Background
Value Chain Analysis
The Houseware Sector Value Chain Cross Reference Matrix
Findings/Observations
Human Resource Management
To cut down on costs,
firms and subcontractors
often hire employees on a
contractual basis since
demand is seasonal.
Workers often lack skills on
proper handling of raw
materials.
Inbound workers also lack
knowledge and skills in
quality assurance of
materials and components.
Training received by
subcontractors are usually
reactive and irregular.
Technology Development
Companies usually use
manual means of
monitoring, receiving and
managing raw materials
and components inventory.
INBOUND LOGISTICS
Concerns
Frequent hiring of workers
lead to lack of continuity
in operations. Training
people, now and then, is
costly to the firm and
means workers spend more
time on the learning
curve.
Improper materials
handling causes
unnecessary wastage and
rejects leading to higher
materials cost.
Lack of QC skills leads to
processing of defective
materials and components
which causes problems
further down the value
chain.
This situation leads to low
retention of skills and
addresses only present
problems rather than
training for overall
productivity
improvement.
Reliance on manual
processes at the inbound
stage is inefficient, takes
longer than computerized
methods and more prone
to human errors.
81
Recommendations
A stable base of full time
workers can only be
asurred if the work load is
consistent during the year.
There is a need to
carefully plan out and
balance operations for the
year. Over the long term,
market development
efforts should be
expanded to enable year
round work for workers.
Companies can sponsor
training programs for their
inbound workers and for
their subcontractors and
suppliers on materials
properties, handling,
storage and transport.
Industry-wide standards on
raw materials quality can
be set up and appropriate
training programs
developed for workers.
Firms should engage a
technical consultant who
can assess subcontractors'
training needs and design
an appropriate program.
The training program
should be offered regularly
and fit to the schedules of
the trainees.
Companies should explore
and expand the use of ICT
in managing their materials
and components inventory
to improve accuracy and
control.
82
Findings/Observations
Technology Development (cont'd)
Gatherers and suppliers of
materials lack proper tools
and storage facilities.
Subcontractors likewise
have insufficient tools,
technical knowhow and
facilities.
Companies lack a
systematic process for
proper management of
inbound operation.
There is inadequate
facilities available for
modern raw materials
processing and research.
Raw materials sourcing and
handling practices often
do not follow good
environmental
management principles.
State of the Sector Report - Philippine Houseware
INBOUND LOGISTICS
Concerns
The lack of tools and
facilities further
contribute to materials
wastage at the source. For
subcontractors, heavy
reliance on manual work
and lack of updated skills
contribute to delays in
work, wastage and
variations in quality.
Lack of standard
procedures based on
management principles
lead to more time and
resources spent on inbound
activities.
Lack of R & D facilities for
materials limit product
innovation and resolution
of problems with raw
materials.
Lack of processing
facilities constrain
production efficiency and
contribute to longer
manufacturing lead times .
These practices lead to
wastage and may make
present raw materials
sources unsustainable over
the long term.
Recommendations
Companies can provide a
program to educate their
suppliers and
subcontractors on the
benefits of proper tools
and storage methods. A
suitable credit program
can be arranged with a
local bank to allow
suppliers and
subcontractors to get loans
for tools and equipment
purchases.
Firms should study their
own supply chain structure
and develop an
appropriate management
system to handle
operations more
efficiently. A technical
consultant can be engaged
to facilitate this program.
The industry can consider
the development of a
common service facility
with R & D functions for
raw materials. A feasbility
study for this project can
be initiated by the
industry for seeking
financing from donors.
Companies can also engage
a consultant to do a search
for all presently available
studies, programs and
services related to
materials processing and
research.
Companies need to have
their own environmental
management systems and
educate their suppliers and
subcontractors on good
environmental
Background
Value Chain Analysis
Findings/Observations
Technology Development (cont'd)
Procurement
Company personnel do a
lot of traveling in sourcing
raw materials from
suppliers and components
from subcontractors.
There is still a lack of
informaton on sources of
raw materials, location
and capabilities of
qualified subcontractors
and related items.
Firms need to find more
affordable sources of some
components such as those
imported parts used in
finishing work.
Human Resource Management
There is a signficant
reliance on contractual
workers by firms to
minimize labor cost.
83
INBOUND LOGISTICS
Concerns Recommendations
management practices.
The industry can also work
with NGOs and
government agencies in
promoting sound EMS in
the rural areas where raw
materials are gathered.
Spending too much time Companies can organize
on the road to assure their suppliers and
supply of materials and subcontractors under
components lowers consolidators or
productivity and increases supervisors who can help
cost. coordinate work and
supplies.
