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Operational Manual

The World Bank

May 2008

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Table of Contents

Introduction 1. Establishing the Programme

1.1 Agency Selection

1.2 Training Needs

1.3 Establishment of a Steering Group

1.4 Involvement of the Trans National Corporations

1.5 Determination of the Sectors in Which the Programme will Operate

1.6 Promotional Activities

1.7 Setting the Criteria for Company Participation

2. Raising the Profile of the Programme

2.1 Selection of First Group of Companies.

2.2 Press Conference

3. The Business Review Process

3.1 The Business Reviews

3.2 Calibration

3.3 Team Meetings

4. Analysis of Needs

5. The Workshop Programme

6. Report on Completion of the First Phase of the Programme

7. The Second Business Reviews

8. Selection for the Second Phase of the Programme

9. Visits and Company Support in the Second Phase

10. Ad hoc Events

11. Review at Close of the Programme

12. Post Project Appraisal

13. Programme Timeline and Budget

3

Introduction

This guide is designed to provide the basic information for practitioners on the application of supplier development as a support to inward investment and as a means of increasing local content in the

procurement activities of foreign investors in Kazakhstan. This support will be for the most part focused on the growth of local content in manufacturing, service, and support to existing foreign and local large

companies operating in Kazakhstan.

Inevitably, there will be areas of spillover into other activities of a government agency and quite possibly into the activities of other governmental and non-governmental organizations. Where this happens, those

charged with the delivery of supplier development must work closely with third parties to ensure that there is no duplication of effort, or expenditure and that government agencies retain and increase their reputation

as an important support to the business community in Kazakhstan. Traditionally, private industry does not value support from government agencies. A major issue for the selected government agency will be to

develop trust and confidence in the private sector. To this end, training initiatives for government agency

staff form an important part of this suggested method of operation.

The activities described in this guide are often of multiple occurrences. For this reason, a time line is

included in this manual. This time line is indicative and does not represent actual start and finish dates for the programme or specific activities.

The approach advocated is an amalgam of models used in various countries. No two countries have

identical requirements in supplier development and this manual is focused on the identified needs of Kazakhstan.

The programme will focus on a selected group of SMEs who will be developed to a point where they can achieve approved supplier status to multinational companies. This will be done by assessments, coaching

and, for the most successful, individual consultancy from international experts.

What follows is a guideline for the implementers of the programme. Further to the activities described reporting to and collaborations with multiple stakeholders will be determined by the delivering agency.

The manual is set out as a series of steps but in reality some steps will be contemporaneous this is schematically represented below though the timeline is more detailed (Figure 1).

Figure 1: Simplified flow chart of the programme

Selection of Suppliers

Selection of Agency & Staff

Formation of Steering & advisory group

First Assessments

Second Assessments

Workshops on Business Improvement

Selection of Suppliers for Phase II

Specialist consultancy

support

Involve Kazakhstani consultants & universities

Phase I Phase II

4

1. Establishing the Programme

1.1 Agency Selection

A key issue when selecting an Agency to deliver supplier development is to choose one which has close

links with existing and potential inward investors. The individuals within the agency must have the capability to absorb technical information (engineering and quality issues) and be commercially minded. The agency

will have to deal with Trans-National Corporations (TNCs) and the small and medium sized enterprises (SMEs) who aspire to supply them.

An understanding of the problems that SMEs have, and the ability to suggest practical remedies is essential to a successful programme. A profile and competence model should be used to aid selection of individuals

who have the potential to fill this role. The major benefit from this will be to ensure that money is not spent on training individuals with unsuitable profiles.1

From the view point of the TNC there is a desire to work with one agency and not multiple agencies. In many cases the impression of a “one stop shop” is given by various agencies coordinating their activities to

such an extent that there appears to be a single line of communication for the TNC. It is often the case that aftercare of inward investors is a bi-product of supplier development.

A multiple agency approach can give rise to confusions over training, funding and responsibilities. For this reason a single agency approach is recommended in which one agency, or a semi autonomous part of a

Ministry, takes the lead with investors, suppliers and coordinates any involvement of other Government Departments. The agency selected will need to meet the criteria described here and must have access to

the relevant Ministry at the level of Vice Minister.2

Another essential criterion for the delivering agency is resource provision. In the recent case, a Serbia

supplier development programme was under-resourced and this led to delays and performance failure in some critical activities. The number of person-days required for a Supplier Development Programme (SDP)

is easy to calculate. There are only two key variables, SME locations, that is to say travel time, and the number of SMEs to be included in the programme.

There are a number of academics who take the view that Supplier Development Initiatives should be left to the private sector.3 The approach taken here is that of a private public partnership. The reason for this is

that one of the outcomes of the SDP will be increased capacity to initiate further interventions. This economic development side of the SDP is a function of Government. This said, the delivery of consultancy

to individual firms is the province of the private sector and academic and research institutions. The programme outlined here combines the best of both.

1.2 Training needs

Once the agency has been selected a competence model must be applied to those staff who are to take

part in the SDP and training and development given where a need is recognized.

More often than not this training need will fall into three areas:

Consultancy skills

Use of the assessment model selected, general material on international benchmarks for quality

and lean production.

1 It has been know for people to put themselves forward for development as assessors just to obtain consultancy qualifications that can be used outside of the organisation. As a key goal of the pilot is to develop capacity in the Government Agency the involvement of these types of practices should be discouraged. A competence model can be used to ensure that the right people are recruited.

2 The most successful programmes have had their steering group chaired by Ministers (Ireland) or Vice Ministers (Czech Republic)

3 PSAS Strategy paper Chiaki Yamamoto WB Sept. 2001

5

Programme administration and management (use of MS Project or similar)

1.2.1 Consultancy skills

Training in consultancy skills will be ongoing throughout the programme. Much of the success of the programme is dependant on the ability of people from the agency to empathize with the clients and

facilitate the production of business improvement plans. This involves high levels of interpersonal and

communication skills. As well as taking care about the selection of the implementing agency the right individuals must also be chosen. Training in this aspect is to be delivered by an external international

consultant. The European Foundation for Quality’s Business Excellence Model (EFQM) part of this training is rigorously assessed and certificates are issued to those who pass the examination.

