Category: Manufacturing & Industrial
Winner: Richards Bay Minerals
Partner: Addendum Financial Technologies
Summing up: A programme designed to meet a strategic goal of extending payment terms to support business growth while ensuring the company stood by its responsibilities to the local rural economy.
What the judges said: “The accessibility to that programme for all suppliers (no matter of the size) make this a very interesting one – great for corporate social responsibility.”
- The programme was implemented from first engagement to go-live in less than 28 days
- More than 34 per cent of Richard Bay Minerals total eligible annual supply chain spend is currently traded on the programme.
- More than 95 per cent of suppliers have elected to automatically receive early payment
Richards Bay Minerals is South Africa’s largest mineral sands producer and beneficiation company with worldwide recognition for its strength in mineral sands extraction and refining. It accounts for about 3.3 per cent of South Africa’s mining sector by value of output.
The company is a joint venture between Rio Tinto and Blue Horizon. In 2017, Rio Tinto set out the extension of payment terms as a strategically important goal to ensure its business remained competitive and to generate cash to help fund further growth.
Richards Bay Minerals decided to partner with South African technology provider Addendum to develop a supply chain finance (SCF) programme to help achieve this strategic goal. Funding was provided by a South African bank.
By implementing an SCF programme, Richards Bay Minerals wanted to minimize the impact of longer payment terms on local and foreign suppliers. Feedback from suppliers suggestss that the SCF funding was the cheapest available.
From first engagement with Addendum to making the programme live took less than 28 days – a very swift turnaround compared to average industry standards.
Within the first year of operation, more than 34 per cent of RBM’s total eligible annual supply chain spend is currently traded on the programme.
A total of R2.2bn-worth ($135.4 million) of working capital has been released since the programme began.
A stand-out element of the programme is that it offers all suppliers the same benefits and access to the low rate of financing regardless of their size. Many of Richards Bay Mineral’s suppliers are local micro, small and medium-sized enterprises.
This aspect of the programme was praised by this year’s judges from a corporate social responsibility perspective.
Most companies tend to target their largest suppliers to free up as much working capital as they can, but in the case of Richards Bay Minerals, it wanted to make sure all suppliers could access the same benefits. The company recognised that cheap working capital in the remote area of South Africa was hard to find and the SCF programme would prove to be an essential way to help small businesses grow and continue to contribute to rural development of the region.
Richards Bay Sands is already one the major employers and taxpayers in the region and the programme has only further assisted its suppliers to grow their businesses, with one supplier saying the SCF programme enabled the company to hire more permanent and contracted employees.
Supplier feedback has so far been positive, with the programme’s trading statistics illustrating its appeal.
More than 30 per cent of suppliers have registered for Richards Bay Minerals SCF programme since it started in 2017. More than 99 per cent of all approved invoices have been traded by suppliers for early payment.
The success of the programme has been recognised by the Rio Tinto parent group, and it will be potentially expanded to include other Rio Tinto subsidiaries in other countries.