Suppliers Development Programme - UNDP

Programa de Naciones Unidas para el Desarrollo

Programa de Desarrollo de Proveedores Montes Urales 530, piso 4, Lomas de Chapultepec, CP 11000, México D.F.

www.pnud-pdp.com

Suppliers Development Programme

Contributing to articulate the Mexican Economy

TEN YEARS OF EXPERIENCE HOW DOES IT WORK

Overview

• Is a model supported by the Mexican Ministry of Economy to develop better supply chains in order to improve the performance and competitiveness of strategic business in México.

• It is focused on implant the continual use of a methodology based in world best practices with the intention that it could be adopted by local suppliers.

• Created and operated by The United Nations Development Programme, México

Objectives

1) To integrate small and medium enterprises (SME´s) as suppliers into the world commercial and financial flows present in México.

2) To raise the competitive capacity of the largest companies (OEM´s) through the consolidation of a high performance network of business allies.

3) To improve the efficiency of the companies by the development of market focused channels and flows of information.

4) To contribute to the strengthening of the internal market.

5) To increase the participation of SME´s in the exportations markets.

Our Portfolio

How to find new suppliers in an efficient manner

How does it work

Value Proposition

• It is a process that promotes the development of the productive chain and the improvement in the competitiveness of the suppliers network.

• It diagnoses, evaluates, certifies and promote the professionalization of the value chain and the integral development of the suppliers.

• Is oriented to improve the quality, price, time of delivery, service and technical assistance.

Creating the network

• Through a net of collaboration structures by enterprises leaders and SDP consultants.

• It success is based on the commitment to achieve common goals.

Win – Win Relationship

The Methodology

The Final Result

With who are working with

Special Project with National Energy Company

• CFE is the largest and only public company responsible for generation, transmission and distribution of electricity in the country.

• Actually the program is attending 50 Sme´s related to a Tier 1 CFE´s supplier, such as Siemens, ABB, Schneider, Voltran and some other global companies established in México.

• We have more than 600 potential suppliers ready to become a new business allied for the potential new investors in México.

Mexico, D. F., on July 2, 2010. Took place in Mexico City,

the signing of collaboration agreement between the

Comisión Federal de Electricidad (CFE) and the United

Nations Development Programme (UNDP) and the signing

of cooperation agreements between UNDP and tractor

companies, this in order to improve the competitiveness of

productive chains formed between the CFE and the

Providers of the Electricity Sector in Mexico.

http://www.undp.org.mx/spip.php?article1456

Success History: Nestlé 1st Generation

• The success of this initiative is based on increasing the competitiveness of suppliers with a focus on generating business relationships win - win in the long term, resulting in increased exports, raising the level of local content and strengthening the chain value. In that sense, Juan Carlos Marroquín Cuesta (México CEO) said that is important to generate profitable and sustainable economic growth, but also a commitment to society. Because of this, is that the Nestlé Group Mexico joins the recognition of the companies participating in the Supplier Development Programme UNDP, the dedicated effort and investment to increase productivity, enhance their skills and create more jobs, which are actions fully aligned with our philosophy of Creating Shared Value for the benefit of nutrition, health and welfare of Mexicans.

México City Jun 21st 2011. Nestle Group and UNDP

recgnize small and medium companies as qualified

supplieres.

The Supplier Development Programme UNDP encourages

SMEs to implement improvements in their production

processes for Nestlé value chain

Participating companies achieved 15% increase in sales

and 6% of average job grow.

TRANSFERENCE MODEL CREATION OF NATIONAL CAPABILITIES

• Linking demand with supply.

• Speeds identification of domestic suppliers

• Inventory of Installed Capacity Web Site

• Systemic Instrument, orderly and replicable

• Intervention Model.

• Focus on results Methodology

• Corporate Governance Model

• Formation of a group of specialists

• Operational Capacity Execution Unit

What does you receive

Key Information for

development policies

Business Model

• Adjusting to global trade

rules.

• Achieve standardized

quality systems.

