Loggic Managing Director Bazil van Loggerenberg tells Smart Procurement that “Business Safety Ratings identify what we call “winner suppliers”. “It also identifies performance gaps which must be closed to enable a trailing supplier to become a winner supplier.”

He explains that: “A winner supplier is able to decrease Rand selling prices to compete in export markets and to compete with cheap imports.”
“This is financed by product cost reduction which flows from increases in the productivity of all resources used,” he says.

“Supplier product cost reduction finances price competitiveness at target quality in domestic and global markets.”

He believes that, ”Traditional financial yardsticks are ambiguous and inadequate for business safety ratings. A signal of financial improvement in traditional yardsticks is reducible into one of the following seven possible cases of business safety which are called Safest, Safer, Safe, Neutral, Risky, Riskier, Riskiest.”

“The twin drivers of supplier business safety are productivity and price recovery,” he says.

Productivity growth
Reduces unit cost at the supplier and hence raises profitability. At the same time this increases cost-competitiveness which deters competition and hence raises business safety.

Price recovery growth
This has no effect on unit cost but extracts a subsidy from the consumer which raises profitability, attracts competition and hence lowers business safety.

“Productivity change and price recovery change impact profitability in the same direction and business safety in reverse directions. Business Safety Ratings decode ambiguous profit signals to identify Winner suppliers.” he says.