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The group continued to promote the principles
of openness, integrity and fairness in its drive
to implement best procurement practices. Our progress
in 2004 included the development of:
- a preferential procurement policy aimed at
opening new opportunities for black South Africans;
and
- a supplier transformation policy emphasising
our commitment to help create, support and develop
black-owned businesses as suppliers of goods
and services. Progress was made in categorising
our suppliers in line with the charter definitions.
The graph above shows that ten suppliers out
of the top 20 suppliers were black (2003: seven).
Procurement spend
The 2004 procurement spend, in terms of the charter,
amounted to R2,9 billion. Our spend with BEE suppliers,
as defined per the charter, was R0,8 billion. The
pie chart below shows the allocation of our BEE
procurement spend, according to the charter definitions.
We are reviewing our corporate procurement policy
to align it more closely with the requirements
of the charter. The revised policy will also include
social, environmental and ethical clauses. We
have a 30-day payment term unless different terms
are agreed with the supplier.
Supplier engagement strategy
We recognise the importance of supplier engagement
and we have introduced an engagement strategy with
methods of engagement including supplier forums
and summits.
Supplier satisfaction is monitored continually
and all supplier feedback is channelled through
to supplier management, to enable them to create
long-lasting relationships. Engagement will furthermore
help to unlock value for the bank by ensuring
that we obtain high-quality goods and services
at fair value and that a satisfactory portion
of our spend is with small, medium and micro enterprises
(SMMEs), including black empowerment SMMEs in
line with the charter.
Our suppliers have raised other issues that
will be addressed with the implementation of the
new policies referred to previously. Some of the
issues raised include:
- supply chain management;
- supplier strategy;
- interpretation of the charter; and
- deliveries and processes
Procurement and enterprise development guideline
We participated in the interbank procurement work
group during 2004. This group was tasked with the
interpretation of the procurement pillar of the
charter and its uniform implementation within the
financial sector. The main participants were from
the major commercial banks and the Banking Council.
The working group met regularly and the outcome
was a comprehensive enterprise development guideline
that provides a uniform interpretation of the
charter’s requirements for procurement.
This document will form the basis of the major
banks’ position in the industry-wide procurement
task group.
Supplier accreditation and rating
Our supplier accreditation process is ongoing. In
order to reduce the rating costs that have to be
borne by the suppliers, they now have the option
of using their own external auditors. One of the
initiatives being considered by the charter council
is to introduce a code of good practice for accreditation
agencies.
Centralised database
The group has a centralised database that is maintained
by the supply chain management function. In 2004,
we improved our database by introducing a new procurement
package called Enterprise Buyer Professional (EBP).
The benefit of this system is that it will provide
relevant management information at a business unit
level, thereby ensuring better management and reporting
of procurement spend throughout the group.
Enterprise development
Enterprise development is one of the key areas of
the charter and supply chain management is responsible
for developing SMMEs. This will form a top priority
for 2005.
The holistic approach adopted means that the
bank will fund an SMME through business banking,
and supply chain management will in turn provide
procurement opportunities to that SMME. Price-matching
opportunities, tender advice, mentoring (where
necessary) and advance payment will be arranged
in specific cases.
Supplier summits are held to allow traditional
and BEE companies to network, to encourage the
development of partnerships and the transfer of
skills. The first summit was held at the end of
2004 in Cape Town and was attended by approximately
60 suppliers. SMME forums will also be held for
development and information sharing.
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