1.2.2 Assessment training

In the vast majority of cases4 the assessment can be carried out using one of the internationally recognised standards. In the case of Kazakhstan, an adapted version of the European Foundation for Quality’s Business

Excellence Model (EFQM) is recommended and all participating staff will receive training and full accreditation (subject to their passing the final exam) in this methodology (Figure 2).

The EFQM differs from standards such as VDA or ISO which are one-off events concentrating on specific areas of the business. The EFQM is a philosophy for the whole business, it is never complete, it is an

integral holistic view which demonstrates the health of the organisation and forms the basis of a continuous process of improvement (see Appendix C for a more detailed description of the assessment). The

modifications to the model will be aligned to the needs of the sectors selected for the programme. For example, the oil industry has standards of its own which would need to be recognized in any assessment

instrument.

Training will be delivered by an international expert and conclude with the presentation of certificates to the

participants. It is recommended that two staff of the implementing agency be selected to go to Brussels for full EFQM training which will enable them to certify other assessors in Kazakhstan. The proposal is that stakeholder consultation (see Figure 3 for a stakeholder map) take place prior to the

completion of the assessment model and its associated documents to ensure their focus reflects the needs of the sectors chosen for development.

Figure 2: European Foundation for Quality Management Business Excellence Model

The Business Excellence model is split into nine areas

4 Some sectors may have highly specific entry qualifications for suppliers, for example aerospace. If sectors of this

nature are chosen a specific assessment instrument will need to be created as the generic ones are not adequate.

Leadership

and

Management

10%

Strategy and Planning

8%

Processes

14%

People 9%

Partnerships and Resources

9%

People Results 9%

Society Results 6%

Customers Results 20%

Key

performance Results

Results Enablers

15%

Learning and Improvement

6

Throughout the programme, regular reviews of training and development needs must be made and appropriate provision of training as a continual part of the staff’s development needs.

1.2.3 Recording and monitoring

The third area of training is equally vital. Whilst much of the interface with the companies involved in the programme will be informal relaxed and flexible, the recording of findings and subsequent application of

metrics to the programme will need to be detailed meticulous and precise. A method of recording and disseminating company information must be created. Rather than establishing another database staff

should be trained in the use on Microsoft Project and a multiple user license obtained.5 The benefits to the Agency of teaching people to use sophisticated project control software will be seen in all activities not just

SDP.

In summary: Train in consultancy skills, EFQM plus gain assessor status, and Microsoft Project

1.3 Establishment of a Steering Group

This group should be made up of key stakeholders who will be willing to meet on a regular basis

throughout the programme. It should be made up of a wide range of interest groups and representatives of both the public and the private sectors. The key functions of this group will be to oversee the selection of

the participating SMEs for the programme in both the first and the second phase. In addition, this group will inform the programme director of any matters of concern about the programme, and to evidence the

transparency and integrity of the programme. This group should be established at the very outset of the

programme and should help with the pre-planning stage and the development of assessment models.6

The steering group should be made up of other stakeholders and chaired by a Vice-Minister to give the necessary gravitas to the proceedings. The involvement of a senior politician as “champion” for the

programme is essential to success. The meetings at which the “champion” should attend will not be

frequent but need to be regarded by all as serious high level occasions if they are to gain full support from the TNCs. This involvement of senior political figures was of immense benefit to the Czech supplier

development programme. Conversely the lack of a senior political champion considerably weakened the Serbian programme. From international experience, it can be expected that through time, TNCs and SMEs

will make more important contributions to the programme, as they realize its positive impact on their

activities (Figure 3).

Figure 3: Stakeholder map at programme initiation (left) and end (right)

Note: Size of circle represents relative non-financial resource implications

5 A further spin off from SDP is the creation of a supplier data base.

6 TNCs will have their own supplier assessment documents. The assessment tools used for supplier development should cover the issues which are important to the TNCs. Several TNCs contacted have agreed to this participation. Feasibility

Report details this.

Govt. Agency

SME

Importance to programme

Universities

TNCs

High Low

Contribution

to cost

Importance ttoo pprrooggrraammmmee

High

Low

Low High

Govt. Agency

SME

Universities

TNCs

High

7

1.4 Involvement of the Trans-National Corporations.

This activity should ideally take place before embarking on a programme to gain evidence that there is

demand for the programme. TNCs active in Kazakhstan should be contacted by the implementation agency

to establish: Their willingness to participate in guiding the programme.

The demand for local suppliers.

The areas where local suppliers fail to meet their standards.

Their willingness to speak at workshop events.

Having made contact with a representative number of TNCs, the Agency should invite them to a formal meeting. TNC representatives’ panel should be created in addition to the aforementioned steering group

named either the TNC Advisory Panel or something similar, to avoid confusion between it and the programme Steering Group. Two groups have therefore been established, a stakeholder group to be known

as the Steering Group and a TNC group to be called an Advisory Panel. The role of the first is to ensure

propriety, the second to offer technical and business support. One of the first steps in supplier development is to establish focused base lines. A questionnaire about local content should be sent to participating TNCs

at the commencement of the programme. This will provide baseline data of a non-aggregated nature against which the success of the programme can be measured.

1.5 Determination of the Sectors in Which the Programme will Operate

There are several ways in which this can be done. Thorough economic analysis of those sectors where

Kazakhstan believes it has the potential to compete on a global scale is the first step. This approach has a high dependency upon existing information. If sectoral profiles do not exist, or the Standard Industry Code

records are not reliable, this approach may be difficult to follow.

An alternative is to target sectors where Kazinvest knows there is interest. That is to say, ask the existing

and potential investors what suppliers they are or will be looking for and make these the initial targets, if there is evidence that there are local suppliers capable of meeting these needs. This is by far the most

reliable approach for a pilot programme. An alternative is to look at the operating plan for the economy and

find areas that have been chosen as targets fro economic growth and work with these. Here too there are difficulties as the SDP is short term and Government Operating plans for the economy tend to be long term.

