By: Foschini Group  11-11-2011


The Merchandise Procurement division is an entity interposed between the trading divisions of TFG and its suppliers of merchandise, whether local or foreign. It supervises transactions between the trading divisions and these suppliers, and it nurtures the relationships which exist between them.

The division as a separate entity was created in 2009 and the past year was the first complete financial year in which the division has been in operation.

The broad objective of the division is to optimise the group’s relationships with its suppliers so that merchandise, once ordered, can enter the group’s distribution network with the minimum of delay and with the utmost reliability.

To reach this goal requires effort in a number of spheres. In essence they encompass:

  • Stability in the relationships, so that both TFG and the suppliers have a base of knowledge and experience to allow them to predict events affecting their transactions and to take action timeously and effectively to meet commitments and overcome any obstacles along the way.
  • Cultural alignment, regardless of differences in background and geography, so that understanding and trust can flourish and common interests can be cultivated.
  • A proper balance must be maintained between local and foreign suppliers so that undue reliance on any one zone is avoided, and so that the benefits of the group’s buying power are judiciously spread.
  • "Hard" criteria must be developed and constantly updated to measure the performance of suppliers in an objective and fair manner, so that the quality of goods and services supplied is properly assessed and the auditing of suppliers is conducted rigorously but transparently and equitably.

Experience has shown that it is not desirable for TFG to be either the sole customer of a supplier or that the supplier be TFG’s sole supplier of any merchandise. (Minor exceptions are possible in TFG’s relationships with local CMT suppliers.) To establish a desirable balance in this regard requires patience and hands-on experience.

Three years of work in the division and in predecessor units of the group have been expended in developing an audit form which is opened when a supplier is first contracted and which is then regularly updated as transactions are executed and the supplier’s track record is established. The end-point is a scorecard in which the outcome of the audit processes is recorded and which then determines how the supplier is rated.

Both the audit form and the scorecard now exist as completed proprietary documents. When they are used, the output is a fully objective and independent assessment which immediately reveals the strong points and any weak points of a supplier’s performance. Every transaction with the supplier is analysed and is added to the supplier database.

The Jewellery division, which will be integrated into the supplier performance appraisal in the next year, is the last of the trading divisions to which the process will be applied.

The division’s established role of controlling both the group’s shipping and quality assurance functions continues. An export arm has been added to the shipping unit to cater for all offshore requirements as the group expands into Africa and beyond.

Service providers to the group sit on the shipping unit’s floor to facilitate the forwarding and clearing of all imported goods.

The division has also reviewed and acquired a new courier service for in-house operations.

In quality assurance, the division has fully aligned both process and structure in the past year. This has achieved seamless decision-making on day-to-day issues and a much-enhanced team dynamic. Fabric quality is now dealt with at group level and this has enabled synergies to be achieved by each division in learning from the experience of others.

The division has been active in supporting the official national goal of retaining and growing employment in South Africa. Several promising initiatives are under way in this regard.

A decision has been taken to examine import possibilities from a wider region than has been traditional, and this will continue into the future both locally and offshore.


The more extensive use of the supplier measurement system led to a marked improvement in supplier behaviour since the system is transparent and the causes of both favourable and unfavourable events are easily identified. Areas of particular improvement were conformance with distribution centre procedures, the accuracy of invoicing and greater consistency of the quality of products. Work remains to be done on the delivery of merchandise in full and on time.

The key objective in quality assurance has been to entrench the new "quality ethos" aimed at creating a more structured flow of process, improved decision-making and moving quality control as far upstream as possible. There has been success on all fronts in this regard, with positive benefits in the collaboration between internal buying units and the outside supply base.

The shipping unit had an active year, one of its tasks being the introduction of a new computerised treasury control system that gives management greater control and visibility. Another has been the setting up of an export division that is responsible not only for moving merchandise but ensuring that customs compliance is achieved and legislative requirements are met in all transactions with the group’s franchise partners in Dubai and Mozambique and with the group’s own external stores in Zambia.

Good working relationships have been maintained with all governmental agencies and the division has been proactive in assuring compliance with all local and international legislation. The division is conscious that it has a wide responsibility for meeting labour and environmental requirements and observing ethical codes wherever the group operates.

This programme of activities requires a high calibre of staff resources and the well-being of employees receives high priority. Succession and EE planning and retention, recognition, and reward processes and procedures are firmly in place.

Efforts to rekindle large-scale local manufacturing in the clothing industry are still at a delicate stage, but among the year’s successes was the fact that a substantial part of the group’s requirement for knitwear, once made locally but taken over some years ago by foreign manufacturers, was brought back to local factories.


The division’s strategy for the next year is to consolidate the progress made in the recent past and to continue to support the trading divisions in their fast fashion goals. For this to be possible the division must maintain and optimise the group’s supply base. The ultimate benefits will be improved lead times for merchandise, increased stock turn, greater flexibility and agility in procurement, reductions in costs and waste, and increased visibility for the group.

It is important for these objectives that the division promotes integrity and trust in all dealings with suppliers, and to have partnerships with suppliers that incorporate good ethics and fairness in all transactions. The way in which measurement and feedback are carried out is structured and factual and consistent across the supplier base.

The division looks continuously at its talent and succession planning with a view to having structures in place to develop, coach, assess and measure all staff members.

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