Transnet’s Competitive Supplier
Development Program (CSDP)
(Part 1)
Presented by Fanie van der Walt CSDP
Implementation Manager
2009-01-29

CSDP Purpose for Transnet
Background
• For the pat 30 years, the capacity of Transnet’s supply base for capital good has declined
along with their capital investment.
• However Transnet is now investing strongly in infrastructure again.
From NIPP to CSDP
• Cabinet approved the new policy on 25 January 2007
• The DPE established a Competitive Supplier Development Program (CSDP) to which Transnet
GCE formally gave notification in February 2007 to DPE that Transnet wishes to participate.
Programme Aim
• Transnet’s long-term aim with CSDP is to localise its supply chain of imported manufactured
goods or services to a reasonable level while promoting local industries and South Africa as an
off-shore site of choice for OEMs’ and multi-nationals’ procurement personnel.
• This will depend on Transnet’s ability to create a cohesive picture of future spend, to be the
catalyst for local suppliers’ investment in their own capacity and in their capability to meet
Transnet’s future manufactured equipment requirements.
Approach to CSDP
• To achieve this ambitious aim, over the next five years Transnet will implement CSDP in a
phased manner, starting off by engaging with opportunities in two priority-focus areas, namely
Rolling Stock and Port Equipment, while preparing SM staff to exploit emerging localisation
opportunities.
• Transnet’s CSDP rollout will be supported by a holistic Change Management Programme, which
will include a strong focus on stakeholder management and communication.

CSDP focus areas: Rolling Stock & Port Equipment
Transnet Spend 2008 – 2012*

CSDP: Current & Future Objectives
Focus Area
Focus Area
Focus Area Focus Area
Priority 1
Priority 2
Future Priority Focus Priority
Locomotives –
Infrastructure Other
components Harbour
and spares

Transnet’s CSDP Approach
Transnet’s CSDP phase one Strategic Approach will be to focus on Tier 1
suppliers and to assist them in engaging local Tier 2 suppliers
Supplier Supplier
Supplier Base
Development Development
Category Activities
Export
Transnet’s CSDP
Port Equipment Rolling Stock SM personnel
lobby with
Sphere of Control OEM Global
Sourcing Team
OEMs: Kalmar, Liebherr
OEMs: GE, GM, EMD,
Cranes, Straddle Carriers, SM personnel
Focus
Mitsui, Alstom, Siemens
RTGs, Tugs, Dredgers RFx process
Tier 1 and contract
OEM
Systems – negotiation
IP
Subsystems FDI
CSDP Focus
TRE
Suppliers’
SM personnel
Kalmar DCD advise on
Liebherr / CPS Projects available
UCW
Tier 2 Goods
partners and
Alstom SURTEES* s Services
TRE
Assemblies involvement
Transnet’s ED
Skills
Suppliers’ PP Focus
SM personnel
Focus
Tier 3 identify ED
opportunities
Components
Sphere of Influence
Transnet’s
PP Focus
Other
*SURTEES IS A WAGON MANUFACTURER IN MINING INDUSTRY
**ED – Enterprise Development / PP – Preferential Procurement

Railway and Harbour Association
& Tender Process
OEM’s
OPERATORS SUPPLIERS
SA Regional Rail and Harbor
SADEC
Tier 0 Tier 2/3 Tier 1
Operator process
Plan Tender RFP Award Contract Implementation
DEAD ZONE – NO COMMUNICATION OPEN ZONE - COMMUNICATION

Railway & Harbour Supply Chain Association
CSDP
(Transnet Contracts)
Meeting 15 Aug 08
(Operator)
+
Administration
+ www.rhsupplychain.com
(Railways Africa)
+ * Training
* Self Assessment
Meeting 25th Aug 08 * Final Assessment
Benchmarking
(OEM’s, Suppliers) * Networking
(UNIDO)
www.benchmark2grow.org
+ * Professionalization - IPSA
* CIPS/ NQF Qualifications
Skills Development * Boot Camps

Railway & Harbour Supply Chain Association
The initial foundations for the affiliation between UNIDO and CIPS is based on:
In the case of CIPS*
• to assist the purchasing and procurement officers of private and public organizations
• in gaining greater transparency on possibilities for local procurement in developing
country environments; and
• in making more informed procurement decisions.
In the case of UNIDO**
• to assist local enterprises in developing countries to be more visible and attractive as
suppliers; and
• expand their market access through supplier contracts.
RRA
Foundry Rail & Road Association
Foundation of
SARA
South Africa Southern African
(Supported by CSIR) Railway Association

New Association Structure
OEM’s
RHSCA
Operators
Suppliers
Communication
Administration & Marketing
Chair DPE
Steer Committee
Phillippa
(Founders)
Fanie, Karen - Transnet
Yolandi - IPSA
Working Group
Priority Work Streams (Focus areas)
CSDP: Fanie
IPSA - Yolandi
UNIDO - Herman
components and
Ports & Harbour
Locomotives –
Marketing & Admin - Phillippa
Infrastructure Current
Technology R&D - Phillippa
Priority 1
Priority 2
Priority 3
Priority 4
Priority
spares
Other
Foundry – Fanie Focus Area
OEM’s
Future
Suppliers
Priority
Other Operators
Focus Area