This mismatch can lead to problems.

Having said all of this, if supplier development is to form part of long range planning then issues of world demand conditions, growth vectors in markets and global competition have to be addressed when selecting

sectors. Inevitably in pilot programmes a combination of the approaches above is used.

An extra complication for Kazakhstan is the physical size of the country. When selecting sectors for

development location has to be taken into account as does proximity to Universities and Research establishments which will play an important part in the second phase of the programme.

1.6 Promotional Activities

The programme needs to be promoted to several different audiences:

Members of the Government and Government Agencies.

The Trans-National Corporations The SME population

Potential investors.

Other stakeholders including the general public.

Through the steering group and the TNC Advisory Group the implementing agency should coordinate their

activities to ensure successful promotion of the programme. The programme should be advertised in the business and economic press. This advertising should describe the programme and its aims and should

include the criteria and an application form.

8

In the pilot programme, there will not be a large number of applicants as the programme will be unknown in Kazakhstan. It may be necessary to ask TNCs for nominations. This is not unusual at the start of this type

of intervention and will be overcome when the programme establishes itself in the public domain.

1.7 Setting the Criteria for Company Participation

As set out above, the sectoral criteria will be paramount. However, a number of other aspects should be assessed before accepting companies onto the pilot programme. In addition, the implementing agency, or,

for that matter, other stakeholders, will need to create a list of unambiguous criteria for entry to the programme. An example of such a list can be found in Appendix A.

The list should contain any legislative or fiscal issues which are specific Kazakhstan and which may impact a

company’s abilities to fully participate. For example in some transition countries, banks are not allowed to lend to companies who have a debt to the state. This might inhibit the company’s ability to grow. Great

care should be taken over the criteria as in subsequent programmes there is likely to be over subscription and the criteria will form a first filter for limiting the number of participants.

2. Raising the Profile of the Programme

2.1 Selection of First Group of Companies.

The applications and nominations must be sorted by the implementation agency into three groups:

Companies which fully meet the criteria

Companies which almost meet the criteria

Companies which do not meet the criteria

Companies will be ranked according to their scores according to the table below. The best will be offered places on the programme

After sorting, the highest scoring applications should be put before the Steering Group for approval. Letters

to selected companies should be sent out first and a request for confirmation of participation will be required. If some of the first selected companies refuse the offer then those who were nearly accepted

should be offered a place. When the required number of participants has been achieved letters to the companies not selected can be sent out. 7

2.2 Press Conference

Once all companies are selected, a press conference should be called to announce the official start of programme. A press release should be prepared by the implementing agency in conjunction with the

7 This will vary according to resource levels. Czech Republic: 50 companies selected; Ireland: 150 companies; Serbia:

100 companies. These numbers fall to half for the second phase of the programme,

Score 80 + Score 60 + Score 60 -

9

Ministry. The press release must ensure that the core messages are put across in as small a number of

words as possible. There should be at least a Vice Minister at this meeting as it is an opportunity for the Government to speak about what work is in hand to develop the economy.

3. The Business Review Process

3.1 The Business Reviews

Each company selected for the programme will receive a two-day visit. A suggested agenda for the visit can be found in Appendix B. The main purpose of the visit will be to agree a business improvement plan that

will be used by the assessing teams to measure the company’s progress after six or so months.

In order to find areas for improvement, the company management team will complete a self assessment

questionnaire (Appendix C). This will then be aligned with the two-day assessment made by the agency team. The assessment instrument used by the agency will be found in separate document along with the

scoring guide. These documents will be brought together on the second day of the assessment team visit when a business improvement plan will be agreed. See Appendix D for template. This process is seldom

easy as companies often identify areas for improvement that are different from those highlighted by the

external assessors. This is an example of the assessors need for highly developed interpersonal skills.

The first assessment phase of the programme is very work intensive. Two person teams of assessors can only complete two assessments per week. As an example; if six people will be engaged on this activity, in

two person teams, this would result in a maximum of six companies assessed each week. This figure assumes that there will be infinite flexibility from the companies, a highly unlikely supposition. To take

account of contingencies, a five visit per week should be used to estimate the period of time required for

the initial assessment visits. Further, assessor teams will have to work into the evenings to complete assessments in time to review them with the companies on the following day.

In addition, there will be a heavy burden of administration during this period. The booking of visits, the

recording of outcomes and assessments, the organizing of transport and accommodation are only some of

the activities involved. One or two people should be given the responsibility for this work as this will optimize coordination. This person also must be trained in the use of MS Project to facilitate record keeping.

This training can be sourced from either local or external providers.

3.2 Calibration

The assessment model uses a scoring system. As all participants are new to this, calibration meetings must be held at first weekly and subsequently monthly. At early meetings an international expert should guide

the assessors through the calibration which is designed to ensure that teams are scoring uniformly. It is vitally important that assessor teams do not disclose scores to assessed companies even after

calibration. They should rather talk about areas for improvement. Actual scores can be discussed after the

second assessment.

An external expert should work with the assessor team until they are familiar with the working of the model. An expert should also be available in these early stages to support the work of the agency staff.

3.3 Team Meetings

A meeting between the assessors, project leader, and programme administrator should be held weekly.

Issues arising from the week’s assessments, correspondence with TNCs, information from participating companies etc., should be discussed. This programme is a pilot and evidence of reflective learning by

participants in the programme should be recorded.

10

4. Analysis of Needs

As the business reviews proceed, patterns of specific support for the SMEs will become evident. The project

leader should analyse these patterns and use the information to identify topics for business improvement

workshops. In addition, this information should feed into the TNC advisory panel as this would assist the identification of TNC speakers for workshops.

Given that Kazakhstan is a very large country the workshops may have to be delivered in as many as four locations.

