SUPPLY CHAIN MANAGEMENT
By: Mr Themba Shezi
Head & CPO Supply Chain Management Unit
By: Mr
Themba Shezi
Director-Institute
of Purchasing and Supply South Africa
Head of Supply Chain Management & CPO
1 September 2010
PRESENTATION TO SMME FAIR
THE PRESENT (Starting from 2001 to Date)
 After the promulgamation of The Preferential Procurement Policy Framework Act (PPPFA) No.5 of
2000, Preferential Procurement Regulations followed in 2001, which gave guidance for the
implementation of the said act.
 This gave birth to a new and existing criteria for the awarding of preferential points to companies
owned by HDI’s, or for Sub-contracting to HDI’s and/or Achieving one or more of the RDP Goals.
For all tenders with the rand value from R30K up to R500K, 20 points are allowed for preferential
status and the remaining 80 points for the price. For all tenders with the rand value above R500K,
10 points are allowed for preferential status and the remaining 90 points for the price.
 In line with these developments, eThekwini Municipality developed it’s own Targeted Procurement
Policy which was adopted by Council in June/July 2003. This changed the way we recognised
Targeted Businesses and allocation of preferential points.
 The new categories of recognition are :
Historically Disadvantaged Individual (HDI) : The definition includes Black, Women, and Disabled Individuals and
preference has been given to all these target groups who, due to the apartheid policy that had been in place, had no
franchise in national elections prior to the introduction of the Constitution of the Republic of South Africa, 1983 (Act
no 110 of 1983) or the Constitution of the Republic of South Africa, 1993 (Act No 200 of 1993) (the Interim
Constitution). Provided that a person who obtained South African citizenship on or after the coming to effect of the
Interim Constitution, is deemed not to be an HDI.

Priority Population Group (PPG): Black Individuals who fall into population groups that were not offered a
franchise in the national elections before or after the introduction of the 1984 tri-cameral parliamentary system and
only received a franchise during 1994. That exclusion had a major negative bearing on their lives therefore,
resulting in them being worse affected in terms of poverty levels, unemployment and/or unfulfilled basic needs
(Water, Electricity, Housing & Sanitation)

Black Business Enterprise (BBE): At least 26% Black Owned in terms of equity and voting rights/powers, with a
corresponding management representation at all levels.
THE PRESENT (Continued)

Priority Business Enterprise (PBE): At least 26% Owned by individuals which are from the Priority Population
Group in terms of equity and voting rights/powers, with a corresponding management representation at all levels.

Women Business Enterprise (WBE): At least 26% Women Owned in terms of equity and voting rights/powers, with
a corresponding management representation at all levels. See below, for various categories of ownership and
management.

SMME’s : Are Small, Medium & Micro Enterprises

Local Content/Resources/Businesses: Local Resources for the purposes of this policy is EThekwini Municipality
Area first, KZN second and SA third and where applicable, Africa fourth.
 Other Preferential Arrangements include the following :
Participation Goals: Participation goals and preferences are set for companies who meets the minimum
requirements in terms of a Balanced Score Card as stipulated in the Department of Trade and Industry’s Broad
Based Black Economic Empowerment Strategy. This will apply mainly to major contracts and/or engagements.

Payment to SMME`s (EARLY PAYMENT CYCLES)
SMME`s within the Very Small and Micro categories are paid within 14 days of receipt of approved invoice. All other
payments are to be within 60 days from date of delivery or in the case of work completed, the date on which the
invoice has been approved or 30 days with a 2,5% settlement discount, unless otherwise agreed.
 Levels of Recognition are as follows:-
 Influenced Company: We call a company ‘influenced’ in a category when ownership in that
particular category is between 26 and 50 percent, with corresponding management representation at
Board, Executive and Operational levels.

Empowered Company: We call a company ‘empowered’ in a category when ownership in that particular category is
between 51 and 75 percent, with corresponding management representation at Board, Executive and Operational
levels.

