In the face of changing BEE codes enterprise development (ED) programmes provide a means of removing barriers to market entry and creating sustainable jobs, says Shawn Theunissen, head of CSR at Growthpoint Properties and Property Point (Growthpoint Properties’ enterprise development programme), in this month’s SmartProcurement.
However, Theunissen says this necessitates that companies change their view of procurement as an opportunity holder and link supplier diversity programmes directly into their enterprise development initiatives.
Supply chain management (SCM) cuts costs and improves efficiency; however, procurement departments are now considering SCM in the context of the new BEE codes, amendments to which are set to change how companies select suppliers.
Consequently, ED programmes are coming under increased scrutiny as companies begin to review the real impact – and value – of ED investment in line with the latest BEE requirements.
While programmes should unlock opportunities within organisations and enable transformation beyond compliance, very few of them seem to be meeting these objectives and developing the next generation of small business suppliers in a meaningful way.
“It is critical for us to ask why this is not the case, and what needs to be done by corporates to unlock opportunities in order for SMEs to thrive and become legitimate suppliers of choice,” says Theunissen.
Developing and managing Property Point, Growthpoint Properties’ enterprise development programme, over the past five years has given Theunissen a number of unique insights into this challenge.
Perhaps the most important of these is that unless procurement and supplier diversity programmes are actively integrated into enterprise development initiatives, one runs the risk of creating a disconnect between the corporate and the SME.
This is typically because the SME usually does not understand the opportunity-holder or business – often at a very basic level. This lack of understanding subsequently manifests as an inability to compete effectively with more established suppliers and/or secure contracts from the organisation starting at RFP level in many cases. Needless to say, this has implications for both parties.
While some corporates have chosen to address this by assisting non-core small businesses, a more viable long-term alternative is to structure one’s enterprise development model to create an integrated support practice.
“In this way, one can improve individual SME competitiveness and facilitate implementation of their respective growth strategies, as well as encourage sustainability – something we have seen at Property Point,” says Theunissen.
“By incubating SMEs directly in an opportunity-holder environment, we work to facilitate the relationship between Growthpoint’s procurement department and the various entrepreneurs on our programme. In this way, we partner with all parties involved to ensure that SMEs on our programme become ‘procurement ready’.”
In the months to come, Theunissen will share, through case studies and articles, details of Property Point’s programme. “Until then, I encourage you to better understand the procurement opportunities your own organisation holds – as well as the barriers to entry it simultaneously creates, especially for SME suppliers. This will provide you with the ideal means to challenge and change this system, and start to unlock the true potential of your own supply chain.”