5. The Workshop Programme

Based on the analysis of needs, experts will be sought by the programme director to conduct seminars and

workshops. The programme administrator will book accommodation, transport venues and deal with the financial arrangements for the visiting experts. This work may involve interpretation costs if foreign experts

are brought in to deliver the workshops. Workshops will need to be delivered in different geographic

locations. The workshops should continue until the last company in the programme has had six months to complete its’ business improvement plan.

Workshops will comprise a morning session, in which experts will present on agreed topics. In addition, a

speaker from one of the TNCs in the programme will discuss current issues in supply chains and purchasing. In the afternoons, sessions will be held at which individual meetings for companies to discuss

problems or issues with the experts or with the TNC representative will take place. In all cases, company

delegates will be asked to complete an assessment sheet so that the usefulness of each workshop can be measured. The timeline shows workshops going on for around six months, this may be extended if funding

allows.

6. Report on Completion of the First Phase of the Programme

The project director will prepare a report on the progress of the programme and present this to the Steering Group and the TNC Advisory Panel. The report should include general findings, main areas of

company improvement needs. The project leader should report to the director copying the report to the Project “champion” and the steering group. If it is thought helpful, this could be done at quarterly review

meetings.

7. The Second Business Reviews

The second reviews will be of one day duration. The EFQM score will only be used as a guide to progress. The achievement of aspects of the business improvement plan will be more important to the second

assessment. Aspects of the improvement plan will be regarded as:

Strategic goals

Major Operational Goals

Minor Operational Goals

Non business critical goals

Scoring for these will be weighted in a way that will ensure equivalence between the categories. For example, a milestone achievement in a strategic goal will score equally with the full achievement of an

operational goal. Guidance on this approach is given in Appendix E.

11

8. Selection for the Second Phase of the Programme

The outcomes of the second reviews will be collated and presented to the working group, who will select

the best companies to go forward into the second phase. Scoring for this selection should be done by an

expert and will be based upon the results from the second business reviews.

In this second phase, the emphasis moves from the general to the specific. The assessors, it is suggested, are joined by a Kazakhstani Business Consultant, which could double the number of consultants supporting

the companies (Figure 4). The newly formed teams will change their roles from assessors to supporters.

During this second phase, external foreign consultants and Kazakhstani experts will be sent into the companies to deal with specific problems or opportunities. It will be this phase in which the companies

develop their capabilities to compete at a global level. In addition to this primary gain, the visits of experts will be accompanied by agency staff and the Kazakhstani consultants. In this way, knowledge transfer will

take place at three levels the firm, the Kazakhstani consultant and the agency team member.

Figure 4: Team composition

The second phase should be launched with a press conference and with the release of information/articles

on the selected companies. The agency should ensure that these articles are published in the business and economic press.

It will also provide an opportunity for a “Supplier of the Year” award with attendant publicity should this be thought worthwhile.

9. Visits and Company Support in the Second Phase

The support team comprised of a member of the agency staff and an independent Kazakhstani consultant

will identify specific areas for business improvement. The Kazakhstani consultants could be provided by either the Universities or independent Consultants such as those currently engaged by EBRD

If this proves difficult, because of technicalities or other reasons, a European expert on TNC supplier audits will be available to consult as required. Agreed areas for consultancy will be passed to the programme

director who will find expert consultants from international sources. The CV of the selected expert will be sent to the SME company so that suitability can be ensured. The logistics of the expert’s visits will be the

responsibility of the programme administrator, transport, hotel accommodation and interpretation services will be arranged by the administrator. Expert visits should be for a minimum of two days as anything less

does not deliver adequate outcomes. Because of the geographic difficulties in Kazakhstan it may be worth

considering bringing company representatives to small highly-focused seminars rather than attempting to visit them individually. This problem would be obviated if the SMEs were selected on a geographic as well

as sectoral basis.

Detailed background of the company and its needs will be sent to the foreign expert by the support team.

The expert will agree an agenda for the day with the support team. This will be passed to the company for

THE COMPOSITION OF THE SECOND PHASE SUPPORT TEAM

PERMANENT

Account Manager

taken from the assessors

A selected

Kazakhstani consultant

AD HOC

International

consultant Kazakhstani

academic or specialist

COMMUNICATION

12

approval. This will ensure that the greatest possible use is made of the expert’s time and that the support

team and the company derive the maximum benefit from the expert visit. The expert will provide a report for the company and for SIEPA the company will be asked to complete a questionnaire evaluating the

experts visit. All reports will be kept in MS Project. As the programme progresses the Project file will prove an excellent source of information tracking the progress of each participating company in great detail.

Over and above the consultancy role, the support team will promote their companies to potential customers and liaise between their companies and the TNCs. In effect they will become account managers for their

adopted SMEs.

10. Ad hoc Events

From time to time, promotional events to help the participating companies should be arranged. There are

many formats for this, but the most successful are reverse exhibitions, where companies display to

suppliers items that they need and meet the buyer events where a group of purchasing managers from TNCs meet suppliers from the programme. These events need high levels of support from the TNCs and

should be planned well in advance. In other countries these are very successful and far more effective in business generation than conventional trade fairs.

11. Review at Close of the Programme

It is not possible to make a meaningful analysis of the programme at its conclusion. However, reflection

upon what worked well and was effective should be undertaken. This will help with the design of the legacy system which will be left with the agency. Spin offs from supplier development should be the permanent

use of supplier development in Kazakhstan not simply to increase local content but to encourage FDI and

the transfer of technology into Kazakhstani firms. A questionnaire concerned with local content should be sent out again to TNCs at this stage to gain a general view of any changes.

12. Post Project Appraisal

At around twelve to eighteen months after the end of the programme, companies who participated should

be surveyed to estimate the impact of the intervention. A primary metric will be new business attributed to participation in the programme. The levels of local content used by inward investors, and levels of export

business done by participating companies should also be measured. Once the methodology is tested in a pilot then the Kazakhstani government can select further sectors or geographic locations for further

development. The SDP should over time become self sustaining as private initiatives from inward investors become more prevalent and the government agency becomes a facilitator rather than the deliverer for such

initiatives.

