INTERNATIONAL FINANCE CORPORATION TERMS OF REFERENCE

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1 INTERNATIONAL FINANCE CORPORATION TERMS OF REFERENCE Position: Project: Region: Sector: Manager: Dairy Consultant (a firm) Ukraine Dairy Supply Chain Development ECA, Ukraine Animal Protein Regional Lead, MAS Advisory, ECA & MENA Global Head of Animal Protein Platform BACKGROUND IFC s Manufacturing, Agribusiness and Services (MAS) Department covers sectors which cater to basic human needs such as food, shelter, jobs, and health and education. They play a critical role in providing goods and services to consumers, creating jobs, contributing to government revenue, and stimulating growth through SMEs. IFC's priorities in MAS are: (i) increasing access to goods and services, with a particular focus on frontier countries and regions; (ii) building top sector expertise to make IFC the preferred partner for key clients, (iii) supporting local companies while improving their transparency, efficiency and sustainability; (iv) catalysing foreign investment; and (v) developing client, sector and country- level solutions which can be scaled and replicated with a special focus on climate change. In January IFC has launched Ukraine Dairy Supply Chain Project. The Project s goal is to create the required know-how and partnerships among dairy industry stakeholders in Ukraine with the aim to increase the cost-efficient output of high quality milk and to support the modernization of the milk processing industry and, as a result, to contribute to improving the competitiveness of the industry on global export markets. The Project is to be implemented in the following phases: the Pilot Phase is from to 2019: o Phase 1:, o Phase 2: 2019, the Roll-out Phase (or Phase 3) is from 2020 to The main goal of the Project activities during Phase 1 () is to define and to design the profitable dairy farm reference models, which will incorporate best practices in dairy farming and will incorporate local specifics. The main goal of the Project activities during Phase 2 (2019) is to test the profitable dairy farm practices selected (based upon the reference models designed by the Consultant), to develop a sustainable business model for a competence center and, finally, to validate the project concept. The main goal of the Roll-out Phase (Phase 3, ) is to facilitate the scale up of the improved dairy farm management practices with a large number of farmers via the Page 1 of 7

2 competence center and the project partners/clients. To this end IFC is hiring a Consultant (a firm), which will support the Project team on the design, testing and implementation of the dairy farm reference models for large-scale and medium-scale dairy farms in Ukraine. SCOPE OF WORK IFC is hiring the Consultant in order to design and implement Phase 1 of the assignment, starting in mid. IFC expects to extend the project into Phase 2, but will make a decision on whether and how to contract for it in late, based on the program needs and budget. At its sole discretion, IFC reserves the right to conduct a new selection process for the requirement for Phase 2 or to make a follow-on award to the firm selected under Phase 1, subject to a satisfactory performance under Phase 1. The current contract will only cover the activities under Phase 1. However, the creative materials and messaging developed in Phase 1 will also be used for the scale-up in Phase 2. During the Phase 1 () the Consultant will conduct the diagnostic of up to 10 dairy farms with an average size of between 300 and 2,000 dairy cows, will provide recommendations on improvement opportunities, will support the implementation of the recommended improvements and will support IFC on developing two reference models for a dairy farm: one is for a farm with an average herd size of 500 cows and the second reference model is for a farm with an average herd size of 2,000 cows. This TOR defines the scope of work and the deliverables for Phase 1 (). The scope of work and the deliverables for Phase 2 (2019) will be developed at the end of based on the results of the findings and the activities which will have been implemented in. (1) The diagnostics and implementation of the improvements on the pilot farms will include: Based upon the diagnostic methodology agreed upon and approved by the Project manager, the Consultant will conduct the diagnostic of up to 10 dairy farms. The objectives of the diagnostic will be to: o Build a comprehensive understanding of a dairy farm s business model; o Build a comprehensive understanding of all of the dairy farm s business processes, including: business management, dairy herd management, crop production and fodder management, asset management, etc.; o Identify the gaps and the areas for improvement in the business models of current dairy farms and in their farm business processes. Evaluate the financial impact of the gaps and inefficiencies identified on the profitability of milk production and identify quick win improvements with the highest ROIs; o Develop recommendations on how quick win improvements could be implemented by the farms and provide cost-benefit analyses of the proposed improvements; o Develop a description of a TO-BE target business model for each of the dairy farms and a road map with the required tools and instruments on how to get there; o Provide support to the farms on implementing the recommended improvements during Page 2 of 7

