by Nimroth Gwetsa, 12 September 2014
With so many companies running supplier development programmes, why are we not inundated with evidence of success of their interventions in developing emerging suppliers?
No news is good news. Does this explain the outcome of Corporate South Africa’s efforts in supplier development?
The effects of low cost of running business operations by Chinese and similar Asian companies on South Africa’s manufacturing and textile industries have been widely reported. We don’t have to look hard to see the effect of these imports on local production. Just look at the label on items you bought to see that local manufacturing is dying, if not dead already.
Corporate South Africa’s efforts to boost emerging suppliers need to be commended. One needs to glance at relevant pages of annual reports from many companies to appreciate their efforts in pouring millions of resources developing emerging suppliers. With so much being done, why is there a small notable improvement in the local manufacturing sector?
Has China’s devastation of our local manufacturing and supplier market and inadequate investment in technology in that sector set us back to the stone ages? Surely by now, millions invested in local manufacturing should be bearing fruit. We understand that it is easier to destroy than build and that good things take time. Almost every sector of our economy is slowly dying. Our farmers are now finding it difficult to grow crops and breed chicken to maintain our food security. We seem to be in crisis mode. The consumer is urged to buy Proudly South African goods. On the one hand, the South African Reserve Bank keeps telling us consumers are heavily indebted and don’t know whether they are coming or going. How then can the outcome be improved so we can see the tide turning in favour of local manufacturing?
We should start tackling these problems decisively. Anywhere we begin should take us somewhere better than we were before. To you Corporate South Africa, thank you for your efforts in developing emerging suppliers. We know you to be interested in getting more bang for your buck. Isn’t it time then to start uniting your efforts to create one functional block where all your individual companies’ supplier development efforts could be managed centrally so you can increase your returns? The creation of a central function is not insurmountable. It can enable you to be more effective and still be more profitable. You need to look at what South Africa’s (top) banks are achieving with their jointly owned clearing house (BankservAfrica), coordinating many common payment and settlement functions for their common good. The same can be achieved with the creation of a shared local supplier development clearance house.
I’ll come back to some details of this envisioned function. But first, we need to reflect on many lessons we learned over time that two is better than one and as the Tanzanian Bondei ethnic group proverb says: “sticks in a bundle cannot be broken”. Better results could be achieved from coordinating Corporate South Africa’s supplier development efforts centrally.
The idea behind the creation of a coordinating central function is to maintain a system not only to ensure intervention support covers wider needs of beneficiaries, but to also detect serial beneficiaries. The idea is to have all active and interested SMMEs register centrally and have their needs, support given and progress also monitored centrally. The overheads of having companies individually coordinating their programmes can now be reduced and those funds included in the much-needed resources for supplier development. The function could appeal to business veterans to guide beneficiaries. Only our imagination would limit what this function could or should do.
Either way, businesses are subjected to their version of a “hierarchy of needs”. Centralisation could help in verifying and assessing levels of intervention needed by or already provided to SMME’s, thus avoid duplicating and saturating support to the same beneficiaries.
Pursuing an individual effort has its benefits. Just as there is room for individual programmes, there is an opportunity for the creation of a central function. There would also be further opportunities for the creation of a function based on a hybrid model. Opportunities exist and should be exploited.
If a coordinating function cannot be created currently, government as the defacto facilitator of economic growth could consider the value of creating a shared registration and information sharing repository for supplier development. It can then give companies incentives to use the information to publicly declare their supplier development interventions. The repository would help prevent inadvertent over-concentration of support to serial beneficiaries who possibly abuse the good work done by companies in their current individual efforts. It could become the much-needed relief to emerging suppliers who feel left out and are battling to secure funding and to contribute to the economy for our national benefit.
I would be keen to provide the development platform for the creation of this repository. I would also be keen to participate in the development of such a system and the design of the function.
United we stand, divided we fall should be our rallying call. Let us renew our minds and work together to usher in a new era of economic prosperity for all. Let us resolve to do this even if we stand little chance of benefiting directly in our lifetime. Future generations would be indebted to us for this effort, just as we are benefiting from work achieved by ancient discoverers and lawgivers.