Category: Manufacturing and industrial

Winner: ArcelorMittal South Africa

Summing up: A supply chain finance programme with an enthusiastic rate of take-up was implemented with 12 weeks, injecting hundreds of millions of rand into the economy-afflicted South African steel industry.

What the judges said: “This programme was important for the local market. The onboarding process is carefully tracked to achieve a 48-hour onboarding target.”

Key facts:

  • One of the largest supply chain finance programmes in southern Africa
  • The programme was successfully implemented with a go-live within 12 weeks
  • Full liquidity capacity of ZAR1bn was achieved within eight months
  • The programme has freed up some ZAR1.25bn of cash for more than 50 suppliers – mostly SMEs – that are now on the platform
  • The multi-bank facility means suppliers can take advantage of highly-competitive rates

The entry:

The steel industry in South Africa has experienced one of the most challenging periods in its history, affecting hundreds of suppliers. ArcelorMittal, a major in the sector, recognised the challenges and  showed leadership by implementing a very successful supply chain finance programme which has provided a much-needed injection of finance into the South African steel industry.

ArcelorMittal South Africa negotiated increased payment terms with suppliers, typically from 30 days to 60 days, as well as streamlining its payment runs, providing a cash flow benefit to the group of almost ZAR600m.

However, the introduction of a supply chain finance programme enabled suppliers to secure early payment at competitive rates taking advantage of ArcelorMittal’s creditworthiness. Such was the rate of take-up that the ZAR1bn credit facility on offer from Barclays was fully-utilised within eight months. Many of the suppliers opted for auto trade to maximise the benefit.

The Propell Supply Chain Finance platform, in partnership with PrimeRevenue, has seen 97% of supplier invoices traded, proving that suppliers recognise the value in freeing up cash using supply chain finance. The onboarding process is as quick as 48 hours. More than ZAR1.25bn has been made available to suppliers, many of them SMEs that are not otherwise able to get cash at such competitive rates.

Figures on this scale make the programme one of the largest in southern Africa – and a true win-win for suppliers and for ArcelorMittal SA.

“The requirements from the other funders are almost impossible to meet and the rate they charge is much higher than the supply chain finance rate,” said one supplier in a testimonial. Another supplier reported that the cost of using supply chain finance rather than traditional invoice discounting reduced their financing cost by 16% pa – equal to ZAR160,000 savings for every ZAR1,000,000 of monthly sales to ArcelorMittal.

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