Supplier chain walks and local procurement move for SMMEs

By Larisha Naidoo - Head of Anglo American’s enterprise development arm, Zimele

Every year, corporate South Africa spends billions of rands on well-intentioned programmes designed to mentor and coach SMMEs. It’s not enough. To take SMMEs to the next level, where they thrive and become employers in their own right, big businesses must be doing more to integrate them directly into their supply chains.

Many large companies have existing enterprise supplier development (ESD) programmes. But they don’t have enough growing SMMEs in them. Just like our young people need jobs as well as skills, our small businesses need the backing of corporate supply chains. They can do all the mentorship programmes they like, but the fact is that without that first purchase order or contract, they will never take the next step.

Making this happen starts with executive sponsorship, it requires a culture change and a business shift. Somebody senior and passionate in a large corporation needs to actively drive the process of onboarding and retaining small businesses. Businesses must have deliberate supply chain policies, practices, and targets that focus on local procurement. For a successful local procurement programme there need to be specific local community procurement targets and procurement planning with accountability filtering down the organisation.

Providing access to markets is key – but corporates can only give opportunities to SMMEs if they know they exist, and what they can do hence getting to know suppliers is a critical step to shifting to local community procurement. There has to be strong engagement with community businesses to appreciate the issues faced by the small business owners on the ground, and their abilities and skillsets.

It’s inevitable that there will be some early hiccups in any new supply chain partnership not forgetting that the workload increases within the supply chain department however there is a clear business case that is strongly linked to the sustainable development goals. Good... ESD isn’t a one-year engagement: the best results are delivered through sustained, long-term relationships, that deliver real value to both the big and small businesses. It is an investment that requires time and energy towards developing the small business with empowered developmental feedback that translates from a once-off purchase order to a longer sustainable contract.

It is also vital that these small businesses are created, nurtured, and sustained to become valued participants in a supply chain. To create sustainable businesses, an ESD programme needs to focus equally on mentoring and coaching entrepreneurs, igniting partnerships that create market linkages, and assisting with business loan funding.

A critical element of SMME support is understanding the essential services that small businesses need. That means having mentors who understand business problems and can provide support in areas like tax and governance and can help build capacity in areas like financial acumen, leadership, market orientation, and strategic thinking.

Formation of strategic partnerships with established suppliers to the operations is also key to further supporting the development of community-based enterprises and suppliers allowing them to take advantage of contracting opportunities available in the mining value chain.

Covid-19 certainly brought its own set of challenges for many SMMEs going through mentorship programmes. At Anglo American Zimele, we were teaching budding entrepreneurs classroom style – and then the world locked down and changed forever. This meant all stakeholders had to start operating differently in a short space of time and finding different ways to skill people up for the future. Online learning became common almost overnight.

The entire organisation went into survival mode. This included offering holiday payments that were interest-free for SMMEs in Zimele programmes, and creating a crisis toolkit to help small businesses first survive, and then get back on the road to thriving.

While mining operations continued through the darkest days of lockdown last year, many small businesses took the opportunity to diversify and find new income streams – like doing maintenance at nearby resorts as well as their usual contracts at the mines, for example. All the various initiatives combined contribute to a 98% survival rate of the small businesses in the Zimele stable.

In addition to a supplier development programme, which aims to develop more than 750 community suppliers by 2022, Zimele is also running an enterprise development programme, which has the ambitious goal of developing over 2 100 sustainable small businesses beyond Anglo American’s mining operations.

Our Youth Development Programme plans to have worked with about 2 500 youth by 2022 to develop their skills, get them ready to enter the job market, and ensure that they too are economically active. All in all, our ambition is to create and support up to 10 000 jobs by 2022 as our contribution to Anglo American’s goal of creating three jobs off-site for every one job on-site by 2025, and five to one by 2030.

Ultimately, it’s all about actively assisting in the development of small businesses to ensure that they can stand on their own two feet, take charge of their own development and participate meaningfully in the South African economy. That’s a supply chain we can all get behind.

Small business support sets Limpopo entrepreneur on the road to success

Back in 2016, Sharon Mashishi started a small construction business in the Ga-Chaba community near Mogalakwena, Limpopo. Barely five years later, she owns two companies, and business is booming.

The turning point came when Mashishi joined Anglo American’s Zimele Supplier Development programme. Zimele programme not only mentored her in key business skills but helped her form a partnership to secure a three-year joint venture contract for pit reticulation and services from Anglo American Platinum’s Mogalakwena mine.

When Covid-19 struck, Zimele mentored Sharon using a Business Model Canvas, giving her the opportunity to re-engineer her business in response to the pandemic and develop an alternative business model to drive sustained growth.

Zimele Supplier Development programme

Building our suppliers’ skills for long term partnership success

Anglo American’s Zimele programme helps small and medium-sized business owners grow and diversify their businesses, and create jobs, by responding to the procurement needs of large local buyers. The programme not only helps businesses find new opportunities: it also provides business and financial training, and mentorship in developing a tailored growth plan and growing market linkages. Each supplier has a business advisor to advise, support, and motivate them on their business growth journey.