The new Supplier Development rules bring about changes to what was the norm for many years. While it was easy for companies to ‘finance’ smaller businesses to earn points on their BEE scorecard without taking any ‘real’ responsibility, the new codes are forcing companies to think outside the box and contribute to the success of its suppliers. 

Business success rates in South Africa are not pleasing; in fact they are quite scary. “One in 10 businesses survive in the first three years while, we have found that more than 80% of entrepreneurs are struggling with basic accounting and tax compliance,” says The Hope Factory’s CEO, Annie McWalter. .

In order to change this status, small businesses need help from bigger corporates to put the right building blocks in place to succeed. On the 1st of May, the Amended B-BBEE Codes will be implemented and many corporates are still in the dark as to how these impact their business. Buhle Moyo, a B-BBEE specialist at The Hope Factory (THF) unpacked and simplified the notions about Supplier Development to the company’s funders at a recent event.

Moyo says, “Supplier Development is all about corporates working with their suppliers to guarantee success for both parties. The new codes stipulate that recipients of investors must now be suppliers to the businesses. Big businesses can do more to support the improvement of financial management and operations of SMMEs and also need to help smaller businesses to overcome their challenges i.e. when they make mistakes, it’s not enough to just walk away and get the services from another company. Supplier Development requires that these small businesses receive help from corporates that they service to help meet its own efficiencies.”

Government is unable to create jobs on its own; therefore, it’s made provision with the new codes that corporate South Africa also play its role in improving the economy and Supplier Development is one of those avenues. According to Moyo, The Department of Trade and Industry recognised that under the current codes, there’s not enough transformation and therefore, the procurement structure needs to change. “Some organisations only have one black-owned supplier which is not enough. Corporates already have suppliers on their database they can choose to work with and help develop. When we refer to black owned businesses: the two options apply, the company is either owned by a black women with 51% ownership or 51% of the shares are black-owned.” The suppliers have to become the core of the business, therefore, they have to be integrated into the investors supply chain. Moyo says, if investors develop and graduate Enterprise Development candidates into their supply chain, they can earn extra points.”

There are two options available to investors in order to meet the new requirements; either invest in existing black suppliers within the company supply chain or  introduce new black suppliers into the company supply chain. Both options require the investors to develop a supplier development strategy and get the assistance from a business development company to help it meet the requirements.

Supplier Development is proactive and the new codes encourage big companies to offer three-year contracts to its suppliers and to help them fulfil the terms of the contract along the way. Supplier Development and Enterprise Development contribute to 40% of the BEE scorecard. Earning the 15 points through Supplier Development and Enterprise Development are quick wins if done properly. “And The Hope Factory can help,” says Moyo.

Firstly - the team offers, for free, a funder needs analysis on suppliers thereby assisting investors to find the most compatible service providers / suppliers for their businesses. Through planning and implementation, the Hope Factory team offers investors a seamless and holistic Supplier Development solution. More importantly, is it’s independent identification assessment of potential suppliers. Although The Hope Factory also has its own supplier ready entrepreneurs and is prepping others to become Supplier Development candidates, it will assist clients to pick the best suppliers for their needs under the professional development of existing and potential suppliers. Supplier Development is not as simple as it sounds. Why not engage with a trusted partner like The Hope Factory in navigating this new transformation strategy?