Professionalization: Benchmarking
Graduate Diploma Leading Supply Chain Strategic
6 in Purchasing and and Influencing Management Supply Chain
Supply in Purchasing in Practice Management
National Qualifications Framework Levels
Plus 2 choice units from 3 options
Legal Aspects in Purchasing and Supply;
Advanced Project Management;
Finance for Purchasers
Advanced Diploma Management in Risk Management Improving
5 in Purchasing and the Purchasing and Supply Chain Supply Chain
Supply Function Vulnerability Performance
Plus 2 choice units from 3 options
Marketing for Purchasers; Storage and Distribution; Operations Management
in the Supply Chain
Foundation Diploma Effective Purchasing Developing Measuring Managing
4 in Purchasing and Negotiation in Contexts Contracts in Purchasing Purchasing
Supply Purchasing Purchasing Performance and Supply
and Supply and Supply Relation
ships
Certificate in Understanding Purchasing Client and Securing Purchasing
3 Purchasing and the Purchasing Operations Supplier Supply in Action
Supply Environment Relationship
Introductory The Role and Systems Working with The
2 Certificate in Scope of and Suppliers importance
Purchasing and Purchasing Procedures of Purchase
Supply in Contracts
Purchasing

CSDP SUCCESSES TO DATE: PRACTICAL EXAMPLES
APRIL - DECEMBER 2008
• Achievements • Next steps
– –
Ports Kalmar has submitted the plan Working with Kalmar to
• Supplier to the DTI to satisfy their NIPP finalise the plan.
– Kalmar
obligations (over Euro 26m).
Implement
– Liebherr This plan will satisfy our
requirements, as it is a Cartego
School (fright solution training
for container cargo).
– Liebherr have considered two – Set up meeting end
CSDP options – both in training. November with Liebherr
The Austrian Ship-to-Shore to discuss next steps.
training school is at full capacity
and they want to create a
second site here. Also there is a
possibility to send welders to an
apprentice programme in
Ireland.
Rolling Stock – Ongoing
– GE
– SSM working with TRE continue
– EMD discussions on localised part
– MARS (Mitsui) manufacture, such as traction
motors, with GE and EMD for
current fleet.
– Other OEM’s (TBD)*
– SSM working with TFR on new
loco RFP documentation,
including CSDP.
* TBD = To Be
Determined

CSDP SUCESSES TO DATE: PRACTICAL EXAMPLES
APRIL - DECEMBER
• Area • Achievements • Next steps
– Ongoing
– Meeting with Operators & Suppliers
* Railways and Harbours
Supply Chain from Railways and Harbours occurred.
• Current
Association – Well attended
Activities
– Industry voted
– Nature & Mandate of Association
Established
– Web Page Created
– Networking
– AC DC Locomotive discussion
– UNIDO to perform training & perform
– UNIDO Training in progress to develop
final Supplier Assessments by end
Champions to perform benchmarking
February 2009; All suppliers to be
* Top 20 Strategic Local assessment (Tier 2 &3)
registered on Association & Yellow
Suppliers for Rolling
Pages database by end December
Stock (Loco’s)
2008
Identified- 80: 20
– Suppliers identified (Tier 2 &3) –
Principal All suppliers to be registered on
Association & Yellow Pages database
by end December 2008
* Top 60 Tactical Local
– Road shows were held with Suppliers
Suppliers for Rolling
Stock (Loco’s) – All suppliers to be registered on
Identified Association & Yellow Pages database
by end December 2008
– Interest shown by other SOE’s which
* Transnet Port Terminals contacted Transnet to assist in
–
Identifying Synergies Alignment meeting to be held
Supplier list
1December 2008 followed by future
rhythm meetings to Identify Synergies
* ESCOM & PetroSA

CSDP Challenges
April – October 2008
Resistance to Change
- Both Internally & Externally
- Transet was not allowed to Negotiate up to 2005
- Transet Business Units operated in Silo’s
Time Constraints
- Limited Resources
- Training & On boarding time of Suppliers
- Synchronization of Supplier Development & Capital Expenditure (Tenders)
Sustainability of Capability & Capacity Building
- Poor Sustainable Demand Management & Forecasting

Closing Summary
Continue with Capability & Capacity Building through:
- CSDP Methodology
- Working with RAILWAY & Harbour Supply Chain Association
- UNIDO Benchmarking
- IPSA Skill Development
Collaborate with other SOE’s
- Identify Synergies
- Combine efforts & Resources
- Share Lessons Learned & Successes

Questions

Transnet’s Competitive Supplier
Development Program (CSDP)
Part 2 (Supplier Benchmarking)
Presented by Fanie van der Walt CSDP
Implementation Manager
2009-01-29

The main objectives and value proposition for Benchmarking
• From a supply chain perspective we aim to achieve the following:
• Improved alignment between buyer and supplier organisations which improves the
effectiveness of the total supply chain;
• More sustainable trading relationships based on clear measures and expectations;
• An increase in local participation in both local and global supply chain
opportunities;
• A more sustainable business by accelerating the competitiveness of the
participating individual firms and the industry as a whole; and
• Providing suppliers with a network of support organisations and possible funding to
focus on specific change interventions.
The high level process
• The benchmarking and development process will be implemented in stages,
starting with the locomotive contracts and the harbour equipment contract
opportunities, from where it would be rolled out to other commodities.

