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MNP2601 CHAP 17-1
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CHAPTER 17-1
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Justify the use of small suppliers from a global point of view in the face of governmentpressure and initiatives and from a business related perspective.
Small suppliers play a pivotal role in the global economy eg. Eskom is supplied by small
business enterprises with coal for electricity generation. As eskom is an estate owned entity
therefore the use of coal forms part of government initiatives to empower and capacitate the
small suppliers.
CLARIFY the challenges encountered by the role players in the small supplier-large-buyer
situation.
Location
Will increase costs in terms of transportaion of the products and wll therefore increase
supplier's financial price.
Lack of experience
Developing programme to capacitate and to empower SME's in mangement skill, pricing and
invoicing.
Financial instability
Most SME's don't have sufficient funds.
This lead to negative impact on deliveries.
Dependency
The suppliers tend to depend on the enterprise that buys the products from them.
Welfare perception
Most SME's have a perception that as they were disadvantaged they should have a first
preference
Accordning to procurement policy all suppliers should be treated equally
Risks
Poor products quality
Supplier errors
Increase inventory situation
Out of stock situation
Tracing and development
Identifying weaknesses and develop suppliers
DEVELOP and implement a plan to manage a small business purchsing programme.
SA organisations have to comply with the current legislation concerning BEE. They have to
implement a small business purchasing policy and programme incorporating elements of
BBBEE concepts
Goal and mission of the the organisation
Should be implemeneted with caution
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