TRADE AND DEVELOPMENT BOARD COMMISSSION ON ENTERPRISE, BUSINESS FACILITATION AND

DEVELOPMENT

Expert Meeting on

"ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN GLOBAL VALUE CHAINS"

Geneva, 18-19 October 2007

PAPER SUBMITTED TO THE EXPERT MEETING*

What are the characteristics of the most successful supplier development and

linkages programs worldwide? The SEBRAE Experience in Brazil

by

Ms. Eliane Borges Portfolio Manager, SEBRAE, Brazil

____________________ *The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD

Eliane BorgesEliane Borges

What are the characteristics of the most successful supplier development and linkages programs worldwide?

The SEBRAE Experiencein Brazil

Expert Meeting on

"ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN GLOBAL VALUE CHAINS"

Geneva, 19 October 2007

by

Eliane BorgesPortfolio Manager, SEBRAE Brazil

“The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD”

1. SEBRAE2. Phase 1 - Supplier Development

Projects3. Competitive and Sustainable Inclusion

of MSE in the Oil, Gas & Energy Supply Chain

4. Linkages Project (Projeto Vinculos)5. Final Considerations

Content

1. SEBRAE

Promote the competitiveness and sustainable development of Brazilian micro

and small companies and foster entrepreneurship.

SEBRAE’s Mission

• 35 year-old non-profit autonomous Social Service• A National Board with 13 public and private organizations, the Headquarters, 27 State Units and more than 600 offices and representations• Income: 0.6% of the payroll of the formal enterprises• around 3.000 employees• network of over 10.000 consultants• hundreds of partnerships with national organizations• dozens of partnerships with foreign organizations

SEBRAE BRAZILIAN MICRO AND SMALL COMPANIES

SUPPORT SERVICE

2. Supplier Development ProjectsPhase 1

1992-2004

19921992--1994 1994

-- Sebrae launched its first development suppliers Sebrae launched its first development suppliers projects in 4 of the 27 States. projects in 4 of the 27 States.

-- No interchange among projectsNo interchange among projects

-- In one of the States the methodology couldnIn one of the States the methodology couldn’’t t be replicated: it was too expensive for micro be replicated: it was too expensive for micro and mall companies because large consulting and mall companies because large consulting firms were hired to implement the projects.firms were hired to implement the projects.

19951995--19961996

-- One of the States transfers its methodology to One of the States transfers its methodology to a 5th Statea 5th State

Until then: Until then: -- all the projects had only one anchor, from the Industry all the projects had only one anchor, from the Industry

sector.sector.-- all the micro and small companies were effective all the micro and small companies were effective

suppliers of goods and services to the large company.suppliers of goods and services to the large company.

19951995--20042004

-- Unification of the methodologiesUnification of the methodologies-- Partnerships to develop the stores in shopping centersPartnerships to develop the stores in shopping centers-- Development of distributors Development of distributors -- Development of technical representativesDevelopment of technical representatives-- Development of strategic clients of the Anchor Development of strategic clients of the Anchor

companiescompanies-- Projects involving 1 anchor and suppliers from 2 or 3 Projects involving 1 anchor and suppliers from 2 or 3

statesstates-- Inclusion of other institutional partners besides SEBRAEInclusion of other institutional partners besides SEBRAE-- Launched the idea of developing suppliers in clusters Launched the idea of developing suppliers in clusters

and local supply chains, with several anchors in the and local supply chains, with several anchors in the same project and with potential suppliers.same project and with potential suppliers.

METHODOLOGICAL FLOWMETHODOLOGICAL FLOW

INTERVIEW WITH THE ANCHOR (S)INTERVIEW WITH THE ANCHOR (S)SELECTION AND ADHESION OF MSESELECTION AND ADHESION OF MSE

GENERAL DIAGNOSISGENERAL DIAGNOSIS OF EACH SMEOF EACH SME

SUPPLIERS DEVELOPMENT PLANSUPPLIERS DEVELOPMENT PLAN

IMPLEMENTATIONIMPLEMENTATION

CHECKACT

SEBRAEAnchors and PartnersMSE representative(s)

Steering Group

Project Manager

Instructors

Work GroupSME

Consultants

Work GroupSME

Work GroupSME

STRUCTURE OF THE PROJECTSSTRUCTURE OF THE PROJECTS

Results

1992-2004

30 Anchors

1000 SMEs

3. Competitive and Sustainable Inclusion of SMEs in the Oil, Gas & Energy Supply Chain

Content

Convênio Petrobras / SebraeConvênio Petrobras / Sebrae

Goods and services:

• Industrial Maintenance• Metal-mechanics• Electronics• Construction and assembly• Engineering projects• Refrigeration• Information Technology• Safety Equipment• Painting• Services in general• Food and beverage, hotels, boots, retail etc...

