Operational Efficiency. Presentation at Grain Ukraine Conference. September 2018. Sergiy Bulavin.

1. Presentation at the Grain Ukraine conference September, 2018
“Operational Efficiency”
Measuring, Managing and Dealing with Challenges
Sergiy Bulavin

2. What is Operational Efficiency?
How to Measure and Manage it?

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Operational Efficiency Indicator
Users
Management
Strategic or tactical target set by owners or by the Board of Directors
KPI for the management set by owners or by the Board of Directors
Production planning
A way to analyze best practices and to find additional efficiency
Owners, Boards of Directors
Benchmarking & Comparative valuation
Indicator that has impact on investment attractiveness
Assessment of management’s efficiency / KPIs
Indicator that may be used as a strategic or tactical target of the company
Potential buyers, investors, co-investors
Benchmarking & Comparative valuation
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

4. EBITDA (classic definition) stands for an English abbreviation of Earnings
Before Interest, Taxes, Depreciation and Amortization
"EBITDA per hectare" in agriculture means income generated by every
cultivated hectare
4
"EBITDA per hectare" as performance indicator
What is "EBITDA per hectare"?
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

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Operational Efficiency Indicator
Factors complicating the use of “EBITDA per one hectare”
Differences in accounting and reporting systems
Differences in approaches to revaluation of biological assets
Differences in accounting policies
Differences in approaches to EBITDA adjustments (capitalization of
costs, one-time losses, etc.)
Vertical integration (transfer prices, allocation of indirect costs, etc.)
Regional differences (soil, weather, custom duties and barriers, land
issues and the cost of land control, taxes and grants, labour costs, etc.)
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

6. Operational Efficiency: Challenges and
Opportunities.

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Operational Efficiency: Challenges & Opportunities
Challenges & Opportunities
Specific agricultural challenges
Dramatic growth of:
Cost of land leasing and
retaining
Price of crop protection
chemicals
Cost of logistics
Salaries
Moderate increase, stability or
decrease in crop prices
Climate changes and climate risk
strengthening
Non-specific challenges
Qualitative changes in post-
industrial economies
Continuing transformation and
adaptation
People are the main asset of
companies
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

8. 8
Operational Efficiency: Challenges & Opportunities
Challenges & Opportunities
Specific mental heritage of post-”kolkhoz” farming
Directions of typical inefficiencies
Inefficiencies that exist today = Great opportunities for additional
efficiency
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

9. Lean Six Sigma in industrial growing of
commodity crops

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Lean Six Sigma
Main concept of Lean
Main focus of Lean:
Waste Reduction
Value Driven Problem Solving
Continuous Improvement
Standardized Work
Personal Development
8 Wastes of Lean:
Transport
Inventory
Motion
Waiting
Over-Processing
Overproduction
Defects
Non-Utilized Talents
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

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Lean Six Sigma
Main concept of Six Sigma
“Six Sigma is a quality program that, when all is said and done, improves
your customer’s experience, lowers your costs, and builds better
leaders” – Jack Welch
“Six Sigma (6σ) is a set of techniques and tools for process
improvement… Six Sigma strategies seek to improve the quality of the
output of a process by identifying and removing the causes of defects
and minimizing variability in manufacturing and business processes”
https://en.wikipedia.org/wiki/Six_Sigma
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

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Lean Six Sigma
Examples of Lean Six Sigma Application
Examples of Lean Six Sigma Projects:
“Optimization of procurement of tires, oils and oil filters”:
Detailed analysis of existing procurement process
Determination of losses (“wastes”)
Development of changes in processes
Economic effect: 7% of the annual volume of purchases of tires, oils and oil filters
“Accuracy of preparation of crop protection chemicals for application”
“Preparation of crops to basis quality requirements”
“Reduction of inventory of crop protection chemicals”
“Optimization of actual seeds sowing rates”
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

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Lean Six Sigma
Critical Factors of Lean Six Sigma Implementation
1. Support and understanding from owners, Board of Directors and top-
management.
2. LSS has to become a part of corporate culture, one of the Core Values.
3. A significant part of staff has to be involved in training and participation in
projects.
4. Top-managers have to participate in training and projects.
5. There has to be a plan on belts’ structuring – who has to be a certain belt.
6. Belts’ structuring has to be written in the terms of Job Descriptions.
7. A remuneration should be set for a successful closure of a project.
8. Projects’ closure and remuneration receiving by the project participants have to
be maximum public within the company.
9. All belts have to have access to all information and documents affiliated with LSS
projects. Possible exception: a strictly confidential information.
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.

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Q & A

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Q & A
Sergiy Bulavin
sbulavin@agrogeneration.com
+38 050 331 34 50
www.linkedin.com/in/sergiybulavin/
Sergiy Bulavin. Presentation at the Grain Ukraine conference. September, 2018.