13. Programme Timeline and Budget

Table 1 provides a twenty-month timeline for a Kazakhstani Supplier Development Programme. Table 2 provides an estimate of the budget associated with this pilot programme. The budget has been estimated

under the assumptions that forty SMEs would participate in the first phase and twenty in the second phase.

Table 1: Plan for first twenty months of Supplier Development Programme

Year Year 1 Year 2

Month M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8

Activity

Training

Advertising

Application sent out

Selection of companies

Assessments

Workshops

Supplier of the year

Assessment 2

Selection of top 40

Intensive Phase

Progress review + calibration

PR events

Meet the buyer

Reverse exhibitions

Steering Group Meetings

TNC group meetings

14

Table 2: Kazakhstan Supplier Development Programme 20-month pilot budget estimate Elements Notes Cost

A STAFF TRAINING AND SUPPORT FROM INTERNATIONAL EXPERTS

A1 General Training

Training needs assessment 10 days plus travel and accommodation $8,000

On the job training by international experts $20,000

A2 EFQM Training including exam fees and certification International consultants selected by call for ELI against ToR $40,000

A3 Lean Manufacturing and capability training Lead international expert and university professors 10 days $7,000

A4 Use of the Kazakhstani assessment model $3,500

A5 Supervised calibration meetings International experts 10 days (fee and in-country travel) $10,000

Category total A $88,500

B TRAVEL COSTS FOR INTERNATIONAL EXPERTS

B1 International flights (Average cost Europe or US and return) 60 flights Europe or USA $93,600

B2 In country flights combined with B3 $60,000

B3 Other in country travel (taxi , car hire) TBD*

Category total B $153,600

C OTHER COSTS ASSOCIATED WITH INTERNATIONAL EXPERTS

C1 Accommodation cost for International experts $112,000

C2 Per Diems @$100 $30,500

C3 Workshops (venue refreshments and sundry expenses) Three workshops delivered at three venues $6,000

Translation services for workshops $6,000

Category total C $154,500

D PROJECT OFFICE OPERATING COSTS AND INFRASTRUCTURE

D1 Project staff

Long term international expert (LTI) ( to provide support through critical phases) $168,000

Per diems for LTI per diem reduces to meals only if housing is sought $120,960

Short Term International Experts 280 days $240,240

Local Experts 400 days $88,000

Local support staff 1WTE $15,200

D2 Equipment/furniture and office operating costs $50,000

D3 Project transportation costs $60,000

Category total D $742,400

E Program visibility

PR Events $20,000

Meet the buyer $40,000

Supplier of the Year TBD*

Category total E $60,000

F Pilot ancillary activities

Database of suppliers $60,000

Study tours, training for Kazcontract staff etc., $80,000

Category total F $140,000

TOTAL $1,339,000

*TBD: To Be Determined based on activity design

Appendix A

Possible Criteria for Firms being selected for the Kazakhstani Supplier Development Programme

Companies must fall within the EU definition of SME set out in the Commission Recommendation of 3rd of April 1996 (OJ L 107 30.04.96 page 4)

That is to say that companies should have a minimum of twenty and a maximum of two hundred and fifty full time employees. SIEPA reserves the right to treat the limits set on employee numbers by this definition in a flexible way.

Revenues in the last accounting period should not have been less than €1,000,000.00 and not more than €50,000,000.00

Assets should not exceed €30,000,000.00

Companies with outstanding State Debt will not be considered for this programme.

Companies should have a good record of development and improvement. For example ISO certification or other.

Companies must be Kazakhstani owned (no more than 25% non Kazakhstani Shareholding) and based in the Kazakhstan.

Companies already supplying the sectors identified will be especially welcome though those who wish to become suppliers

in these areas will also be very welcome to participate. A full list of eligible sectors is provided below.

Company must have traded for five years and must submit the last two year’s annual reports.

Sector classification of companies for Supplier Development Programme.

P A C K A G I N G I N D U S T R Y

MANUFACTURING OF CORRUGATED PAPER AND PAPERBOARD, PAPER AND PAPERBOARD PACKAGING MATERIALS

PRODUCERS OF PLASTIC , CARD OR PAPER PACKAGES

PRODUCERS OF SPECIALIST WRAPPINGS PRINTERS OF PACKAGING OR LABELLING

OIL & GAS

PIPE AND PIPE FITTINGS WELDING SERVICES

VALVES

PIPELINE CONTROL EQUIPMENT WELL HEAD SERVICES

METAL AND ENGINEERING

MANUFACTURING OF PLASTIC PRODUCTS

FOUNDRY IRON CASTING

STEEL CASTING LIGHT METAL CASTING

CASTING OF OTHER NON-FERROUS MATERIALS

FORGING, PRESSING, STAMPING, ROLL FORMING, POWDER METALLURGY SURFACE TREATMENT, COATING AND MECHANICAL TREATMENT OF METALS

MANUFACTURING OF BEARINGS, GEARS, GEARING AND DRIVING ELEMENTS MANUFACTURING OF CABLES AND WIRES

MANUFACTURING OF ACCUMULATORS, PRIMARY CELLS AND BATTERIES

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GLASS AND GLASS COMPONENTS

AUTOMOTIVE INDUSTRY MANUFACTURING OF RUBBER TYRES AND TUBES

MANUFACTURING OF MOTOR VEHICLES, TRAILERS MANUFACTURING OF MOTOR VEHICLE BODIES, TRAILERS AND SEMI-TRAILERS

MANUFACTURING OF PARTS AND ACCESSORIES FOR MOTOR VEHICLES AND MOTORS

PHARMACEUTICAL

MANUFACTURING OF PESTICIDES AND OTHER AGROCHEMICAL PRODUCTS MANUFACTURING OF PHARMACEUTICALS, MEDICAL CHEMICALS

TIMBER INDUSTRY

TIMBER MILLS

TIMBER PROCESSORS MANUFACTURERS OF ENGINEERED WOOD PRODUCTS

Scoring Matrix

Selection Criteria Matrix

Fully met Borderline Not met

1. Sector compliance

2.Annual revenue 2005

3.Employee numbers

4.Solvency

5. Ownership

6. Business performance

Score

Information sources for checks

Sector compliance Companies declared activities and existing customer base.

