Lviv company “Progress Service” has been making shoes for Ukraine for 30 years, and has recently started exporting them to Moldova and Poland. A three-week course on cost-effective production held under the EU4Business initiative has helped the company to triple its efficiency and increase its financial indicators fivefold. Now they produce a pair of shoes in 30 seconds, whereas the quality of the product has improved, and its cost has fallen.
Progress Service has been working in Lviv since 1991. According to Pavlo Fediuk, the company was founded by his father. At the beginning the company produced only the bottoms of the shoes by order and from 2005 it also designs own models.
«Our products are everyday shoes for ordinary consumers. The products are aimed at mass market; thus their cost varies between 26 to 260 hryvnias. The assortment is wide: home and beach slippers, rubber boots, boots, galoshas, snow boots, winter shoes, etc. All expendables are produced in Ukraine and are ecologically safe”, – tells Pavlo Fediuk.
According to him, Progress Services shoes can be purchased at any consumer goods market in all cities of Ukraine. Besides that, the company has been exporting the shoes to Europe, namely Moldova and Poland, for several years. To penetrate the foreign market, the company had to adapt to its requirements and adjust its daily operations.
«At first we started changing the culture of people: we must make quality products without slightest defects. We also changed the product line and design. Fur shoes are very popular in Ukraine, while for export we make shoes without fur on a foam or fleece, as the climate of European countries is warmer. Therefore, for now we are focused on our neighbouring countries where the climate is like ours», tells Pavlo Fediuk.
Under the EU requirements, the products exported to Europe can not contain certain chemical substances, for instance chrome or mercury compounds. However, the laws of the European Union provide for both compulsory and voluntary requirements to the exported goods. For instance, certification of footwear is voluntary, but it allows to reduce the customs duty. The compliance certificate can be received at the Chambers of Industry and Commerce of Ukraine; therefore, it is necessary to apply to the customs authorities or to find out the procedure for obtaining the European certificate.
«Certification is not a problem. Certificates can be received very quickly. As for me, the problem is different: to penetrate international markets we need to learn to respond to the changes quickly. Ukrainian companies do not give enough attention to foreign trade. They rarely travel abroad to gain the experience and learn little. Together with my wife Hrystyna we visit different companies, which are even not connected to the tailoring business, because all have the same essence – client-orientation when working with the customers, employees, as well as compliance with the current requirements in the field of finance, sales, etc.”, explains Pavlo Fediuk.
According to him, the secrets of successful business at the European market is simplification of the production to make the most of it. He says that Ukrainian companies do not know how to arrange the production, thus they lose resources. Instead, it is necessary to think how to avoid such losses.
Recently, by recommendation of some friends, the representatives of the company participated in training course “The Design Thinking in Creating New Products” and the course on cost-effective production that were arranged with the support of EBRD as part of the EU4Business program. The cost of the training was partially funded by the bank. All employees and crew chiefs of the company passed the three-week training on cost-effective production.
Pavlo Fediuk tells that the training was very useful as during it they were told about a new concept of management – a system of cost-effective production that minimizes expenses. It is called Lean or “Toyota Way”. It was developed at the Japanese enterprise “Toyota”. The cost-effective production provides for engaging each employee in business optimization and maximum consumer orientation.
«Lean has many instruments and provides for a different approach to making business by the owner, director and all employees. The system envisages eight types of losses, namely extra movements, transportation, overproduction and defects. All employees understand that they are not being paid for extra steps, remaking low-quality products or for something that is not directly connected to the production of the goods. The payment is made for an actual action and effective work», says Pavlo Fediuk.
He says that after the training his company learnt to save the working time and now it takes 30 seconds to produce a pair of Progress Service shoes. Each shop has a special mailbox where employees can leave their comments, ideas and recommendations. All are engaged in the process: from writing an idea to solving a problem.
«Many employees and directors think: “Why to pay for education if we have been working already for many years and know everything?» As it turns out, it is necessary to learn a lot. Learning is an endless process and it is not important if you are a director or an expert of the production shop”, believes Pavlo Fediuk.
According to him, after introducing a new approach of business conduct the productivity of the company increased by three times, the income of employees also grew, the quality of goods improved while the cost reduced.
«The financial indicators for two years increased by five times, while the full transformation should happen in four years. I strongly recommend to other companies to participate in the initiatives of EU4Business, as they help achieving success», he says.
In the opinion of Pavel Fediuk, currently the Ukrainian tailoring and footwear industry is in a bad condition, however it means that there are perspectives for development. He recommends Ukrainian entrepreneurs to learn, gain new knowledge or penetrate nearby European markets.
By Mariana Tsymbaliuk
Source: Tvoie Misto