A collaborative framework to accelerate
industrial development across the economy
Alignment
• Common assessment
• Benchmarking
• Cluster development
• Industry-wide development
• Shared IT platform
• Visibility

The Benchmarking and Supplier
Development Process
Supplier Benchmarking and Development Process
Inputs
• Benchmarking information
Improvement Cycle
• Comparative country strengths
• Other industry studies
• Supplier Development Plans
7
2 Do any local
1 Possible shortlisting
Identify focus Buyers capture suppliers meet
Buyers for participation in
areas for local requirements buyer
buyer’s supply chain
procurement (assisted by UNIDO) requirements?
3
UNIDO facilitates access to govt./buyer/donor
Invite all potential
supplier development programmes
UNIDO suppliers to
participate
4 5 6
Assisted self Develop Implement
Suppliers
assessments improvement plan improvement plan
Ongoing improvement cycle

Competitiveness is increasingly driven by the
ability to integrate within a broader network
of organisations
Supply
Value Drivers
Chain
• Strategy Execution
Community
• Customer Centric
Strategic
• Market Responsiveness
Business Value
Collaboration
Extended
• Performance Excellence
Supply
• Organisational Efficiency
Extended
Chain
Marketplace
Industry Community
Integrated
Enterprise
SC Execution Integration
Cross-
Functional
Customer Integration
Integration
Supplier Alignment & Collaboration
The
Fundamentals Integrated Business Planning
SC Visibility
Process Alignment
Key Measures
Isolated
Level of Integration
Improvements
Network
Functional Supply Chain
Business
Hierarchical Process

The immediate focus is to facilitate the participation of the rail and
harbour community through the following process:
• On-boarding workshops: This entails a series of workshops,
including owners and operators to discuss the initiative with the Railway
and Harbour supply chain community and gain commitment for those
companies interested to participate.
• Participation registration: Organisations provide their basic
information on the benchmarking web site www.benchmark2grow.org.
• Training invitation. Organisations that are registered on the web site
will be invited for a training programme.
• Training courses: A two day training course which should ideally be
attended by a senior executive who is overall accountable for
competitiveness and growth within the organisation, and the operational
person who would implement the initiative.
• Implementation: Supplier benchmarking and development process
including benchmarking, development plans and support.
• CSDP Implementation Champions:

Working throughout the infrastructure development
programme supplier network
Typical Supply Chain Structure Focus of Procurement Teams
Buyer
Procurement teams embed
local procurement
Buyers Tier 1 Suppliers
(i.e., OEMs,
requirements in RFx and
Sphere of System
contract negotiation process
Control Integrators)
Buyers Tier 2 Suppliers
(i.e., System or Subsystem
Sphere of
Procurement teams identify
Assemblers)
Influence
ED opportunities and advise
on available partners
Tier 3 Suppliers
(i.e., Component Manufactures)
Tier 3 Suppliers
(i.e., Other Input Industries

It provides a detail view of performance gaps, what
to do about it and who can
assist in doing so
Below Expectations Exceed buyer expectations
Financial Performance
• Cost management
• Productivity
Output Areas
• Financial Stability
Customer Performance
• Product Quality
• Service Quality
• Customer responsiveness
Internal Processes
• Operations Management
• Supply Chain Management
Building Blocks
• Information Management
• Corporate Governance
Learning and Growth
• Leadership
• Human Capital Management
• Safety and Health
• Environmental Management

The programme deploys a common framework to rate
competiveness and develop this in line with contract
and/or management expectations
Supply chain matrix
• The benchmarking framework provides the ability to
Ability to minimise risk
strategically position a company in terms of it ability
Expectations
to minimise cost and risk performance. This can be
cascaded into the detail evaluation of each of the
underlying performance areas.
Current
• It then provides the means to identify the
competitiveness
rating development areas in line with management and/or
customer expectations.
• It provides the means to determine what needs to be
Ability to minimise cost
done to address development gaps and who can
assist in this.
Financial Performance
• Cost management
• Productivity
Output Areas
• Financial Stability
• It then provides the management team with visibility
Customer Performance
• Product Quality
on the ongoing development of the organisation,
• Service Quality
• Customer responsiveness
which can also be provided to customers and other
Internal Processes
• Operations Management
stakeholders.
• Supply Chain Management
Building Blocks
• Information Management
• Corporate Governance
Learning and Growth
• Leadership
• Human Capital Management
• Safety and Health
• Environmental Management
Broad-Based BEE contribution: 9 8 7 6 5 4 3 2 1