Two Annual Report copies

Published accounts

Number of employees

Company records

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Appendix B

Business Review Agenda

The first business review, which takes two days, is vitally important to the whole programme as it forms the

platform for business improvement with management team of the client company. The business review seeks to find aspects of the business which will benefit from an innovative approach. It is necessary, in this respect, to

assess current performance level of the business and the potential for improvement then to, prepare a plan for improvement in the identified areas. Participation of the company’s top management is essential to the success of

the development process

The programme of the first day includes explanation to key managers of the Supplier Development programme and a methodology of self-assessment. Managers of the company are also asked to fill self-assessment workbook during the

course of the first day. They will also spend considerable time on interviews with the assessors. These interviews are necessary for forming of an independent view on company operation and performance. This external assessment and

information gathering allow external assessors to help the management team with the self-assessment and identification

of strengths and areas for improvement.

A. First Day

Start at 8.00 Topics / Outcome Participants

Introduction (Opening

Meeting)

30 minutes

Introduction of participants, Explanation of the Programme,

Benefits, Q&A

GM and Senior management team

Company presentation

15 minutes

Short presentation of the

company and its business plan

GM and Senior management

team

Introduction to self-

assessment

45 minutes

Introduction to the assessment

model and to the process of

self-assessment


Facility ‘Walkthrough’

2 to 3 hours

(Self assessment may begin in parallel)

Assessors view on the operation (production floor and

other facilities, infrastructure, attitude of workers)

Operation manager or other

members of the management

team, Quality manager, Individual members of the

senior management team and/or other members of

management and staff as needed

Interviews with members

of management team 3 hours

Gathering of information

needed for external assessment

Members of the management

team according to an agreed schedule

Final meeting of the day

(Optional) 30 minutes

Close for the day, Information

still to be obtained, any problems with the self

assessment workbook.

GM (other Senior management

team members according to their needs and questions

related to self-assessment)

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Second day of the business review is dedicated to discussion of self-assessment findings by management team and

assessors’ view on the company, and to discussion of areas for improvement. Result of collaborative work of the

management team and the assessors is a realistic assessment of company operation and performance including strengths and areas for improvement. The output from the second day is plan for business improvement in the

following 6 months of the project.

B. Second Day

Start at 8.00 Topics / Outcome Participants

Presentation of

Assessors’ findings

15 minutes

Short summary of strengths and

areas for improvement including

hand-over of the list.


Complete Info

Gathering 1 hour

Follow up from Day 1 and gathering of missing information

Members of management

team or other employees as needed

Workshop – Review of

self assessment and discussion of strengths

and areas for

improvement 3 hours

Presentation of self-assessment by

management team including Strengths and areas for

improvement. Discussion of findings

/ Agreed list of areas for improvement

GM and Senior

management team

Action Plan workshop 2- 3 hours

Prioritisation of areas for improvement. Selection of specific

areas for the improvement plan. Set

up of goals for Improvement. /Short term improvement plan


Closing meeting

30 minutes

Close of the business review, Next

steps

GM and Senior

management team

C. After the Business Review Topics / Outcome Participants

Report and Follow up

Management completes Plan for next

6 month and sends it to assessors

within 2 weeks from the BR.

Management prepares short interim

report after 3 months

Second assessment visit after 6

months

Management team

Management team

Management team and assessors

Appendix C

Kazakhstan Supplier Development Programme

BUSINESS REVIEW WORKBOOK

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FOR SELF ASSESSMENT

Purpose

To involve management team in generation and formulation of strengths and opportunities for improvement as seen by the company;

To apply a tool for self-assessment which can be used in the future by the management team;

To build a team consensus and commitment to improving the business;

To identify companies with high potential within the Supplier Development Programme.

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Instructions

This workbook is summarised from the EFQM Excellence Model and is structured according to the 9 Model criteria including 5 ‘Enabler’ and 4 ‘Results’ criteria.

It asks fundamental questions about the business, including the quality of leadership, use of resources, people and processes, results etc.

For Criteria 1-5 (Enablers) please consider the statements on the Analysis sheets (there is one page for each Criterion of the Model), think about what processes or methods

you use to satisfy the requirement and how well developed they are. Use the list of best practice examples that can help you better understand the meaning of listed Model

requirements. Try to record your view by placing a tick for each on a scale of 0-100, using the description for scale limit values to guide you. The only purpose of the score is to

help you identify key strengths and opportunities for improvement for each criterion and no total score will be calculated based on it.

On the sheets headed Findings, capture Strengths and Areas for improvement in order that reflect the priority they have (1 is the most important for the company). Optionally

you can use scoring results to support your decision.

For Criteria 6-9 (Results) please notice there are two sections and think about the specific measures of key stakeholders’ perception of the company and internal performance

indicators. Use the list of measures / indicators according to best practise that can help you state relevant examples. Try to evaluate the scope and trends of results, targets

achievement and benchmarking comparison on a scale of 0-100, using the description for scale limit values to guide you. On the sheets headed Findings, capture Strengths

and Areas for improvement in order that reflect the priority they have (1 is the most important for the company). Optionally you can use scoring results to support your decision.

After completion the entire workbook the management team will discuss the findings in each area, including the evidence (examples) on which conclusions were based and

agree improvement priorities.

1.

Leadership and

Management

3. People

5. Processes

2. Strategy and Planning

4. Partnerships

and Resources

6. Customers Results

8. Society Results

7. People Results

9. Key Performance

Results

Results Enablers

Innovation and Learning

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Enablers – analysis (examples)

Criterion (EFQM)

EFQM Excellence Model Requirements Method used, Evidence, Examples How well done? (*)

10 20 30 40 50 60 70 80 90 100

1c_1 Do leaders systematically interact with key customers? The guidelines for communication with key customers are developed and used but do not exist in written form. Leaders interact with key customers occasionally (exhibitions, social events etc.).