Firms spend considerable The industry can start
time searching and mapping out materials
identifying raw materials sources using existing
suppliers and potential information compiled by
subcontractors. This other agencies (i.e DTI) as
lowers productivity and well as from their own
increases cost of sources. A simple
operations. accreditaton system for
subcontractors can also be
developed and updated
regularly. Information on
both suppliers and
subcontractors can be
made available to
interested firms.
Rising cost of such Firms can explore going
components contribute to direct to foreign suppliers
higher product costs and for their components
restrains firms from needs. They can also make
making the shift to high more extensive use of the
end markets. internet to search for
sources of needed parts.
OPERATIONS
Extensive use of part time Over the medium to long
workers requires term, firms should develop
continuous training of new a proper forecast of their
personnel who also spend production to balance the
more time on the learning use of full time and part
curve. time workers.
84
Findings/Observations
Human Resource Management (cont'd)
Workers still lack updated
technical skills.
Available curriculum in
vocational schools for
worker training need to be
continuously aligned with
industry needs.
Company level designers
need to expand their
exposure to changing
product trends and
upgrade their capabilities
to innovate based on
market needs and the
firm's manufacturing
capabilities.
Workers usually do not
have updated skills in
pacakaging.
State of the Sector Report - Philippine Houseware
OPERATIONS
Concerns
Insufficient technical
knowhow of workers
restrains further
mechanization of
operations and lowers
productivity.
Failure to maintain
relevance of training
courses in vocational
schools with industry
needs leads to
inappropriate or
inadequate skills of
graduates.
If the industry continues to
make the shift to the
medium to high end
markets, product design
and innovation becomes
critical to maintaining
competitiveness.
Designers need to be
current on trends and
expand their product
portfolio.
Lack of proper packaging
knowledge can lead to
defects in the product
packaging or longer lead
time in packaging and
shipping.
Recommendations
The industry should expand
links with training
institutions in their areas
as well as government
agencies such as TESDA to
establish a continuing
program of worker training
in modern production
processes, use of tools and
equipment, etc. Training
should be aligned with the
workers schedules.
Training institutes and the
houseware industry should
maintain regular dialogues
on evolving industry needs
for skilled workers. Faculty
of such institutions can
also expand consultancy
work with houseware
firms to gain further real
world experiences.
Companies can pool
resources for regular fora
on current and upcoming
trends in the global home
furnishings market. Joint
subscriptions to
publications and websites
specializing in houseware
trends can also be done.
Firms that can afford it can
continue to send their
designers to fairs and
trainings abroad.
Companies can search for
available programs or
technical consultants who
can help train workers in
the latest packaging
techniques and
procedures. Specialized
agencies of the DOST or R
& D institutes of
universities may be
sources for such
consultants or programs.
Background
Value Chain Analysis
Findings/Observations
Technology Development
Quality control activities
are still mainly manual and
visual with no set industry
standards.
Awareness of international
standards and those
required by buyers are still
limited or not fully
appreciated by some firms
and workers.
Most houseware firms and
subcontractors still employ
manual production
processes but worker
productivity remains low.
Use of good environmental
management systems is
still limited among
houseware companies.
Product testing facilities
are still limited or not
accessible for some
houseware firms.
85
OPERATIONS
Concerns Recommendations
Lack of quality standards Firms need to be exposed
and manual QC systems can to more scientificially
lead to higher product based quality assurance
quality variations needing methods and encouraged
more time for rework. to adopt such practices
even on an incremental
basis. Over the medium
term, large exporters can
set the trend towards
common industry standards
for product quality based
on buyers' needs.
Compliance with The industry can conduct
international standards regular fora on
may become increasingly international standards and
necessary as more buyers how to comply with
demand adherence to said these. Tie ups with the
standards. Competing in Foreign Buyers Association
the medium to high end of the Phils. (FOBAP) can
markets may also require be explored for such
strict compliance. events.
Low worker productivity Companies should engage
leads to less competitive a production consultant to
products due to higher review and assess their
cost of production and current production process
longer lead times in flow and make the
manufacturing. necessary changes to
improve efficiency. Firms
also need to improve
production planning by
using more scientific
methods of estimating,
allocating and scheduling
work.
The industry needs to The industry should
expand use of EMS among develop a coherent
firms to help reduce enviromental management
pollution, wastage and policy and program. A
related problems. Having a qualified consultant can be
proper EMS among firms engaged to setup and
will also satisfy some implement a proper EMS
buyers' requirements. program for companies.
