black-owned suppliers and access to a pipeline of partners to meet business goals and objectives.

As a Professional Empowerment Advisor (Pr EAd), experienced and competent Entrepreneur I can help your suppliers help your company achieve success in Enterprise Supplier Development by focusing on the matters that really count.

Contact me today.