1d_2 Do leaders listen to ideas of others and respond to them? Leaders are present at annual meetings with employees to summarize major achievements of the company and to answer questions. There also informal opportunities of meeting and discussing (e.g. social events).

2a_2 Do leaders find about market trends and results of key competitors?

The information is collected centrally by dedicated department, which prepares both regular and ad hoc analysis for the management team.

2d_1 Are there functional processes of strategy preparation, communication and deployment with clearly defined responsibilities and powers?

The process of strategic plan preparation and review is described including process ownership.

3a_1 Are human resource policies, strategies and plans developed and updated?

The policies including recruitment, appraisal, career development and rewarding are described and annually reviewed. The employees’ feedback is used to improve human resource policies.

3b_3 Are the employees evaluated in order to help them reach their personal and group goals?

There is annual performance appraisal, which is the base for individual personal development and training plans for all employees.

4b_1 Are the financial resources utilised systematically to support the strategy and policy of the company?

The financial strategy’s major goal is to drive improvements in cost-effectiveness in compliance with the overall strategy.

4d_1 Does the company manage technology development in order to support stated business goals?

There is one specific part in strategic plan dedicated to the technology development.

5a_1 Are the organisation’s processes systematically defined and managed (e.g. with the utilisation of quality systems like ISO and environmental standards)?

All processes are described and documented, and are certified according to ISO standards. Regular internal and external audits are performed.

5c_1 Are new products and services designed and developed based on customer needs and expectations?

Data from customer surveys and market research are used to design new products and services.

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Assessment Questionnaire 1. Leadership - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

1a_1 Do leaders develop the company’s mission, vision, values and ethics?

1a_2 Do leaders stimulate and encourage improvement activities of their employees on a continuous basis?

1a_3 Do leaders act as role models of values, and ethics identified and obtain critical feedback from their employees to review their own leadership effectiveness?

1b_1 Are leaders personally involved in systematic development and continuous improvement of the organisation’s management system?

1c_1 Do leaders systematically interact with key customers?

1c_2 Do leaders establish and develop relations with their strategic business partners in a planned way?

1c_3 Do leaders interact with representatives of society, professional bodies and associations?

1d_1 Do leaders motivate other employees and reinforce culture of Excellence within the company?

1d_2 Do leaders listen to ideas of others and respond to them?

1e Do leaders identify, manage and communicate organisational change?

(*)

0-10 = approach is not defined or it is in the beginning;

100 = approach is well defined, implemented in all relevant areas in a structured way, supporting strategy, linked to other approaches; approach effectiveness, its deployment and results achieved are regularly measured, improvement opportunities identified using existing best practice, benchmarking and measurement results, planned and implemented according to the priority assigned.

24

1. Lead Leadership - findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.

Areas for Improvement

1.

2.

3.

4.

5.

6.

7.

8.

25

2. Policy and Strategy - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

2a_1 Do leaders gather and understand information on short-term and long-term needs and expectations of stakeholders including customers, employees, partners and society?

2a_2 Do leaders find about market trends and results of key competitors?

2a_3 Do information concerning needs and expectations of stakeholders as well as market trends become the basis for the preparation of the company’s strategy?

2b_1 Do leaders monitor the internal performance indicators, trends and factors that can influence it?

2b_2 Do leaders consider the information concerning performance measurement for the input into the strategy?

2c_1 Do leaders develop the policy and strategy of the company on a continuous basis, identify critical success factors, review progress against plans and make adjustment where necessary?

2c_2 Are possible risk that can threaten the achievement of the objectives identified and alternative scenarios/ contingency plans developed?

2d_1 Are there functional processes of strategy preparation, communication and deployment with clearly defined responsibilities and powers?

2d_2 Is strategy transformed into specific targets for individual areas/employees and achievement of these targets regularly evaluated?

(*)

0-10 = approach is not defined or it is in the beginning;100 = approach is well defined, implemented in all relevant areas in a structured way, supporting strategy, linked to other approaches; approach effectiveness, its deployment and results achieved are regularly measured, improvement opportunities identified using existing best practice, benchmarking and measurement results, planned and implemented according to the priority assigned.

26

2. Policy and Strategy - findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

27

3. People - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

3a_1 Are human resource policies, strategies and plans developed and updated?

3a_2 Are employees of the company involved in the creation and development of human resources policies?

3a_3 Does company manage recruitment, career development (succession planning, promotion) on the basis of equal opportunity?

3b_1 Are existing competencies identified and compared to the organisation’s needs?

3b_2 Are training plans used for the systematic development of qualification potential in accordance with the company’s strategy?

3b_3 Are the employees evaluated in order to help them reach their personal and group goals?

3c_1 Are people involved in the company’s development and is their initiative (including improvement activities, conferences, innovation, creativity, team work) supported?

3d_1 Do people within the organisation communicate effectively using both top down and bottom up forms of communication?

3e_1 Are people recognised with different forms of appraisals in order to maintain their initiative and motivation?

3e_2 Are the terms of employment aligned with the policy and strategy of the company (appraisals, etc.)?

(*)



28

3. People – findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

29

4. Partnerships and Resources - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

4a_1 Are key partnerships opportunities corresponding to the company’s strategy identified?

4a_2 Does the company share knowledge with selected partners and organise joint innovation activities?

4b_1 Are the financial resources utilised systematically to support the strategy and policy of the company?

4b_2 Are control mechanisms implemented to ensure the company has effective structure of the resources and is able to manage financial risks?

4c_1 Are all assets including buildings, equipment and materials of the company utilised in accordance with business goals?

4c_2 Are environmental impacts of the company’s operations and its facilities identified and then resolved?

4c_3 Are materials and utilities efficiently utilised and volume of the waste reduced? Is recycling utilised?

