Pillar 4: Procurement

Some of the greatest challenges facing small businesses in South Africa today are access to affordable capital to start up and run a business, finding suitably skilled entrepreneurs and employees to make a business plan work and grow the business over time, and access to a market for goods or services.

The charter addresses each of these challenges within the context of procurement and enterprise development. The charter places an obligation on large financial institutions such as Standard Bank to actively seek ways of increasing procurement from BEE accredited suppliers and small businesses. In addition, the charter creates a framework within which skills transfer can take place to enable businesses to become suppliers in cases where they may not meet requirements. Assistance with tender procedures, meeting technical specifications, delivery requirements and other important aspects of supply chain management are all components of procurement and enterprise development as set out by the charter.

Standard Bank's procurement and enterprise development strategy centres on a total cost of ownership approach, which seeks to maximise the bank's economic impact across the full scope of its supply chain.

Progress made

Standard Bank has embarked on an initiative to increase procurement spend with BEE companies, especially BSMEs. These suppliers will now have the opportunity to supply goods and services provincially, which were previously procured centrally. This initiative targets certain predetermined goods and services below a certain value. In addition, Supply Chain Management Services (SCMS), that is centrally responsible for procurement, has finalised a list of goods and services to be procured only from BEE companies.

Standard Bank’s supplier development function commits the bank to supporting and developing black-owned businesses as suppliers of goods and services. Business units are encouraged to bring new BEE suppliers on board who previously did not have access to Standard Bank. The bank encourages current strategic and niche suppliers on its database to transform, to be accredited and to formalise joint ventures and strategic alliances between non-BEE suppliers and emerging BEE businesses. The achievement of the charter procurement target of 35% is treated as a priority objective among suppliers.

The bank has embarked on a number of enterprise development initiatives, most notably a series of national summits with its supplier network, which gave parties the opportunity to focus collectively on the business potential of transformation, while also addressing a range of important technical issues. A wide range of SMEs were exposed to Standard Bank and its accreditation requirements, and given the opportunity to network with established companies. The relevant business development areas in the bank, as well as provincial offices, participated in this initiative. The feedback received from delegates to these summits has been very positive.

To enable effective information flow between the bank and its supplier network, detailed information with regard to all processes (including supplier engagement policies, BEE and performance requirements) is available to suppliers on our website.

The increase from 26% to 41% in 2005 is a result of an internal focus on increasing all business units spending with BEE suppliers, especially BSMEs. The SCMS department has developed and begun to rollout this strategy which is already proving successful in moving the bank towards the 2008 target of 70%.

Group procurement (%)

Figure 11

Procurement summary scorecard

¹Supplier rating is in respect of the BEE rating of the supplier as per their own sector’s scorecard.
²In terms of the charter there is no narrow-based equivalent for a C rated supplier.