TPT outlines a business supplier development initiative

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Heading heading heading
Date
TPT CE’s Procurement Imbizo
KZN Region
Supplier Development
2nd November 2015

2. Contents
SD : Proposal vs Final plan
SD : Background and Objectives
Tender gateways : SD
2
SD : Returnables
SD : Performance bond
BBBEE : Scorecard and Improvement Plan

3. Supplier Development (SD)
3
• Supplier development refers to the improvement in the socio-
economic environment by creating competitive local suppliers via
Competitive Supplier Development and other initiatives. This results
in a local supply base that can eventually be competitive to market
its goods on the international market leading to increased exports
• Transnet’s SD strategy aims to holistically satisfy all of Government’s
legislation and requirements in respect of identifying and undertaking
opportunities through specific initiatives

4. Tier 1
Systems –
Subsystems
Tier 2
Tier 3
Other
Components
Assemblies
Supplier Base
Sphere of Control
Transnet’sCSDP
Focus
Suppliers’
CSDPFocus
Transnet’sEDandPP
Focus
Suppliers’Focus
Supplier Development
Category
**ED – Enterprise Development / PP – Preferential Procurement
s
Transnet’s CSDP phase one Strategic Approach will be to focus on Tier 1 suppliers to assist them in
engaging local Tier 2 suppliers
Transnet will use its sphere of control to contract with OEM’s as tier-1
suppliers
Sphere of Influence
CSDP Development:
Port Equipment
BBBEE Focus
Enterprise Development
4

5. The IC3 Matrix is used as the basic framework to plot the SD opportunities
identified in its appropriate SD initiative bucket
Value leverage
HighLow
HighLow
Focused
Small
Enterprise
Development
Programmatic1
Strategic
Industrialleverage
1 This could be further refined in the future through the DPE Programmatic Policy
2Adapted from the DPE Supplier Classification Matrix focused on Increased Competitiveness, Capability and Capacity.
IC3 Supplier Development Classification Matrix2
StrategicImportancetoTransnet
Industrialisation
Capability and
capacity building
in SA and
Supplier
Development
Skills
Development
Value Leverage refers to transactions where the financial scale of the transaction allows the buyer the opportunity to negotiate supplier
development.
Industrial Leverage refers to transactions whereby the nature of the procurement is such that the scale and the industrial complexity of the
item being purchased allows for local supply chain development around a particular industry.
Strategic Importance to Transnet refers to the extent to which the product to be procured has a impact on Transnet’s core business.
The IC3 supplier development
classification matrix assists in
categorising opportunities
according to their industrial
leverage, value leverage and
strategic importance to
Transnet
Once opportunities are
identified it will be possible to
identify the tools that should
be implemented to maximise
the full supplier development
potential from the
opportunities
Not currently a focus area
5

6. Strategic objectives within each quadrant have been identified
Strategic ObjectiveIC3 quadrant Key Outcomes
Programmatic
• Assist Government achieve their industrialisation objectives
through development of local supplier base to increase the
cost efficiency of fleet procurement, support and maintenance
• Industrialisation
• Technology transfer
• Job creation/preservation
• Skills Development
• Downstream Supplier Development
• Increased exports
• Reduction in capital leakage
Strategic
• Influence multinational organisations toward initiatives that
lead to the development of local downstream suppliers through
large-scale SOE procurement in order to develop a competitive
local supplier base focusing on Rolling stock, Port Equipment
and Infrastructure
• Capability and capacity building in SA
• Increased Technology transfer
• Job creation/preservation
• Skills development
Focused
• Assist local suppliers to improve their performance, enhance
their existing production & skills capabilities by placing
increased emphasis on benefiting previously disadvantaged
individuals and rural development
• Provide a platform through which local suppliers can test their
local innovations for export promotion
• Job Creation/preservation
• Empowerment
• Skills Development
• Rural Development
Small
Enterprise
Development
• Assist local suppliers to improve their skills by placing increased
emphasis on benefiting previously disadvantaged individuals
and rural development in line with the BBBEE strategy
• Empowerment
• Rural Development
• Skills Development
• Job Creation/preservation
Transnet has to develop an internal policy to support product development and funding as the current innovation policy drafted by the DPE only allows for testing
local products in the Transnet operating environment
Source: Team analysis
6

