Supplier Development (SD) holds Financial Benefits for Procurement Managers

Supplier Development should not be interpreted as an issue of compliance or been seen as an issue of “transformation”. Currently many companies are more concerned of achieving the full points for a specific BBBEE element to ensure that they maximize their BBBEE levels. If this is the case this is a short-term view or very shortsighted.

A key element of procurement is the Optimisation of spend to the benefit of a companies bottom-line. A saving made by procurement contribute directly to the bottom-line of a company.

Chief Procurement Officer’s (CPO) worldwide hold a different view: They don’t need BBBEE codes when it comes to their supply bases – the reality is they understand the methodology and is measured against the savings they made. In simple terms they cant ignore Supplier Development – it helped them to achieve their procurement objectives. This is what key CPO’s are saying:

“As we transform or expand we need to ask ourselves who is our supplier of the future and how can we develop our supplier of the future to partner with us to be relevant with us in the future.”(TOYOTA)

“It is more than just been certified – innovation, to be relevant, able to strategically sell its value proposition and to grow with corporates as they expand. As our company grows so should our supplier as a partner grow too. Companies cannot afford that their suppliers are not growing with them. This shall undermine their future positioning, growth, expansion into new markets and more so contribute to successfully meeting customer needs. (Coca-Cola)

Given how CPO’s are looking at supplier development and the opportunity presented by the Amended BBBEE Codes, below is a demonstration of what was said above:

Reduction of costs through SD can lead to cheaper pricing & competitive bids by suppliers
Cost reductions leads to competitiveness for both parties
Assist SD support organisation improve its own competitiveness and gain markets
Suppliers have the opportunity to offer same commodities to markets at ruling prices or a competitive price
Suppliers experience better profitability and lead to better opportunities

Let us develop you a Supplier Development Plan based on the above model.