Management Archive - Bonds and Shares

Florent BOUILLYJuly 28, 2018

Lean managements technics are very efficient tools used to increase productivity and processes in several sectors (financial services) such as automotive. Indeed, automotive companies are using lean management technics for several years and a well-known pioneer of these technics is Toyota. The founder of lean approach was, Taiichi Ohno, an executive member of Toyota during the 50’s. He wanted to focus on production processes, wastes, value streams and the Kaizen to improve Toyota’s efficiency and be more competitive on the automotive market.

This is the reason why, today, Lean manufacturing is often called “Toyota Production System” and this model is analysed by many companies in order to improve their activities.

In 50 years, Toyota became leader of a highly competitive market being in average 4 times more productive and 2 times more profitable than other competitors. These results are mainly due to Lean management and the way Toyota is organized, consequently we will look at how can we implement this model in financial services in order to reduce wastes and produce a more profitable and qualitative service.

financial services

Indeed, financial services are following very strict procedures mainly because of legal requirements and these procedures can be improve using lean management technics. As we discussed in the introduction, effects of lean has been demonstrated in the automotive sector which is organised by a succession of stages aiming to produce a final product.

The way Financial services are operating today, using sets of procedures explaining steps by steps what to do to accomplish a specific task, lead us to the conclusion that lean management technics used in manufacturing industry can be adapted to financial activities.

Knowing that lean management can be adapted to financial company, the most difficult point is now to look at how can these technics be implemented.

5 steps to Implement a lean strategy:

A first step that company usually follow is to choose one or several pilot sites where they will test and generate their news technics and ideas on current practices. This step should last 1 or 2 years in order to analyse effects of this new organisation on company’s activities and observe points that need to be improved.

Step 1: Define a target:

Define several objectives corresponding to key deadlines which could be represented in term of value, time, customer satisfaction or any kind of measurable data.

Step 2: Map

This step is important because we will define every action needed to create value in the activity such as the different step of a car production. We will create a map or a timeline going form the current state to the future state. This timeline or map is commonly called “value stream”. Then we will identify and categorize waste in the Current State, and eliminate them. This step will end up with a process where only “useful” steps are present.

Step 3: Flow

We will organise the value stream as a flow of step that we perform one after another. Then we will turn the flow to a product or service-focussed organization in order to put the service’s quality and performance as main point in the company. This will directly impact the production’s duration or services performance.

Step 4: Pull

This steps is mainly use for production of finished good as we will let the customer pull products as needed and so eliminate the need for sales forecast. In a services industry, such as finance, we will highlight which steps are needed by customers and focus on these ones. Consequently, it will remain only useful task and services in the company’s process as both customers and organisations will express what do they expect from each other.

Step 5: Perfection

This steps is not the end of lean implementation process because we can always improve a service or a production. We will restart at step 1 and go through every step again and again in order to keep only essential parts of the value stream.

What impact can we expect on Financial activities?

We can often hear people saying that lean management is only efficient in manufacturing activities because they are producing the same kind of product several times over long periods and that we can easily standardize this flow of production.

When we talk about implementing lean in industry of services, main part of people say that lean management is not applicable because tasks are too complicated.

When we step back and reflect about it, we observe that services are composed of long processes which could be sometimes more complex than those of manufacturing industries because they need to be specific to each client. The important thing to notice is that as long as we have processes to improve, lean management will be useful for the company. Hence, having processes in the financial industry makes the lean management implementable.

A difficult point will be now to convince people to get involve in a such organisation as lean strategy usually takes place on the long term and result are difficult to see on the sort term.

Many people will ask you the following questions: “Does this strategy will positively impact the financial turnover of the company? Will we see a real improvement on a financial point of view?”

A simple answer to this question is to make a quick exercise.

Find two teams having similar missions such as entering consumer transaction. We will give to each member post-it and ask them to detail how they process step by step to accomplish the task. This will create a map of the employee activity and way of working. At the end, we will put on a wall every map coming from each employee and will see which step are the most listed. This will give us the most important part to keep in the process and we will be able to look at the remaining others and see if it is possible to remove them.