7. 7
Small Enterprise
Development
Focused
Strategic
Programmatic
Strategic Focused Small ED
*Points allocated in further recognition of certain components of BBBEE in line with Transnet and government objectives
Programmatic
• Localisation
• Technology
transfer/
sustainability
• Skills
development
• Job creation /
preservation
• Small business
promotion
• Further
recognition*
• Rural
development
and regional
integration
• Industrialisation
• Technology
transfer/
sustainability
• Skills
development
• Job creation/
preservation
• Small business
promotion
• Further
recognition*
• Rural
development
and regional
integration
• localisation
• . Job creation/
preservation
• Skills
development
• Further
recognition*
• Rural
development
and regional
integration
• Small business
promotion
• Further
recognition*
• Job
preservation
Decreasing
emphasis on
evaluation
criteria
categories
Sphere of
influence
** Indicative and varies on business and Macro Economic need
Transnet value capture through supplier influence

8. Category Description
Capability and
capacity building in
SA
• Developing local capability and efficiency through : investment in plant, increasing the number
of products bought locally and qualifying suppliers to meet international standards.
• This criterion refers specifically to industrial capability building that focuses on value-add activities of
the local industry through manufacturing or service-related functions.
Source: Team Analysis
Technology
transfer/
Sustainability
• Refers to process, know-how and Intellectual Property associated with developing a competitive local
supplier post the current transaction
The recommended SD categories are based on the alignment with
government objectives
8
Skills
development
Job creation/
preservation
Small business
promotion
• Refers to skills transfer with an emphasis on the accumulation of knowledge and experience
• Generally targeted toward sector specific skills development with a focus on artisan and technical
skills
• Refers to an increase or preserve in the number of jobs due to the award of business from Transnet
• Favouring more labour intensive methods for job creation
• Jobs include both skilled and unskilled
• Encourage the growth and expansion of small businesses and start ups through procurement and
support mechanisms

9. Contents
SD : Proposal vs Final plan
SD : Background and Objectives
Tender gateways : SD
9
SD : Returnables
SD : Performance bond
BBBEE : Scorecard and Improvement Plan

10. SD Plan: Capability and capacity building in SA Summary – Supplier (x/x)
Description Sub-initiative
Total Summary • 1.0 xxx
• 2.0 xxx
• 3.0 xxx
• Total Capability and capacity building in SA Value
1.0 xxxx • xxxx • Rx.xm
Key KPICategory
Capability and
capacity
building in SA
A • R xxx.xm
• R xxx.xm
• R xx.xm
• R xxx.xm
Transnet Authorised Signatory Date
Name / Title
Supplier Authorised Signatory Date
Name / Title
2.0 xxxx • xxxx
3.0 xxxx • xxxx
• Rx.xm
• Rx.xm
Example
10

11. SD Plan: SD Capability and capacity building in SA Initiative (x/x)
Transnet Authorised Signatory Date
Name / Title
Supplier Authorised Signatory Date
Name / Title
Initiative Description: Target KPI
Detailed Description
R x.x* ZAR
Transnet Lead:
TPT Lead:
x
# of reports
completed
Supplier Lead:
Supplier Lead:
TBD at
selection
meeting
# of
components
selected
Start Date:
End Date:
Reporting Frequency:
(one month prior to DPE
report)
Monthly
11

12. Transnet Authorised Signatory Date
Name / Title
Supplier Authorised Signatory Date
Name / Title
412 9871110 498764321
20132012
8765 9321 10 11
2011
5 12 1 62 3 5 121110
Year
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Activity
SD Plan: SD Capability and capacity building in SA Initiative (x/x)
12

