Innovation at the Frontier

The vision of the Indonesian firm Servitama Consulting is to provide world-class consulting services with a local touch, helping its clients to achieve profitable services and holistic business solutions.

When Servitama (whose clients include private and state-owned companies as well as government agencies) was awarded a grant from SENADA's Business Innovation Fund, the company used the funds to develop and pilot a market driven, results-oriented training and technical consulting service for SMEs that is typically only available to large, wealthy companies.

The SENADA grant, entitled "Increasing SMEs' Competitiveness through Problem-Solving Capabilities Improvement," provided Servitama with Rp 224,100,000 from November 2007 to April 2008. The grant was designed to create an advanced management consulting service suited to the needs of Indonesian SMEs.

The service will help tackle loss of competitiveness by smaller firms, who increasingly find that their products are higher priced, relative to product quality, than products made by their competitors in places such as China and Vietnam.

In order to regain their competitiveness, Indonesian SMEs must learn to think critically about their production processes from start to finish, identifying problems and developing solutions.

The newly developed service uses a combination of classroom training and field coaching to assist SMEs to analyze and upgrade their operating processes. Before hitting the market, the service was pilot-tested with five firms:

• PT Cipta Kreasi Muda, which manufactures mirrors for automobiles and motorcycles
  
• PT Nusantara Buana Sakti, a producer of LPG tubes
  
• PT Mutichem Indojasa Artaprima, an automobile pedal brake manufaturer
  
• PT Tepat Guna Utama, which manufactures cartons
  
• PT Meta Presindo Utama, a stamping plant and plastic manufacturer. 8
  

After three months of technical support, all five firms were able to make tangible improvements to their manufacturing processes after Servitama's coaching, which included brainstorming sessions in which dozens of managers and over 750 line staff were shown how to develop innovative solutions to their problems. For example, one firm reduced machine change-over time from an average of 61 to 55 minutes. Another firm cut its reject rate in half, dropping it from 19.6 percent to 9.8 percent.

As one General Manager participating in the training sessions observed, "This is what we need – a practical coaching developed specifically for small firms that helps us develop our mindset and creativity in exploring day-to-day problem-solving needed to improve productivity and quality."

The training that Servitama offered each company included three 8-hour workshops supplemented with day-long site visits once a week for three months. The curriculum introduced "5S" concepts (sort, set in order, shine, standardize, sustain), a set of rules designed for lean manufacturing; and kaizen (a Japanese term for continuous improvement).

The goal of the consulting is not only to show companies how to apply problem-solving strategies to current problems in order to produce immediate results, but to leave them better prepared to apply problem-solving techniques in the future as well.

Servitama's consulting service is fully operational and is currently taking new clients. For more information contact their Management and Organization Development Service Division at servitama@dnet.net.id.

The Business Innovation Fund (BIF) is an initiative launched in June, 2007 by SENADA. BIF offers short-term, high impact grants for the development of innovative products for the value chains where SENADA focuses. Details can be found at www.senada.or.id/innovation.

SENADA is a four-year, USAID-financed project whose goal is to increase Indonesia's economic growth and employment by improving the competitiveness of major, labor-intensive light manufacturing industries.