After this exercise, we can now prove that on a middle to long term strategy, after some change in team’s organizations, the company will be able to perform a quicker and more qualitative service to its customer. The financial result of this strategy will be the reduction of costs, (less time to perform a task) and also an increase of the company’s turnover because employees will be able to perform more tasks in a same period of time compare than before thanks to this new organisation.

Lean is about standardizing processes to make problems visible and developing your employees’ critical thinking ability so that they can solve those problems and improve work processes. In these conditions, financial industry can take advantage of these methods and it’s sure that some of them have already started to use them in their daily activities.

Florent BOUILLY

References:

http://leleanmanufacturing.com/histoire-du-lean/

https://www.institut-lean-france.fr/lean-management-resultats-incomparables/

https://www.lean.org/WhoWeAre/LEINewsStory.cfm?NewsArticleId=17

http://www.industryweek.com/blog/lean-even-more-important-services-manufacturing

Engy KHALIFAJuly 16, 2018

Interview mit Mr. Khalid Gabr. Mr. Gabr is the regional director of BFC Bank UK “ EzRemit”, member of BFC group holdings “ BFC Group”. EzRemit is a money transfer product that offers fast, reliable, and cost effective global money transfer services in minutes. EzRemit has an expensive network of over 55000 agent locations where customers can send or receive money to over 40 countries worldwide. It’s all about competition.

Khalid has B.A in commerce from Ain Shams University in Egypt. Moreover; he proceeded his post graduate’s studies in one of France leading business schools “ESLSCA Business School” specializing in “Global Management”. Khalid has been working in the money services industry since 2005, his specialization is the money transfers.

EK: Please tell us about your relationship with banks, Do you do the competition with them or you work together?

We don’t do competition with banks, as we have mutual benefits together. Banks are our intermediate source of exchanging money. As according to the Egyptian law, money transfer can only be done through banks.

EK: What about the challenges you are facing?

The Central Bank of Egypt is encouraging money transfers companies and is giving banks the validity to take the decision with comparison to other countries. However; the challenges we are facing lies in the long procedures in banks, technology access, bureaucracy, too many departments involved in the process like compliance, legal, and many other departments, too many documentations. Also some banks have a lack of communication as they are not updated with the other banks in the world.

I do suggest that Banks should communicate with correspondents’ banks to get more information about the market and the governmental new rules and regulations. For instance; the taxes and its effect on the amount of transfers. Banks have to increase the payment channels by working as a union.

In addition to the lack of marketing internationally of the money transfer services as the blue collars market is having difficulty on dealing with the banks’ products concerning with money transfers. Finally I do suggest the intervention of the monetary policy in Egypt as we really need the basic steps of initiation to make it easier for money transfer clients.

EK: What Privileges do you give to your clients ?

I would first introduce to you how the money transfer companies work. For a company owning a money transfer system to be established; first it has to get its license, either from the united kingdom or from the United states. Its more easier to get it from the united kingdom as you just have to set two main offices. One in the united kingdom and the other one in any country you desire.

“EzRemit” established an office in UK and our headquarters is located in Bahrain. The departments of our companies are divided as follows compliance, Anti Money Laundry, Business team, operations team, implementation team, marketing, and sales. The main services of our company is to send and receive money. It is a great competition.

Also you need representatives in every country you transfer money to. So you need to build the receive network then the send network. Our representatives main duty is to market for us. The privileges that we are giving to our clients are the services we give to our clients. Those services are:

Account to Credit: Money are transferred directly to the client bank account.
Cash to Door: Money is transferred directly to the clients addresses through a courier company managed by the bank.
Cash to Cards: Money are transferred to cards that are established with no account base and a KYC “Know Your Customer” application is only done once.
Cash to ATM: Cash are transferred into ATM with no cards or accounts.
Mobile Services: Money are transferred to a mobile line.

