Stop panicking, and start transforming instead

Applying the five lean manufacturing principles.

Measures to curb the spread of COVID-19 has not only directly impacted the ability of businesses to operate, but has infected them with something even more deadly: uncertainty.

Small and medium-sized businesses are the most vulnerable segment to uncertainty, and manufacturing has been one of the worst-affected industries. Although it can be difficult to stay positive during uncertain times, those business that hope to survive must look beyond the current crisis and focus on those things that do remain in their control. “SMEs should use this time to build more efficient and effective organisations. One way to do this is to apply the five lean manufacturing principles,” says Marten Stavast, Senior Industry Expert in Manufacturing at GroFin, an impact-driven SME financier. He reminds manufacturers of these principles:

1. Define value

Any entrepreneur will agree that the customer always comes first. Lean manufacturing takes this idea beyond customer relations to also put the customer first in the production process. The true value of any product or service is defined by what your customers are willing to pay for it. Your product may seem valuable to you because of the time and resources that went into creating, but its value is determined from the point of view of the customer.

Lean manufacturing begins by determining the needs of the customer. Interviews, surveys, demographic information, and web analytics are some of the tools you can use to determine what your customers want and at what price they can afford it.

2. Map your value stream

Once you know what your customers want and value, you can map your value stream. Use your customer’s value as a starting point and identify all the activities that help to create this value. The goal is to ensure that every activity in your production process adds value to your customer and can be delivered at the price point they want. If an activity does not add value to your customer, it is a waste. If you cut out any unnecessary processes that do not add value, you can reduce production cost while ensuring your customers still get what they want.

3. Create flow

Now that only necessary and value-adding activities remain in your value stream, you should ensure that each step flows smoothly to the next. Interruption and delays in production are no different to waste. A delay is more than just a bottleneck when one production step waits on another – it is any step that takes longer than it has to. You can improve the flow of value-adding activities by breaking down every step of the process and reconfiguring it as efficiently as possible, levelling out the workload, and training your employees to be multi-skilled and adaptive.

4. Establish pull

Stock sitting on your shelves or raw materials piled up in your warehouse is one of the biggest forms of waste in any production system and often places a big drag on cashflow for smaller businesses. This is even more true in the current environment.

A pull-based production system means that you only produce products based on the needs of your customers and only at the time and the quantities needed. Strive to limit your inventory and work in process items to only the materials needed for a smooth workflow. This approach requires ensuring some flexibility in your production process and the current environment, it might just give you the edge as a small business.

Stock sitting on your shelves or raw materials piled up in your warehouse is one of the biggest forms of waste in any production system, and often places a big drag on cashflow for smaller businesses.

5. Pursue perfection

The final step in implementing lean manufacturing is by far the most important. Lean thinking should not be a once-off exercise that you complete now, while times are tough. It should become part of the culture of your company in such a way that every employee strives toward perfection and constantly getting better at meeting customer needs and reducing waste. This will not only set your business apart during times when customers are themselves under financial pressure but also when things improve.

Mend your nets

When this pandemic and the uncertainty it brings have passed, those business owners who spent this time wisely will have built businesses that can remain competitive by increasing the value they deliver to customers. There is a saying that goes “when fishermen cannot go to sea, they mend their nets.” Now is the time for business owners to do this same by using their time to transform their businesses, not just to survive the current storm, but also to look to the future.

This article was first published in the August/September 2020 issue of Your Business Magazine.

GroFin supports SMEs through COVID-19 crisis

The COVID-19 pandemic is having a severe impact on economic activity and small businesses are bearing the brunt of this crisis in both developed and developing countries.

GroFin finances small businesses in some of the world’s most vulnerable economies. We are hard at work to increase the resilience of these communities as they deal with the fallout of the outbreak.

