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
- 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 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
REVIEW OF THE YEAR
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
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
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
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