EK: Would you tell us more about the regulation authority supervising your line of business?

Our company works under the supervision of the Financial Service Authority, Financial Conduct Authority, and the Money Laundry Regulations in the united Kingdom. In Egypt we work under the rules and regulations of The Central Bank of Egypt. Also in Egypt every bank we deal with have its own set of rules. It is such a great competition.

EK: How do you deal with them ?

When dealing with the authorities of the UK or Egypt, we have no problems as long as we are abiding to their rules and regulations. However we might face some problems with banks due to several reasons. No centralization in money laundry policy in Egypt; as each bank has its own rules. No centralization on the money transfer reports in Egypt. Also the money transfer business in Egypt needs a lot of attentions as there are a lot of wasted opportunities if it has been efficiently used, investments and economy can be built on it.

EK: How do you perceive the Egyptian Economy now in Egypt?

There are a lot of encouragements of investment in Egypt by the Egyptian Government specially the (SME’s) small and medium sized Enterprises and start-ups companies. They give total support to new entrepreneurs, and the youth of Egypt are being directed a lot as there are a lot of created opportunities to them. Moreover; the cost of investments is low in comparison to other countries.

EK: Has it changed during the previous years?

Absolutely; as the concern in the previous years were about the heavy and large investments. As what keeps the economy of a country going is the success of their SME’s business.

EK: What would you say to young entrepreneurs?

I have been a while in the Ecosystem of Entrepreneurs; the problem lies in both the ecosystem and the entrepreneurs themselves. The main problems of the entrepreneurs lie on the fact that they don’t want to take any risk, as no one needs to compromise. They ignore the aspects of business and they lack marketing and financial knowledge, they also lack the knowledge on how to retain their customers. They also lack the procedures to make their business going.

On the other hand; the Ecosystem lacks a lot of aspects as they are seeking publicity and ignoring a lot of aspects. Lack of information which makes it difficult to proceed. Lack of feedback and the quick loss of interest. As I do suggest the availability of a government authority to guide and lead the entrepreneurs through the way.

For example; the establishment of a consultancy office for some postponed fees in finance, investment, marketing, and research. Also, the incubators of the Ecosystem should establish a committee to evaluate the entrepreneurs to help them to proceed in aspects like when to start, understand market penetration, market resistance, and enable them to know when is the right time to take decisions. Also, they shouldn’t assume that the entrepreneurs knew every aspect in business. They only have good idea and needs help to accomplish it.

For entrepreneurs, I suggest that they should be risk takers and they should believe in their ideas. They also should know the difference between the “Red Ocean “and the “Blue Ocean” and should decide which one they want to position themselves in. It’s all about competition. If you don’t have a competitive edge, do not do competition.

As no blue ocean lasts forever. You should continuously own a competitive edge, always have a new aspect to introduce to the market. Don’t burn yourself, don’t give all your cards at once. Never ever go to the market based on assumptions. Finally; never go to the market without a second and third plans.

EK: What do you think about financial inclusion in Egypt?

In Egypt, we are just applying terminologies, we need more applications. As large wholesalers are the one who gets the benefits from the financial inclusion, but when it comes to the small and medium- sized traders it will be too costly on them. Unless there are rules and regulations that will be on their favour and will be less costly on them.

I see that the most successful financial inclusion in the world happened in “Kenya”; when the cholera disease spread in the country; the country prevented the exchange of paper money in the market, and Vodafone entered the market and implemented an application called
“M- Pesa”. By this the people were forced to apply the financial inclusion.

EK: What does it need to be more activated in Egypt?

I think the best way to activate the financial inclusion is through the implementation of laws, and maintaining the tools to help in achieving it and create substitute channels. Also, giving support to the companies that works in FINTECH. Start-ups and provide the support to them. The financial inclusion should be spread by both the public and private sector. Rules should be applied strictly to face the resistance to the financial inclusion from the market, besides the right tools should be created to face the resistance.

