SMME Support StructureImproving Productivity,

Profitability and Competitiveness

NAFCOC RE-LAUNCH CONFERENCE: BOJANALA

DISTRICTRustenburg Civic Centre

By: Conrad Sebego-Principal Consultant

24 AUGUST 2006

PRESENTATION OUTLINE

NPI MandateOverview of NPI Strategic ThrustsLocal Case Study: Turn Around StrategiesLocal Case Study: Continuous Improvement

MANDATE

Tasked with the responsibility of improving productivity in all spheres of the nation’s economic and community life.

Governed by a tripartite Advisory Council drawn from government, labour and business.

Our offices Johannesburg, Durban and Cape Town.

STRATEGIC THRUSTS

Enterprise productivity and competitiveness

Micro-small enterprises productivity capabilities

Public sector efficiency and effectiveness

Knowledge Management and Research Strategic Leadership on Productivity

SOCIAL PLAN PROGRAMME

The programme is an initiative of the Jobs Summit, aimed at reducing retrenchments and creating new jobs:

it applies when large scale retrenchments look likely (50 people or 10% of the organisation’s labour force) because retrenchment on this scale can affect the sector, regional or national interests

SOCIAL PLAN PROGRAMME (cont

it aims to prevent job losses and a decline in employment by promoting negotiations on security of employment

It aims to lessen the social and economic impact on individuals, regions and the national economy

A social plan approach is vital when there is a reasonable possibility of developing alternatives that could save jobs

WHAT DOES IT COST?

This support initiative is partially funded by the state, which pays 65% of the consulting costs. The company pays the balance. Companies that cannot afford to contribute 35% should submit a special application for a 100% funded intervention.

PHASE 1 – PREVENTING JOB LOSSES

Through the National Productivity Institute’s social plan technical support facility, we can:

Establish Future Forums to identify problems, working collaboratively with labour and management on the future of the company

Save the jobs of workers facing retrenchment by providing technical assistance and support

Develop strategies to turn the company around Improve the company’s performance through better

marketing, operations and financial strategies Assist companies to assess their performance

and detect early signs of decline

PHASE 2 – MANAGING RETRENCHMENT

Following notification by the company, the Department of Labour will:

Provide counselling of affected workers Present life skills techniques in compiling a

resume, interview behaviour, etc. Provide information on accessing opportunities

for employment, small, medium and micro enterprises and provincial projects

Provide contact details for organisations of learning or financing small business

Assist with skills development

PHASE 3 – JOB CREATION

The Department of Provincial and Local Government will help by:

Developing regional and local economies Regenerating local economies affected

by large scale retrenchment

PROCESS OVERVIEW

Nurturing

Preliminary Assessment

Monitoring

Strategy Implementation

Indepth Assessment

Future Forum

Train productivity champion

Go?

Crisis ManagementCrisis?

Viable?

SERCO INDUSTRIES

Serco Industries started up 20 years ago. The business grew steadily and by the late 1990's was the leading supplier of insulated trucks in the country. New competitors emerged using lower prices and faster turnaround from their under-utilised facilities, and were able to capture a significant share of Serco's traditional market. Serco was in distress and facing the real provide assistance in turning the company around.

THE PROBLEM

After an indepth analysis, the NPI determined the following problems:

Late delivery Low productivity Clients complained of poor quality Lack of reporting systems and ineffective

planning Accepted inferior products from suppliers Ineffective customer relations

NPI’s SOLUTION

Implementation of quality management and production methodsManagement were coached Supply chain development saw lead times and quality improve.Accurate specifications were developed and used to ensure products were delivered "right first time". Researching the market and identifying customer issues affecting relationships and sales

THE IMPACTAs Serco's performance improved, clients expressed approval of the positive developments and started to place more orders with the company. Turnover increased from R30.5 million in 2002/3 to R 45.0 million in 2004/5.Innovative thinking resulted in the development of new, technologically advanced trailers.Production increased from 12 units per months to 17 units per monthA target of 80% "right first time" on completed products has been achieved.Improved workforce morale and greater motivation at management levels

HIGHLIGHTS

64 jobs secured34 new jobs created14 learnerships created75% full order on-time delivery to clients

WORKPLACE CHALLENGE PROGRAMME

Workplace Challenge Programme-Supply side measure of the DTIAimed at improving productivity and competitiveness of enterprises by:

Increasing collaboration between management and workers

Implementing Best Operating Practices Sharing and disseminating lessons

WIDNEY TRANSPORT COMPONENTS

Widney’s core business is the manufacture of aluminium framed sliding windows for the transport industry. Widney services three main customers namely: automotive industry, bus industry and rail industry.

STEPS FOR CONTINUOUS IMPROVEMENT

Participated in the Alberton Cluster since late 2003Leadership commitment and labour buy-in was crucial for success from the onsetEstablished minibusiness areas and necessary support structuresCreated visual display mechanismsAgree on performance and productivity improvement measuresGenerate standars judiciously and maintain themConducted regular auditsProblem solving sessions are active and functionalSharing of benefits due to improvements

RESULTS

Reduced lead time from 6 weeks to 3 weeksNo customer rejects, from 3000 (internal rejects in 2001)Increase in productivity of 10%Increase in on-time delivery of 8%Bus assembly time reduced from a week to one day100% pass rate on related training and improvement programme (ABET)Increased worker participation10 Learner-ships completed; personnel retained as staffAbsenteeism at less than 2.5%Clearer focus on the customer.

HIGHLIGHTS

Widney is the first company worldwide to design and manufacture plastic windows to the rail market.Innovations harvested from employees resulted in R3500 saving on the cost of making the product.Captured close to 70% of the market share.Employees empowered to make improvements and implement their ideas.

END!

THANK YOU FOR YOUR ATTENTION!RELEVANT INFORMATION:Telephone: (011) 848-5300

National Productivity Institute: www.npi.co.zaSocial Plan: www.turnaroundsolutions.co.za

Workplace Challenge: http://dev.absol.co.za/publisher%5Fwpc/