SEED-Linkages Program October 2002 European Movement

1. SEED-Linkages Program October 2002 European Movement

2. SEED & Accenture Development Partnerships • SEED IS is a regionally based consultancy working under the management of IFC – the world’s leading frontier market investor • SEED’s overall remit in the region is to support the development of viable SMEs through direct consultancy work, training and other support • ADP is an affiliate of Accenture, one of the World’s leading management consultancies, established to apply high quality business and technology consulting skills within a development context Jointly we are developing a Linkages Programme to assist SMEs surrounding a large company in the optimisation of their internal operations, in order to achieve mutual benefit for both the SME and the large company….

3. SUPPLIERS SUPPLIERS SUPPLIERS SUPPLIERS SUPPLIERS SUPPLIERS SUPPLIERS SUPPLIERS DISTRIBUTORS DISTRIBUTORS DISTRIBUTORS DISTRIBUTORS DISTRIBUTORS DISTRIBUTORS DISTRIBUTORS DISTRIBUTORS Raw Raw Raw Raw Raw Raw Raw Raw Retail Retail Retail Retail Retail Retail Retail Retail LOCAL CORE LOCAL CORE LOCAL CORE LOCAL CORE LOCAL CORE LOCAL CORE LOCAL CORE LOCAL CORE Materials Materials Materials Materials Materials Materials Materials Materials BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS Components Components Components Components Components Components Components Components FDI FDI FDI FDI FDI FDI FDI FDI (Foreign Direct (Foreign Direct (Foreign Direct (Foreign Direct (Foreign Direct (Foreign Direct (Foreign Direct (Foreign Direct Franchise Franchise Franchise Franchise Franchise Franchise Franchise Franchise Investment) Investment) Investment) Investment) Investment) Investment) Investment) Investment) Services Services Services Services Services Services Services Services Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale Wholesale Non Core Businesses Non Core Businesses Non Core Businesses Non Core Businesses Non Core Businesses Non Core Businesses Non Core Businesses Non Core Businesses (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core (‘Spun Off ‘ from Core New New Business) Business) Business) Business) Business) Business) Business) Business) Key: Key: Key: Key: Key: Key: Key: Key: SMEs SMEs SME SME SME SME SME SME SME SME LINKAGES LINKAGES LINKAGES LINKAGES LINKAGES LINKAGES LINKAGES LINKAGES Linkages Program: Background Linkages helps different types of SMES within an emerging economy affected in different ways by the intervention of Foreign Direct Investment (FDI) in a large company

4. Move Buy Make Sell Sell Spin Off-Related Consulting Services SEED provides a range of related support services following the spin off of Non Core Assets aimed at assisting both the Large Company as well as the new and spun off SMEs affected by this process Spun Off Non Core Assets New Businesses Large Company • How do I Set up as a Spun Off SME? • Business Plan • Sourcing of Funds • Training & Technology • How do I Set up as a New SME? • Business Plan • Sourcing of Funds • Training & Technology Make/ Provide Make Spin Off/ Outsource Establish as New How do I Spin Off or Outsource my Non-Core Assets while ensuring I adhere to Corporate Social Responsibility principles? • Generation of New Business Ideas • Feasibility Study for New Businesses • Non-Core Asset Assessment & Feasibility Study • Outplacement program for Redundant Workers

5. SME Core Business Supply Chain Consulting Services – Supplier Focus Suppliers SMEs must focus on developing certain key functions in order to maximise the value chain throughout the supply chain network Hyper-Market Supplier Customer Provide Buy Sell • How can I be a good supplier? • Competitive Pricing • Quality Products • On-time Delivery

6. SME Core Business Supply Chain Consulting Services – Distributor Focus Distributor SMEs must focus on developing certain key functions in order to maximise the value chain throughout the supply chain network Factory Suppliers Distributor Move Make Sell • How can I be a good distributor? • Focus on Sales & Marketing • Effective Merchandising • Excellent Customer Service