EK: What do you think about the application of the KYC in Egypt?

There is major bureaucracy in applying the KYC “Know Your Customer” because it is about competition, as institutions in Egypt don’t accept passports, or car License. They only accept ID’s although they contain the same information and they are issued from the same government authority.

The KYC channels should increase by creating a union platform system to decrease the bureaucracy; as KYC, can lead products to failure if it wasn’t managed correctly. Although some banks have created a solution which was sending a bank officer to the client addresses and obtain their KYC, but what we need is an implementation of KYC all over Egypt. The KYC can be the main gate for the financial inclusion to be spread all over Egypt.

Engy KHALIFAApril 11, 2018

Interview with Mr. Mohamed El Garhy founder of “El Garhy for Steel”. He has a BA in International Logistics from Arab Academy for Science and Technology in addition to an executive diploma in commerce. He is the managing director of El Garhy for Steel, board member of Suez for Steel, board member of west village a real estate Investment company, the managing director of Master Batch for Plastics, he is a member of the development committee of human resources in the Egyptian Industrial Syndicate, also he was elected to be Egypt’s representative in the International Labor Organization in Genève in 2017. Finally, in November 2017 he was elected as a board member in Al Ahly Sporting Club; the main sporting club in Egypt where he face challenges.

You have become one of the major investors in Egypt. What were the major challenges that you were facing?
Thank God for what I have accomplished, I am still at the beginning of my Path, generally challenges are presumed in life, in particular the most important challenges that the businessmen in Egypt are facing are the enemies of success who are always trying to distort the image of anyone who tries to work hard and strives to achieve success. From the glory of our Lord is that I don’t stop in front of those people and try my best to concentrate on my work and on what I am planning to achieve.

Please give us your opinion about how the investment situation evolved in Egypt in the last years?
What has happened in Egypt in the laws and legislations is literally a leap in laws. For example; the new investment laws, the amendments done in the corporate law, adding the law of one company per person, and the Bankruptcy law.

In fact, we now have a great development in legislations and at the same time we have a development and modernization in the governmental departments. It’s true that the amount of bureaucracy is large but the most important thing is that the government is going in the path of developing the governmental institutions.

Are there additional measures that could increase the business climate in Egypt?
A lot of studies have been made to improve the investment climate in Egypt, and I believe that supporting the competitive environment are the most important issue that needs to be developed meaning that developing the investment climate to be competitive in an international level in which the investment opportunities in Egypt become more attracting for investors and to be more competitive than other countries.

What kind of advice would you give to young entrepreneurs?
Working and to focus on achieving their objectives is much more important than paying attention to criticism and critics.

And to young managers?
What is needed in the Egyptian economy is the development and modernization the management and investment skills in youth. The management organization in Egypt should invest in the youth and in developing their abilities and capabilities.

What qualities do you expect from future managers?
The most important qualities are the continuous development, and the use of the most advanced technological methods, also relying on performance measurements and standards of assessments. Another important quality is to manage using the management by example technique in which the manager sets a successful example for workers where they are abiding to follow it and this is considered the most developed way in management.

What are the challenges that El Garhy for Steel have faced during the previous years?
The most difficult challenge was after the 25th January revolution as we were in the stage of opening our new factory in Suez City also the stage of assembling the factories in the group under one Entity “El Garhy for Steel”. To establish one big industrial entity in the most competitive market and with the monopoly attempts. But Persistence and Determination are the most important tools that I use to face challenges.

How do you see the future of El Garhy for steel?
At El Garhy for steel; we have a plan for development and establishing new factories. What distinguishes our future plans is the diversification in investments in the area of investment, real estate development, investment in education, and finally investment in Agricultural Processing.

At the end I would like to thank you for give the chance to the audience of Bonds and Shares to know more about you and Egypt. Also for being a source of motivation to many youths. Wishing you all the best of success.

Implementing lean management strategy in financial services.

Khalid GABR: It’s all about competition!