Substantially Owned Company: We call a company ‘substantially owned’ in a category when ownership in that
particular category is between 76 and 100 percent, with corresponding management representation at Board,
Executive and Operational levels.
THE PRESENT (Continued)
 Contract/Tender Adjudication Methods Used by eThekwini
Municipality
 For all values equal or less than R500 000, 80/20 Scoring is used, where
80 points are for the price and 20 points for the preferential/BEE status
 For all values more than R500 000, 90/10 Scoring is used, where 90
points are for the price and 10 points for the preferential/BEE status
 EThekwini Municipality were the first to include Priority Population Group
and PBE’s in their policy to address the skewed results achieved prior to
this policy.
 This policy was hailed as the best policy in the country and very
progressive.
 Through this policy a lot has been achieved in terms of the Economic
Transformation as would be seen from the figures shown in the
achievements slide.
THE JOURNEY ACHIEVEMENTS
INTERPRETATION OF THE RESULTS
 Results Speak for themselves. There has been significant
improvement and progress made since year 2002/3 to 2009/10 as
evidenced by the following movements : PBE’s moved from R15m in 2002/3 to R1057m in 2009/10.
 BBE’s moved from R207m in 2002/3 to R1798m in 2009/10.
 WBE’s moved from R15-38m in 2002/3 to R1007m in 2009/10.
 SMME’s moved from R207m in 2002/3 to R2298m in 2009/10.
 Local Businesses moved from R8-38m in 2002/3 to R2598m in 2009/10.
ELECTRICITY SPEND DATA ANALYSIS
CATEGORY
TOTAL
% OF TOTAL
ELECTRICAL CONSTR/MAINT
198,611,242
19%
SUB-STATION CONSTR/MAINT SWITCHGEAR
185,404,203
18%
ELECTRICAL ACCESSORIES
169,388,555
16%
ELECTRICAL CABLE
134,248,815
13%
UNKNOWN
63,009,287
6%
LIGHTING
28,840,077
3%
INFORMATION TECHNOLOGY
28,312,078
3%
SUB-STATION CONSTR/MAINT
24,309,311
2%
92 OTHER CATEGORIES
204,860,510
20%
GRAND TOTAL
1,036,984,078
100%
How does SCM Facilitates BEE
Developing an Empowerment Charter which will Describe Specific
Empowerment Objectives for Different Types of Projects & Through
Continued Enforcement of the City’s Procurement Priorities which are :

