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INCLUSIVE GROWTH BY REALIGNING SUPPLY CHAINS-
Ancillary Development
 

Targeted Procurement provides employment and business opportunities for marginalised / disadvantaged individuals and communities – referred to as the “Target Groups”.

It enables social objectives to be linked to procurement in a fair, transparent, equitable, competitive and cost effective manner.

Targeted Procurement is effective in establishing new business linkages, particularly between large and small businesses.

Targeted Procurement, through a variety of techniques, provides opportunities for participation by targeted enterprises. On small contracts having a value below a predetermined financial threshold, direct preferences are accorded to targeted enterprises to tip the scales in their favour. On contracts above a financial threshold, bidders are required to compete on the basis of both that which is to be constructed or maintained (the product) and the social benefits which target groups (business for targeted enterprises and / or employment for targeted labour) may derive in the execution of the contract (social deliverables).

Technical specifications are used to define the product and to set out the acceptance criteria relating thereto. Resource specifications are used to define social deliverables and the acceptance criteria relating thereto. These specifications not only define the social deliverables which are to be realised in the process of delivery, but also set out the manner in which they can be achieved, measured and monitored. They accordingly enable bidders to quantify the social deliverables which they are prepared to offer during the bidding stage of the procurement process. Contracts was awarded to the most advantageous offer, based on a balance between the tendered price and the tendered deliverables in respect of targeted groups. Sanctions are applied to contractors who, in the performance of their contracts, fail to deliver their contracted social deliverables.

The Targeted Procurement approach of making the social benefits just one of the criteria relevant to the contract award, which must be balanced against other criteria (such as price and quality) ensures that social benefits are obtained with the minimum possible costs. This enables companies to make use of varied sector expertise and knowledge of the markets concerned to use the targeted groups in the most effective way possible. Targeted Procurement also promotes business linkages between large and small scale enterprises. Such linkages link not only services but also materials supply and manufacture, transportation etc.
 
In South Africa, Targeted Procurement has been used mainly to target those groups of society that were disadvantaged under the apartheid system. It has however also been used within South Africa to support local economic development, to promote growth within the small business sector and to target the unemployed in poverty alleviation program. However, it is important to emphasise that this kind of approach can be used by companies and governments to target any kind of community or group or used to underpin a range of socio-economic policies.
 


 
Click these links to read in details:

Introduction
Inclusivity Measurement
Present Scenario
Supply Chain

Realigning Supply Chain through :

Direct Procurement from Producers/Primary Suppliers
Use of Information & Technology
Vendor Development
Open Tendering
Ancillary Development
Targeted Procurement
Unbundling of Contract

Discussion
 

 
 

 


By
Digvijay Singh, Dy. Manager (Materials Management)
Research & Development Center for Iron & Steel (RDCIS)
Steel Authority of India Ltd. (Ranchi)

 

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