Old boys supplier networks are dominating the procurement landscape and continue to enforce barriers to entry for new and emerging black competitors, says South African Supplier Diversity Council (SASDC) CEO Gary Joseph.

He tells Engineering News that access to these markets can stimulate competitive growth, and that transformation will be significantly accelerated by the promotion of sustainable supplier diversity through targeted procurement and black-supplier development.

The old boys supplier networks are informal systems through which money and power are retained by a select few through commercial relationships that have a long history of benefit between these partners and traditionally exclude other players from gaining entry, Joseph explains.

“Consigned to the ‘lower’ rungs of the supply chain ladder, many black-owned businesses have been squeezed out of the more strategic and more lucrative areas of procurement. ‘Ghettoisation’ of supply chain opportunities has been the result, fuelled by a deep cynicism among procurement chiefs of the competence and experience of black companies.”

This inhibits healthy competition, limits innovation and prevents the unlocking of potential commercial benefits across immediate and extended value chains, he adds.

Joseph suggests that broad-based black economic empowerment (BBBEE) be understood as a means of helping to unlock value within business and “not as a means of splitting the economic pie into smaller pieces, but of growing the pie itself”.

BBBEE aims to drive equitable access to and the participation of more black South African citizens in the mainstream economy, he says, adding that, instead of viewing it from a compliance perspective, it should be regarded as a means to build better businesses and empower everyone.

However, Joseph cautions that black businesses, which believe they “are owed success because of past injustices”, should put in the work required, be competitive and research best practices in their various fields.

The dominant perception of black businesses by big business is that they lack the competence, experience and expertise to supply the solutions required and to which big business is accustomed, he adds.

“Black businesses must target corporate customers to understand what their strategic priorities and business challenges are. Define how your business can provide competitive solutions in response to these and why your solution is better than that of your competitors. Join networks, such as the SASDC, to enhance the visibility of your business and build relationships with others that can support the success of your business goals,” Joseph advises.