BEE: look beyond regulation to be effective in supply chain

| 0 Comments

 

Parliament.jpgBlack Economic Empowerment (BEE) is one of the most highly regulated aspects of the South African business landscape today. The most recent changes to the regulations have both large corporate businesses and smaller businesses returning to the scorecard drawing board. Louis Coetzee - General Manager of the Ecsponent Development Fund (part of JSE-listed African financial services company Ecsponent Limited) - told SmartProcurement that this has contributed to inhibiting economic growth, and the stunting of competitiveness in the industry.

BEE Counter-intuitive

Coetzee said that “instead of creating an enabling environment for large corporate businesses to jump start small enterprises’ economic activity, BEE has been counter-intuitive. The current structure often results in conflict between efficient procurement and the drivers of enterprise development and social responsibility in corporate South Africa. The underlying intent of broad-based empowerment is lost from sight.”

It was recently announced that the B-BBEE Commission would oversee new, and compulsory reporting requirements that include the submission of an annual compliance report for all JSE-listed companies, within 90 days of a company’s financial year-end. It is unclear at this time how non-compliance will be measured.

Compliance-based regulation

Coetzee added that this is an example of regulation that is compliance based, which removes the focus from the underlying intention of the social upliftment it wants to achieve. BEE has in many instances led to a strained relationship between corporates and their suppliers. If a business does not deal with Level 1, 2, or 3 suppliers, their own ratings will be prejudiced. The recent changes have forced the hand of many organisations, and as a result orders may have well been issued to vendors with the correct BEE credentials, but with limited ability to deliver.”

A combination of lack of funding and skills often results in the vendor failing to deliver, compromising corporate operations. In addition - in some instances - resellers are used to ensure compliance with the B-BBEE code, but this can cause margins to be inflated in order to provide for these resellers. This practice reduces the organisation’s (and ultimately the country’s) competitiveness. “This”, Coetzee says, “just adds to the frustrations of large businesses and the state - who carry the cost and efficiency burden”.

He added that “one of the biggest issues around BEE regulation is a distinct lack of infrastructure and regulatory cohesion supporting historically disadvantaged vendors. An example of this is the National Credit Act, which has effectively, and radically reduced the provision of credit to this sector. Access to capital and skills, combined with an understanding of the procurement dynamics, are key elements of supply chain success. These elements are co-dependent, and a vendor cannot be successful without support in each one.”

South African economy to be inclusive

Coetzee believes that while good governance is essential, the shortcomings of underlying BEE infrastructure in South Africa result in ongoing negative perceptions, when it comes to aspects such as skills, corruption, the racial divide, and a lack of true transformation.

He stated that “the South African economy has to be inclusive to survive. Large corporate businesses should be able to focus on their core strategies, while the BEE procurement cycle is supported by specialists who work with them to truly transform the market in the country. Education, community upliftment, and true empowerment will be the natural result of this, with all the stakeholders involved drawing benefit.”

Solution for B-BEE compliance standards

The Ecsponent Development Fund offers a comprehensive solution to assist businesses in achieving and maintaining B-BBEE compliance standards. In addition to ensuring more reliable delivery and driving socio-economic development, it also provides local enterprises with the skills transfer and skills development they need to fulfil their duties and deliverables, as preferred vendors.

Coetzee says that “the solution is about linking large corporate businesses and their vendors with an efficient funding and supply chain facility. Currently, there are financing operations in the market that provide financial assistance to vendors. There are also numerous operations that assist with tender applications, procurement negotiation and supply assurance. Ecsponent has combined all these elements. By taking a holistic approach in working with large corporate businesses and their preferred vendors, we have managed to achieve success in both controlling and uplifting. This allows corporate organisations to focus on their core business with complete peace of mind that Ecsponent ensures the delivery.”

He concluded that “the structure of the Ecsponent Development Fund creates a synergy across the supply-chain, fostering a more trusting environment of mutual benefit with goods delivered, compliance standards taken care of, and vendors being upskilled and empowered”.

Leave a comment


 

 

Career opportunites

Planner

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Are you looking for new career opportunities as

Procurement Specialist

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing Supplier / Business Development
As a specialist Supply Chain recruiter, I am

Logistics Controller

  • <500 000 Gauteng Logistics & Warehousing Procurement Officer / Specialist
Seeking dynamic up and coming candidates looking for

Supply Chain Manager

  • >500 000 Permanent Procurement Management Supply Chain Western Cape
As a specialist Supply Chain recruiter, I am

Business Process Specialist

  • <500 000 Gauteng Procurement Consultant Procurement Officer / Specialist Supply Chain
A company within the financial services sector is

LOC Procurement Manager

  • Gauteng Permanent Procurement Management Procurement Officer / Specialist
Your Responsibilities: Job Purpose To be the interface ...More

Account Manager

  • >500 000 Procurement Officer / Specialist Supplier / Business Development Western Cape
Key Performance Areas:• To ensure that all aspects

Consultant

  • >500 000 Gauteng Procurement Consultant Strategic Sourcing Supply Chain
Key Performance Areas:• You'll be concerned primarily with

Commercial Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Technical Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Business Development Executive

  • >500 000 Gauteng Supplier / Business Development
A retail solutions company is seeking a New

Financial Manager

  • >500 000 Contract Operations, Planning & Inventory Procurement Management Western Cape
Looking for an unemployed CA (SA) in Cape

Chief Financial Officer

  • >500 000 Gauteng Operations, Planning & Inventory Procurement Management
An exciting opportunity exists for a CFO with

Procurement Consultant

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing
Key Performance Areas: A profound knowledge of sourcing

Commodity Specialist: IT

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Effectively applies acquired technical/functional skills

Senior Consultant

  • >500 000 Gauteng Projects / Category Management Supplier / Business Development
Key Performance Areas:• Adheres to best practice processes

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Procurement Management
Key Performance Areas:• Manage warehousing and distribution 3PL's

Head of Franchise Network

  • >500 000 Contracts Operations, Planning & Inventory Western Cape
The opportunity to work for a multinational retail

National Driver Manager

  • >500 000 Analyst Contracts Logistics & Warehousing Operations, Planning & Inventory Western Cape
The opportunity for an extraordinary individual to join

Commodity Specialist: Industries

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Under the guidance of the