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Wasting less to gain more

25 November 2013 [12:00] - TODAY.AZ
What does it mean for a company to invest in advisory services? One of the furniture plants in Azerbaijan has transformed its business and established a sound management system with clear duties and job descriptions, ad hoc departments, transport and delivery planning and much more. Thanks to the Business Advisory Services (BAS), a programme offered by the European Bank for Reconstruction and Development (EBRD) and funded by the European Union through its Small and Medium Enterprises (SME) Flagship Initiative for the Eastern Partnership countries, Sama has obtained a quality certificate and increased its production efficiency.

Thanks to the support provided by the EBRD, the company's operations have considerably improved, the working efficiency has increased and the company's financial turnover has grown by at least 50%. Thanks to the improvement of the management, the company is now using its resources more efficiently, and have increased its revenues.

Supporting small and medium-sized enterprises through the provision of business expertise is an important part of the EBRD's activity in transition countries. Micro, small and medium-sized businesses are the backbone of a dynamic market economy. By connecting companies to local consultancy expertise that can help transform their businesses, BAS projects can support the establishment of a sound management within enterprises.

"In over ten years, more than 700 companies have benefited from BAS projects," says Lala Rzayeva, EBRD Business Advisory Services National Programme Manager in Azerbaijan. "Business Advisory Services (BAS) helps companies to work with consultants across a wide range of areas," she adds, "including market analysis and planning, marketing and sales research, searching for business partners, quality control, and energy efficiency and beyond."

"We work mainly with private and local enterprises with up to 250 employees, already established in the market but needing support for business development," explains BAS Project Specialist Emin Guluzade.

According to him, in this case the enterprise should be able to contribute 25-75% of the project's total costs, while the remainder is paid by a BAS grant. The maximum EBRD grant to any enterprise is not more than €10,000."

"Now we all have clear duties and a job description"

At the end of 2011, the mentioned furniture company approved its strategic plan for 2012. To move forwards in compliance with its plan, the company needed to introduce an Integrated Management System to meet international standards for quality management and occupational health and safety. The EBRD connected the furniture company, with a local consulting company with experience in a wide range of industries, to provide the necessary expertise. Training was a crucial part of the project. The consulting company conducted three series of trainings for the managers of the furniture plant, each ten days long. There, we received very useful management knowledge and skills. Then I shared this knowledge with my colleagues at the plant. The trainers also visited our plant to train employees from different departments," said the representative of the furniture company.

As a result, the company has introduced a new management system based on international standards, as well as improved its occupation health and safety system for employees.

"Before, the activities of different managers often overlapped. Now, each of us has clear duties and a job description. Each manager implements his duties and this work is well coordinated. Moreover, the logistics department itself was created on the advice of consultants. In the past, the process of receiving orders and sending the finished product to clients was largely spontaneous, which often caused uneven loads on production and transportation - there were problems with the lack of cars and timely delivery. Now, the orders are sorted by geographical areas and the time required for manufacturing the furniture. The production load is therefore distributed evenly, transport is used with maximum efficiency, and costs are minimised." says head of the logistics department of the furniture company.

Protective gears, first aid kits, emergencies training

Measures to improve occupational health and safety system were another important part of the consultancy support. Employees, who previously had worn no protective gear, were provided with their own uniform and helmets. Those who work on the machines were equipped with special headsets to shield them from high noise levels. The personnel were also trained on safety measures for loading and unloading cargo. Industrial areas were equipped with first-aid kits and the fire safety system was upgraded. Fire boards were installed in four areas of the production site and were linked with the water tank. Employees whose job placed them close to the fire boards were specially trained to use fire-fighting equipment. Additionally, all the employees were trained for the first time on how to behave in case of fire and emergencies.

"The consultancy expertise we received has allowed us to improve the organisation of labour within the plant, reducing the physical load of workers but enabling a higher production volume, now we all have at least one day off a week. Introducing new quality management and vocational health standards has also allowed the enterprise to expand production in new ways. Now, thanks to international quality certificates, we can start looking at exporting our furniture" - said, the general manager of the company.

Advisory services to 700 projects

Every year, about 60 companies in Azerbaijan receive support through a BAS project. BAS' work is donor funded and €2.2 million have been allocated to Azerbaijan to support BAS projects by the EU, Canada, Austria, China and the EBRD Shareholder Special Fund and EBRD Transition Countries Fund. A further €1.9 million has been raised through client contributions to projects.

"We've worked with more than 100 local consulting companies to provide the advisory services for our 700 projects," reports Lala Rzayeva, BAS National Program Manager for Azerbaijan.

Seventy-two per cent of the companies who have worked with BAS increased their financial turnover after a project. Fifty-two per cent improved their productivity, 55 per cent increased their number of employees, and 14 per cent successfully obtained financing from local and international banks.

The Eastern Partnership

The Eastern Partnership (EaP) completes the EU's foreign policy towards Eastern Europe and Southern Caucasus countries as a specific Eastern dimension of the European Neighbourhood Policy (ENP). Launched in May 2009 at the Prague Summit, the EaP fosters the necessary conditions to accelerate political association and further economic integration between the European Union and Azerbaijan, Armenia, Belarus, Georgia, Moldova and Ukraine.

Business Advisory Service

European Bank for Reconstruction and Development

BAS enables micro, small and medium-sized enterprises (MSMEs) to access a diverse range of consulting services by facilitating projects with local consultants on a cost sharing basis. Direct assistance to enhance enterprise performance is combined with systemic market development activities to create sustainable and commercially viable infrastructures of MSME support in the Bank's countries of operations.

Find out more

EBRD small business support in Azerbaijan

http://www.ebrd.com/pages/workingwithus/sbs/where/azerbaijan.shtml

The Eastern Partnership

http://enpi-info.eu/maineast.php?id=506&id_type=2

EU Neighbourhood Info Centre Thematic portal: ECONOMY

http://www.enpi-info.eu/themeeast.php?subject=4


/AzerNews/

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