STATEMENT-400 GENERAL PRINCIPLES FOR MEASURING ENTERPRISE AND SUPPLIER DEVELOPMENT
This is the tenth article in a series discussing the Event, Technical, and Production Services Industry B-BBEE Sector Code Scorecard.
In this article, we discuss the basics of Code Series ETPSI-400: MEASUREMENT OF ENTERPRISE AND SUPPLIER DEVELOPMENT.
OBJECTIVES OF THIS STATEMENT
1.1 Specify the scorecard for measuring Enterprise and Supplier Development;
1.2 Specify the key measurement principles applicable to calculating Preferential Procurement Contributions; Qualifying Enterprise Development and Supplier Development Contributions;
1.3 Define the principles applicable when calculating B-BBEE Procurement Spend and Enterprise Development and Supplier Development Spend; and
1.4 Indicate the formula for calculating the individual criteria specified in the Enterprise and Supplier Development scorecard.
ENTERPRISE AND SUPPLIER DEVELOPMENT SCORECARD



KEY MEASUREMENT PRINCIPLES
3.1 The Enterprise and Supplier Development consist of:
3.1.1 Preferential Procurement;
3.1.2 Enterprise Development; and
3.1.3 Supplier Development.
3.2 Enterprise Development and Supplier Development Contributions will be recognised as a percentage of annual Net Profit After Tax (NPAT).
3.2.1 The Net Profit After Tax (NPAT) or average target applies unless:
3.2.1.1 the company did not make a profit last year or on average over the last five years
3.2.1.2 the net profit margin is less than a quarter of the norm in the industry.
3.2.1.3 If the Turnover is to be used, the target will be set at:
3.2.1.3.1 1% (ED) or 2% (SD) x Indicative Profit Margin (NPAT/Turnover) x Turnover
SUB-MINIMUM AND DISCOUNTING PRINCIPLE
3.2.1 A Measured Entity must achieve a minimum of 3% of each of the total weighting points as set out under Statement-000, Paragraph 23.1
3.2.2 Non-compliance to one or more of the threshold targets as per paragraph 3.1 will result in the overall achieved B-BBEE status level being discounted in accordance with paragraph 12.1 in Statement-000.
3.3 An Empowering Supplier within the context of B-BBEE is a B-BBEE compliant entity, which is a good citizen South African entity, complies with all regulatory requirements of the country, and should meet at least three if it is a large enterprise or one if it is a QSE of the following criteria:
(a) At least 25% of the cost of sales excluding labour cost and depreciation must be procured from local producers or local suppliers in SA, for services industry labour costs are included but capped at 15%.
(b) Job creation – 50% of jobs created are for Black people provided that the number of Black employees since the immediate prior verified B-BBEE Measurement is maintained.
(c) At least 25% transformation of raw material/beneficiation which includes local manufacturing, production and/or assembly, and/or packaging.
(d) Skills transfer - at least 12 days per annum of productivity deployed in assisting Black EMEs and QSEs beneficiaries to increase their operation or financial capacity.
3.3.1 Exempted Micro Enterprises and Start-Ups are automatically recognised as Empowering Suppliers.
3.4 The Weighting points in the Enterprise and Supplier Development scorecard represent the maximum number of points possible for each of the criteria.
3.5 If a Measured Entity procures goods and services from a supplier that is:
3.5.1 A recipient of supplier development contributions from a Measured Entity under Code series 30 which has a minimum 3-year contract with the Measured Entity, the recognisable B-BBEE Procurement Spend that can be attributed to that Supplier is multiplied by a factor of 1.2;
3.5.2 A black-owned QSE or EME which is not a Supplier Development beneficiary but that has a minimum 3-year contract with the Measured Entity, the recognisable B-BBEE Procurement Spend that can be attributed to that Supplier is multiplied by a factor of 1.2;
3.5.3 A supplier to the Measured Entity that is at least 51% Black Owned or at least 51% Black Woman Owned utilising the Flow-Through Principle, the recognisable B-BBEE Procurement Spend that can be attributed to that Supplier is multiplied by a factor of 1.2.
3.6 Procurement of goods and services and any other activities that fall under 2.1 (of the table above) will not qualify for scoring under 2.2 and 2.3 (of the table above) and vice versa.
3.7 Beneficiaries of Supplier Development or Enterprise Development are EMEs, QSEs, or Event, Technical, and Production Services Industry B-BBEE Sector Code Entities which are at least 51% Black Owned or at least 51% Black Women Owned utilizing the flow through principle.
3.8 A Supplier Development Beneficiary is a part of the Measured Entity’s supply chain, whereas an Enterprise Development Beneficiary is not.
3.9 B-BBEE Procurement Spend from Event, Technical and Production Services Industry B-BBEE Sector code Entity Suppliers which are at least 51% Black Owned or at least 51% Black Women Owned utilizing the flow through principle can be recognized under Point Indicator 2.1.2 and 2.1.3 of the Enterprise and Supplier Development Scorecard. However, this is based on the provision that first time of procuring goods and services, it was identified that such suppliers were EMEs or QSEs. The recognition
under Point Indicators 2.1.2 and 2.1.3 will only be allowed for 5 years from the first time procuring goods and services from such suppliers.
GENERAL PRINCIPLES
4.1 To actively support procurement from black-owned QSEs and EMEs by identifying opportunities to increase procurement from local suppliers to support employment creation.
4.2 To support procurement from black-owned and black women-owned businesses to increase the participation of these businesses in the mainstream economy.
4.3 To promote the use of black-owned professional service providers and entrepreneurs as suppliers.
4.4 Measured Entities receive recognition for any Enterprise Development and Supplier Development Contributions that are quantifiable as a monetary value using a Standard Valuation Method.
4.5 Measured Entities are encouraged to align their Enterprise Development and Supplier Development initiatives with the designated sectors of the government’s localisation and value-adding programmes.
4.6 Measured Entities are encouraged to align their Enterprise Development and Supplier Development initiatives with their supply chain requirements thereby linking Enterprise Development and Supplier Development with Preferential Procurement.
4.7 Qualifying Enterprise Development and Supplier Development Contributions of any Measured Entity are recognisable on an annual basis.
4.8 Contributions, programmes, and/or initiatives that span over multiple years, the total contribution amount must be divided by the number of years, and the average per year is then to be utilised for the annual contribution.
4.9 Measured Entities are encouraged to develop and implement an Enterprise Development plan and Supplier Development plan for Qualifying Beneficiaries. The plan should include:
4.9.1 Clear objectives
4.9.2 Priority interventions
4.9.3 Key Performance Indicators; and
4.9.4 A concise implementation plan with clearly articulated milestones.
4.10 Measured Entities will not get recognition for the same activities undertaken under 2.2 and 2.3, they will only get recognition for one of the two i.e. 2.2 or 2.3.
4.11 No portion of the value of any Qualifying Enterprise Development and Supplier Development Contribution that is payable to the beneficiary after the date of measurement can form part of any calculation under this statement.
This concludes part 1 of Code Series ETPSI-400: MEASUREMENT OF ENTERPRISE AND SUPPLIER DEVELOPMENT.
Part 2 will discuss TOTAL MEASURED PROCUREMENT SPEND, EXCLUSIONS FROM TOTAL MEASURED PROCUREMENT SPEND, MEASUREMENT OF B-BBEE PROCUREMENT SPEND, and THE CALCULATION OF PREFERENTIAL PROCUREMENT CONTRIBUTIONS TO B-BBEE.