Link procurement and enterprise development to build SMEs
As corporates continue to grapple with the real transformation of their supply chains, they should look at the link between their procurement and enterprise development departments in order to provide SMEs with the openings to market they need, says Shawn Theunissen, head of CSR at Growthpoint Properties and Property Point (Growthpoint Properties’ enterprise development programme), in this month’s SmartProcurement.
Integrating procurement and supplier diversity programmes into enterprise development initiatives can meet the business objectives of the corporate and the SME.
“This market-driven approach develops SMEs so that they can meet the needs of the sector. By working with procurement departments to become ‘procurement-ready’, entrepreneurs are assisted to become compliant, and compatible with the client,” explains Theunissen.
Furthermore, this approach ensures transformation beyond compliance.
Theunissen draws on Growthpoint Properties’ enterprise development programme – Property Point – to illustrate how this can be achieved on a practical level.
“Property Point was developed based on the premise that there is a direct link between procurement and enterprise development, and that this could be used to close operational gaps in a SME’s business model. By designing our programme accordingly, we have unlocked direct procurement opportunities to the value of R62-million at Growthpoint and an additional R50-million in the greater property industry, while creating meaningful supplier diversity for Growthpoint.”
Property Point’s SMEs are thus incubated directly in the opportunity holder’s environment.
“Relationships between the procurement department and entrepreneurs are facilitated and enabled through the programme,” says Theunissen. SMEs are exposed to the individuals within the procurement department and key procurement staff work with entrepreneurs on an individual basis to help their businesses become procurement-ready.
The procurement department further facilitates access to markets by aligning businesses with Growthpoint’s supply chain needs and requirements. These requirements are also streamlined so that no barriers to entry are created for SMEs.
“Additionally, procurement shares industry insights with our entrepreneurs, enabling these SMEs to tap into the thinking of front-end decision-makers.”
However, Theunissen cautions that this type of integration must be accompanied by business development support and SMEs must be assisted to become more bankable. “By tailoring our approach to meet the needs of each business, our programme managers help them with everything from complying with operational management requirements to developing – and implementing – their own growth strategies.”
While the programme does not provide funding for the SMEs, it assists them to access finance by referring them to financial partners and providing them with an overview of financial products available. Theunissen adds that empowering entrepreneurs with an understanding of financial management forms a critical part of this process.
By facilitating the relationship between Growthpoint’s procurement department and its target suppliers, Property Point works to ensure that Growthpoint provides access to opportunities while diversifying its supply chain at the same time, says Theunissen.
“The direct link the programme has created between our procurement and enterprise development has thus had measurable and meaningful benefits for all parties concerned.”