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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
has complied with the country’s tax regulations. SouthAfrican law prescribes
that every business should honour its taxation dues to government. Failure to
do so is a crime. Therefore, it is natural that only businesses that have been
paying corporate tax, as evidenced through the availability of tax certificates,
qualify to benefit from the scheme.
The Department of Trade and Industry usually updates the eligibility criteria
when necessary [21].
5.7 SUPPLY BASE LOCALISATION
Organisations often face the dilemma of choosing between local suppliers
and international or global suppliers. Where international or global sourcing
is used, there should be sufficient reason for selecting it as a strategy ahead
of local sourcing. In most cases, organisations start by using local suppliers
before extending their sourcing practices to include international suppliers. It
is therefore important for supply management practitioners to understand the
dynamics behind local sourcing.
Local procurement may broadly be defined as the systematic obtaining of
personnel, services, supplies, and equipment from indigenous sources [22]. In a
competitive global operational environment that is characterised by persistently
unpredictable market forces, sourcing from local suppliers may have become
an important strategy for maintaining an organisation’s competitiveness and
prosperity. In fact, failing to adopt local procurement strategies can have several
negative consequences for organisations. For instance, a non-localised supply
chain can increase lead times to undesirable levels. It is also easier to develop
a global supply strategy from a local one than the other way round. However,
procuring locally demands outstanding commitment from an organisation, as
does building the capacity of local suppliers so that they can become more
competitive and profitable. This must, however, be implemented within the
objectives and goals of the organisation.
The reasons for adopting localisation strategies are many, depending on the
needs of the organisation concerned. A set of primary reasons will include
contributing to the development of the local economy; growing local relationships;
‘green’ reasons, such as reducing spending on carbon fuels that create pollution;
assisting local not-for-profit enterprises and charitable organisations; improved
services as involved organisations are bound to take care of each other and
to treat each other respectfully; buying fresher products; keeping taxes in the
local fiscus; and supporting community buying groups [23].
5.7.1 STEPS INVOLVED IN LOCAL PROCUREMENT
5.7.1.1 Self-assessment
Self-assessment is an effective way of assessing the extent to which the