7. Linkages Program: Methodology Overview The Linkages Program begins with a business assessment during which all aspects of the SME/Large Company are analysed, followed by a phase during which recommendations are made for the implementation of tools, technology and/or training Business Business Business Business Assessment Assessment Assessment Assessment Recommendations Recommendations Implementation Implementation Technology Technology Tools Tools Training Training Finan Finan - - Ware Ware - - General General Supply Supply Metho Metho Data Data Manage Manage cial cial Chain Chain house house dology dology Models Models ment ment Planning Planning Mngt Mngt Mngt Mngt SCM SCM Business Business Overview Overview ERP ERP Assess Assess Course Course ment ment Sales & Sales & Trans Trans - - Process Process Quality Quality Score Score Order Order Market Market - - port port Reengi Reengi Mngt Mngt Mngt Mngt Cards Cards ing ing Mngt Mngt neering neering

8. SEED Offerings – Business Assessment • SEED will analyse existing operating practices across and within the SME/Core Business Supply Chain to identify the key issues faced both upstream and downstream. For example: • Upstream: • Competitive Pricing • Quality Products • On-time Delivery • Downstream: • Focus on Sales & Marketing • Effective Merchandising • Excellent Customer Service • SEED will produce a report recommending ways to overcome the issues

9. Accenture & SEED - Implementation:TECHNOLOGY • SEED Staff will be skilled in implementing business software solutions (specific to the region) for SMEs • Software will be implemented by the SEED local consultant network and will typically cover some or all of the following modules:

10. Example of Materials - Supplier Side Training Courses • Introduction to SCM • Management of service contracts • Cost accounting • Quality control management • Production planning • Business Strategy IT Systems • MIS • Inventory Control • Production • Financial Mngt System Consultancy Services • Supplier Selection and Evaluation Program • Organisation Design • HR Management • Product Standards • Compliance with Buyer’s purchase criteria • ISO Accreditisation

11. Example of Materials - Distribution Side Training Courses • Retail/Store Operation Management • Marketing Concepts • Customer Relations • Sales Motivation • Business Strategy IT Systems • POS • Inventory Control • Transportation System • Financial Mng System Consultancy Services • Incentive Program • Merchandising • Marketing/Promotion Design & Implementation • Organisation Design • Sales Network Design • HR Management

12. Tigar: A Linkages Case Study • Product: Automobile Tyres & Tubes • Annual Turnover: > US$ 70 million • No. of Employees: > 4,000 • Location: Pirot, Serbia • Date Established: 1935 • Legal Status: Privatized, 1991 • Joint Venture set up: • Tigar Holding 65% • Michelin 25% • IFC 10% Supply Chain Business Assessment to recommend solutions to existing issues and future strategy of spun off sales network (Tigar Trade) Spin Off/Outsourcing Assessment of Non-Core Assets in order to determine Spin Off or Outsourcing Strategy for each New Business Work with Tigar Management to help develop new business ideas for outplacement of staff affected by spin off or outsourcing program

13. Tigar: A Linkages Case Study • Product: Automobile Tyres & Tubes • Annual Turnover: > US$ 70 million • No. of Employees: > 4,000 • Location: Pirot, Serbia • Date Established: 1935 • Legal Status: Privatized, 1991 • Joint Venture set up: • Tigar Holding 65% • Michelin 25% • IFC 10%

14. Mountain House Workers catering Flourmill Business restaurant Bakery shop Workers catering Pasta Production Animal Farm Business Services Division Business restaurant Retail stores Syndicate catering Animal Food Tigar Tours Transportation Tigar INCON Insurance Construction Catering Babusnica Tigar: Outsourcing & Spin Off Program Assessment of Non-Core Assets in order to determine Spin Off or Outsourcing Strategy for each

15. Tigar: New Enterprises Program Work with Tigar Management to help develop and conduct feasibility study into new business ideas for outplacement of staff affected by spin off or outsourcing program • Laundry Facility • Mini Cattle Farm • Herbal Product Processing

16. Tigar: Supply Chain Network Program Business Assessment to recommend solutions to existing issues and future strategy of spun off sales network (Tigar Trade) • Work methods in the network • Warehouse utilization and logistics  • Management Information Systems and tools • Merchandizing, product specialization in the stores  • Store profitability • Introduction of new services  • Franchise system