South Africa’s supplier development professionals are serious about transforming their sector and it’s exciting to see rapid transformation and growth taking place. The recent Insider Track workshop hosted online on February 3 2022, unpacked two case studies that found solutions to ongoing challenges.
The 2021 winners of the Absa Business Day Supplier Development Awards were used to show that rapid transformation and business growth is possible and necessary for all corporates. The compelling cases are Distell and their SME, Stellar Agri winners of the small supplier award and Exxaro and their SME, MB Resources, winners of a special award for outstanding growth over R50 million, of their small supplier.
Distell and Stellar Agri Case Study
The grape farming sector is largely untransformed and for radical transformation to take place, Distell and Stellar Wines combined their resources to provide business growth support to a new small business, Stellar Agri. The aim of the partnership was to find solutions to the lack of black owned farms, the lack of high-quality organic grapes in the Western Cape and how to pivot during lockdown. “We wanted to see greater participation of black farmers in the rural economy in a bid to transform society,” said Charles Wyeth the Enterprise and Supplier Development Manager at Distell.
Their strategy was to introduce an intervention that leveraged Distell’s resources and uplifted an emerging farmer. During lockdown, they introduced cash crops of high value to pivot the business and open new markets. Lukas Theunissen, a general farm worker from Stellar Wines was groomed to be part of the partnership because he had a growth mindset and willingness to learn. The ongoing and inclusive support that Distell and Stellar Wines provided to Stellar Agri, led to rapid growth. Under Theunissen’s technical leadership and production competence, the farm grew from 23 hectares to about 150 hectares in just two years, and access to quality supply chain markets.
Their strategy was a success because Theunissen is now a shareholder, board member and the production manager of Stellar Agri. Today Stellar Agri is a successful business that supplies perishable products to Woolworths and others, and has become an exporter of quality seeds. Theunissen is on a continuous development and learning growth pathway as he positions himself to take on increasing leadership responsibility.
Key lessons learnt for supply chain professionals
Collaborate and combine resources to uplift emerging small businesses in your network.
Empower a success driven business leader who has experience and a growth mindset.
Use your credible network to help open market access opportunities for emerging suppliers.
It’s advisable to work with fewer emerging suppliers at a time, to provide inclusive business growth support.
Exxaro and MB Resources (MBR) Case Study
There is lack of transformation in the mining sector and emerging suppliers in the mining sector are struggling to grow and access markets. Exarro’s inclusive strategy prioritizes the growth of black local youth and women owned businesses in the mining sector. Mining is a capital-intensive industry to operate in and when emerging suppliers get a contract, they usually don’t have assets to do the work and are forced to hire the equipment at a high rate which erodes their profit margins. Exxaro’s Enterprise and Supplier Development programme focused on asset acquisition, providing grants or low interest loans and payment holidays to help their targetted SME suppliers grow.
One ESD beneficiary, MB Resources (MBR), an emerging contract mining and consulting SME, owned by Lerato Lelaka, has achieved exponential growth of over 300% since breaking ground on their first Exxaro contract in Belfast in 2016. Through Exxaro’s SME rapid growth strategy and Covid-19 relief packages, MBR has qualified out of the Exxaro ESD programme to full status supplier. “We share and practice the same values and principles as Exxaro now.” said Lelaka, who explained that 30% of MBR work is sub-contracted to 3 local companies, creating a further 18 local jobs.
Key lessons learnt for emerging suppliers
Seek both financial and non-financial support, i.e. financial and non-financial support. Exxaro engaged with their machinery suppliers to help emerging suppliers access machines on beneficial terms.
Rapid growth comes with its own challenges and skills development support and training will assist emerging suppliers deal with rapid growth.
Pay it forward, now that MB Resources is successful, they are empowering local black female and youth owned suppliers in the mining sector by selecting them as sub-contractors.
Relationship management with corporates that are uplifting small businesses is important because if the relationship fails, so does the business.
Emerging suppliers are facing challenges that need practical and tangible solutions. Join the Insider Track Series for an informative and interactive workshop with likeminded professionals that are serious about finding solutions. For more information, visit: https://sdawards.co.za/insider-track-workshops/