Supplier development is becoming an increasingly important strategy for many corporates, not only from a scorecard compliance perspective, but also as a means of growing the economy and increasing job opportunities. The Absa Business Day Development Awards recognise companies who are making significant strides in terms of their supplier development initiatives by acknowledging those who go beyond the scorecard, fostering learning, showcasing best practice and encouraging collaboration.
This year’s winners were announced recently at an event held at The Empire Conference and Events Venue in Johannesburg. The overall winner is Distell Group. The company clearly stood out as an overall leader in the supplier development arena, said Catherine Wijnberg, director at Fetola, taking on board lessons from 2018 and improving on their metrics.
Other winners included Exxaro Resources who clinched the Newcomer Award, sponsored by Absa. This award acknowledges companies that have recently initiated supplier development programmes. The winner, revealed Wijnberg, blew the judges away with a bold and inclusive programme.
The Collaboration Award, in partnership with Fetola, was awarded to South African Breweries. The award acknowledges companies who recognise the importance of industry relationships and cross-sector collaboration for the benefit of the wider ecosystem.
The Nation Builder Award, in partnership with Cold Press Media, was awarded to Accenture. The award recognises initiatives that achieved exceptional results in supporting and growing non-traditional suppliers in one or more area including youth, black women, rural areas or areas with few alternative opportunities. Accenture, revealed Wijnberg, is doing good work at scale in three of these areas.
The Impact Award, sponsored by Business Day, went to Property Point, a Growthpoint initiative. This award acknowledges companies whose supplier development initiatives have impacted substantially on the value chain and are effective in the return on investment or efficiency of impact or scale of impact.
The local manufacturing and Small Supplier Award, in partnership with Seda, went to Macsteel for its success in developing an ecosystem of small suppliers, manufacturers or value-add services and products from the local industry.
Absa’ s Head of Supplier Development, Hank van Rensburg, said it was important to share successes and learnings in supplier development.
In a keynote address Vusi Fele, Chief Procurement Officer at Absa Group discussed unlocking growth through convergence and high impact enterprise and supplier development approaches. He said that while the number of SMMEs in the country was increasing, supply chain and supplier development practitioners need to maximise the economic development benefits flowing from foreign direct investment as well as local funding to ignite SMME growth. How and where procurement budgets are spent does have a significant socio-economic impact,” he said.
Economic futurist, Marius Oosthuizen gave a broad context for future scenarios for supplier development programmes. The Fourth Industrial Revolution is a transformative moment in history, he argued, that will fundamentally change the logic of how economies work.
The most significant continental trends, he said, were that African governments were developing increased capacity to manage countries. This was particularly prevalent in countries like Mauritius, Ethiopia, Botswana and Rwanda which were all experiencing growth in their economies. Investment in the continent, particularly from China, was growing, with 80% of China’s foreign direct investment going to transport, energy, metals and real estate.
A rising middle class in Africa, added Oosthuizen, was driving economic demand, and the continent was making significant technological leaps in health, food production and mobility which has the potential to change the way we live and work.
He pointed out, however, that mass unemployment and system exclusion occurred across the continent. “Children are still receiving a 19th century education, despite the fact that they live in a 20th century economy and are confronted with 21st century technology. Combined these factors are deepening inequality,” he said.
Oosthuizen outlined four potential scenarios for 2025. Rather than adopting a scenario which involved state-led industrial development, he said the most exciting option was systemic transformation with the aid of public-private partnerships which would require the creation of a totally new ecosystem.
He offered five strategic take-outs for supplier development. Firstly, a short term focus would result in skewed and unsustainable market structures. Secondly, he pointed to massive opportunities in infrastructure and primary industries. Thirdly, he said navigating politics and partnerships needed to be a strategic skill. Fourthly, human capital and skills development in design, general management and project management would be at a premium; and lastly, he pointed to the prospect of supplier development creating a business culture revolution which unlocked a wave of entrepreneurship in the country. “We can no longer wait to be saved,” he said.
Supplier development has traditionally been considered somewhat of a tick box exercise, commented Nicholas Maweni, Executive Chairman of BRICS Fashion, one of this year’s judges. “That’s changing as the practice has become a moral imperative” he added.
The calibre of entries received this year was much better than the inaugural year, he said. “What was evident in this year’s submissions is that there is a lot more passion around supplier development and that more senior executives are getting involved and sponsoring supplier development programmes”.
During a moderated panel discussion, this year’s winners discussed their strategies around supplier development. Shawn Theunissen, CSR Executive at Growthpoint Properties and Head of Property Point said there needs to be a shared value strategy. While corporate SA is struggling, the reality is that small businesses still need to be able to grow even in tough economic times. He said supplier development should not be considered from the point of view of black economic empowerment only but also in terms of economic growth.
Bishen Morgan, Sustainability & Value Creation Director at SAB said the way in which supplier development programmes are developed and designed is critical. He stressed the need for programmes to create value for both the business and the entrepreneur and said corporates need to start working together to enable scale. SAB has started collaborating with Macsteel and other corporates in a bid to grow suppliers.
Charles Wyeth, ESD manager at Distell agreed that creating wealth had to be a priority in any successful supplier development programme. He also said successful programmes relied on having a driver at the top and getting buy in from everybody. Wyeth stressed the need for supplier development to move beyond the scorecard.
Lusapho Njenge, ESD Programme manager at Exxaro advised adopting a supplier lifecycle approach to supplier development initiatives. He agreed that support from the top was imperative.
Lenny Govender, CFO at Macsteel said that once the company had educated suppliers around its business, suppliers started to identify mutually beneficial opportunities. Macsteel has established a programme to provide suppliers with cost effective finance in order to meet cash flow constraint problems many of its suppliers faced on a regular basis. Govender said Macsteel’s supplier development programme was successful because it was headed by somebody who was passionate about it.
In closing, Wijnberg thanked this year’s judges as well as the award partners and sponsors and congratulated all the 2019 winners and participants.