Seven steps to ESD nirvana

By Dylan Baxter
Raizcorp Head of Sales

Enterprise and supplier development (ESD) programmes aren’t just a core element of many companies’ B-BBEE scorecards, they’re also a major contributor to building a growing pool of thriving small businesses in South Africa.

But the road to a great ESD programme is littered with potholes for the unwary. Here are our seven key success factors that form the basis of any successful ESD programme.

Know your compliance targets
Your targets for enterprise development and supplier development are largely dependent on the spend you would like to make within that pillar.  This may be influenced by two things: to get the minimum of 40% sub-minimum score, or to achieve maximum points. This needs to be considered upfront as it fundamentally shapes the direction of the programme.

Set a desired strategic outcome for the year
In other words, what does success look like – not only for the business but for the various divisions and departments that will be influenced, like transformation, procurement and even marketing. Success is more than just getting your points; it’s about taking a long-term view, aligning the programme to the needs of the business, and putting in place key milestones along the way to measure progress.

Assess your internal capabilities
If you have limited resources available to deliver on your ESD strategy, seek external assistance. This is sometimes freely available and there are many companies (like Raizcorp!) that can help. If you do get external help, do your homework. There are literally thousands of providers out there offering various levels of solutions. Find one aligned to your strategy and way of thinking – and then go and visit them at their premises to look them in the eye, as it were, and get a feel for their fit for your company.

Identify the right products and services
This is critical. You have to know what products and services your company can use now and into the future in your supply chain. Engage your preferential procurement people to get a good idea of what these products need to look like, with robust, detailed specifications. Determine the rand value that you aim to procure from each business, and get traction from within the business. If the business does not buy into the strategy, the chances are they will not participate meaningfully in preferential procurement and the programme won’t achieve the desired outcomes.

Source the potential beneficiary businesses
To start with, you have to find businesses that you can procure from in your immediate measurement period. At the same time, you need to start creating a pipeline of supply and development beneficiaries (these are potential businesses you can start developing now to get them supply chain-ready for the next measurement period). This has the additional benefit of providing bonus points by graduating small businesses from enterprise development to supplier development.

Evaluate progress and track
Track, monitor, evaluate – this is the mantra of any successful ESD programme. It’s vital to measure the impact the ESD initiative is having on the business. The better the feedback, the stronger the buy-in from top management and the business, and the quicker you can make changes to the programme on the fly. Remember: as the supported entrepreneurial businesses create jobs, you are entitled to the additional bonus point.

Get your beneficiaries actively involved
To fully develop the beneficiary, you have to make sure they are as deeply involved in your business as possible. Get them to attend meetings, and share your goals and targets. An arms’ length approach doesn’t give them the opportunity to entrench themselves in your business, which affects their ability to develop as a business and deliver on the quality and spec that you’re looking for.

Done well, ESD can create sustainable small businesses that add real value to a supply chain. But it’s got to move beyond being a compliance exercise for big enterprises to an approach that forges long-term partnerships. Get that right, and everyone wins.