Our model has always centred on providing entrepreneurs with continuous support and advice. We realise that it is even more crucial than ever before during an unprecedented crisis like this. As such, we have taken several measures to continue assisting our clients despite the challenges presented by the virus and are responding as follows:

Ensuring we can continue servicing SMEs

The health and safety of GroFin’s staff and clients are our highest priority. We ensured a safe working environment for staff across our markets by implementing Environmental, Social, and Governance (ESG) measures to limit the possibility of infection. The majority of GroFin staff is working from home and we plan to extend this to all staff within the next week. All our core business platforms are available remotely so that we can continue operating and engaging with our clients using digital platforms.

Advising SMEs on measures against the spread of COVID-19

We have also focused on helping our clients to minimise contagion risk to their own employees and customers. GroFin’s Impact team developed a COVID-19 Environmental, Social, and Governance (ESG) framework, drawing on international best practise on this lifesaving issue. This ESG framework has been shared with our clients and the GroFin Investment team is providing them with support and advice to implement the measures it recommends.

Providing support to our clients

Unlike commercial lenders, we decided not to take a portfolio approach to assess the impact of the outbreak on our investees. In line with our focus on providing entrepreneurs with continuous support, we developed a toolkit to assess the disruption and impact on key business elements of each SME in our portfolio.

We believe this will allow GroFin to use our expertise to provide appropriate advice to each entrepreneur, while also giving us a view on the viability of each business during and after disruptions to their operations. The outcomes of this assessment will determine our actions to be taken per client. Where available, we will also link our investees to local relief options like government support.

As an organisation working with SMEs in some of the most challenging markets, we have always been amazed and inspired by the resilience, determination and ingenuity of the entrepreneurs who are our clients. They will need all these qualities to overcome this crisis but can rest assured that GroFin will be there to support them throughout it.

Brienne van der Walt

Chief Executive Officer, GroFin

GroFin Nigeria supports women entrepreneurs to ‘step up and scale up’

GroFin Nigeria (Lagos) recently hosted nearly 90 women entrepreneurs at a capacity building workshop in Lagos. The event formed part of GroWoman, GroFin’s Gender Lens Investing Initiative, and focused on equipping women entrepreneurs in business planning and strategy. Women empowerment is one of GroFin’s core impact objectives.

GroFin hosted the event in partnership with Sheba Centre, a GroFin client and events management company. Omolara Adelusi, the owner of Sheba Centre, shared her entrepreneurial journey and encouraged other women entrepreneurs “to step up and scale up” their businesses.

Women entrepreneurs from various sectors including agro-processing, education, healthcare, retail, and manufacturing attended the event and were inspired by its theme of ‘Breaking the Myth’ around gender roles which assume that women cannot – or should not – venture into the business world.

Bisi Onim, executive director and COO at FundQuest Financial Services, and Tope Orolu, managing director at TIS Capital & Advisory, spoke on the role of a business plan in a thriving business. The speakers encouraged entrepreneurs to develop their business plans holistically.

The learning sessions included practical guides to business planning which some of the participants even described as an “abridged MBA”. Attendees also testified to have garnered more knowledge on sustaining their business, building a proper structure as well as implementing the right strategies for business growth.

“The facilitators made the business plan very easy to digest. I am going to run my business as a system and leverage on resources outside of my immediate environment. I will further develop my business plan and would love to have more information on subsequent events of this nature.” said one attendee.

GroFin’s mission is aligned with the United Nation’s Sustainable Development Goal 5 (Achieve gender equality and empower all women and girls) through its focus on women–led businesses and women employment. GroFin has supported over 122 women-owned businesses and 30% of the jobs our investments sustain are held by women.

GroFin is partnering with the International Trade Centre (ITC) in SheTrades Invest, an initiative to increase investment in women-owned businesses in the countries where we operate. The SheTrades initiative aims to connect three million women to market by 2021. In addition, GroFin works with the Vital Voices Programme to help women entrepreneurs lead positive change in their communities. GroFin sponsored 12 clients for the VV GROW Fellowship, a highly competitive one-year accelerator program for women who own small or medium-sized businesses.

