SELLING TO GOVERNMENT AND CORPORATES – HOW TO BREAK INTO THE SUPPLY CHAIN

SELLING TO GOVERNMENT AND CORPORATES – HOW TO BREAK INTO THE SUPPLY CHAIN

The codes have been reduced from seven to five elements, with three – Ownership, Skills Development and Enterprise and Supplier Development – elevated to priority status. These priority elements require a sub-minimum of 40% of the targets to be achieved, failing which large entities will suffer one level discounting of its recognition level, based on the total score on its scorecard. The entities are defined as follows:

  • Qualifying Small Enterprises (QSEs) have an annual revenue of more than R10m but less than R50m
  • Exempted Micro-Enterprises (EME) have an annual turnover of up to R10m

YOUR HIGH B-BBEE RATING IS A COMPETITIVE ADVANTAGE

For small and medium enterprises (SMEs), as well as growing businesses, the new codes present an opportunity to gain a competitive edge. The amended codes reflect a higher recognition than before of the measurement of three key components of empowerment – preferential procurement, enterprise development (ED) and supplier development (SD). This is very much to the advantage of growing businesses. The codes have in fact been simplified to be small business-friendly and increase the number of SME players in the market, thereby resulting in greater competition and innovation.  

HOW YOU RATE UNDER THE NEW CODES

Under the new codes, EMEs with 100% black ownership qualify as level 1, and those with greater than 51% will gain a level 2 rating. QSEs with a 100% black ownership qualify for an ‘enhanced B-BBEE recognition’ level 1 rating, and those with more than 51% black ownership qualify for a level 2 recognition. Suppliers with at least 51% black ownership and at least 30% black women ownership are at an advantage as large and developed businesses will be keen in procuring their goods and services in order to gain 9 and 4 points respectively, under the preferential procurement criteria.  

HOW TO LEVERAGE YOUR B-BBEE LEVEL

The requirement to meet 40% on both enterprise and supplier development criteria has forced the crafting of a BEE strategy amongst big businesses and a massive search for eligible enterprises that qualify for development. Large companies are setting aside significant amounts to develop both suppliers and enterprises. This creates great opportunities for the development of eligible small business and enterprises in South Africa which will assist with job creation and skills development. The codes also actively encourage larger companies and government to trade with and develop small businesses that have a high ranking as this will increase their own B-BBEE level.

Reference:

Leratho Sithole – Director of Supply Chain Management at Deloitte (Your Business – December 2015 / January 2016)