Shifting to higher end Houseware firms can work
markets requires strict with DOST, universities
quality assurance for and private R & D
products which may not institution to expand the
be met without such present level of testing
testing facilities. services available.
86
Findings/Observations
Technology Development (cont'd)
The rate of modern
technology adoption in the
industry is still slow.
Maintenance of tools and
equipment are usually
reactive and irregular.
Locally fabricated tools
and equipment are more
affordable but often of
inferior quality compared
with branded or imported
items.
Current packaging of firms
can still be improved in
terms of updated
processes and the use
alternative or better
packaging materials.
State of the Sector Report - Philippine Houseware
OPERATIONS
Concerns Recommendations
There is less opportunity The industry should
to improve productivity provide more
among houseware firms opportunities for firms to
without using appropriate assess available
and updated technology. technologies by
researching and
disseminating sources of
technologies, holding
presentations from
vendors and engaging
experts to explain how to
select and use such
technologies.
Lack of systematic and Vendors and equipment
regular maintenance of suppliers can be tapped to
tools and equipment can provide technical
lead to unexpected orientation, updated
breakdowns, shorter manuals and assistance in
equipment life or sub proper tools and machine
optimal usage. maintenance.Technial
consultants can help
company owners develp
and stricly implement an
equipment maintenance
program.
Use of such tools and A study can be done on
equipment may have the comparative technical
unpredictable results such performance of tools
as unexpected breakdowns available in the market for
or substandard outputs. companies to see the long
term cost and benefit of
branded or imported tools
vs. local models.
Firms are limited in their Companies should explore
packaging and may not be available R & D on
able to realize the packaging techniques and
potential of packaging for materials from specialized
marketing or enhancing technical institutions such
the image of their as DOST and large suppliers
products to buyers. of packaging materials. A
program to present the
latest packaging trends can
also be organized for
houseware firms.
Background
Value Chain Analysis
Findings/Observations
Procurement
Companies often do not
have access to much
information on tools and
equipment suppliers and
technical services for use
and maintenance of said
equipment.
Human Resource Management
Workers doing outbound
work do not have much
knowledge of automated
systems or use of logistics
software.
Technology Development
Adoption of systems that
integrate all outbound
operations and links these
with other business
processes is limited among
houseware firms.
87
OPERATIONS
Concerns Recommendations
Lack of data on tools and The industry with the help
equipment suppliers and of government can
services limit choices of organize a fair for tools
firms and may result in and equipment suppliers as
higher prices, well as technical service
inappropriate items providers to display their
purchased and related wares and interact with
issues. houseware firms.
Information on such
suppliers can also be
actively researched and
disseminated.
OUTBOUND LOGISTICS
Lack of knowledge on Groups of companies can
modern computerized organize a workshop or
tools for outbound seminar on available
operations inhibits firms automated systems and
from increasing worker software tools to increase
productivity in this area efficiency in outbound
and possible improvement operations. Interested
in shipping lead times. firms can proceed to
engage a technical
consultant to train their
workers in such methods.
Companies that can afford The industry can develop
it but have not yet an awareness program for
computerized their firms on the latest
outbound systems miss out technologies that
on opportunities to be streamline outbound
more efficient and cut operations.
shipping lead times. Demonstrations of said
systems can also be made
with the help of system
vendors. A technical
consultant can be engaged
by groups of companies to
help assess, acquire and
implement a system
appropriate for their
needs.
88
Findings/Observations
Human Resource Management
Company owners usually
do most of the marketing
activities including
attending trade fairs, price
negotiation and
entertaining buyers.
Marketing personnel lack
knowledge of formal
marketing concepts and
procedures. Most are
trained on the job.
Most company owners and
marketing officers also
lack the skills to develop a
suitable market strategy
and program over the
medium to long term.
Technology Development
Updated market
information on houseware
is limited, irregularly
available or lacks
sufficient details.
State of the Sector Report - Philippine Houseware
MARKETING AND SALES
Concerns
This practice may
overload the owner and
take time away from other
importants tasks besides
marketing.
This situation limits the
ability of employees to be
more creative in their
marketing work and adapt
to changing market
conditions.
Lack of a sound marketing
strategy and program
limits the capabilty of
firms to compete
effectively in the global
market. They can miss
opportunities or fail to
respond effectively to
competitors.
Limited or outdated
market information
prevents companies from
making sound marketing
decisions that can improve
their market share or sales
level.
Recommendations
Owners of houseware
companies need to train an
understudy, either a family
member or trusted
employee, to do some of
the marketing work.
