Referential Procurement Process

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What are the consequent strategic considerations to supply chain management and the Preferential Procurement outcomes?
Peter Drucker is quoted as saying “You can’t manage what you do not measure”. This is certainly true in terms of Preferential Procurement. Essentially, in the context of B-BBEE, collating, recording and validating each supplier’s B-BBEE certificates, in a supply chain, will ensure that the data presented is credible and reliable for compliance reporting purposes, without exception.
Collation Process
NEVER ..... collate supplier B-BBEE certificates at the end of your measurement period or just in time for your verification audit, which is the general modus operandi of most organisations.
ALWAYS .... be proactive. The implementation
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For example, this may occur when an organisation elects, or is forced by its clients, to perform a verification on a specific division of their organisation, for competitive or comparative purposes.
› There is often no data accuracy or any commitment from the source of information that data is accurate.
› There is often no effective recourse if a certificate is found to be fraudulent. You could report it but it would be difficult to hold anybody accountable, unless there is an audit trail tracking any submission right back to the person who provided the certificate in the first place.
Why is B-BBEE Certificate Validation necessary?
Collating all supplier B-BBEE data is not sufficient. Reasonable validation is necessary to ensure that certificates are:
› Not obviously fraudulent;
› Issued by a legitimately accredited verification agency. All issued certificates must be SANAS accredited;
› Contains the minimum data requirements – see page XXX which highlights non-negotiable elements which must appear on a valid
B-BBEE certificate - and
› as far as possible, verified by the Verification Agency or
B-BBEE Professional who issued it. This can be done via email or telephonically by providing the B-BBEE certificate number to the
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It is critical that an organisation has processes in place to oversee the receiving, validating, verifying and capturing of supplier certificates, as well as periodic reporting on all preferential procurement spend. This will ensure that the management of Preferential Procurement is proactive, resulting in a substantially improved outcome.
In conclusion, the core lesson of Preferential Procurement to Team Transformation is about embracing Preferential Procurement, not as a single autonomous element, but rather as a critical aspect to the ESD component. Taking a holistic view of the ESD element by linking it strategically to an organisation’s Supplier Development and Enterprise Development initiatives, will ensure a more robust and complete approach to supply chain management. Remember, it is about looking deeper into how you procure, not necessarily where you procure.
› Supplier engagement – This involves communicating and educating those within your supply chain, specifically in relation to your transformation expectations, to include the consequences of not improving their B-BBEE status level;
› Spend shift – in terms of larger suppliers, it will be necessary to shift spend to smaller ‘Black’ Owned or ‘Black’ Women-Owned suppliers, in order to improve the outcome of this element;
“A Preferential Procurement

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