OPPORTUNITIES FOR SME OF A VARIETY OF SECTORS

STRATEGY ADOPTED :Structuring projects results oriented built with local

partners

Creation of a favorable environment to the sustainability of the process of inclusion of SMEs in

the oil, gas and energy industry

Convênio Petrobras / Sebrae

Agreement with Petrobras signed on

08/10/2004

STRATEGIC FOCUS OF THE PROJECTS

• DIAGNOSIS OF THE LOCAL SUPPLY CHAINOpportunity mapping for SMEs

• SUPPLIER DEVELOPMENT

• SUPPLIER NETWORKS – REDES PETROEffective and potential suppliers and support institutions

• MOBILIZATION OF LARGE COMPANIESTo join the process of inclusion of SMEs

Convênio Petrobras / Sebrae

ResultsResults

18 Business Unitsof Petrobras

5 new Units of Petrobras in preparation

Objetivo: Inserção competitiva e sustentável de Micro e Pequenas Empresas – MPE na cadeia produtiva de petróleo, gás e energiaProjeto IND P&G-06 do PROMINP

14 projects in 11 states: 2005-2007 with 28 anchors in the Steering Comitteee

10 Other anchors

9 Redes Petro in operations and 4 in preparation

137 additionalAssociatedAnchors

www.sigeor.sebrae.com.brwww.sigeor.sebrae.com.br

GestãoGestão EstratEstratéégica Orientada gica Orientada para Resultadospara Resultados -- GEORGEOR

Example of a PROJECT GEOR in SIGEOR

4. Linkages Project

Projeto Vinculos with UNCTAD, GTZ, FDC, Ethos

Content

www.projetovinculos.org

Large Companies(TNC’s)

Local Suppliers

Competitiveness Gap

Linkages Project andLocal Partners (SEBRAE, SESI, SENAI, IEL, Banks and others)Implement actions that prepare local supplyiers to meet TNC’s requirements

TechnologicalDemand

TechnologicalDemand

TechnologicalSupply

Mental Model – Logic of intervention

Linkages Project StrategiesImplementation

1. Organize the demand of large companies for local suppliers

2. Facilitate the communication between local institutions –Structure the technological institutions to meet the requirements of large businesses

3. Plan the Program and Process Management

4. Facilitate the process of technological transfer amongcompanies and institutions, and assist in the SME upgrading

5. Manage the Program6. Document and promote the dissemination of best practices

among the projects

Macro level: Policies

Meso level: Institutions - SEBRAE, SENAI, SESI…

Micro level: Companies (TNCs –SMEs)

Project intervenes at 3 levels

Steering Commitee(UNCTAD, GTZ, SEBRAE, FDC,

ETHOS)

AdvisoryBoard

LinkagesProjectDirector

Project 1Bahia

Project 2Sao Bernardo

Do Campo

Project 3Manaus

Project n

ParnerInstitutions

ContractedInstitutions

Companies

ServiceProviders

Organizational Structure

Project 4Pernambuco

Project 1: Bahia

Companies: Bosch, Veracel, Lyondell – 30 SMEs

Upgrading in Process Management (PQF)

Project 2: Sao Bernardo Do Campo

Companies: BASF – 10 SMEs Upgrading in Safety, Health and Environment (SHE) standards

Project 3: Manaus

Companies: Philips – 12 SMEs

Preparation for ISO 14000 certification

Project 4: Pernambuco

Companies: Gerdau, Alcoa, Philips – 31 SMEs

Upgrading in Process Planning and Management

Steering CommiteeAdvisory

Board

LinkagesProject

Financing Model of Linkages Project

GTZ: support to planning and management, exchange of experiences and best practices amongthe program in Brazil.Premise: to act at MESO level – strengthening theinstitutions to support the companies.Act in the Brazilian Northeast and Northern regions.

UNCTAD: leads the linkages policy component, international dissemination of best practices,provides support to streamlining institutions and provision of technical advice

SEBRAE: sensibilizes and mobilizes national institutions at federal level and supports the development of SMEs and policy coordination

TNC and SMEs: end beneficiaries and provide support to upgrading.

10 Members(Presidents & CEOs – Odebrecht, BASF, GE, Telefonica…) provide strategicadvice and raiseawareness

Expected Results– 2008 / 2010

R1: Document with recommendations for public policies delivered to thefederal, state and municipal government of Brazil – contribution to improve the Systemic Conjuncture.

R2: Qualification of Local Institutions to implement the Linkages Projectmethodology to improve sustainable business relations among largecompanies and small local suppliers.

R3: Improve the business environment and increase the business generated among large companies and local suppliers.

International competition is now among value chains

Local value chains must be able to participate into global valuechains in order to be able to compete in its own country

An alternative option to build competitive capacity is to think globally and act locally in the development of clusters that arepart of local value chains.

Useful to create networks of companies (large & small) from different sectors in the same region before focusing on a specific value-chain.

5. FINAL CONSIDERATIONS

Thank you

Eliane Borges

eliane@sebrae.com.br

www.sebrae.com.br