CORPORATIZATION CASE STUDY ITI

1
CORPORATIZATION CASE STUDY - ITI

• Nirmala M. Pieris
• Head, Corporate Services Division, Industrial
  Technology Institute (ITI)
• 1st Vice President, WAITRO
• UNIDO/WAITRO Workshop on Significance of Testing
  Conformity Assessment in Global Trade
  Challenges for RTOs
• 19th April 2005, SIRIM Berhad, Shah Alam,
  Selangor, Malaysia

2
Presentation Brief

• General overview of Industrial Technology
  Institute (ITI)
• UNIDO Intervention
• Corporatisation Service capability enhancement

3
ITI

• Established nearly 50 years ago 
• Nationally unique - only multidisciplinary
  scientific service RD organization  
• Employs close to 350  
• Provide clients with specialized capabilities (on
  a fee for service basis) through a complement of
  multidisciplinary scientists
• Recognized leader in the field continuous
  improvement 

4
Facilities

• Largest most comprehensive complex of
  laboratories in the country - physical, chemical,
  microbiological and metrology
• Pilot plant engineering workshop Technical
  Information Center
• Over 900 pieces of laboratory equipment
• Leading edge testing metrology facilities with
  03 internationally accredited laboratories
• Over 50 PhD/Msc/BScs over 110 Technicians

5
Services

• Testing, Calibration Measurement
• Research Development (RD)
• Consultancy
• Technology development transfer
• Training of technical personnel
• Laboratory equipment repair

6
Testing Calibration

• Over 650 Service offerings in areas of Chemical,
  Microbiology, Materials Metrology
• Extensive menu of more than 3000 tests
• A client portfolio of over 2000
• Over 10,000 client focused services provided in a
  year

7
UNIDO Intervention
Integrated Industrial Development Support Program
for Sri Lanka - Quality, Standardization
Metrology
1999 - 02 labs identified for upgrading to
international status
2001 to 04 - 03 other labs identified
Funds for expert inputs, training/study tours,
equipment/chemicals/reference materials, facility
upgrading inter-laboratory testing proficiency
schemes
8
Laboratory Accreditation

• 03 laboratories internationally (SWEDAC)
  accredited (ISO/IEC 17025 Standard) 
• Chemical - June 2002.  
• Microbiology - September 2002 
• Metrology - September 2004 
• UNIDO - financial support for lab assessments
  annual accreditation fees (02-03 years) 
• ITI had to generate funds to retain accreditation
  status when UNIDO support ended 
• Presently Rubber lab and Food analysis labs being
  upgraded

9
Accreditation benefits
Potential for increased business through greater
client confidence
Formal recognition of capability by a third party
using internationally-recognized accreditation
criteria procedures Has advantages at both
ends of the supply chain
To the accredited laboratory/ Institute
Increased visibility through certification by an
organization with recognized international stature
Potential for increased market access of products
due to national international recognition of
reports
To clients of the accredited laboratory
10
Accreditation sustainability

• Profitability
• Increase productivity cost effectivity
• Laboratory Quality Managers
• Recognition to deal with pressures to deliver
  results to growing number of customers
• Commitment to provide customer satisfaction (more
  than closest competitors) without compromising on
  quality
• Staff
• Expertise dedication to be captured to optimize
  accuracy, productivity performance

11
Accreditation functionality

• For accredited labs to achieve full range of
  functionality
• Concept had to be leveraged across the
  organization through integration with other
  platforms systems
• Had to be linked to corporate governance,
  operating strategic goals
• Had to be linked to performance measures,
  incentives to demonstrate importance of achieving
  set goals

12
Follow through UNIDO intervention

• Retention of UNIDO Consultant (4 phases) (Sep
  2001- May 2004 spread over about 12 w/m)  
• Assessment of demand anticipated growth for
  services, assess factors affecting motivation,
  productivity service capacity enhancement
  provide recommendations (phase 1)
• Enhance Corporate governance, commercialization,
  motivation strategic planning functions (phase
  2 to 4)

13
Assessment of demand growth
STRATEGIC AUDIT
External analysis
Internal analysis
14
External analysis

• Market industry analysis (market size, growth,
  segments, share etc.)
• Customer analysis (segments, size, growth,
  trends, unmet needs)
• Competitor analysis (major competitors, their
  market share, likely new entrants)

