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Enterprises that partner with local suppliers help SMMEs to flourish

Home Business Management SMME Enterprises that partner with local suppliers help SMMEs to flourish

By Hepsy Mkhungo

LOCALISING the supply chain could spell significant benefits for the South African economy, driving the development of small, medium and micro enterprises (SMMEs) – a sector central to the country’s economic recovery.

Localisation essentially requires corporates to provide business opportunities within the sphere of their own operations to local players, and demonstrate a commitment to transformation and SMME development.

The obvious broader benefit of this is economic growth, but localisation must ultimately result in job creation to have any real and significant effect. Any organisation – even a global enterprise – that wants to grow its market needs to start at home.

Organisations tend to be scrutinised for their actions and the work they do in proximity to where they operate. In the South African context, if local players are not given opportunities there is a tendency to disrupt operations, usually out of a desperate need to uplift the local community. SMMEs want to be included in supply chain opportunities and if there is a barrier to participation, communities expect corporates to demonstrate what they are doing to help local small businesses to qualify.

Aside from being a legislative licence to trade in many countries, localisation is often an unwritten contract between corporates and local communities in South Africa. A community that is able to access opportunities from a corporate supply chain in a specific area will protect their livelihoods. In the absence of this compact, we often witness destruction in our country.

However, corporate enterprises commonly face the problem of not having sufficient data to prove the extent of their involvement in the communities in which they operate. And while they may have some pockets of interaction with local SMMEs, these activities don’t necessarily yield significant results.

Furthermore, not having sufficient data, or having data in silos with respect to enterprise supplier development (ESD) initiatives, mean that many organisations miss out on leveraging insights that can inform decision making and provide meaningful feedback to the community.

When corporates start to digitise this information they begin to build an arsenal of information to prove their value in the community. This value becomes clear only when data is consolidated across various departments and used to provide a transparent and accurate picture of the processes undertaken and the number of SMMEs they have supported.

Thus, a digital supply chain is key to the operations of companies as it ties together relevant players through a network of sensors and social technologies, overseen via a central control hub, and managed through an overarching data analytics engine.

Digitalisation of an organisation’s operations, including its local supply chain, provides the transparency that enables workflows through multiple stakeholders who share the goal of working together. Additionally, data-driven insights facilitate decision making that is critical to create access to opportunities for stakeholders who are excluded from supply chain opportunities.

To effectively manage a local digital supply chain, enterprises need to streamline procurement opportunities, funding, and supplier development at a central point. This will ensure this information, as well as access to it it, is shared openly and not owned by a commodity manager with a list of preferred suppliers.

This removes a major barrier to entry, creating access to supply chain opportunities that are standardised, fair, transparent, and clear.

Hepsy Mkhungo is Co-Founder and Director of One Linkage

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