Getting the most out of supply chains
In recent years, production processes have become increasingly shaped by demand rather than supply. Consequently, manufacturing systems have experienced radical changes, with cooperation among enterprises becoming one of the most important phases of production so as to widen product range with minimal cost.
Through global supply chains, commercial partnerships between purchasers and suppliers have gained importance. Throughout the process, companies which have acquired a competitive edge in the international market and obtained a global dimension in terms of brand image, turnover and production capacity have better access to raw materials and intermediates in final goods production processes; they are supported in the distribution and sales processes of production outputs as well. Through this cooperation, with trade volume created by the global company, other firms are also gaining competitiveness and becoming a part of global trade.
The Ministry of Economy, particularly in the recent years, has developed several policies aimed at increasing export capacity. Many different incentive programs have been designed with the aim of strengthening company structures and improving brand image intended to increase the share of Turkish companies in the international market.
The potential in tapping global supply chains has not been lost on the Ministry. Within that context, a new incentive program - the Global Supply Chain (GSC) Competency Project - has been established, based on the Decision for Market Access Supporting Documents no.2014-8.
These incentives have received little attention, but large segments of the manufacturing sector were informed of the program last year. To broaden the understanding of this program, we will begin by clarifying some of the definitions of terms before going into detail about how a company can become eligible for the incentive.
Global Firm: A foreign company with a global scale in terms of brand, export, turnover, etc.
Supplier: The company that produces intermediate goods and will supply new products to a Global Firm or will be a supplier to a new Global Firm with its current product.
Global Supply Chain: A global network of producers and distributors, including those that convert raw materials into intermediate goods and intermediary goods into finished products, those that distribute intermediate goods or final products to customers and those providing post-sales services.
The aim of the program is to ensure that Turkish companies pro- ducing intermediary products participate in the global supply chain as more efficient suppliers. Projects developed by companies to produce a new intermediate good for a Global Firm or projects developed for the sale of intermediate products to a new Global Firm are supported through grants of up to one million dollars for each project, implemented as 50 percent of expenditures, for up to two years.
Eligible expenditures include:
►Hardware purchases: Any machinery, equipment and hardware to support product development (prototype/sample), testing, analysis, verification, quality control or measurement purposes that are considered appropriate by the Ministry.
Software purchases: Software that the suppliers need in the GSC accession process which are considered appropriate by the Ministry
Capacity building: Training or advisory services received on matters considered appropriate by the Ministry. Travel expenses of personnel from a Global Firm or project proprietary supplier company for customer visits for mutual assessment of the project are supported up to $100,000.
Certifications: Test/analysis reports and product verification expenditures of the suppliers from accredited institutions and organizations deemed appropriate by the Ministry.
The support program is subject to certification and companies are required to apply to the Ministry and explain the projects in detail. Approved applicants are entitled to receive grant payments after submitting their expenditure documents.
Applicant companies will be evaluated in line with the following criteria;
- Existing production competence and development potential, - Financial performance, - Information systems management,
- Organization and human resources.
Support for project-based investments will be offered to those with an incentive certificate. However, for these the investment volume is expected to be higher and support elements are applied as a tax exemption/reduction. In the Global Supply Chain Competency Program, direct grants are applied and there is no minimum investment expenditure requirement.
We feel this is an important program, particularly for small-scale companies, and we think that increasing such programs will make a substantial contribution to the necessary revival in the economy.