Covid-19 case study: Dints International adapts to client needs, maintains momentum
BExA member Dints International is a British exporter supporting the mining sector in emerging and developing markets. It is a supply chain partner to its clients, providing sourcing, procurement, delivery logistics and supply chain finance. Dints has traditionally served the African market and has clients across the continent; in recent years it has developed strong demand in South America and has an emerging client base in Asia. Andy Colquhoun, Dints’ Business Development Director, provides a detailed overview of how the business has reacted to the Covid-19 pandemic.
The effect on the operational capability within Dints due to the Covid-19 pandemic has been limited, but our suppliers, logistics partners and particularly our customers have been affected in different ways. Below are three examples of areas that have caused issues and how Dints has adapted its approach:
Cash flow. This has been a challenge for many of our customers. Whilst some commodities, such as gold, have very favourable market prices, restrictions on logistics and end buyers have impacted sales. Multiple gold refineries shut initially due to Covid-related staff shortages; gold then takes longer to sell and so cash is not available to pay suppliers and release critical supplies. Dints has maintained close contact with clients and flexibility with payment terms has been important to keeping supply flowing. If supplies don’t reach a mine, vehicles aren’t fixed, and production is affected, further reducing mine revenue.
Logistics. In countries with limited air freight flow, passenger planes are critical and, without them, cargo space and frequency are limited. DHL and other couriers have been critical lifelines but have restrictions, which has meant flexible thinking to deliver critical supplies. A good example was a 3.2m drill rod, which could not be transported by DHL due to dimension restrictions and so a different supplier selling a 2.1m drill rod was identified. The product was then agreed by the end user and shipped. Dints initially looked at providing a charter air service, but it was quickly apparent that DHL and other air bridges were able to provide. We have adapted our logistics providing and consolidation points to meet availability.
Medical. Mines have focused on trying to prepare for Covid-19 and sustaining the business. In many cases this has led to a diversion of funds to ensure that the mines retain working capital and invest in Covid-19-related activities. As a result, we have seen large orders on our normal product range reduce, but by supplying key Covid-19-related medical equipment, we have managed to maintain a good order book.
By adapting to clients’ needs Dints has been able to maintain momentum created by a good first quarter and, in some instances, rekindle relationships with old clients.
We have a wide base of suppliers and, where required, have been able to alter our sourcing in reaction to capacity changes, although the effect on our main suppliers in North America and Europe has been less damaging than anticipated. New medical supply lines from China have been more challenging, but this was expected.
Reaction to the pandemic has not only required considerations of how to manage our client relationships but also management of our internal business, as follows:
Long-term strategy. With an expected reduction in activity, the company has taken the opportunity to refine its five-year business plan. Revenue over this period will reduce, but there is confidence that good use of this time can prepare a stronger business for 2021.
Working environment. The company had many elements working remotely already and so going to 100% remote working was not a big shock to the business. The company is not expecting to resume office working for several months to come; the greatest risk is multiple infections within the business at one time causing a significant capacity reduction. The key question now being addressed is understanding what the 2021 working environment will look like for the company.
Composition. Dints has not needed to furlough any workers, and we increased our workforce, with a new expeditor who started in April. The added fixed costs at a time when revenue was expected to fall was weighed up against the benefit of training at a time of decreased activity. Customer service has never been so important as a tool to retaining clients and increasing the team despite the conditions has been the correct decision.
Financing our exports and protecting our working capital was expected to be a significant challenge in March, and Dints took several quick steps to de-risk:
Payment in advance. Critical supplies were requested to be paid in advance. Especially with medical supplies, the pressure on availability was significant and customers understood this requirement.
- Receivables. Working with customers to ensure that the receivables book is up to date has been key. With pressure on working capital ensuring that you are seen as a key supporting actor during this period is critical to being high on their priority list.
Government support schemes. Dints prepared applications for a number of grants from Innovate UK as part of the government’s Covid-19 response. Whilst some were, in the end, not judged to be applicable, the application process was a good exercise for the business to define our current position. Others were taken up and have provided security to the business. Dints has successfully been approved for a CBILS facility.
South American clients are only now beginning to enter the worst phases of the virus, but have already been affected by lockdowns. Clients in Guyana, for example, are not only contending with Covid restrictions but also uncertainty over election results that should have been declared in early March.
African clients have been widely affected by lockdown and travel restrictions but the real effect of the virus in Africa is still uncertain. Governments in some parts of the continent can be relied upon to make abrupt decisions or defer decisions without limit, and this can be very damaging to business.
Suppliers have mostly managed to maintain their service, but future waves of the virus may have different impacts. Further uncertainty is to be expected.
Dints has had a positive second quarter in the circumstances and maintained profitability. It cannot be guaranteed that this will continue, and we will continue to look for new methods to innovate. But keeping close to our clients and providing exemplary customer service is key to staying afloat.
About the Author:
Andy Colquhoun is Dints’ Business Development Director and has been with the company since 2016. Andy has a military background, spending time in various parts of the Middle East and Africa as an officer in the Black Watch infantry regiment. After the Army Andy worked in the Republic of Congo for 5 years, initially setting up and running operations for a gold exploration company and then as the Managing Director of a logistics business. He is passionate about the role of the private sector in development and supporting good businesses in difficult places.
Posted 10 June 2020