Enterprise Development unlocks Preferential Procurement value

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Enterprise Development, along with Socio-Economic Development and Skills Development, should be a fundamental cornerstone of any well-structured South African BEE Procurement strategy.  Andrew Bizzell, co-founder of the Institute for Enterprise Development and a BEESA consultant, told Smart Procurement how procurement organisations can make Enterprise Development (as a BEE strategy) work for them...
 
Enterprise Development:  The Basics

At a recent public workshop on Preferential Procurement (co-hosted by Smart Procurement and EES-Siyakha) on 27 February 2008, the integral role of Enterprise Development within the financial sector was explored.  Andrew Bizzell opened the floor by explaining that Enterprise Development can be defined as 'the investment of time and capital in creating, expanding, or improving the operations of a business or an endeavour that contributes to the vitality of a community'.  He continued by asserting that anyone, irrespective of an individual or corporate identity, can add value to a country's growth through economic participation.  When looking at a corporate framework specifically, one of the most powerful, well-structured and sustainable ways of economic participation is through the implementation of Enterprise Development.

According to the Institute of Enterprise Development, the top three resources, when assembling an Enterprise Development Project, are:  existing internal management structures, newly-formed in-house Enterprise Development teams, and/or making use of specialised Enterprise Development professionals (outsourcing).  Usually, the Enterprise Development process within a BEE framework can be summarised as follows:

1.    Calculate your Enterprise Development target.
2.    Decide how many BEE points you need / want.
3.    Calculate a relevant budget.
4.    Allocate deadlines for verification.
5.    Decide on an in-house or outsourcing strategy.
6.    Identify an Enterprise Development team.
7.    Create and manage the programme.
8.    Monitor the effectiveness of the programme (results).

Bizzell concluded his broad discussion on the topic by highlighting four main areas within any economic sector that can be supported through an Enterprise Development Model.


Enterprise Development.GIFFigure 1:  The Enterprise Development Model of Support.

The first area of support refers to the customer (also known as 'upstream development').  Within this segment, the developing company can:

  • achieve increased market share and turnover;
  • increase customer loyalty;
  • build the existing brand;
  • create brand association; and
  • develop new products / services / unexplored markets.

The second area of support is that of the suppliers (also known as 'downstream development').  Herein financial participation can:
  • reduce cost;
  • achieve better quality and service delivery;
  • increase supplier loyalty;
  • solve identified supply gaps; and
  • build a better overall working relationship with the supplier.

The next area of Enterprise Development is concerned with the internal domain (microstructure), namely an organisation's staff.  Opportunities that are worth looking into in this realm include:
  • outsourcing and helping staff to grow their own businesses;
  • new product / service / market development;
  • lowering of staff overheads; and
  • reducing staff turnover.

Lastly, support can be focused on a market's external community (macrostructure).  This segment stretches across all market communities, namely local, national, international, industry and profession areas.  Once again, this Enterprise Development support segment can:
  • reduce cost;
  • improve quality;
  • decrease risk;
  • improve brand awareness and credibility; and
  • allow the organisation to enter new markets, to name but a few.

From the above, it is clear that Enterprise Development is a very powerful, yet arguably underutilised form of Preferential Procurement within organisations' BEE spend.  This sector can thus not only increase an organisation's BEE scorecard significantly, but, indeed, uplift a whole country at the same time.  

For more information, or advice on Enterprise Development visit www.enterprisedevelopment.co.za

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