3 DELIVERABLES 1. No. Description of deliverables Schedule Developed and approved by IFC the pilot farms diagnostics tools: - The questionnaires The information requests - The visit schedules (to each of the pilot farms) 1.2 Conducted diagnostics of the following business processes on the pilot farms: - Herd Management - Feeding - Milking - Health Management - Comfort Management - Reproduction - Young Stock Management - Fodder Production and Storage - Business Management and other supporting business processes, and the following components (for each of the business processes): - Policies - Procedures - Human resources - Performance management - Financial management - IT - Data. High level cost benefit estimates of the improvement opportunities identified Improvement recommendations discussed and pre-approved with the pilot farms during the diagnostics. 1.3 Developed the pilot farms diagnostics reports, inc.: - The description of a farm business (production) model, business processes and of the gaps and inefficiencies identified; - The root-cause analysis of the gaps and inefficiencies identified - The recommended improvements - The cost-benefit analysis for each improvement recommended - A description of the proposed TO-BE target farm business (production) model - The implementation plan for: (a) Quick wins (b) Longer term improvements to be made in the target business model The diagnostic reports should be approved by IFC before it will be presented to a farm. June, July, July - August Page 3 of 7

4 No. Description of deliverables Schedule 1.4 The diagnostic reports and recommendations presented to the pilot farms. Developed solutions with the appropriate set of tools and documentation for each of the improvement recommendations. The findings and the recommended improvements are accepted by the pilot farms and the improvement implementation plans are agreed upon with the pilot farms. 1.5 Implemented improvement recommendations at the pilot farms, inc.: - Provided on-site and off-site support to the pilot on implementing the improvements and the corrective actions, if needed - Delivered trainings to the employees of the pilot farms in the areas required to bring their competences to the level needed for the proper implementation of the recommended changes and improvements on the pilot farms. - Tracked and documented the base-line farm status and the interim and final results achieved by the end of. - A report with the results of the assessment of the impact of the improvements. 1.6 Developed and presented monthly interim project status reports with the on-going results and the corrective actions, if necessary, to the pilot farms. 1.7 Developed and presented a final report with the results achieved thanks to the improvements implemented and with assessment of the financial impact of the achieved results to the pilot farms. September October December October November December (2) Development of a Dairy Farm Reference Model for each of 2 dairy farm segments Based on the knowledge, experience and results gained during the work with pilot farms on conducting a diagnostic, defining the TO-BE models and on implementing the recommended improvements with them, the Consultant will develop a Reference Model for a medium-sized farm (500 cows) and for a large-scale farm (2,000 cows) Each reference model should consist of the documents and materials as described in the table below. DELIVERABLES 2. No. Description of deliverables Schedule 2.1 Developed 2 farm reference models, inc.: - A farm business model which should also include a farm financial model with the key target operational and financial KPIs; - A farm operational model, inc.: Organisation chart Job descriptions Policies and decision-making trees September December Page 4 of 7