Increased Usage of Local Resources

Redressing of Skewed Employment and Ownership

Patterns through Black Economic Empowerment

Creation of Opportunities for Job Creation and Poverty

Alleviation

Stimulation of Skills Development and Transfer

Fast-tracking the Growth and Ensuring Sustainability of SMME’s
How does SCM Facilitates BEE (Continued)
Increasing usage of Local Resources
Means of Achieving that are:
By Setting Minimum Targets for Usage of Local Labour and
Businesses
Redressing of Skewed Employment and Ownership
Patterns through Black Economic Empowerment
Means of Achieving that are :
By Setting Minimum Targets for Broader
Participation by Targeted Businesses through
Packaging of Contracts
Enforcing Panel Contracts
Creation of Opportunities for Job Creation, Poverty
Alleviation and Skills Development /Transfer
Means of Achieving that are :
 By Targeting Certain Contracts for Compulsory
Employment of the City’s Unemployed Youth and
Graduates/Skilled Labour through Learnerships
and Apprenticeships
 By Facilitating Incremental Implementing of EPWP
 By Facilitating Incremental Usage of Co-ops
 By Implementation of the Unit’s Trainee Program
Range of Procurement activities
Fast-tracking the Growth and Ensuring Sustainability of
SMME’s
Means of Achieving that :
 By Ensuring Enterprise Development through Setting the
Targets for SMME’s Participation
 By Setting Minimum Requirement for Procurement of
Goods and Services from SMME’s by Successful
Contractors
Range of procurement activities (continued)
Goods:
Stationery, staff uniforms, medical supplies, material supplies, etc.
Services:
Insurance, banking, vehicle repairs, cleaning contracts, software development, etc.
Professional Services:
Engineering consultants, Auditors, Attorneys, etc.
Engineering and construction work:
Civil, Building, Electrical, Structural, etc.
Disposal of movable & immovable assets:
Office Furniture, Computers, vehicles, land, etc
Hiring and renting of assets:
Plant Hire
Acquiring and granting of rights as applicable to procurement:
Range of procurement processes
Upper Limit
Procurement
Method/Quotes
Tender
Charge
Sureties
(10%)
R500(vat incl.)
Petty Cash
N/A
N/A
R500.01
R5 000.00
One Quote
No
No
R5 000.01
R30 000.00
Formal Written
Quote
No
R30 000.01
R200 000
Mini Public
Tender
No
Public Tender
Yes
Lower Limit
R0
>R200 0000
*
No
No
Yes
(>R500,000)
* Tenders >R10 million and Long-Term contracts award by Accounting Officer
General Preconditions for consideration of written
quotations or bids
A written quotation or public tender may not be
considered unless the provider has:
furnished the providers name,ie
i.
Full name
ii.
Company registration number
iii.
tax clearance certificate-which provides that the providers tax are in
order
iv.
& statement providing that water,electricity, rates are up to date or
formal payment arrangement)
has indicated –
i.
Whether he or she is in the service of the state, or has been in the
service in the previous twelve months
ii.
If the provider is not a natural person, whether any of its directors,
managers, principal shareholders or stakeholder is in the service of
the state, or has been in the previous twelve months; or
iii.
whether a spouse,child or parent of the provider or of a director,
manager, shareholder or stakeholder referred to in subparagraph (ii) is
in the service of the state, or has been in the service of the state in the
previous twelve months
As a guideline, an enterprise that is ready to tender:
Is a registered business
Is able to deliver - on time and according to specifications
Is up to date with its taxes, rates, electricity and water.
Is pro-active, actively looking for business opportunities
Has registered its employees with the Department of Labour (UIF,
Skills Development Levy, Workmen's Compensation etc.)
Registered in the eThekwini Municipality’s Suppliers’ Database.
Registration forms can be collected from Procurement Monitoring
Unit 1st Floor Shell House, Durban; and
Registered with the relevant Professional Body, such as the CIDB,
NHBRC, Seta, etc.
Suppliers Database Registration Requirements:
 Application forms (Part A and Part B)
 Valid Tax Clearance
 Owners ID’s
 Company Registration Certificate (such as, CK)
 Company Letterhead
 Cancelled cheque/bank statement
 Address:
City Engineers Building – 6th Floor, 166 KE Masinga Road,
Durban, 4001
 No faxes and emails
Tendering opportunities
Contracts under R200 000.00, Quotations
Advertised on the notice board in the following units /departments;
1. City engineers Unit , 166 KE Masinga Road
2. Water Services, Wastewater Management, 3 prior Road
3. Materials Management Branch,166 Old Fort Place, Ground
floor
4. Architectural Department, at 166 Archie Gumede Place,
Ground Floor
5. Electricity Unit, 1 Jelf Taylor Crescent,Ground Floor
6. Housing Unit, 90 Shepstone Road, New Germany
Contracts above R200 000.00, Public Tenders
Tenders are advertised in the eThekwini Municipality’s own free newspaper, Metro
Ezasegagasini, which is issued every Friday. Copies of this Newspaper are
obtainable at City Hall basement Churchwalk Entrance, and other Municipal offices.
Frequently asked Questions
 How does eThekwini Municipality support and develop Small, Medium and
Micro Enterprises (SMME’s)?
 Does the Municipality offer Tender advice and support ?
 What is the Purpose of the Accredited Supplier Database?
 Why are companies registered on the Database and not called for quotations?
 Where does Council advertise Tenders?
 Does the Council have a Rotation System to ensure that not only one Service
Provider is used all the time?
 Does Council ensure that breakout Procurement or unbundling occurs when big
projects are advertised, or is the main contractor allowed to sub-contract and
outsource?
 Why does the Municipality not provide feedback to Tenderers on unsuccessful
Bids?
 Does the Municipality issue more than one cession – sometimes the contractor
uses the cession with one Supplier and when he/she requires something else
from another Supplier, it becomes a problem?
 Can a person registered on the Council database Tender for Provincial work or
is it necessary to register with the Province and vice versa?
 Is it necessary to submit a Tax Clearance Certificate with every Tender Bid?
SCM CONTACTS
Designation
Name
Telephone
Head: & CPO Supply Chain Management
Themba Shezi
031-322 7003
Deputy Head: Supply Chain Operations
Sandile Ngcobo
031-322 7001
Deputy Head: Policy & Business Support
Andre’ Petersen
031-322 7002
Manager: Customer & Supplier Relations
Bongi Blose
031-311 7153
Snr.Manager: Corporate Procurement
Nhlanhla Mathenjwa
031-3117530
Manager: Water Procurement
Tarryn Bartholomew
031-3118619
Manager: Electricity Procurement
Tumo Mpetsane
031-3119420
Snr.Manager: Performance Risk Mngt
Mdu Mkhize
031-322 7006
Manager: Tender & Contract Coordination
Bongiwe Nyandeni
031-322 7015
Manager: Supplier & Empowerment Mngt
Zandile Sithole
031-322 7007
All Supply Chain Related Queries/ Complaints/ Information
Central Contact
Manager : Customer & Supplier Relationship
Bongi Blose
031-311 7153 / 7028 / 7153-telephone
031-3117330- fax
BloseCB@durban.gov.za :email
NzamaN@durban.gov.za
166 Archie Gumede Place, Corporate Procurement
Building (MMB), ground Floor
Questions ??
THANK YOU
SMME FORUM 2010