Supporting inclusive procurement and enterprise development
What we are doing
We ensure that suppliers in South Africa have a valid B-BBEE scorecard, where feasible, and we monitor our procurement spend on a monthly basis to better understand how it is being distributed among our suppliers and to identify opportunities to shift spend to more B-BBEE compliant suppliers.
Despite our ability to score full points for enterprise and supplier development, providing black-owned SMEs with training, mentoring and financial assistance; our business model hinders the achievement of full points for preferential procurement as many OEMs are multi-nationals and we are not able to score highly on spend with 51% black-owned businesses. OEMs are working together to develop a feasible ownership solution that targets a Level 4 contributor status, which will help Motus improve its scorecard rating.
Our enterprise and supplier development initiatives focus on the empowerment of SMEs, particularly black-owned enterprises.
2021 performance and looking forward
Group (South Africa)
spent with >51% black-owned businesses against a target of R1,1 billion(F2020: R1,3 billion)
spent with 30% black women-owned businesses against a target of R550 million(F2020: R498 million)
- Our procurement spend for F2021 totalled R56,7 billion, of which 35% was categorised as controllable. Of this controllable procurement spend, 63% was with preferential suppliers (F2020: 70%).
- 61% of suppliers (excluding OEMs) in South Africa have valid B-BBEE scorecards (F2020 77%).
- R2,0 billion was spent with EMEs and QSEs (F2020: R1,3 billion) against a target of R1,0 billion.
a 153% increase compared to F2020(F2020: R30 million)
- Of our R76 million enterprise development spend, 71% (R54 million) qualified for the B-BBEE scorecard. This equated to 3,1% of NPAT, meeting the dtic Codes' target of 3% of NPAT and scoring 15 out of 15 points (F2020: 3,7% of NPAT; R26 million).
- Objective: expand the inclusion of black-owned SMEs in our value chain supported by enterprise and supplier development spend.
Supply chain transformation
Wash bays and cleaning
Certain businesses outsource their wash bays to small businesses, who deliver on-site vehicle cleaning services, rent and utility free. As examples, Mercedes-Benz outsources one of its wash bays to Active Corporate Cleaning, an SME. Initially assisted in 2016 with the purchase of vehicle wash equipment and materials, Eco Auto Spa provides vehicle wash and cleaning services to Motus Auto Auctions. Rent and utilities are provided free of charge. The business has since expanded its service offering to include the sanitisation of buildings, which it does for Auto Pedigree's head office and branches in Gauteng. This year, Car Rental's enterprise development beneficiary, Favourite Brands, expanded its provision of domestic cleaning products to Europcar and Auto Pedigree. Going forward, Hyundai intends to expand the number of its outsourced wash bays managed by SMEs.
Culinary Concepts provides a bistro service at two Cargo Commercial sites, and has since grown its operation to sites outside of Motus. In 2018, we assisted McLicious Café with the purchase of kitchen equipment to sell cooked food, refreshments and snacks to Motus Auto Auctions and surrounding businesses. The business is not charged for electricity, water, ablution and storage facilities. Since opening, one person has been employed by the business. In F2021, Auto Pedigree provided their catering service provider, T&T Tripple K, with a R64 000 cash grant towards obtaining a trailer and to pay wages.
Enterprise and supplier development
(Hyundai, Financial Services and Car Rental examples)
During F2021, Hyundai and Financial Services invested over R20 million in enterprise and supplier development. Among the beneficiaries, are two high-growth potential SMEs and two 100% black-owned businesses in Hyundai's supply chain. All four beneficiaries received interest-free loans to assist their acquisition of equipment and improve their infrastructure to scale up their businesses and build competitive advantage. The businesses include an aviation technology SME, a panel beating and spray-painting business, a business consultant and a wheel alignment specialist.
One of the SME beneficiaries is a 100% black woman-owned and managed panel beating and spray-painting business, based in Mopane, North of Pretoria. The business has an average vehicle throughput of 25 vehicles a month and employs 27 people. Understanding the plight of unemployed youth, the owner turned this social challenge into an opportunity, acquiring MerSETA1 accreditation as a training and skills development institution. The training facility, based on her premises, provides learnerships and skills programmes for the youth in the local community. The first intake started their programmes in July 2021.
The wheel alignment specialist provides services to one of Hyundai's dealerships in the Gauteng East region. The dealership accommodates the supplier's wheel alignment machine, enabling him to operate on-site without incurring overhead costs. With Hyundai's assistance, the supplier is expanding the business to an additional two dealerships in the region. The loan will be used to acquire new wheel alignment equipment and the business will employ two people to service the additional dealerships.
In a separate initiative, Car Rental provided interest-free loans to suppliers during COVID-19 who were waiting for insurance companies to settle claims for damages caused while transporting rental vehicles. This assistance was over and above standard business practice.
Some of our enterprise development initiatives and highlights include:
- Provided a R2 million interest-free loan to the Unjani Clinics network as part of our focus on the development of women.
- Kia will investigate the feasibility of creating an enterprise and supplier development programme for panel beaters.
- Renault continued to support I Am An Entrepreneur (IAAE), which hosts skills workshops and masterclasses delivered by experts in various business disciplines and successful entrepreneurs to start-up and established businesses as well as entrepreneurs. This year's programmes focused on resilience, the entrepreneurial mindset, digital tools that aid productivity and marketing a business online. Programme events took a virtual format given COVID-19.
- As part of its supplier and enterprise development focus, Car Rental plans to provide a black-owned business (established or a start-up) with financial and technical support to enable its growth into a permanent supplier.
- Financial Services approved a service provider to develop a procurement database of suppliers to enable group buying power from B‑BBEE compliant suppliers. The procurement system will be cloud-based and provide automation capabilities, improving supplier relationships and enhancing the management of B‑BBEE initiatives. The business segment also approved a funding and development initiative for black‑owned businesses who are part of the value chain. The initiative will be brought to scale in F2022.
- Aftermarket Parts has supported the development of innovation hubs to assist young start-ups.