How is your ESD Plan aligned to your business objectives?
According to the amended BBBEE codes all companies will now need to have an Enterprise and Supplier Development (ESD Plan) submitted (Section 4.12 of Statement 400) before the commencement of their new financial year. In essence there are three main strategies or a combination between these three strategies that an ESD Plan can focus on. The first and the most obvious of these strategies is around Preferential Procurement and this is where most companies will start their focus. The second that companies should carefully consider is that of Social Impact and the third strategy is a client facing strategy.
The Preferential Procurement Strategy
The first strategy focuses your efforts in the area of Enterprise and Supplier development and the gaps that you might experience in the areas of Preferential Procurement. If you therefore do your Preferential Procurement gap analysis and find out that you have gaps in the area of Black Woman Owned companies you might decide to build your ESD Plan around a strategy for the procurement of Black Woman Owned Companies. For more information on your Preferential Procurement strategy and the various different variations of the plan please see our section on Targeted Procurement Strategies. The process to go about selection of ESD Beneficiaries would first be to consider what your various procurement strategies would be. After you have decided on this you can then go about aligning your Enterprise and Supplier Development efforts with your Targeted procurement efforts.
The Social Impact Strategy
It is sad that this needs to be mentioned as a strategy under BBBEE. The reality though is that many companies out there consider points first before considering social impact. As we discussed earlier in a blog entitled “BBBEE and the right thing to do” it is important that you consider wisely how your BBBEE efforts will have a societal impact. The intention of BBBEE is to bring about transformation in the country and creating a myopic view of BBBEE points will not lead to the achievement of the intended outcomes.
In your social impact strategy you will need to be aware of how your plan could affect the social communities in which you operate or if your plan is aligned to your strategic social impact drivers. If your Social Economic Development targets are therefore seeking to educate and inform woman in rural communities it might be wise to align your Supplier and Enterprise Development Plan (ESD Plan) with your social drivers.
What you might also consider is how you can increase the social impact of your ESD Plan by, for instance, using government or other resources. An example of this might be using the Incubation Support Program of the DTI to leverage your ESD spend. You could also focus on making your Incubation activities sustainable so that you might leverage your future ESD spend.
The Commercial Strategy
This strategy could assist you in addressing some of the needs that your clients might experience in their BBBEE codes. Many government institutions for instance seek to procure from Joint Ventures in their tenders. If you are in such a situation it might make sense for you to target the needs of you clients in your ESD Plan.
An example of this strategy is the Franchising model that some facilities management companies are currently employing. This assists them in leveraging their BBBEE scorecard and current black ownership in order to gain market share and brand awareness while also developing EME/QSE companies.
Some ESD Plans that also follow this strategy are those taking place in the distribution chain of companies such as Coca Cola or SAB. This enables the company to develop smaller companies while at the same time significantly increasing their reach and competitive footprint.
How do I put together my ESD Plan?
The decisions that you make in your ESD Plan will depend on various factors. You might also find that a combination of all three strategies works best for your company. What is important to note though is that this will need some serious consideration and that companies will no longer in the future be able to just outsource the task to someone else to make the decision for you. Your ESD Plan will need to be integrated with your business plan.