15
Internal analysis

• Marketing (performance, competitive advantage,
  product portfolio, customer profile, pricing
  strategy)
• Production (performance in relation to
  competitors, capacity, competitive advantage,
  quality control, flexibility of facility)
• Finance (financial performance)
• HR (expertise, HRD, training, succession
  planning)
• Organisational (SWOT)

16
Recommendations from Phase 1

• Corporate Governance
• Commercialization
• Performance based incentive scheme
• Strategic planning
• Prioritizing of Research
• Developing plan for Technical Services

17
Corporate Governance

• Introduction of costing cost control systems
• Introduction of devolved Group budgets
• Introduction of Systems Procedures - approval
  of research projects/training, capital
  expenditure, support service Groups
• Formulation of Restructuring plan

18
Restructuring

• Immediate goal streamlining of business
  processes
• Separation of Technical Services from the RD
  function
• Emphasis on Quality via appointment of Senior
  Quality Manager staff for entire institute
• Emphasis on Business Development Marketing plan
  via appointment of BDM
• Bringing all Administrative/Operational/Corporate
  functions into on entity)

19
Organization (previous)
CHAIRMAN GOVERNING BOARD
DIRECTOR
Agro Food Technology Division
Materials Technology Division
Process Plant Engineering Division
Corporate Services Division
Metrology Instrumenta- tion Division
Personnel Administration Division
Chemical Environmental Technology Division
Accounts
Internal Audit
Chemical Technology Group
Metals Minerals Technology Group
Food Products Development Group
Pilot Plant Group
Industrial Promotion Marketing Group
Supplies
Metrology Group
Services Group
Environmental Technology Group
Wood Cellulose Technology Group
Engineering Services Group
Information Services Centre
Instrumenta- tion Group
Personnel, Administration, Stores
Post Harvest Technology Group
Laboratory Services Group
Rubber Plastics Technology Group
Computer Services Group
Natural Products Development Group
20
Organization (present)
Deputy DirectorTechnical Services
Deputy DirectorAdministration
Operation/Corporate Services
Deputy DirectorResearch Development
Food Technology
Chemical Microbiological Laboratory
Business Development
Finance Administration
Herbal Technology
Materials Laboratory
Information services
Materials Technology
Industrial Metrology Laboratory
Computer unit
Environmental Technology
National Repair Maintenance Centre
Project Managers
21
Commercialization

• Facilities strengthened are used to the maximum
• Pricing policies
• Competitive pricing
• Customer satisfaction

22
Performance based incentives

• Focus on developing implementing incentive
  strategies that brought employees together to
  achieve institute goals 
• Scheme formulated to realize objectives with
  respect to financial sustainability customer
  satisfaction
• Performance objectively measured, incentives
  financially backed
• Scheme also provided for employee appraisals
• Performance indicators, both financial
  non-financial

23
UNIDO
Treasury
PBIS
Fund deficit
24
Financial gap
Rs. Mn
25
The PBIS

• Scheme very successfully developed
• Different performance criteria for Services, RD
  Support Groups
• Successfully Implemented for 2003 2004

26
Revenue achievement
Rs. Mn
27
Expenditure recovery
28
Prioritizing Research

• Next step, to achieve commercial orientation of
  research functions
• Research carried out, either financed by funding
  organizations or contracted by the Government
• Research more of a knowledge accumulating nature
  with less commercial orientation
• Significant change was necessary development of
  strategic research priorities was deemed essential

29
The Key Driver Delivering Value for Money
Customers
Value for Customers
Revenue from Customers
Division
Division
Division
ITI
Capital from Stakeholders
Value for Stakeholders
Stakeholders
30
Opportunities - Outcomes
What to do?
Priority directions
Many opportunities
Direction setting
Resourcing
Availability of resources
Implementation
Rate extent of adoption (outcome)
Value from Research
Outputs
31
Priorities Process Criteria - Research
Potential Benefits
Attractiveness
Ability to Capture
Return to Sri Lanka from R D
RD Potential
Feasibility
RD Capacity
ITI Response
ITI objectives Role
32
Plan for Technical Services

• Framework for working out effective strategic
  priorities for Technical services to propose a
  medium term plan based on country demands
• Formulation of implementation plan based on
  development plan

33
Priorities Process Criteria - Services
Leadership
Attractiveness
Marketability
Country Demand
Profitability
Feasibility
Capacity
ITI Response
ITI objectives role
34
Summing up

• Corporate Governance
• Restructuring
• Performance based Incentives
• Research prioritization
• Plan for Technical services

35
Thank you