Supplier development in tough times: SASDC’s CEO Gary Joseph | by Kate Ferreira

Kate Ferreira 2Gary Joseph is the CEO of the South African Supplier Diversity Council (SASDC), a leading national business membership organisation focused on linking black owned suppliers and corporates with the critical objective of contributing towards transforming the economy. Effective supplier management, which includes supplier development, has been a component of strategic sourcing for a number of years, and Joseph believes it is even more critical in times of economic strife, such as South Africa, the continent and many other countries are currently experiencing.

Counting pennies
“The environment is intensifying around how people view costs right now, and suppliers are struggling to access new opportunities under these conditions,” says Joseph.

This is compounded by enduring myths about supplier diversity, he explains. “There is a challenge that we are seeing now,” says Joseph, “that the risk aversion for switching suppliers or introducing new suppliers into a corporate supply chain is becoming more pronounced. There is a perception on the part of certain corporates and organisations that this comes at a higher cost; that black suppliers and new entrants aren't able to compete on price, and therefore that engaging them will impact on cost saving objectives in the organisation.”

Compliance versus culture
At the same time, there is recognition that compliance with the B-BBEE codes of good practice is still an important aspect of corporate risk management, argues Joseph. “So corporates recognise that they need to comply, to improve their score card, but many are asking how they do that without excessive monetary outflow.”

It is the SADC’s position that the way to counter this perception is to move from compliance-based thinking and activities, and rather view supplier development and localisation as an opportunity to optimise your supply solution, while pursuing your preferential procurement goals.

Joseph says: “If you look at supplier diversity and its implementation, it is not intended to be a compliance-based programme, but rather a strategic aspect of procurement and supply chain where, as you pursue having a more diverse supply base, it is representative of the communities within which you operate or that which you service with your business.”

SME squeeze

It is important to remember that these small and new suppliers are also being affected by low growth.
“From the SME side, there is also pressure on their own cost containment objectives. In certain measures, they are quite fragile because of the maturity of the business, and they can find it difficult to respond to this new pressure.

“Additionally, new entrants have big shoes to fill,” he continues. “They enter corporates with little or no historical supplier relationships, and that already puts them on the back foot. The feedback that we are getting from black-owned suppliers is that because of client-driven cost containment expectations, the relationship becomes difficult to manage with end users and contract managers who are at the same time becoming more demanding on performance levels.”

SASDC Gary Banner 1
Creating competition
If supply chain practitioners were implementing best practice methodology, Joseph believes that that would this would actually lead to the creation of more competition, which would result naturally in cost savings.

“Whether the outcome is that you end up sourcing from a diverse supplier or a black-owned one, or whether you stick to your existing supplier, the fact that you've gone out to market, and created a competitive market opportunity should result in a more competitive offer coming to the fore. As a result you’ll either see a costs saving impact or increased value delivery at the same cost.”

Supplier Development Summit 2019
The SASDC (www.sasdc.org.za) have once again partnered with Bespoke in hosting the annual Supplier Development Summit (www.supplier-development.co.za). The popular event will provide several case studies and examples of programmes that Joseph believes will push the message that procurement is an important enabler for supplier development and localisation.

“Without the procurement opportunities driving demand on the supply side, returns on investment on the supplier development and localisation efforts are low or even absent - because there still tends to be a culture of driving supplier development and localisation in isolation from procurement strategy.

“The objective of the Summit is to change the dialogue and focus, to educate and show how demand-driven supplier development and localisation are an ideal means of driving greater impact for the benefit of corporates, suppliers, and communities.”

Kate Ferreira is the Contributing Editor of Bespoke CfSD's Bulletin - www.bespoke.co.za

SDS2019 Strip Banner 130219

Posted on April 10, 2019

Subscribe to our Bulletin

FREE-OF-CHARGE

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input