.png)
Enterprise and Supplier Development (ESD) is taking center stage in the national socio-economic empowerment agenda. As this becomes more apparent, firms now have a need for a more strategic approach to Enterprise and Supplier Development in addition to focusing on investments in it that fall in line with the core aspects of their business, especially their supply chain.
Enterprise Supplier Development (ESD) in the South African context is the proactive business process of sourcing products and services from previously under-used suppliers. It involves growing small and medium-sized black businesses by providing finance, support and assisting business development and sustainability. ESD is a combination of Preferential Procurement, Supplier Development and Enterprise Development programs to service business needs. ESD is one of the three Priority Elements of the Broad-Based Black Economic Empowerment (B-BBEE) Scorecard.
ESD is business-critical and is not only related to the value of contracts given to black-owned businesses by corporates but impactful contributions to operational knowledge, skills transfer, best business practices, and financial management. This approach drives small business performance and simultaneously strengthens the supply chain of the corporate.
The Directors’ approach to ESD has evolved into one that is no longer a checklist activity, but one that has a positive impact on the business. ESD is mutually beneficial to both the Enterprise and its suppliers. As the enterprise gives suppliers financial support and expertise, the enterprise ultimately benefits by getting better value for money by lowering procurement costs, improve the quality of products purchased and positively impact the B-BBEE scorecard.
With all transformational programs, the ecosystem participants face various challenges. Some suppliers are faced with financial management and regulatory management challenges, whereas others lack business development expertise. The Enterprise in some cases may struggle to identify the ESD beneficiaries, implement programs and measure the actual impact of the program. The enterprise also stands to lose good suppliers due to non-compliance on the supplier side.
There is a great need for buy-in from top management. Initiatives need to be driven by leadership to encourage collaboration across a range of partners in the value chain.
Organizational leadership needs to adopt and focus on the following aspects that will mutually benefit the Enterprise and suppliers;
Strategized impact – Enterprises need to invest in businesses within their supply chain and procurement needs. This direct link between Enterprise Development and its core business guarantees the beneficiaries access to markets to promote their business growth and sustainability. What follows is that larger companies are more strongly committed to the success of their Enterprise Development support since their own supply-chains are directly involved.
Initiating impact approach - Meaningful enterprise development through financial support and access to the market alone does not guarantee successful business growth. Beneficiaries need additional support in key areas of the business such as Business Development activities, business skills training and mentorship. Taking an all-round approach to helping the ED beneficiaries ensures that they have been initiated into the right direction.
Measuring the impact - It is important to evaluate the progress and the levels of success of your ED programs, therefore, by putting in place standardized metrics to measure the socio-economic and environmental impact of your Enterprise Development Programme. Impact assessments are built into the ESD Strategies and this allows you to accurately capture and understand the impact.
Going forward there will be a more symbiotic relationship between the Enterprise and Supplier. It is now clearer more than ever before, that real grassroots impact must be felt.