17 November 2010 | Nick Martindale
South African companies seeking to improve their broad-based black economic empowerment (BBBEE) rating are failing to fully benefit from the ‘preferential procurement’ element.
Sandile Hlophe, managing director, restructuring advisory at business analysts KPMG, said CEOs and leadership teams now realise the benefit the preferential procurement part of the scorecard can bring. This is not, however, filtering down to purchasing leaders who in turn need to communicate clear strategies to suppliers.
“Preferential procurement carries a high rating of 20 points and it doesn’t cost companies anything to implement, only communication and working with suppliers,” he said.
“Leadership and management have realised that preferential procurement is important but purchasing officers need to wake up.”
As reported in SM, a recent KPMG report found preferential procurement has for the first time become one of three ways for organisations to improve their BBBEE rating.
Despite this, the number of companies setting a minimum standard for suppliers fell from 46 per cent in 2009 to 27 per cent in 2010.
“Procurement departments need to put together a clear strategy to contribute to their company’s score by making sure they only source products and services from companies with a good scorecard,” added Hlophe.