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Improving Productivity, Quality, Competitiveness, Performance Management &

Business BenchmarkingTraining Programmes for entrepreneurs

Facilitating knowledge based sustainability of

economic growth by applying UNIDO

methodology, IT tools and developing of best

continuous improvement practices

in

Training & Upgrading Programmes for

Entrepreneurs

Measuring and Improving Business

Results



Presentation at World Association for Small and Medium Enterprises

(WASME) 2005 Conference in Bucharest, Romania, 16-18 May 2005

by

Serge Golovanov,

PhD, Dipl.Eng., UNIDO International Consultant

Director, Enterprise Performance Improvement Centre,

GOLEM IMS GMBH, Vienna, Austria

in partnership with United Nations Industrial Development

Organization (UNIDO), Vienna, Austria

www.win2biz.com www.golem.at



Focus on Small and Medium Enterprise performance and innovation management

capacity:

• Do entrepreneurs manage businesses

with high efficiency and min losses?

NO!

• Do they have & use IT tools to measure

business results and simulate decisions?

NO!

• Can innovation, technology transfer be

managed effectively in such cases? NO!



Definition of Small and Medium-sized Enterprises

Category Number of employees

Middle 50 - 250

Small 10 - 50

Micro < 10



Estimations of lost gross profit (GP) due to various inefficiencies, per annum

Enterprise Group 1 (GP € 400,000): 54,900 €

Enterprise Group 2 (GP € 3,000,000): 215,500 €

The price of ignorance (UK case studies, CoVE and MII, food industry):



Average enterprise improvement results benchmarked after the Programme

implementations

• Overall Productivity Increase (or value Added/person) + 9%

• Improved Efficiency + 18%

• Improved Gross Profit + 25%

• Reduction in Labour cost - 15%

• Overall Effective Efficiency increase + 5%

• Acceleration of business development - 6 years



Challenges facing entrepreneurs:

• Businesses are run with relatively high losses

and inefficiencies without knowing actual

figures!

• Major decisions are not prepared and

evaluated in necessary detail, compared by

consequences, optimized and monitored in

implementation

• The potential is underutilized, developments

are risky, results may be unpredictable and

unexpected!



Businiess Navigation:

Measuring & Monitoring & Planning of Business Performance Results



Sailing to target destination

Initial position

Target

(Promised Land)

Ideal path



Sailing with navigation



Sailing without navigation

New technologies do not help reaching the target but can make failure impact more costly and severe!

(e.g. new engine, design or construction of the ship do not change the outcome )



SME mortality rate after successful start-up is high due to premature death of SMEs caused by uncontrollable losses and non- efficiencies unknown to management

?Result: Most of SMEs are running life time experiment

“W i n or D i e” !

Actual data by San Paulo Department of Statistics, Brazil:

5 billion dollars lost and 530 thousands jobs in the medium and low range of manpower are lost within one year in San Paulo State only.

1,000,000 businesses closed between 1990-2002 just in the State of San Paulo worth of 62 billion dollars in invoicing and consequent losses in taxes.

(Source: Newspaper “O Estado de San Paulo”, Economy and Business Section, 4th December 2003)

Similar situation exists in other developing countries lacking of official statistics.



Common issue:

What are the practical solutions for enterprises?



Continuously improving business based on its measurement



1. Measuring business results (UNIDO Software)

2. Identifying problematic areas having measurements data

3. Formulating optional solutions which can potentially solve

problems and bring improvements (new machine, production

profile, production team change & control, etc)

4. Evaluating impact of uncertainties and risks by simulating the

major outcomes (scenarios)

5. Selecting the best (e.g. most profitable & sustainavle) option

6. Implementing the decision in practice

7. Returning to Step 1

Basic principles of continuous improvement in business


Business BenchmarkingTraining Programmes for entrepreneursComponents of UNIDO’s Enterprise Business

Performance Management Solution

Software SuiteClient Support &

Consulting on-site

Pharos – Business Navigator

Produce Plus

Financial Improvement

Toolkit

Training Course

In country – regional industrial center

Vienna or any

European location

Certification

Enterprise

Professionals

Benchmarking

Software Installation

Data collection & entry,

Biz target setup Reports,

Export-import

Measuring & Improving Business:

Developing best practices



1. Awareness seminars,

selecting of enterprises

2. Training courses for SME

management (5 days, < 24

persons per group)

The Programme Content & Budget



3. UNIDO Business

Performance

Measurement &

Management

Software tools (at least 2 licenses per

enterprise for general and

production managers)

The Programme Budget Components



4. Training and certification of client’s

support team

5. Transfer of know-how,

methodology to Enterprise

Management, setting best

continuous improvement practices (up to 12 months, 1 consultant support up

to 10 enterprises, installing software, data

collection, business targets, decision

support, results’ measurement, etc).

6. Final results evaluation and

reporting, conference

Phase 2 option: On-site consulting & support



UNIDO Performance measurement tools:

Business Benchmarking

Report



Improvements by KBI summary graph at a glance



Key Business

Indicators (KBI) in

bench-marking module



UNIDO Performance Measurement tools: Pharos Business Navigator (main menu)



UNIDO Performance Measurement tools: Produce Plus (main menu)

Produce Plus



• Pre & Post Programme enterprise benchmarking, diagnostics, performance measuring, production efficiency analysis provided for each participating enterprise (customers, suppliers, non-conformances, planning, production resources' utilization, etc.)

• UNIDO Certificates of “Enterprise Business Performance Excellence“ for enterprises and “Business Performance Management Excellence” for entrepreneurs and managers based on benchmarked improvements.

