The amount of interest generated by the DTI with the Amended Codes of Good Practice has been staggering. As a simple comparison, when the DTI launched the first set of the Codes in 2007 there were only a few delegates at a small presentation with not much interest. In October 2013 the entire Hall 5 at Gallagher Estate was booked for the presentation and most of Hall 4 was booked for the exhibition. All in all we estimate that as many as 3 000 people attended. More importantly President Jacob Zuma and two other ministers were speakers.
B-BBEE has become very much entrenched in the way we do business in South Africa. We can complain that the Amended Codes have far too many mistakes and that there are aspects where interpretation is very unclear or even outright wrong. We can continue applying B-BBEE as it was done based on the 2007 codes in the hope that the Amended Codes deadline of October 2014 will be delayed. We can even elect to not get a BEE scorecard in 2014. The reality is BEE is an essential part of the way South African business operates.
It has now passed the point where we can debate whether the Amended Codes are good or not. There is no point in pointing out the mistakes. The old codes had mistakes and interpretation issues and grammar and spelling mistakes and other issues.
The way we see it is that the Amended Codes need to be implemented now so that you can get a head start on your competitors. BEE has always been closely linked to the amount of business a company is awarded. The new codes now present a wonderful opportunity to win business from all those competitors who are still trying to find a reason to not comply.
The question we ask is – using the Amended Codes what can a business do to earn points? Let us look at Procurement (Supplier and Enterprise Development).
Using Black Owned Suppliers is one aspect that a company needs to implement to earn points.
9 points are available on Procurement for 51% or more Black Owned Businesses with a target of 40% of total spend
4 points are available on Procurement for 30% or more Black Female Owned Business with a target of 12% of total spend
Procurement is also a priority element. Unless you achieve at least 10 points (40% of 25 points) you will drop a level. We already know it will be harder to earn points from suppliers based on their recognition level because it is now much harder to achieve a higher level.
This leaves a major target area to earn points on the Amended Scorecard for procurement from black owned suppliers. 40% is a fair amount of the total procurement to spend on black owned suppliers, in particular if you previously had not bought much from black owned businesses.
The first step is to identify your procurement and calculate it correctly using the amended codes procurement scorecard. We suggest that you halve your total procurement spend from compliant suppliers to take into account a good estimate of the potential scorecards you will receive from those suppliers.
Set a target – how much is 40% of your total procurement and what are you currently spending on black owned suppliers?
Once you know how much you need to spend start looking through your supplier list for suppliers that are hurting your BEE status. Common examples are suppliers who have achieved a bad level and then of course the suppliers who do not have any black ownership.
List the different types of products/services that the suppliers who are hurting your score supply you with.
Through that list identify the types of products/services that you can purchase from alternative suppliers.
List all the suppliers who have black ownership. Speak to them to see if they can supply you with some of the products/services you need. In that way you already have a trusted supplier who can help supply you.
Last step is to start looking for particular types of products that can be supplied by black owned suppliers.
Remember that a black owned supplier can also be used for supplier development which allows you to help them so that they supply exactly what you need. It is a true win-win because you gain a supplier who could be potentially very loyal to you and you gain BEE points in a set of codes where earning points is much more difficult. The supplier also becomes a sustainable business.