Are corporate systems ready for SME suppliers?
With 2018 bringing new opportunities to challenge South Africa's persistently low growth rate, the role and value of entrepreneurs in our economy is sure to remain in sharp focus. To this end, "big" business needs to continue working to overcome barriers to entry for smaller suppliers to ensure meaningful transformation. Kervin Ali, Head of Group Procurement at PPC, argues that the process of value chain integration is a complex one which corporates often take for granted. By creating an engagement and on-boarding process where assumptions aren't made and "standard practices" are actively communicated, SMEs can potentially start delivering far sooner and as per expectations - challenging entrenched status quos and adding new value. As formal economies around the world continue to grapple with sensitive markets and new market drivers, more entrepreneurs are taking their own destinies in hand and stepping out to pursue opportunities they can own and control. "While we're seeing this in South Africa, we're also seeing the rise of a new generation of young entrepreneurs who have never been formally employed or exposed to standard business practices," notes Ali. "We're additionally finding many well-established small businesses starting to actively chase more formal opportunities - again, not necessarily having a professional background that has exposed them to these." Having these new entrants compete for and access opportunities in the corporate space can be extremely beneficial, as they often bring very different and innovative ways of thinking; simply because they haven't been exposed to "traditional" corporate methodologies and processes. "These entrepreneurs typically look at challenges and current solutions with fresh eyes - interrogating what's really behind them. Given that they don't usually accept the status quo, they can add a lot of new value which hasn't previously been tapped into, making them potentially key strategic partners in many instances." Ali adds that the potential downside to incorporating a relatively new market entrant into one's value chain is that they often haven't been exposed to standard corporate non-negotiables. "After inviting a new contractor to a site visit recently, we discovered that they weren't aware that they should report with the required protective safety gear - which we had assumed they knew or should have known. This brought us to a decision point that many corporates often find themselves facing: where you have a choice to assist the entrepreneur with appropriate advice or dismiss them as unprepared for the opportunity." Instances like this are arguably defining ones - that should be used to empower and enable as opposed to allowing existing barriers to entry to remain unchallenged. "It's important to discern between a genuine inability to deliver or meet key contractual requirements and issues (like wearing appropriate PPE when entering a site) that can easily be overcome through effective communication and information sharing, as well as training. By addressing the latter one doesn't lose sight of the value a small business can add: which is why it should be afforded the opportunity; if nothing but to gain experience," explains Ali. This requires a different approach and "system" as well as greater involvement of "champions" throughout the value chain integration process. "While many would argue most of this responsibility lies with procurement, for on-boarding to be effective and to enable the entrepreneur to start work as soon as possible, internal systems must equally be geared accordingly. This includes all key points of contact within the on-boarding process seeing themselves as relationship-stakeholders. They need to guide and assist, and communicate pro-actively and openly - helping the small business to deliver to the best of their ability. "As corporates, we need to remember that the starting point for any beneficial relationship is finding that common point between us and our smaller suppliers. If we initiate the process with the end in mind; envisioning a mutually beneficial and sustainable partnership; we will not only deconstruct 'barriers' but will allow us to focus on real issues in assisting entrepreneurs to succeed and add value within our environments. There can be no better definition of a win-win for both parties," concludes Ali.