The Railways and Harbours Supply Chain Association is an initiative originally set up by Transnet as a support service to its Competitive Supplier Development Programme (CSDP). The CSDP, which was developed by the Department of Public Enterprises, is being implemented in most state-owned enterprises.

The RH NETWORK tool allows for a broader scope of participation from operators throughout Africa. It will connect many more global suppliers to these industry sectors.

• to contribute to the ASGI-SA aims of increasing economic growth, employment creation, skills development and BBBEE;
• to develop local industries to supply participating SOEs with high-quality, globally-competitive goods and services;
• to improve the quality, efficiency and cost-effectiveness of the services provided by the SOEs, as a result of their obtaining more-competitive goods and services from local suppliers; and
• to improve the competitiveness of the SOEs as a result of procurement savings from engaging innovative, responsive and more competitive suppliers.

When Transnet elected to participate in the programme, the DPE provided it with a CSDP planning framework which supports internal organisational aspects. The framework also has an external change management focus, based on extensive consultation with the supply industry and sector.

Internal process steps in Transnet’s SDP development

• An internal spend analysis (refer to Part 5) was conducted with a planning horizon of five years. This analysis was followed by the identification of core spend commodities that might appropriately be targets for CSDP-related supplier development interventions.
• Several suitable pilot initiatives were identified and the lessons derived from investigations of these localisation opportunities were documented. This was then used to create a prototype for the development of Transnet’s CSDP approach (refer to Part 6) of a multi-phased rollout. Rolling Stock and Port Equipment were identified as the Phase 1 priority areas.
• An analysis (refer to Part 7) was carried out of the rolling-stock and port-equipment supply
• industries.
• This formed the basis for identifying Transnet’s priority interventions linked to associated sectors ( refer to Part 8 ) and was included in a high-level implementation plan (refer to Part 10).
• Finally, Transnet’s five-year CSDP programme objectives (refer to Part 4) were measured against the relevant Key Performance Indicators (KPIs) as contained in Part 9. External process steps in Transnet’s SDP development

The priority interventions contained in Part 8 of this SDP document were presented at a second round of discussions with industry, represented by a number of industry associations and interested government stakeholders, including DTI, Department of Science & Technology (DST) and the Industrial Development Corporation (IDC), in February, 2008.

The first consultative session took place in November 2007. Feedback from the second consultation session was used in compiling this final SDP. Transnet’s finalised first SDP was submitted to the Minister of DPE by the end of February 2008 for
approval, after which it will be implemented. Transnet’s long-term aim in applying the CSDP will be to localise the supply chain of imported manufactured goods or imported 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.
A local supply chain of previously-imported manufactured goods or services may not necessarily result in direct cost reduction, but it should result in lower transport costs, shortened lead times and better control of quality. It will also have a direct impact on job creation, economic development and heightened awareness of South African manufacturing capability.

However, it is essential that all stakeholders understand that, while an ultimate goal of a reasonably localised supply chain is hugely beneficial to Transnet, localisation will not be done at the expense of quality or of asset reliability and it will not be at premium cost. The “C” of CSDP stands for competitive and, as such, is aimed at attracting local suppliers who demonstrate the characteristics that will attract positive global attention and not at those who participate in collusion or monopolistic practices.

NOTICE: Transnet must at all times balance the disclosure of information to supplier industries with the requirements of the group’s commercial processes. Public disclosure to suppliers, industry associations and government stakeholders must be grounded in sufficient facts to make the information relevant to an industrial sector without disclosing specific purchase details prior to undertaking tender activities. Any type of expansion is ALWAYS at the risk of the supplier within an industry subsector and as such, Transnet will not assume responsibility for any activity that a supplier may independently undertake based on this strategy or on public statements about CSDP.

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