LEADER
stratport
Litha Kutta
Why we LOVE our Aggregator Model for ESD

Headline: QUICKENING THE PACE OF SUPPLY CHAIN TRANSFORMATION

Every day, Tiger Brands’ much loved and trusted products are found in almost every South African’s shopping baskets. Being so close to the nation’s heart and building brands that people love, we are deliberate in ensuring that as many as possible benefit from our operations. Enterprise and Supplier Development activities (ESD) are a key part of our strategy to transform lives in far reaching ways. 

By 2022, our plan is to develop 900 sustainable black owned enterprises, create 4000 jobs and increase procurement spend towards black owned enterprises from R2.3 billion today. These aggressive targets have paved the way for innovative thinking within our ESD programme.

With agricultural procurement at the center of our supply chain, we intentionally develop black and black women farmers throughout the country.   

One of our key initiatives - The Smallholder Farmer Programme - was deliberately designed to create access for small-scale black and black women farmers to actively participate in our supply chain through guaranteed offtake agreements. This initiative has now grown to a point where we can evolve it to create further opportunities for new entrants into our supply chain.

Tiger Brands’ new Agriculture Aggregator model launched in 2019 is set to increase the number of participating small-scale farmers while growing the number of black suppliers for the company holistically.

The brains behind the concept is Tiger Brands’ Enterprise and Supplier Development Director, Litha Kutta. “The biggest issues facing small-scale farmers are producing at the scale and at the quality standards that corporates demand. This means that farmers need to graduate from being standalone entities and develop the operational and financial capacity which enable them to sustainably compete. This requires a great deal of development and support often spanning several years and adds additional complexity for corporate supply chains.”

“We plan to assure the ongoing participation of smallholder farmers through nurturing new expert black-owned farming companies who act as an ‘Aggregator’ of our smallholder farmers.”

Aggregators work directly with farmers to provide technical and management skills. As fully-fledged business entities themselves, Aggregators will procure from multiple farmers and enter into commercial agreements with corporates like Tiger Brands, providing better guarantees on tonnages, delivery timeframes and quality standards.

Tiger Brands will support the Aggregator with input finance, agrarian and technical support, business contracts and offtake agreements, with support services also extended to the black smallholder farmer.

“But real business value and opportunity for Aggregators will be unlocked when they develop agro-processing capabilities, moving from the ambit of primary agriculture alone into the beneficiation of value-added inputs that Tiger Brands can procure directly. Such diversification significantly enhances their sustainability.”

This big shift in tactics in approaching ESD and unlocking access opportunities requires a real meeting of minds and collaboration between key functions such as procurement, finance, marketing and corporate affairs.  

“The success of our ESD programme is hinged on our ability to evolve our focus and approach in line with our desire to rapidly progress economic transformation as an organisation. Thinking of unique ways to address complexity and still broaden participation will certainly help any organisation quicken the pace of their supply chain transformation” 

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