The Procurement Problem
Procurement is worth 20 points on the Generic scorecard and 25 points on the QSE scorecard.
On the Generic scorecard it is worth as many points as equity ownership (without the bonus points).
The aim of preferential procurement is to support black owned
businesses, EMEs, QSEs and generic companies that have a good BEE
level. This is important. In order to score points on procurement, a
company will have to identify its suppliers via the score they achieve.
It is no longer sufficient to merely ask for the percentage of black
ownership or black management. The entire score, or level of that
supplier must be identified.
This can be a difficult task! Some large corporations have
over 5000 suppliers, of all sizes. It can be a logistical nightmare to
obtain verified information from each supplier. It gets more difficult.
In our experience, only about 10% to 20% of suppliers will even respond to a
request from a company for their score. Those suppliers themselves need
to go through the process of obtaining a scorecard, including doing
their own preferential procurement exercise.
Some issues around the procedure:
Encourage your suppliers to submit their information. They
probably do not know how important it is to you that they give you
their score. If they knew that by giving you a score, would help you in
your own business, they would probably be more accommodating.
The reality is that most companies will have a low score.
Explain to your suppliers that any score is better than no score at
all. We know of many companies that are too embarrassed (or scared) to
submit a score.
Where the supplier has a score or a rating, you should allow him to submit it to you.
If the supplier does not have a score you should send out a
questionnaire to its suppliers. The questionnaire should be as simple
as possible, but ask for sufficient information to be able to obtain a
proper scorecard. See questionnaire for a sample questionnaire. The
questionnaire should be easy to fill in and submit back to you, via a
printed form, or an on-line site.
Assist the supplier. We can offer to host a workshop in your
offices to explain the intricacies of the scorecard and why you need it
If the supplier does not want to fill in the questionnaire, he
can choose to get a rating, or better still, do his own self-rating,
which is implicitly allowed. Our EconoBEE Scorecard software is a
low-cost starting point, and could be recommended to all suppliers.
Once supplier responses start coming in, you should create a
simple database – we have even seen excellent Excel spreadsheets that
handle this, or we can help you in this regard.
The responses should be analysed. If the response is a rating
or document from a responsible source, it only needs a quick glance to
ensure its accuracy. Alternatively it should be investigated and
accuracy confirmed. The codes do say that it is not your responsibility
to double-check all scorecards you receive, but you are entitled to
check up on a scorecard and investigate further if you have reason to
believe it is not accurate. Experts from our company will be able to
give an informed opinion within a minute or two, without having to
double-check all the information.
The information in the database to be captured should include
the Type/Size of Company (ie EME, QSE, Generic), black ownership %, and
the level achieved by the company.
Eligible procurement in your company should be identified, by
value, type of goods/services and supplier. This information is
obtained from your accounting/finance department.
We need to know the value spent with each supplier. This gets
put into the same database/spreadsheet, ideally next to the companies’
The actual calculation is not that complicated once you have
all the data in a nice formatted spreadsheet or database. You may
download an example of the calculation here.