If you are a woman entrepreneur looking to grow your business, learn more about GroFin’s financing and business support. Or speak directly with a GroFin representative at one our local offices for more information.

GroFin and Shell Foundation: Harnessing technology for SME finance

From mobile money to blockchain and data analytics, fintech is not only disrupting the way corporate financial institutions operate, it also presents far-reaching opportunities for social enterprises and development finance institutions to strengthen their impact and efficiency.

Shell Foundation (SF) supports innovators to test new technology and enterprise models to help overcome two major global development challenges: access to energy and access to affordable transport. Its portfolio includes both social enterprises as well as market enablers – like GroFin – that accelerate the growth of proven sectors.

SF, a UK registered charity, has supported GroFin since its inception in 2004, when the two organisations came together to develop a unique model that combines finance and support to grow SMEs and drive inclusive economic growth. In line with SF’s focus to support businesses and intermediaries capable of delivering social change at scale, it also assisted GroFin in two projects aimed to enable the company to better leverage technology and increase the efficiency of its growing operations.

Mairi Tejani, Head of SME Growth at Shell Foundation, says financial technology innovations create a unique opportunity to redefine the SME lending ecosystem.

“We remain committed to supporting initiatives that increase the efficiency of the SME finance sector in emerging markets, and are pleased to partner with GroFin to test the use cases for financial technology innovations in SME funds.”

Increased efficiency

GroFin provides financing and business support to SMEs in 14 countries throughout Africa and the Middle East and has invested in over 700 businesses. The ability to provide effective business support to its clients is integral to GroFin’s business model. This requires the company to accurately capture and analyse financial and other data gathered from these SME businesses, or created through its transactions with them.

Until recently, GroFin relied on various internal systems and manually extracted the data it needs for analysis and reporting – a process which was both time-consuming and error prone. With Shell Foundation’s support, GroFin enlisted Altron Karabina, a specialist in helping companies digitally transform using the Microsoft platform, to develop a data warehouse and business analytics platform.

The data warehouse allowed GroFin and Karabina to develop automated reporting templates, eliminating the need to manual collate and update data for reporting purposes and greatly improved efficiency. For example, the project has allowed GroFin to slash the time spent on collating certain data for creating quarterly reports for investors from about two weeks to mere minutes.

GroFin is now using its own internal resources to extend the infrastructure and functionality created during the project to create a wider range of automated reports. Since the completion of the project, GroFin has already published more than 60 automated reports. The automation of reporting processes is freeing up time and resources within GroFin’s investment team, allowing them to spend less time on verifying figures and conduct the analysis needed to manage their portfolios and support their clients better.

A digital solution to capturing data

The need to maintain an efficient system of collecting data that is complete, accurate and auditable also led SF to provide GroFin with support to test and pilot a blockchain platform from BanQu, a US based, blockchain solutions provider. GroFin tested the use of a digital platform using distributed ledger technology (DLT) as a more effective and convenient means for its clients to submit the data required from them.

Philippa Massyn, IST Executive at GroFin, says the pilot project showed the great potential for development finance institutions and others engaged in impact investing to use digital platforms to collect data in the field.

“The project showed that a digital platform can not only make it easier for SMEs to submit their data, it can also be used to generate key insights through analytics.  We believe that if SMEs see this immediate benefit to submitting their data, they will be incentivised to submit again and on time.”

Serving SMEs better

Ashraf Esmael, Chief Development Officer at GroFin, says exploring new ways to capture and analyse data from SMEs, can make an important contribution to the development of the sector.

“Small businesses are vulnerable to shocks and therefore need to identify changing trends early on. The ability to capture and analyse data quicker and more effectively will help GroFin to provide better and more timely support to SMEs, and to do this more efficiently.”

Ryan Jamieson, CTO at Altron Karabina, says the company is excited to work with organisations like GroFin which have both an economic and societal impact.

“Altron Karabina helps companies to understand, manage and make decisions based on their data. In GroFin’s case this not only improved their own businesses processes. It will also help them to empower the SMEs they serve.”