Good manufacturing practices, a tool for value creation

By Dr Lalith Senaweera

Small and Medium Enterprises (SMEs) make a vital contribution to the country's economy as most of the products and services are provided by SMEs. About 80% of total manufacturing and service establishments are SMEs. However these SMEs not only produce products and offer services but also they provide around 35% of employment opportunities in Sri Lanka.

However, their small size constrains them from adopting advanced technology, employing more skilled workers, increasing their capacity and enjoying economies of scale. SMEs are struggling to improve the quality and safety of the products or services they provide to the society.

This is due to the fact that SME's have limited resources human and financial in carrying out strategic business activities. However, SME's have continually sought best practices to improve processes, products and services and to achieve competitive costs while ensuring customer satisfaction.

SMEs in most cases will function as intermediate suppliers to large industries and therefore, in many situations SMEs have to meet their requirements to have a continuous partnership to supply products or services. Because of this backward pressure SMEs are forced to take appropriate actions to improve the quality and safety of products.

However, most SMEs are trying to sell their products and services on their own and many have failed to face the tough competition in the market due to the low quality of the products or service and disappear within a short period. In any industry quality improvement is important to retain market share as it is an accepted fact that survival is dependent on the how best that product or service can satisfy customers.

Constraints and challenges

SMEs have unique issues because of the nature and type of the industry. This has created barriers and constraints in improving the quality and safety of products and services of this sector. The barriers and constraints can be perceived at two levels. One is at the policy level and the other at enterprise level.

At policy level, implementation of quality improvement programs may be hampered on account of:

* Lack of incentive programs to encourage quality improvement of product or services. * Clear cut Institutional infrastructure development system taking into account of SMEs issues to support, guide or these entrepreneurs on issues like technology, packaging, distribution,

marketing or administration. * Lack of trained or qualified manpower in the area of quality in addition to other fields. * No clear emphasis on developing and strengthening SMEs within the country on sector basis to promote implementation of quality improvement programs to strengthen the quality of products and services.

At the enterprise level, the designing and implementing an effective quality improvement program may be affected on account of:

* Lack of management commitment and awareness about the importance of quality improvement programs. * Top management is unable to perceive the benefits of quality improvement programs. * SME does not have a sound organisational structure to administer quality programs. * Employee training is not taking place and hence they are not motivated to implement quality improvement programs. * The system documentation may be difficult and does not have the necessary skills.

Strategy for quality improvement

Considering the above challenges and keeping in line with internationally accepted best practices for quality improvement in SMEs, the Sri Lanka Standards Institution has developed a simple and practically implementable Good Manufacturing Practices (GMP) scheme to help SMEs improve the quality of products and services while paving the way to be competitive and to retain market share by providing products and services that satisfy the consumers.

The Sri Lanka Standards Institution has developed a number of Code of Practice Standards covering the different sectors to implement this scheme in an effective manner.

The details of sectors covered are desiccated coconut, processing of lobsters and prawns, fruits and vegetables, storage of paddy and rice, dairy industry, manufacture and canning of low acid and acidified foods, processing of poultry, canning of fish, catering establishments, biscuit manufacturing and bakery units, fresh fish, frozen fish, parboiling of paddy, processing of cashew nuts, salted fish, natural mineral water, processed meat products, tea and cosmetics.

Many other sectors have been identified and SLSI is in the process of developing relevant Code of Practice Standards for the sectors.

This scheme is popular and as of today over five hundred SMEs have submitted their applications and in the process of working as per the relevant requirements of the scheme to achieve the GMP certification status.

The scheme is based on the internationally accepted well defined Sri Lanka Standards and Codes of Practice relevant to the specific sector.

SLSI has given due consideration to the issues and challenges faced by the SMEs at the time of formulation of Sri Lanka Standards and Code of Practices for relevant sectors.

The areas covered under the Standards and Code of Practice are premises, personnel, equipment, cleaning, sanitation and hygiene, production, quality control, distribution and product recall, complaints, training, pest control, packaging and labelling and purchasing.

A simplified documentation is vital to GMP compliance and ensures traceability of all areas such as development, manufacturing, packing and testing activities.

Documentation provides the route for employees to understand the practices and auditors to assess the overall quality of operations within a company and the final product.

For instance, in production, a brief description of production where possible, with simple flow charts showing the production process specifying important points from receiving materials to finished products and handling rejected products.

A certificate can be obtained from the Sri Lanka Standards Institution and that can be used by the SME to market their products as an assurance to the buyer that the SME is having a best practice that assures the quality and safety of the product or service.

GMP certification process

SLSI uses a two stage process to carry out an audit to grant GMP certification where stage 1 audit is used to do an adequacy audit and stage 2 audit to do a comprehensive assessment and based on the findings a decision will be taken for granting of certification.

Once the certification is given it is coupled with an annual surveillance to ensure that the organisation properly maintains the requirements within the company. The Sri Lanka Standards Institution has already taken steps to promote this scheme and is working in close collaboration with a number of relevant organisations to achieve this goal.

The strategies currently used by the Institution are:

* Updating the knowledge of Small and Medium Entrepreneurs in regard to what the GMP stands will be, the adjustments that will be need by conducting awareness and training programs. * Working with Vidatha Centres and other authorised institutions to develop a network with SME Entrepreneurs to encourage them to adopt practices as per relevant applicable Codes of Practice to help them to obtain GMP certificate. * To provide assistance to entrepreneurs specifically about the manner of developing documentation as per the applicable Codes of Practice. * To carry the message of GMP and its importance for SMEs.

Benefits of GMP certification

The following are some of the benefits that an organisation can achieve by obtaining this certificate:

* Develop consumer confidence * Improve image and reputation of the company * Enhance competitiveness * Recognition and acceptance of Product or Service * Stepping stone to obtain product certification mark (SLS mark) * Provide an initial step to develop a quality culture within the organisation.

It is evident that the market is competitive and the survival in the competitive markets depends on the number of factors and out of that quality is the most powerful factor and therefore, following of quality standards is becoming indirectly mandatory for all organisations including SMEs. As a result complying with GMP requirements is one of the most important objectives for SMEs to perform well in competitive markets.

Therefore, it is imperative that SMEs pay serious attention to quality adjustments to fall in line with the relevant GMP requirements for survival and to contribute to the betterment of the Sri Lankan community.