Leveraging Supplier Diversity
A pioneering partnership to activate SMME success
A pioneering partnership between Johnson & Johnson (Pty) Ltd (J&J) & Shanduka Black Umbrellas (SBU), the LOLONGA mentoring programmes, was launched at a handover ceremony held at Cape Town’s Upper Eastside Hotel on 5 October 2014. The programme sets out to establish a mentoring alliance through which 100% black owned SMMEs aligned with the SBU programme are able to tap into the knowledge, skills and contacts of J&J’s procurement personnel located across the globe. Approximately 40 J&J mentors have made themselves available for the programme.
J&J procurement executives, including Group Chief Procurement Officer MD&D, Ruben Taborda, Daniel Aebisher, Head of Procurement for Sub-Saharan Africa (Pty) Ltd, and members of their team travelled from the USA and Europe to finalise the mentoring agreement with Shanduka Black Umbrellas, representing a fundamental milestone in developing international supply chain diversity within South Africa.
Speaking to the import of the occasion, CEO of Shanduka Black Umbrellas, Mark Frankel said, “Here we have a programme where we have access to mentors from around the world with incredible skills and knowledge and we are excited about the potential for the development and growth of the SBU clients with the impact of the J&Jmentors.”
The launch was held at the Cape Town (SBU) business incubator premises, one of eight such incubators located throughout the country. Donovan Goliath, regional manager of the SBU Cape Town said, “This cements the relationship between J&J and Shanduka Black Umbrellas. Really it is about us supporting each other, and that our community of clients can benefit from the expertise that resides within these executives and managers offering up their time to mentor our businesses.”
Shanduka Black Umbrellas’ community of clients are the black owned small and medium size enterprises within the fold of the SBU programme receiving multi-tiered support aimed at mentoring, professional business training and sustainability through access to procurement opportunities.
The vital connections formed through LOLONGA enable SMMEs to gain first-hand insight into the complexities of corporate procurement processes. And equally important, it offers realistic benchmarks for small businesses to understand the level of innovation and differentiation needed to win the interest of procurement managers, locally and internationally.
In his opening presentation Taborda said, “This is very personal for me as the work carried out by Shanduka Black Umbrellas in supporting local business enterprises is so important.”
Taborda related his personal account of growing up as a Hispanic in North America, living below the poverty line for much of his youth before achieving a tertiary qualification using through a bursary awarded to him by Johnson & Johnson, followed by a 30 year career with the Company.
Having been charged with leading supplier development diversity for J&J has special significance for Taborda who has seen the Company inaugurated into the Billion Dollar Roundtable (BDR). This is an exclusive group of US corporations that have met BDR’s billion dollar annual procurement milestone, created to recognise and celebrate corporations that have achieved spending of at least $1 billion with minority and women-owned suppliers.
As the only pharmaceutical company to achieve this recognition, this status exemplifies the level to which the Company has been committed to supplier development, an extension of their CREDO – the Company’s roadmap to guide decision making throughout the organisation.
Affirming this commitment, Daniel Aebisher, Head of Procurement for Sub-Saharan Africa, says, “We put our customers first: the mothers and fathers, doctors and patients whom we serve. Whatever we do, we do with excellence and do our best to create value for everyone from the suppliers to the internal stakeholders.”
There are important lessons for South African businesses in this model – for both corporates and 100 black owned SMMES. For South African Corporates, the benefits of using smaller companies in their supply chains goes beyond issues of compliance and accruing B-BBEE scored points. It represents meaningful opportunities to help grow the economy through small to medium sized enterprises. In generating economic growth within communities, these companies in turn are supported by citizens who are motivated to buy products and services they know directly benefit previously marginalised groups.
For black-owned SMMEs the value of partnerships, such as the one provided through LOLONGA, offers international best practice know-how and benchmarking for what can be achieved in South Africa through the right commitment and advocacy from government, civil society and corporations.
According to Shanduka Black Umbrellas’ CEO, Mark Frankel, South Africa has a long way to go to undo the legacy of a history that excluded small black owned businesses from the formal economy.
In the 20 years of democracy – the call made by former president Nelson Mandela 3 years after his inauguration as South Africa’s president, was to develop the economy through small to medium sized enterprises within the context of their inherited obstacles – has not received the level of attention it has needed.
Developing this economic landscape is critical to the success of black enterprise in the country who still confront a lack of internal market openness. Large South African companies have tended not to have effective supplier development and diversity programmes, with a direct negative impact on the country’s entrepreneurial activities.
“Supplier development and diversity is something new to South Africa as we are moving into a more open economy. There needs to be a more open culture in supply chains”, says Frankel.
Current statistics revealing a gloomy picture, only 8% of business activity represent entrepreneurial endeavour as opposed to the 16% that the country should be operating at. Furthermore, of those 8% of start-ups, 80% fail within the first two years of operation.
This is why initiatives such as Shanduka Black Umbrellas are creating strategies and partnerships with government, civil society and the private sector to spearhead development in the SMME sector. They do this with the support of Shanduka Foundation and their partners, such as Johnson & Johnson (Pty) Ltd and the LOLONGA intiative.
This is a vital imperative according to Cyril Ramaphosa, Shanduka Foundation Chairperson, who says, “Empowering black businesses, particularly your small-medium enterprises, is absolutely essential if we are going to transform and grow the economy of our country.”