4d_1 Does the company manage technology development in order to support stated business goals?

4e_1 Does the company effectively collect, structure and manage information and knowledge, provide access to relevant data to both internal and external users?

4e_2 Is appropriate information technology implemented to support internal communication and information and knowledge management?

4e_3 Is intellectual property respected, developed and protected?

(*) 0-10 = approach is not defined or it is in the beginning; 100 = approach is well defined, implemented in all relevant areas in a structured way, supporting strategy, linked to other approaches; approach effectiveness, its deployment and results achieved are regularly measured, improvement opportunities identified using existing best practice, benchmarking and measurement results, planned and implemented according to the priority assigned.

30

4. Partnerships and Resources – findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

31

5. Processes - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

5a_1 Are the organisation’s processes systematically defined and managed (e.g. with the utilisation of quality systems like ISO and environmental standards)?

5a_2 Are processes stakeholders identified and interface issues inside the company and with external partners managed?

5a_3 Are performance indicators defined and the target values set for individual processes?

5b_1 Is the effectiveness of the processes regularly reviewed using key performance indicators and potential areas for improvement identified?

5b_2 Are there methods used to prioritise opportunities for improvement and implement changes?

5b_3 Is the new process introduction or process change managed and controlled? Are changes reported to all stakeholders and necessary training organised?

5c_1 Are new products and services designed and developed based on customer needs and expectations?

5d_1 Are products (services) delivered and serviced according to customer needs?

5e_1 Are customer relationships managed, monitored and evaluated in order to enhance them?

(*)



32

5. Processes – findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

33

6. Customer Results - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

6a_1 The measures of the customers’ perception of the company’s image

6a_2 The measures of the customers’ perception of the company’s products and services

6a_3 The measures of the customers’ perception of the after-sale service

6a_4 The measures of the customers’ loyalty

6b_1 Internal measures that are used to monitor and improve performance achieved and to predict external customer’s perception of the company’s image.

6b_2 Internal measures concerning the company’s products and services

6b_3 Internal measures concerning after-sale service

6b_4 Internal measures concerning the customers’ loyalty

(*)

0 = no results available;

25 = positive trends/satisfactory performance and targets achieved in about ¼ of relevant areas, comparison with external organisations takes place in about ¼ of areas; some results (about ¼) are caused by the approach applied

100 = strongly positive trends/sustained excellence results in all areas over at least 3 years, internal targets exceeded in at least ¾ of areas, results of comparison with external organisations excellent in at least ¾ of areas and “best in class” in ½ of areas; all results are caused by the approach applied; results address all relevant areas.

34

6. Customer Results - findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

35

7. People Results - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

7a_1 The measures of the people’s perception of the company concerning employees’ motivation

7a_2 The measures of the people’s perception of the company concerning employees’ satisfaction

7b_1 Internal measures used by the company to monitor and predict employees’ achievements

7b_2 Internal measures used by the company to monitor and predict employees’ motivation and involvement

7b_3 Internal measures used by the company to monitor and predict employees’ satisfaction

7b_4 Internal measures used by the company to monitor and predict the level of services provided to the employees

(*)




36

7. People Results - findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

37

8. Society Results - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

8a_1 The measures of the society’s perception of the company’s image

8a_2 The measures of the society’s perception of the company’s performance as a responsible citizen

8a_3 The measures of the society’s perception of the company’s involvement in the communities where it operates.

8a_4 The measures of the society’s perception of the company’s reporting on activities to assist in the preservation and sustainability of resources

8b_1 Internal measures that are used to monitor and improve

performance achieved and to predict society’s perception of the company.

(*)




38

8. Society Results - findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

39

9. Key Performance Results - analysis

Criterion (EFQM)


10 20 30 40 50 60 70 80 90 100

9a_1 Key financial outcomes

9a_2 Non-Financial outcomes

9b_1 Financial indicators (operational measures) used by the

company to monitor and improve processes and predict likely performance outcomes

9b_2 Non-Financial indicators (operational measures)

concerning processes; external resources and partnerships; buildings, equipment and materials; technology; information and knowledge

(*)




40

9. Key Performance Results - findings

Strengths 1.

2.

3.

4.

5.

6.

7.

8.


1.

2.

3.

4.

5.

6.

7.

8.

APPENDIX C SEE ACCOMPANYING DOCUMENT

41

Appendix D

ACTION PLAN Company :

Number Project name Goals/Targets of the project

1.

2.

3.

Activities Result / Evidence Responsibility Deadline Status after 3 months

1.

2.

3.

4.

5.

6.

42

Appendix E

Quality and Delivery of the Action plan

An important part of the pilot programme process was to identify those companies with the most commitment to achieve the improvements necessary to meet MNC

requirements. The quality of the action plan also indicated the ability of management to think through situations and to plan. The delivery of the plan indicated an ability to

prioritise and to convert plans to reality.

Action plan scoring table

No Progress Partial Progress Milestones Reached Completed

Key strategic goals 0 2 4 6

Major goals 0 1 2 3

Minor goals -1 0 0 1

Action plan areas will be classified not only with respect to the nature of the objective, but also its impact and resource implications, as follows:

Key Strategic Goals

Matters that are long -term involve major resources and have implications for the overall direction of the organisation.

They will have aspects of cultural as well as product and process change.

Typically they require robust financial and other resource allocation planning, and are backed by a considerable amount of analysis and have an impact on the whole

organisation.

Major Goals

Shorter term, concerned with major investment in changes of process or product.

Whilst not impacting on the entire organisation they will be significant in terms of asset utilisation.

Will be a contributing part of the strategic plan of the organisation.

Minor Goals

Not of strategic importance in the long term.

Short term adjustments to processes, minor product changes

Activities with a low investment requirement and low resource implications.

43

Generally, it should be noted that the categorisation taking account of not only the nature of the objective, but also its impact and resource implications in the plan period, had a significant effect on classifications. For example, a goal of a new customer focus would not be strategic if it only included in the plan the action of carrying out a customer

survey.

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