Where to for supplier development in a world forever changed by Covid-19?

By Prudence Gololo

Supplier development was conceptualised and pursued by businesses operating in South Africa for a reason. As a country, we have one of the most unequal societies in the world. For decades, most Small, Medium, and Micro Enterprises (SMMEs), especially black-owned SMMEs, were unable to dream of supplying a national or multinational company – or even a government department. The results of this system are our legacy to bear – crippling levels of poverty, corruption, and the odds stacked against entrepreneurs.

Supplier development, if implemented correctly, can help to address many of these issues. It seeks, to build sustainable and thriving businesses, and ultimately, to level the playing field.

Small suppliers often lack the resources, skills, or experience to meet increasingly complex and demanding business needs.

Through educating and mentoring SMMEs in essential aspects of their business, companies can partner with them to understand every facet of their business, from pricing to quality requirements. This, in turn, leads to more effective mentorship and empowers the supplier to offer more competitive pricing and services.

In an economy battered from Covid-19, SMMEs are expected to play a pivotal role in stimulating employment.

But unlike countries like Singapore, the United States, and China where SMMEs have successfully driven economic growth, similar results have yet to be seen in South Africa, despite the billions of rands poured annually into ESD programmes by corporates and the Government. A research study by the Small Business Institute found that there are only a quarter of a million formal SMMEs in the country, with millions of smaller ‘survivalist’ businesses that don’t create additional employment opportunities.

What’s the best approach to Supplier Development considering the impact of Covid-19 on the world?

Sadly, as a result of the lockdowns and social distancing necessitated by the pandemic, many supplier development programmes have been disrupted, delaying progress and transformation in the SMME space.

Our current situation means that all business owners have a responsibility to acknowledge the role they play in creating business opportunities, and making them accessible to SMMEs. Going forward, there needs to be an understanding that SMME’s will need more support. Corporates must restructure their existing programmes to ensure maximum support and recognize that there is always more that can be done. Ensuring a strategic, controlled response to the impact of the pandemic on the economy.

There is no single approach to supplier development. The procuring company and supplier must develop a strategy that best suits their relationship, supply market, and industry – through partnership.

While supplier development is aimed at improving the performance of the supplier to the benefit of the purchasing company, personal relationships with the supplier can also have a positive impact on the end customer. Stronger customer-supplier relations can lead to better communication, greater efficiencies, and, ultimately, higher quality end products.