• Understanding Business

Cycles.

• Meet and engage in

global trends

Sustentability

• Better costs formation.

• Lower demand for

working capital.

• Increased human talent.

• Improvement of

production technology

and product.

• Higher incomes.

Identify broken links in

the value chains..

• Difficulty of supply of raw

materials.

• Lack of support industry.

• Lack of financial tools for

international trade.

• Weak level Engineering.

• The experiences helps to understand the structural absences hamper the competitiveness in the value chains.

• Information that will enable to define a better industrial policy for each of the strategic sectors.

Private Level Country Level

THE INVENTORY COVERAGE OF THE PROGRAM

The numbers

• It is not a massive project and should be addressed by the decision making of each activity sector

130

78

104

149 153 170

16 10 16 14 7 9

2006 2007 2008 2009 2010 2011

SME´s OEM´s

Improving competitiveness

• As a result of the intervention the SME´s achieve higher productivity and efficient use of assets, which means a better competitiveness of the value chain.

83% 80% 78% 67%

New Markets Cost Reduction Eficiency < Rejections

Competitiveness

Source: OCAV Evaluation 2009

Long term benefits

• Además se favorece la innovación, se desarrollan nuevos proyectos de forma conjunta y se ha logrado incrementar el volumen de compras nacionales.

89%

63%

50% 50%

I & D Products New Technologies New processes Increasing of national content

Innovation

WIN - WIN RELATIONSHIP WHY THE GOVERNMENT SUPPORT THIS INITIATIVE

How does the money backs

• By a better equity in distribution of wealth through employment.

• By the increase in business taxation.

• By the strengthening of the internal market 5.6%

12.5%

24.5%

8.7%

21.3%

67.3%

Employment

Billing

Profitability

The Final Result

High Low

Experience in transference

Mexican model is used as an integration tool.

Aerospace Sector Certifications Project

The Objectives:

• Creating a Certification Program supported with funds enabling by Economy Ministery to detonate under a domino effect:

• National content

• New Investments.

• Employment.

• Technological Development.

• 65 companies certified

• About 1,500 jobs created

• Substitution of imports by 10 million USD

• Exports increased by $ 114 million.

The Results:

Federal Funds

Return On Investment

KEY PLAYERS AND TIMELINE CONDITIONS FOR THE TRANSFERENCE

Transference Phases

Preparation

Dealing

Analysis

Strategic Scope

Integration

Capabilities Construction

Governance Model

Operation

Service Installation

2 success cases

1 m 10 m

Required Investment

Transference (the automobile)

• Preliminary mission : definition of the cooperation project (+/- 30,000 usd)

• On average $ 550 000 usd are required to transfer, installation and implementation of Operating Model through an Executing Agency. This resource is for the full transfer of the methodology and creation of an autonomous SA team.

Operation (the gasoline)

• In Mexico each SME operated has a cost of $ 12.500 for a period of 10 months.

• 60% of this amount is contributed by the Federal Government and the remaining 40% is contributed by the private.

The Key Players

Execution Unit

Ministry of Economy

Development Bank

Industrial Chamber

UNDP

Office

Functions

• Industrial Policy Definition

• Funding for the application of methodology Ministry of Economy

• Financial Instruments

• Projects Integration Development Bank

• Value Chains

• Impulse for strategic sectors Industrial Chamber

• Transparency

• Neutrality UNDP Office

• Intervention in value chains

• Delivery of results Execution Unit

Summary

• Is a valid instrument for strengthening the domestic market.

• It is the fastest way to integrate SMEs into global markets.

• It has proven to be an efficient tool for the creation and employment generation.

• It is within the framework of corporate social responsibility.

• Permit at the time facilitate regional integration.

• Economic development is the best way to generate and distribute wealth.

Programa de Naciones Unidas para el Desarrollo

Programa de Desarrollo de Proveedores Montes Urales 530, piso 4, Lomas de Chapultepec, CP 11000, México D.F.

www.pnud-pdp.com

THANK YOU

rogelio.garcia@undp.org