Valoración de los activos financieros disponibles para la venta ( afdpv )

GC is one of the divisions at Eskom through which strategic sourcing and supplier development are administered. The mandate of GC is to optimally manage external spending, procurement processes, inventory management, warehousing and logistics, contract negotiations and establishment, and supplier relationship management. GC is responsible for driving transformation through supply chain management, such as supplier development and localisation, and procurement equity initiatives (Eskom Corporate Plan, 2015/16 - 2019/20:156). The division consists of eight functions with unique and interconnected roles. In Figure 2.1, a schematic representation of the functions is shown (Eskom GC Business Plan, 2012 – 2017:56-57).

Figure 2.1: Functions of Eskom Group Commercial Division

Source: Eskom Group Commercial Business Plan (2012/2013-2016/2017)

The GC division consists of the following eight functions:

1. Project Sourcing (PS) is solely responsible for all sourcing activities that pertain to projects and as such, it services all capital projects. It advises divisions on their respective capital project initiatives and the correct methodology to use.

2. Tactical Sourcing (TS) undertakes all tactical purchasing of goods, services (tangible and intangible) covering capital and operational expenditure and fixed assets.

3. Supply Chain Operations (SCOPS) is a non-sourcing function and is critical in the entire commercial value chain on inventory, warehousing and supply planning management across the business.

4. Primary Energy procures all primary energy required for the running of all power stations excluding nuclear. This includes coal, water, sorbent, including all the logistics pertaining to the transportation of the relevant energy sources.

5. Business Enablement is a cross-cutting entity that provides support through research and benchmarking with other state-owned entities as well as other global utilities. It provides business support to the rest of GC which includes strategy integration and business performance reporting.

6. Risk and Governance provides a cross-functional view and identifies commercial risks, as well as treatment plans of such risks, including matters of conflict of interest that include investigations of breaches of procedures. It monitors and manages all the governance structures to ensure compliance.

7. Commodity Sourcing (CS) procures all commodities that effectively keep the operations running in such a manner that all required commodities are contracted at an optimal and strategic level ensuring continuity of supply. This unit is responsible for supplier relationship management with suppliers supplying commodities to Eskom. CS operates by using the Eskom’s 7x7 sourcing methodology illustrated in Figure 2.3. Its primary objectives include:

 to establish and manage Eskom group contracts based on sound commodity sourcing strategies; and

 to implement a world–class strategic sourcing for the requirement of goods and services in a cost effective, fair, competitive, efficient and lawful manner, while using its procurement spend to maximise local content, create jobs and develop skills.

8. Supplier Development and Localisation (SD&L) is uniquely structured to ensure the delivery of socio-economic imperatives through the management of Eskom expenditure. This includes elements of optimising B-BBEE, skills development, job creation, localisation and industrialisation. The SD&L Plan for the period 2013 to 2015 consists of the 42 focus areas identified for localisation opportunities (Appendix A). The main objective of SD&L is to achieve maximum and sustainable local development impact. It is carried out through leveraging Eskom’s procurement spend in a manner that allows flexibility within the business in order to accommodate government’s local development initiatives and policies. The SD&L objectives shown in Figure 2.2 are developed to address some of the socio-economic challenges. Note that SD&L and supplier development are used interchangeably in this study.

Figure 2.2: Supplier Development and Localisation Objectives

Source: Adapted from Supplier Development and Localisation Plan (2013-2015:24)

From the eight functions of GC, CS and SD&L are the underlying functions for this study and that is where respondents and participants are located.

Following a detailed review of GC’s performance and processes with key stakeholders across Eskom, a number of challenges have been identified (Eskom Corporate Plan, 2015/16 - 2019/20:09). These challenges are mainly related to procurement and SD&L, and they are presented in Table 2.1. Procurement refers to all departments / sourcing functions responsible for sourcing of goods and services such as CS, TS and PS.

Table 2.1: Eskom’s Group Commercial Challenges

Procurement: CS,TS and PS Supplier Development and Localisation

 Delays in renewal of expiring national contracts.

 Ineffective cross-functional team.

 Government regulatory framework (PPPFA) stifling local development.

 GC overall strategic misalignment with Eskom’s Corporate Strategy.

 Undefined priorities and processes and lack of interface.

 Ineffective implementation of performance management and misaligned performance expectations.

 Inaccurate /incorrect/misaligned performance measures.

 Deficiencies in skills and capabilities impacting behavioural factors.

 Inconsistent transition and ineffective training processes

 System integration and functionality challenges.

 Limited integration within SD&L and between SD&L and CS.

 Delays and inconsistencies in the SD&L assessment process.

 Overall lack of support by SD&L.

 Poor training and communication.

 Overlapping focus and tasks across the SD&L functions.

 Limited supply chain visibility.

 Ineffective monitoring and

 Limited integration with sourcing functions.

Source: Adapted from Eskom Evaluation of Procurement Strategy (2013:9)

These challenges point to a lack of integration, inadequate capacity, inefficient planning and implementation and performance management as fundamental gaps. A great part of these challenges are more associated with processes, practices, planning, skills and training and efforts should have been directed to that for intervention.

A literature framework which combines strategic sourcing and supplier development at Eskom is developed and illustrated in Figure 2.3. It portrays strategic sourcing, supplier development, the manner in which they are implemented at Eskom and how their processes can be possible linked as well as possible outcomes.

2.4 Literature Framework: Strategic Sourcing and Supplier Development at