The 2013 Amended BEE Codes states that Procurement is a priority element meaning that unless Entities achieve at least 10 points (40% of 25 points) they will drop a level. 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. The concept of Empowering Supplier adds a new dimension to the Vendor sourcing.
PLEASE NOTE: If you fall under one of the Sector Codes, you will be rated under the 2007 Codes. There is a possibility, however, that the DTI will override the Charters by proclamation. But, the other side of the coin is that if you do not become an EMPOWERING SUPPLIER now, your scorecard under your Charter will be null and void. It is therefore imperative for you to become AN EMPOWERING SUPPLIER NOW because your client most probably will be rated under the New Codes and you have to proof that you are an Empowering Supplier
The focus has shifted to Black Owned Suppliers as they will be automatically Empowering suppliers and the points earned on them have increased dramatically. We have done comparisons on some of our clients Procurement Element and it became clear that The Procurement Rating part of our clients will drop at least 10 points. Why?
Overall Procurement weighting: previously the Procurement part’s rating was 20 points, now it has increased to 25
All Procurement: previously you have been awarded 12 points if you procure 80% of the Procurement from Suppliers with BEE scorecards, now it dropped to 5 points.
QSE’s and EME’s: previously 3 points awarded for 15% target spend on QSE’s and EME’s, now it has increased to 7 points (QSE’s 15% target for 3 points) & (EME’s 15% target spend for 4 points)
Black Owned and Black Woman owned: previously BO (target 12% for 3 points) and BWO(target 8% for 2 points). Now it has increased to 9 points on Procurement for 51% or more Black Owned Businesses with a target of 40% of total spend and 4 points for 30% or more Black Female Owned Business with a target of 12% of total spend
The above also means that 40% of the total procurement must be spend on black owned suppliers, which poses a major challenge to most businesses if they had not procured much from black owned businesses.
We suggest for you embark on the following Strategic Drive NOW in order to stay competitive:
- Set a target such as: “We need to achieve 35 points out of 40 for the Supplier & Enterprise Development Element”
- Communicate your S&E development target with your Suppliers about the changes in the New Codes
- Involve them in the Process as far as possible and explain to them the situation in which South African Businesses find themselves in
- Identify the willing and support them to become Empowering suppliers
- Cut out/drop the unwilling in a phased out process as soon as possible if they do not fall under the Strategic Importance List
- Source new suppliers and Enable them to become Suppliers
- Add value to train your suppliers through a Workshop and provide them with the information and assisting them to embark on the Empowering Supplier Process.
- Lastly, but extremely important: you as an Entity must also meet the Empowering Supplier Criteria and must be rated on that as soon as possible. A Generic has to meet 3 out of the following 4 criteria and QSE’s only one.
- At least 25% of cost of sales excluding labour cost and depreciation must be procured from local producers or local suppliers in SA, for service industry (labour cost are included but capped to 15%).
- Job creation – 50% of jobs created are for Black people provided that the number of Black Employees since the immediate prior verified B-BBEE Measurement is maintained.
At least 25% transformation of raw material/beneficiation which include local manufacturing, production, and or assembly, and or packaging -
Skills Transfer - at least spend 12 days per annum of productivity deployed in assisting Black EME’s and QSE’ beneficiaries to increase their operation or financial capacity
As you would agree, to achieve the above is a major undertaking for any businesses. We experience that businesses struggle to do the above on their own. You need to involve a partner such as BeeWin4All to guide and assist you. BeeWin4All is already a partner to many successful Businesses. You are welcome to contact me to develop a Supplier and Enterprise Development Strategy and implementation plan.