• Training of SME managers in presentation of the enterprise performance results to investors and credit institutions

Some practical outcomes



Expected Results

• Improvement of Key Performance Indicators (KPI) ~ 10% in

average, e.g. Gross Profits, Productivity (Added Value per Employee), etc.

• Increase in taxation results • Benchmarking reports for each enterprise,• Documented Upgrading Programme results • Important benchmarking data for performance of industrial sectors• Investment environment improving due to increased transparency

of businesses• Certificates for Enterprise and its Management• Improved culture in management of business performance and

innovations, sustainability and competitiveness



• Average annual sales, USD - $632 000

• Net Profit average % (shoe production factory) - 5%

• Increase of net profits, post programme % - 10%

Enterprise Model Enterprise Model of Training Programme Efficiencyof Training Programme Efficiency

(net profit only)(net profit only)



• Number of enterprises in the sector of industry served - 1 000

• Net profit increase per sector, post-programme - $12 ,008,000

• Taxation (annual gross profit, example %) - 35%

• Increase in taxation income for Government, annual - $ 4,202,800

Training Programme ResultsTraining Programme ResultsNational Industry ModelNational Industry Model

(limited by consideration(limited by consideration net profit factor only)net profit factor only)



Implementations

1. UNIDO integrated programme: the Republic of Komi, Russia Sustainable Industrial Development and Competitiveness, Oct. 1999

2. Strengthening of Small and Medium automotive component suppliers to deliver export quality products in India, Nov. 1999, India, New Delhi, Pune, Bangalore, Mumbai, Baroda, Nashik, Ahmednagar.

3. Application of Quality Principles To The Food Processing Sector of 7 Sub-Sahara African Countries, July 2000 Kenya, Uganda, Tanzania, Zambia, Ethiopia, and Zimbabwe.

4. Application of Quality Principles To The Leather Production Sector in Egypt, April 2001, Cairo, Egypt

5. Integrated Programme for Columbia, 4 industrial sectors, Ibage, Pereira (Eje Cafetero), Barrancabermeja.



6. The workshop "Strategic and production management of industrial enterprise: application of UNIDO benchmarking and business excellence tools Pharos + Produce-Plus", UNIDO ITPO/ARCEIT Manama, Bahrain.

7. The workshops "Application of UNIDO benchmarking and business excellence tools for enterprise upgrading, strategic and production management of industrial enterprises, IMC/UNIDO workshops, Cairo – Alexandria - Borg El Arab, Egypt, February - April 2004.

8. Introducing UNIDO measurement tools for continuous improvements in quality, efficiency, productivity and competitiveness in manufacturing, Association of Lebanese Industrialists (ALI), Euro-Lebanese Center for Industrial Modernization (ELCIM), Lebanon, June – October 2004.

9. Improving Business Performance by Introducing Continuous Improvement Practices Based on UNIDO Business Performance Management Software, August – December 2004, UNIDO Programme for Palestine.



C o n c l u s i o n s:

1. The majority of entrepreneurs, industrialists does not have sufficient knowledge, performance management tools and practices to monitor and measure their businesses, optimize decisions, eliminate inefficiencies systematically and maximize use of available resources.

2. The Training and Upgrade Programmes for SMEs introduce best continuous improvement practices and UNIDO IT tools facilitating productivity, competitiveness, quality, sustainable growth in areas where real and tangible improvements can

be made.

3. SMEs become much more transparent and better prepared for national and international investors, improving export potential.

4. The Training Programmes facilitate entrepreneurs capacity building in introduction and managing of innovations, new technologies.



C o n c l u s i o n s (cont)

5. The Training Programmes facilitate human resource developments, managerial capacity and potential, path to ISO 9000 standardization, meeting WTO requirements, decreasing SME mortality in the regions.

6. The Training Programmes deliver unique content and provide comprehensive package of services at acceptable cost level resulting in important Knowledge Capital Gain.

7. Governmental and international support of the Training Programs is an effective way to boost economic performance and sustainability of industrials sectors in regions.

8. The programme results are measured and documented providing vital economic and industrial statistics to organizers and donors .



Input:< N, 000 EURO per enterprise

Training Programme

with or without on-site support<12 months

1.1. The practical instruments exist and proved: The practical instruments exist and proved: Training and Upgrade Programmes for SMEsTraining and Upgrade Programmes for SMEs

2.2. The costs of fundamental improvements are The costs of fundamental improvements are reasonable and realistic compared to any other reasonable and realistic compared to any other existing options.existing options.

3.3. The results are measurable and documented.The results are measurable and documented.

Output:Measurable increase of

major indicators including net profits,

productivity, etc.

The total enterprise service package price depends on the Programme duration, national consultants salaries in country, number of participating enterprises and some other

factors



International Partnerships

• Representative functions: UNIDO Focal Point – National Enterprise Performance Improvement Center

• Innovative directions of working with SMEs• Addressing key national priorities defined by Governments• New projects and funding options by EU, UN, international

and national donors• Preparing SMEs for introducing innovations and new

technologies in effective and controllable way• Training of national consultants and entrepreneurs in

country or/and in Austria • Sharing national experiences and benchmarking results• Distributing UNIDO methodology, software and best

practices



The MessageWe welcome associations with national counterparts supporting growing SMEs industries in countries by

– Deploying

– Training (in country and/or in Europe)

– Implementing

– Improving and Benchmarking

with UNIDO Business Performance Management Solutions for entrepreneurs bringing up productivity, competitiveness, quality and making industrial development more effective sustainable and prosperous!



Development, Training and Support Center for UNIDO Business Performance Management products

Member of INSME Association

Contacts:

Enterprise Performance Improvement Centre

GOLEM IMS GMBH, Vienna, Austria

www.win2biz.com e-mail: [email protected]