An evaluation of the supplier relationship management and procurement practices at a parastatal: the case of Eskom Holdings Limited

Abstract

The primary objective of this study was to investigate the supplier relationship management practices at Eskom. Currently, the challenges faced by the parastatal include diminished reserve margin, increased unplanned generation plant outages as well as coal supply and quality constraints coupled with ever-rising primary energy costs. It is, therefore, evident that as a national asset, Eskom cannot overcome the current challenges successfully without strong partnerships with key suppliers. A framework for supplier management containing four different elements was researched. The first element, which forms the basis for all supplier management operations, is the development of supplier management relationships. The framework also includes supplier collaborations and the various aspects of discovery, supplier pre-selection, and supplier selection, which relate to finding, qualifying, and choosing the best suppliers. Lastly, and also very important was the supplier development and localisation as well as the legislature thereof. A quantitative cross-company survey was conducted using a sample of 260 suppliers, who have been on the database for more than twelve (12) months and who responded to the business requests to update the data on the system. The findings of the study are largely supported by the literature. Finally, the study makes recommendations and highlights further research, managerial, and policy implications.