Reducing risk in sourcing quality SMEs

Corporate supply chain managers often argue that incorporating smaller firms into their supply chains tends to be costlier than working with larger suppliers. Furthermore, smaller companies are often perceived as having a higher risk profile.

While this is perception, it is unfortunately based, to a degree, on fact: meaningful progress has yet to be seen in developing small and medium enterprises (SMEs), Mark Frankel, CEO of Shanduka Black Umbrellas, a non-profit enterprise development service, tells SmartProcurement.

BEE legislation, through its focus on preferential procurement and enterprise development, has not improved the performance and sustainability of local entrepreneurs and SMEs, which represent the backbone of economic activity in South Africa, to the extent necessary to grow the economy and create jobs.

Consequently many established organisations are loath to increase their exposure to small businesses, and those that are willing continue to need assistance in sourcing quality black-owned companies in order to fulfil their target requirements, notes Frankel.

Despite the DTI’s continued introduction of mechanisms to ensure procurement from local black-owned suppliers, corporates can no longer wait in hope that these entrepreneurs will appear – they will need to be involved in the creation and sustainability of black-owned businesses within their supply chain and should look to business incubation as a means to mitigate the perceived risks in doing this.

To this end, Shanduka Black Umbrellas is capable of providing companies with a business incubation solution within its existing supply chain, thereby ensuring that black-owned small businesses are given the requisite support to develop into stand-alone businesses that offer products and services to other companies as well.

The third edition of blackpages, an initiative undertaken by Shanduka Black Umbrellas, which was published earlier this year, provides invaluable assistance in sourcing B-BBEE accredited 100 per cent black-owned enterprises for this purpose, explains Frankel.

All businesses featured in the 2012 edition were independently verified as to their 100 per cent black ownership and are in possession of a valid B-BBEE certificate.

Blackpages also features all the SMMEs that are part of the Shanduka Black Umbrellas programme in Cape Town, Durban, Johannesburg and Pretoria, whom have all undergone a rigorous assessment process prior to inclusion in the programme.

40 000 Copies of blackpages have been printed.

Visit Shanduka Black Umbrellas to find out more about their enterprise development services and view blackpages online.

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