Finding and developing your future, local suppliers, whilst mitigating B-BBEE risk

Any leading industrial enterprise in South Africa knows first-hand the struggle of finding and developing new local suppliers efficiently and effectively, especially small and medium enterprises (SMEs).  

How does a corporate cast a wide enough net to find potential vendors outside of known networks and then rapidly identify promising candidates? Furthermore, how does a corporate assess upfront if potential vendors will be committed, capable, competitive,  aligned with the relevant compliance requirements, and can manage cash effectively? 

Yet, finding the “right” suppliers, is a fundamental pillar of any successful growth strategy, as well as being a significant lever for economic transformation in South Africa.   

The cost of B-BBEE 

Similarly, B-BBEE compliance, especially in enterprise and supplier development sections of the scorecard, have largely become a domain of “normalised pain” for corporates. Administrative inefficiencies, unrealised value, wasted spend, and hidden costs are all too familiar occurrences, with dedicated teams often taking on a significant burden to secure compliance.  

Our research with leading industrial corporates and B-BBEE verification agencies indicates that, on average, 30% of spend is over or under allocated by corporates. Furthermore, on average, 40% of spend has no direct value-add to business strategies beyond securing B-BBEE points. This leaves millions of spend wasted and/or millions of rands of unrealised commercial value locked up in what could be your optimal supply chain.  

The primary drivers of this are uncertain NPAT (net profit after tax), and therefore B-BBEE spend at the point of decision making, insufficient time for quality decision making and project execution, and limited options to choose from which add genuine value to business strategy – compounding the problem.  Thus, corporates typically wrestle with the tension between: 

  1. Making spend decisions early, based mostly on financial forecasts than actuals, risking inaccuracies, but at least leaving sufficient time for meaningful project execution 
  2. Spending late in the financial year, based mostly on financial actuals than forecasts, risking insufficient time to deploy meaningful projects to support the corporate strategy, but at least being more accurate with spend allocations and therefore securing B-BBEE points. 

In the end, complex mixes of these two approaches are often utilised, in an attempt to mitigate the downsides of each approach, with varying results. 

How an Accelerator can address your enterprise & supplier development needs: 

As an industrial corporate, enterprise and supplier development is not your core business or strength. An Accelerator should therefore take this burden from you, in its design to find and develop your future, local suppliers whilst simultaneously optimising B-BBEE outcomes – ideally also mitigating the B-BBEE spend risks discussed above. An Accelerator should, therefore, efficiently identify high potential, committed suppliers, and connect these suppliers with you as a customer with clear commercial opportunities. Thereafter, it should support the small businesses to unlock meaningful growth and scale as they journey from high potential, to receiving purchase orders, to becoming strategic partners in your supply chain.  

There are four key features that we recommend leading industrial enterprises consider when choosing an Accelerator to support their enterprise and supplier development objectives. 

  1. SME selection driven by customer needs

Before proceeding to locate and engage with any SMEs, an Accelerator should seek to first understand what the customer’s needs are, with all subsequent phases of the programme then geared towards delivering on those confirmed needs. This is distinct from many other SME development programmes which generally seek to identify what is deemed to be ‘a good business’ without clarity on what the ultimate customer needs. This ultimately leads to many small businesses being developed without access to a market – rendering commercialisation difficult, if not impossible. 

  1. Competitive placement of SMEs

An Accelerator needs to be structured to identify high quality SMEs who are prepared to demonstrate their commitment and potential to customers, as opposed to simply identifying SMEs needing help. A large volume of applicants should be solicited through several industry networks and media channels, efficiently screened to identify high potential candidates supported to put their best foot forward, and ultimately selected by the customers themselves.  

  1. Customised upgrading focused on unlocking commercial outcomes

Many SME programmes improve or upgrade numerous businesses according to a generic methodology and then try to match them with customers (if at all), with mixed results at best, and often at greater cost. Instead, an Accelerator should focus upgrading initiatives firstly on high potential SMEs (or ‘likely winners’), and secondly on unlocking commercial outcomes as opposed to generic business basics. This approach ensures development efforts directly tackle the challenge of transitioning an SME from being “high potential” to handling purchase orders and growing into a meaningful supply chain partner.  

  1. Minimise risk and maximise impact of B-BBEE spend

An Accelerator is an ideal way to use B-BBEE spend to support a corporate’s growth and supply chain strategy. This is the most commercially impactful approach for corporates and SMEs alike. Accelerators should, however, go beyond this to also mitigate the B-BBEE spend associated risks. To achieve this, an Accelerator should secure near immediate points recognition for your spend, enabling spend allocations to be made later and more accurately to secure optimal B-BBEE points. Simultaneously, an Accelerator should then use your optimised B-BBEE spend for impactful commercial outcomes for your growth and supply chain strategy.  

Whilst other features could be added to this list, these four features of an Accelerator are a sure way to eliminate the burden and “normalised pain” so often associated with enterprise and supplier development and, instead, converting it into a key to unlock genuine commercial outcomes in your business and by extension, the South African economy.  

Corporates and others interested in partnering with Accelerators which have proven results based on these design principles can visit  or contact for more information.