Control Purchasing Costs by Enforcing Contract Compliance

As the economy picks itself back up off the floor, many companies and government agencies are turning toward more structured processes and tools to help them control maverick spending.

Budgets are tightening and more diligent approval processes are driving many toward stricter guidelines when it comes to supplies and services. Managing operational budgets through spend management and contract compliance will continue to help control purchasing costs across the enterprise.

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Executive management is repeatedly tasking the organization to cut costs in order to save jobs and continually looking to the purchasing director for new ways in controlling discretionary spend and driving the enterprise toward global sourced contracts. Unfortunately, these same purchasing directors are losing staff and are tasked to work more efficiently with less people. This can be very difficult to accomplish without the right tools in place.

As part of this effort, the organization must put more accountability on the departmental managers to ensure their employees are adhering to these new guidelines. With procurement tools in place, contracts can be disseminated easily to the organization as a single entry point for most, If not all, purchase requisitions.

With advances in internet technology, online bidding tools are now becoming more accepted and utilized to replace the old bid in the mail process. This type of solution allows online contracts to be created in a compatible procurement tool to present to the entire enterprise. If integration is in place, this can be accomplished with little human intervention, once the contract awards have been completed.

In summary, purchasing managers and their respective management teams should look at procurement and sourcing tools to help control purchasing costs. Strategically, these costs are easier to contain if the organization is able to seamlessly convert awarded bids to online contract portals and enforce accountability at the departmental level.

Control Purchasing Costs by Enforcing Contract Compliance

As budgets tighten it is even more important to Control Purchasing costs across the enterprise!

Find our more about e-procurement at http://gravitygarden.com/procure-to-pay/!

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Company Compliance to BEE Legislation in South Africa

Legislation

The South African legislation of Broad-Based Black Economic Empowerment provides many guidelines and defines which companies are governed by BBBEE rules. It is supported by other forms of legislation and has taken approximately three years to implement.

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Bills

The National Land Transport Transition Amendment Bill: B38-2005 extends the maximum business contract period from five to seven years in order to bring the Act into line withBlack Economic Empowerment (BEE) and Small, Medium and Micro-Enterprise (SMME) development principles.

Acts

Of all the acts, the Broad-Based Black Economic Empowerment Act 53 of 2003 and the Employment Equity Act 55 of 1998 are the most well known.

The BBBEE Act aims to create a legislative framework to promote black economic empowerment, to allow the Minister to issue codes of good practice and to publish transformation charters. The forming of the BEE Advisory Council is as result of this act.

The EE Act is used to determine the Human Resource Management criteria of the BEE scorecard.

The various other acts are the following: Mineral and Petroleum Resources Development Act, the Petroleum Products Amendment Act, the Precious Metals Act, the Preferential Procurement Policy Framework Act, the Revenue Laws Amendment Act and the Skills Development Act.

Scorecard

The BEE scorecard, which rate companies on their level of compliance, lists seven specific elements. There are two scorecards: QSE scorecard and a Generic scorecard.

The QSE scorecard applies to qualifying small enterprises (QSE) and the Generic scorecard applies to all entities that are not QSE and that are not exempt.

The scorecard consists out of the seven following pillars:

Ownership Management Control Employment Equity Skills Development Preferential Procurement Enterprise Development Residual (Corporate Social Investment)

Companies receive points on each element, out of a possible 100 points.

An accredited verification agency such as Empowerdex should prepare and verify the scorecard. Companies may have themselves rated on a yearly basis.

Non-compliance

Companies with a turnover of less than R5 million are exempt from complying with the Codes of Good Practice. This means that approximately 87 % of all South African companies will fall into this bracket.

Companies not competing for government tenders are not affected by non-compliance, however, other business entities may choose not to trade with non-complaint companies.

Banks may regard such companies as a credit risk and your non-compliance may breach fiduciary duty. Directors should compensate the company for any losses occurred due to this breach.

Moneybiz, a leading African Financial Information portal, brings you all the insider news and information on BEE procedures.

We will ensure you are always up to date with the newest developments in Black Economic Empowerment legislation.

Company Compliance to BEE Legislation in South Africa

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