In the second edition of our Enterprise Supplier Development (ESD) series (See Part 1 and Part 3), Vivian Reddy, head of the access business unit for Edge Growth, an ESD specialist firm, breaks down how both SMEs and corporates can both win in ESD programmes, including:
– Advantages for corporates
– Advantages for SMEs
– Examples of effective ESD programmes
How corporates benefit
1. ESD programmes help corporates meet B-BBEE compliance requirements. Corporates need to develop SMEs to gain B-BBEE scorecard points.
2. Diversify their supply chains – corporates are required to procure from black-owned businesses to SMEs. Also by developing SMEs they can create competition for their existing suppliers.
3. Corporates show that they support the government’s transformation agenda. They also contribute to society, by contributing to economic transformation they are creating future customers.
4. Reputational benefits as the corporate is seen as a responsible corporate citizen. It also sends a message to its employees that the corporate cares.
How SMEs benefit
1. Access to expertise – business support with regards to strategy, technical expertise, general business skills (accounting, marketing, etc).
2. Access to contracts – Procurement of goods or services by the corporate from participating SMEs that provides sustainable revenue streams.
3. Access to funding – in the form of investment funding.
4. Access to opportunities for networking with other business owners in the ESD programme and the corporate’s network.
Corporates getting it right
About the programme: The Sanlam Enterprise Supplier programme has three projects and focuses on developing business capacity within their distribution network as well as their supply chain with selected suppliers.
About the programme: The Vumela Enterprise Fund by the Firstrand Group and Edge Growth, is a SME growth fund and also forms part of the Firstrand Group’s primary Enterprise Development and Supply Development vehicle. It is managed by Edge Growth.
Having been running ESD programmes for the last 10 years, they have been successful because:
1. They have senior leadership support.
2. ESD is in the scorecard for senior people.
3. Their ESD and supplier development departments work very close together.
4. Although they have partnered with an external partner they are very vested and are involved in the programme.
5. Their programmes follow a pipeline approach, they do enterprise development (ED), supplier development (SD) and public procurement (PP).
6. 60% of the programme’s SMEs leave the programme with a contract.
7. They provide the top 3 areas of business development support – access to expertise, funding and access to market.