5 No. Description of deliverables Schedule Control charts Business process maps RACI matrixes Standard operational procedures Forms and templates of documents Methodological recommendations Motivation system IСT systems - A prescriptive model for a given type of dairy farm, inc: Infrastructure; Milk production systems; Dairy herd management systems; Quality management systems; Crop management systems; Fodder management systems; Machinery & equipment; ICT systems for managing production and business management systems and for tracking performance of operations and of Dairy Farm KPIs. 2.2 Developed a detailed implementation plan for each reference model (a calendar plan with a sequence of improvement actions required needed to implement the target farm reference model) (3) Support in scaling up of the adoption of the Farm Reference Models in Ukraine, which will include: Recommendations on the design of a business model, an operational model and the organizational structure of a Dairy Competence Centre in Ukraine, which will serve dairy farms on a commercial basis in Ukraine after the IFC Project exit. Recommendations on the portfolio of the solutions for dairy farms to be offered by the Competence Center and on possible pricing models. Recommendations on which approaches the Project partner dairy processors could use to develop their milk suppliers and to build long-term win-win partnerships with them; Development of tools for Farm Diagnostics: o Maturity assessment tool o Performance management tool o Training programs for local specialists on using the tools and solutions developed in order to provide advice and services to dairy farms. Deliver the training- of -trainers program to the specialists of the Dairy Competence Centre. DELIVERABLES 3. No. Description of deliverables Schedule 3.1 Written recommendations on the design of a business model, an operational model and an organizational structure for the Dairy Competence Centre October - November, Page 5 of 7

6 No. Description of deliverables Schedule 3.2 Written recommendations on the design of an operational model and an organizational structure for the pilot processors partnerships on supporting the development of their milk suppliers. October - November, 3.3 Developed a maturity assessment methodology and a tool (MS Excel) for the diagnostic of a medium-scale and a large-scale dairy farm, which should include but will not be limited by the following: - The description of relevant practices and benchmarks for each maturity level; - The methodology for conducting a diagnostic - A diagnostic tool with sets of questions, a scoring system based on the maturity matrix and with recommendations based on the Best Practice Reference Models. 3.4 Developed a performance management system for continuously tracking, collecting and analysing the farms performance, including the following: - Financial and operational KPIs with formulas, a methodology for calculating and visualizing the requirements - Recommendations on automated systems for production control to be applied and integrated within the performance system - Functional requirements of the informational system to collect, present, transfer and store the data - Templates of managerial reports to be generated by the information system - Business process maps of the performance management business process, including data collection, analysis, performance reviews, development and progress checks of the corrective actions, etc 3.5 Developed a training-for-trainers package for each target dairy reference model 3.6 Delivered an in-depth and on-the-job training-of-trainer program for local specialists based on the two Best Practice Farm Reference Models. August October October - December, Page 6 of 7

7 All deliverables are subject to approval by IFC and are deemed to be final based upon IFC s approval. The Consultant should observe the following guidelines: All deliverables should be technically correct and free of programming, grammar and calculation errors; The presentations, training and educational materials developed by the Consultant should convey their messages in a clear and concise way, should be precise, technically correct and free of grammatical and typing errors; All training, educational and promotional materials (presentations, brochures, leaflets, etc.) developed and used by the Consultant within the scope of the Project, must be approved by IFC before their use with external audiences; All deliverables in the form of developed and written materials and tools shall be submitted to IFC in electronic versions in English. The electronic versions must be editable and readable without restrictions. If some parts of the files or software should be locked to avoid unintended modifications or to protect key parameters/calculations, the passwords/permits should be provided to IFC; If there will be data which are to be accessed by the IFC Project team via the Consultant s web- site, the Consultant should open access and create accounts for the IFC Project team so that they will be able to have on-line access to all of the systems and services related to the Project. ELIGIBILITY CRITERIA The Consultant / its team should have a minimum of 10 years of experience in the dairy industry working with medium-sized and large-scale corporate farms in the USA, including in-depth expertise in: - Herd Management - Feeding - Milking - Health Management - Comfort Management - Reproduction - Young Stock Management - Fodder Production and Storage The Consultant s team should have proven experience in the development of dairy supply chains or their elements, such as commercial dairy farms, advisory support to milk producers, development of milk processing businesses, etc. The Consultant / its team should have excellent spoken and written English skills. Page 7 of 7