10 March 2006
	PROCUREMENT Gains MADE in one short YEAR By Larry Claasen Command proves small companies can make a difference through empowered procurement

Security company Command Holdings' success proves a small company can buy most of its goods and services from black suppliers without compromising on the bottom line. Command holds the top position for procurement on this year's Top Empowerment Companies ranking, beat ing large corporations such as Adcorp and Telkom. Telecom giant Telkom increased the percentage of goods it bought from empowered companies from 58,2% to 61,9%, and business services company Adcorp held steady at 67%. But neither was a match for Command at 70%. During the period under review Command substantially increased its procurement of empowered companies, boosting its rating from 52 to one. Revenue rose 12,5% to R56,9m and net profit increased from a modest R1,5m to a healthy R6,2m for the year to end-June. Many corporations are waking up to using procurement as a way to foster empowerment, says Empowerdex researcher Mrinal Patel. Patel says buying goods and services from businesses with empowerment status accounts for between 50% and 70% of the spend of the 10 top-ranking empowered companies. The department of trade & industry's codes of good practice on empowerment and further guidance coming from the sector charters give businesses targets to aim for when it comes to procurement. Patel says there is commitment from large corporations at board level to buy from black companies, but in many cases this still has to filter down into the operations of these organisations. Companies scoring well on the ranking come from the tourism, business services, finance and technology sectors, while mining and industrial companies ranked poorly on procurement. Patel says given the "resource-intense" nature of the mining and industrial sectors, there are few black-owned companies that are capable of supplying companies in these markets. With few black-owned companies in the mining and industrial sectors, he fears that buying from small black businesses will be left to the services sector. There has been a shake-up in procurement rankings compared with the 2005 figures. Telkom and Adcorp are the only companies in last year's top 10 to reappear in this year's ranking. Patel says the introduction of the codes contributed to the changes in the rankings. The changes played a part in sugar producer Illovo's procurement ranking falling from the number one position to out of the top 10. The big changes in the rankings have also arisen from companies becoming more aware of the need to report what they are doing to support small black businesses. Patel says many JSE-listed companies with black shareholders have benefited from having empowerment status. However, research still has to be done on how much of a leg-up small black businesses have gained from preferential procurement. Patel says anecdotal evidence suggests that black-owned businesses are benefiting from these practices.