13. SD evaluation
> Prequalifier
Minimum
SD Requirement
SD
Technical and
price
Award tender to
successful supplier
Review for
1
13
Equipment SD Prequalification
Main offer
Equipmnet acquisition 10%
1
Note: The tender indicates that the SD commitment is aimed at achieving at least 10% of the
supplier’s tender value as part of the tender bid
If no tenderer passes the 10% gateway requirement, the SD prequalification percentage will be
reduced to 5%

14. Contents
SD : Proposal vs Final plan
SD : Background and Objectives
Tender gateways : SD
14
SD : Returnables
SD : Performance bond
BBBEE : Scorecard and Improvement Plan

15. SD Returnables
Capability and capacity building in SA
15
Document
reference
Description Purpose
1 Supplier Development
Initiatives
Outlines the SD requirements for this particular tender
2 Supplier Development
Guidelines
Informs tenderer about the various SD options available
3 Supplier Development Value
Summary
Compulsory returnable to be completed and submitted,
used to determine whether the tenderer has met the
prequalification and threshold requirement
4 Supplier Development Bid
Document
Compulsory returnable to be completed and submitted,
used to negotiate and finalise the SD Plan

16. SD returnables
What is the consequence of non-submission ?
16
As SD is a prequalifier that must be passed in order to be considered for the next
gateway, failure to submit the SD returnables WILL result in the tenderer being
disqualified.

17. SD Returnables
Completion guidelines based on lessons learnt
17
• All fields require completion. Instead of leaving a field blank, please enter an
explanation in SD Value summary notes column.
• Cross reference the SD Proposal document to the narrative SD value summary
• Include only initiatives that are being implemented as a direct result of this contract,
other initiatives already implemented do not qualify as SD on this contract
• Ensure that your total Rand values / percentages cast (sum up)
• A total SD commitment as a percentage of the tendered value is required. Ensure that
your total commitment value is included and ensure that a breakdown of this value is
supplied
• For Capability and capacity building in SA initiatives, note that the acquisition of
goods or services necessary to operate the equipment post its supply, acquired from
an existing SA based supplier, does not qualify as SD eg. Acquisition of tyres from
existing SA supplier.
• Specify details in the SD Bid summary narrative eg Overseas training

18. Contents
SD : Proposal vs Final plan
SD : Background and Objectives
Tender gateways : SD
18
SD : Returnables
SD : Performance bond
BBBEE : Scorecard and Improvement Plan

19. SD Performance Bond
Capability and capacity building in SA
19
Please note that the RFP requires that a depreciating performance bond of 100%
be issued to Transnet to cover the SD commitment value. The bond is required to
be in place for the duration of the SD commitment

20. Contents
SD : Proposal vs Final plan
SD : Background and Objectives
Tender gateways : SD
20
SD : Returnables
SD : Performance bond
BBBEE : Scorecard and Improvement Plan

21. BBBEE Scorecard and Improvement Plan
Capability and capacity building in SA
21
The RFP includes the following documents i.r.o BBBEE:
• BBBEE scorecard - BBBEE threshold
• BBBEE Improvement Plan
• BBBEE Thresholds
• Transnet will set minimum BBBEE threshold as a pre-qualification criteria where the normal
preference points system will not bring about the required transformation.
• The threshold determined will take into account the industry and a thorough market analysis
conducted
• Bidders not meeting the threshold will be DISQUALIFIED from further consideration
• BBBEE Improvement Plan
The BBBEE Improvement Plan is commitment by supplier to improve its BBBEE scorecard over the duration
of the contract.
• Transnet will set the BBBEE Improvement Plan as a pre-qualification criterion where deemed
appropriate
• This will be used in markets (sectors) that are lagging behind in terms of transformation
• QSEs and EME’s which are Level 1 and 100% black owned maybe requested to simply maintain their
BBBEE status
• Bidders may required to improve on one or another element of the BBBEE scorecard over the
duration of the contract.
• Where BBBEE improvement plan is used as a prequalification, the plan will be requested upfront

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