On 9 February 2015 we marked the two-year point in the implementation of the Massmart Supplier Development Fund (SDF), under the condition of the Competition Appeal Court (CAC) Order. The Fund has reached several significant milestones over this period.
The actual disbursements to and on behalf of suppliers as at end December 2014. This represents 36% of the planned direct spend with beneficiaries of the R200 million.
It has not just been about getting funding out the door and Massmart has worked hard to ensure that it is creating sustainable opportunities for small, medium and micro-enterprises (SMMEs). The greatest excitement over the previous financial year has been the take-off of the SDF’s manufacturing portfolio. The SDF closed the year with 24 manufacturing SMMEs on-board all supplying a range of retail products. The Fund also provided market access to 139 smallholder vegetable farmer beneficiaries in 2014 and commenced its first red meat sourcing pilot with smallholder farmers in the Eastern Cape. In 2015 the focus will be on maximising sales for listed SMME suppliers and prioritising even higher impact opportunities in assembly and import replacement.
These are some of the suppliers who have been supported by the
Supplier Development Fund
Through the SDF’s support, XChem has grown from just a handful of stores to a national presence in Massbuild. XChem is now listed through the Massbuild RDC and has total sales in excess of R2.0 million.
The Massmart SDF started working with Angela Chris Pitsi of XChem in 2012, by supporting her through supplying her products in five Pretoria based Builders Warehouse stores. In 2014 XChem demonstrated proof of concept with an increase in sales. Full execution of a national rollout plan followed with strong SDF and buyer support. This included:
- In-store merchandising support
- Listing with the Massbuild Regional Distribution Centre, a move from own distribution to single delivery
- Listing their entire range
Packaging and compliance support
Expanding into other Massmart formats
In 2015 the SDF is sponsoring Angela to attend a comprehensive business management training programme that is run in conjunction with the Gordon Institute of Business Science’s Enterprise Development Academy. While XChem is set to graduate from the SDF’s funding support, sales will be closely tracked, merchandising support will continue for an additional 12-month period and new cross-listing opportunities will be sought within the Massmart Group.
Rivoningo Steel and Design
Rivoningo is a strong example of how women-owned businesses can break into steel manufacturing and steel products supply, for the home construction industry.
Rivoningo has grown from just a single store listing a year ago, to 19 Massbuild stores today. The total sales from the business are now close to R3.0 million having grown from a base of R500,000.
Rivoningo Steel Designs, owned by Nomhle Ndlovu, is a 100% black woman owned manufacturer of steel window and door frames. Rivoningo was established with the sole purpose of actively participating in the steel industry. The company is dedicated to delivering high quality products and craftsmanship.
- Inadequate factory plant: the business currently operates from a 600m2 factory with a height of 3.5 meters which limits them from installing larger equipment.
- Rivoningo requires assistance with accessing equipment to improve efficiencies and ISO compliance and certification needs.
Grow production to optimal capacity. Extend store presence. Investment in equipment and ISO compliance and certification. There is an opportunity for funding assistance for a better facility. With the ensuing growth, all efforts are geared towards empowering Rivoningo to become a preferred and trusted supplier to Massbuild.
The Supplier Development Fund is working with Biscotti to grow their presence throughout the Massmart Divisions. The project kicked-off in Makro at the end of November 2014 and there has been strong early sales uptake.
The Supplier Development Fund provided a finance guarantee into Bheki Zondo’s acquisition of Biscotti. The Fund also assisted the business with food safety compliance support and some limited factory upgrades.
Biscotti Biscuits was a family owned and run biscuit manufacturing business in Vereeniging that came up for sale. Bheki Zondo has since purchased the company and is now the new owner of the biscuit factory. Biscotti make a range of biscuits from entry level to premium level biscuits.
- Bringing the factory into improved compliance
- Taking production capacity higher than the current 33%
Biscotti is set to expand into the other Massmart Group formats with opportunities in product range extensions and supplying private label.
The Supplier Development Fund is supporting the development of regional SMME brick suppliers such as Nkuleko to be able to meet Massbuild’s growing demand for quality clay bricks.
Nkuleko Bricks, based in Balmoral Mpumalanga, is a 50% Black-owned company. They specialise in the manufacturing of mainly face and semi-face clay bricks with a current capacity of two million bricks a month.
- The current brick firing capacity is insufficient to grow production
- Maintaining a consistent, more efficient and environmentally sustainable drying and firing
- Addressing ISO compliance and certification needs
The project will increase their capacity with another 1.7 to two million stock bricks per month, thereby doubling output. An additional 35 jobs will be created.
They will also be able to manufacture and supply Massbuild with Quantum bricks used in RDP projects. Once complete, Massbuild will buy an additional 1.5 million bricks per month.