Marketing activities can be
categorized and identify
those that can be safely
delegated.
Companies should review
and assess available formal
training programs on
marketing and select the
most appropriate set of
training for their workers.
Some agencies such as
PTTC of DTI have regular
courses on marketing.
The industry should
organize a series of
workshops and fora on
developments in the global
market and how to work
out the right competitive
strategy. The services of a
marketing specialist would
be needed to help train
company owners and their
key officers in this effort.
The industry needs to
invest in a market
intelligence system that
would regularly gather,
process and disseminate
developments in the
houseware market. As an
alternative, companies can
reivew available sources
of houseware market data
and subscribe to or
purchase materials that
they find suitable and
affordable.
Background
Value Chain Analysis
Findings/Observations
Technology Development (cont'd)
The industry still lacks a
cohesive marketing
strategy and long term
marketing program.
Houseware firms have not
systematically tried to
exploit the domestic
market.
The use of ICT and the
internet has not yet been
fully expoilted by firms in
their marketing efforts.
Procurement
There is limited
information available on
key events and
opportunties for market
development outside of
the traditonal countries
where houseware firms
export their products.
MARKETING AND SALES
Concerns
The lack of an industry
level market strategy
hinders the sector from
competing effectively
with other countries.
Marketing efforts of
individual companies are
not coordinated.
Firms may miss
opportunities to build up a
base of local buyers which
could help absorb their
fixed costs especially
when export levels
fluctuate. Lack of
attention to the domestic
market may also allow
foreign houseware items
to easily establish a
presence here.
Houseware companies may
miss a chance to save
marketing costs and
expand their market reach
by not tapping the
potential benefits of ICT.
Companies have to spend
considerable time and
funds if they are to check
out non-traditional markets
on their own.
89
Recommendations
Large houseware exporters
should take the lead with
government to work out a
suitable strategic direction
for the industry.
Consultations with smaller
firms can be done to
further flesh out the
desired market strategy.
Several workshops and
conferences can be
undertaken facilitated by
marketing specialists to
work out the desired
strategy.
Companies should setup a
program specifically for
expanding sales to the
local market. This would
include data research on
consumer preferences,
price trends and market
segments. From these
information, firms can
make more appropriate
products at acceptable
prices and distributed
through established
channels.
Expand awareness of the
benefits of the internet
for marketing by
conducting presentations
facilitated by market and
IT specialists. Groups of
companies can pool
resources for a common
web presence.
The industry can gather
data on new markets with
help from Phil.
commercial attaches
abroad. Pooled business
missions can further
investigate market
opportunities while
keeping cost at a
minimum.
90
Findings/Observations
Procurementt (cont'd)
Regular updating of
marketing collaterals is
necessary but costly for
firms.
Human Resource Management
Company personnel still
lack capabilities in
properly attending to
customer complaints and
handling product returns
and rejects. Usually, it is
the owner, especially for
smaller firms, that handle
such issues.
Technology Development
There is usually no
systematic means of
documenting customer
complaints, returns and
feedback among
houseware firms.
Few firms have proactive
and systematic program
for getting customer
feedback.
State of the Sector Report - Philippine Houseware
MARKETING AND SALES
Concerns
Smaller companies cannot
afford frequent revisions
of their marketing
brochures and collaterals
which minimizes their
ability to promote new
product lines.
SERVICE
This situation adds more
work to the company
owner and poses the risk
of unsatisfactory handling
of customer complaints by
workers or settling
complaints at a higher
cost.
Lack of proper recording
and assessment of
customer feedback can
limit the ability of
companies to learn from
past mistakes or problems.
It also makes it difficult to
study the causes of
complaints and returns
over time.
Lack of systematic
feedback mechanism from
buyers makes firms more
reactive to any issues that
arise. Companies may not
be prepared to properly
handle such issues when
these arise.
Recommendations
Companies can consider
developing a common
product brochure or
catalogue to reduce the
cost per firm. Alernative
marketing mediums such as
the internet can also help
reduce cost of promotions.
Companies should identify
a suitable customer
relations and management
program and send their
personnel for training.
Companies should also
properly document their
policies and procedures
for handling complaints
and returns and
communicate this to
workers.
Firms should develop a
database or similar means
of documenting complaints
and product returns. They
can also assign a specific
person to handle such
recording. Reports can be
generated from this
database for further
evaluation by
management.
A marketing consultant can
help companies design the
needed policies,
procedures and forms for
getting feedback from
customers. This would
have to be implemented
by a specific person to
ensure its implementation.