sacdec - operations management

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SACDECSibunag Ati Development CooperativeLiningwan Maabay Guimaras

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ACKNOWLEDGEMENT

The group would like to thank the following for their contributions in the making of this

company study.

To SACDEC (Sibunag Ati Community Development Cooperative) for allowing the group

to study their company and to learn more about actual business operations and processes.

To Mrs. Gemma Chavez Valenzuela for relentlessly giving us the necessary and

relevant information that she unselfishly shared to the researchers.

To Mr. Manuel Ocampo for giving us an opportunity to discover and experience the

actual world of business through his enormous effort for requiring the group for a company

study.

To the Almighty and Loving Father who bestowed upon the researchers the

knowledge and intelligence to make a reliable and informative company study.

And to all the group members, Jiahra Mae D. Maravillas, Jhennilyn J. Arreglado,

Arshie David, Fredrick Valle and Marc Gretel R. Madanguit for their cooperation and

effectiveness to finish the paper on time.


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Introduction

Background

Production/operations management is applicable to firms engaged in manufacturing or

production and even service activities. Operations management involves product and service

design, process selection, selection and management of technology, design of work systems,

location planning, facilities planning, and quality improvement of the organizations products and

services. In a manufacturing firm, the creation of goods involves transforming or converting

inputs into outputs. Inputs such as capital, labor and information are used to create goods or

services using one or more transformation processes. Best strategies are often required to

continuously satisfy old customers and attract new ones. In the operation of handicrafts, these

activities are very much applied. The customers of which are the retailers of hand woven bags

who sell these products for souvenirs and the like. The important employees are the members

of the cooperative who do the weaving of these handmade bags. Like all other firms, the

handicraft industry has three basic functional areas: finance, marketing and operations.

Sibunag Ati Community Development Cooperative (SACDEC) is a group composed of

indigenous people of Ita community in Liningwan, Sibunag, Guimaras. It was formed through

the full cooperation of the Ita in the area. It is a 2-year old cooperative that aimed not only to

give livelihood to the Ita group in the community, but also to nurture their God-given skills,

abilities and talents to gain wealth with their own hands.

The cooperative has started with 27 members, but has continually declined today to 16

members with only 6 members who are weaving when supplies are needed by their respective


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partners. However, the marketing in-charge of the cooperative, Mrs. Gemma Valenzuela, is

conducting regular trainings and workshops to increase the manpower of the cooperative and

gain more income from the products they produce. The management group of the cooperative is

composed of the chief executive officer in the name of Pastor Dennis Bautista with his

associates, Mrs. Gemma Valenzuela (Marketing in-charge), Mrs. Marita Magbanua (Quality

Control), Mrs. Norilyn Bautista (Bookkeeper), Mr. Ode Inagan (Audit Inventory), Lydia Arevalo

(Treasurer) and Mrs. Jenelyn Chavez (Purchaser).

Hand-made crafts are undeniably durable products. Capitalizing on the raw materials

used and the manual efforts of the members, the products are surely reliable and long lasting.

These products are what tourists usually buy as souvenir items. In addition, most people also

love and prefer the beauty of hand-made products rather than rubberized or synthetic materials

not only because they are environmentfriendly, but because they are also fashionable.

SACDEC does not only want to gain income out of weaving. They also wanted to impart

to the buyers and the rest of the people the value of patriotism and nationalism by buying

products that are made locally to help strengthen our economy and help our fellow countrymen

gain for their daily living.


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Objectives of the Study

The study intends to determine the manner of the daily operations of the Sibunag Ati

Community Development Cooperative (SACDEC). Eventually, this paper also aims to formulate

and recommend alternatives of action that could possibly help in the improvement of the

enterprise. More specifically, the study aims to:

Describe and analyze the current status of the enterprise relating to the:

a. Organization and personnel

b. Communications Flow

c. Functions and responsibilities of personnel

Describe and examine the system of operations the business is implementing:

a. In manufacturing their products

b. In the plant location

c. In the production process

d. In managing raw materials and other supplies

e. In selecting the machineries and equipments to be used

f. In determining the production capacity and schedule

g. In disposing/segregating wastes

h. In determining production costs


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Methodology

Research Design

The study makes use of the descriptive-analytical technique especially the focus groups

method. Such method is useful in attaining information that is difficult to obtain with other

methods. This method is also used to set in-depth information and reactions to a relatively small

number of topics or questions rather than to get answers to a large number of questions. Here,

each group is relatively homogeneous with respect to background characteristics of the

participants to encourage an in-depth point of view. The homogeneity helps assure that

individuals will not be afraid about the issues at hand (OSullivan and Rassel, 1995).

Description of the Study Area

Guimaras is an island province of the Philippines located in the Western Visayas region.

Among the smallest provinces, its capital is Jordan. The island is located in the Panay Gulf,

between the islands of Panay and Negros. To the northwest is the province of Iloilo and to the

southeast is Negros Occidental.

The province is located on the islands of Guimaras and Inampulugan. It was a sub-

province of Iloilo until it was made an independent province on May 22, 1992. Located

southwest of Panay, Guimaras is separated physically from Iloilo by a narrow channel, which

takes about fifteen minutes to cross by pumpboat from the Ortiz landing on Iloilo to Jordan.

There are two other ways to get there, the Parola wharf in Iloilo to the municipality of Jordan.

The Parola wharf is used exclusively whenever the water is rough. There is also a roll on roll off

(RORO) ferry that travels around five times a day and is used by the Iloilo bicycle clubs on

Sunday to travel to Guimaras. Geologists opine that the island formed one landmass with Panay

in the past. Guimaras was formerly known as Himal-us.


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Guimaras is also famous for its beaches. Clear blue waters, white sand and marine life

rivals that of Boracay. Commonly visited ones are at Roca Encantada, Alubihod and Puerto del

Mar.

The province is basically agricultural with palay, coconut, mango, vegetables, livestock,

poultry and fishing as major products. Its major industries are tourism, fruit processing, coconut

processing, fish farming, handicrafts making, mining, quarrying and lime production.

Guimaras is well-known for its agricultural crops, particularly mangoes, where some

50,000 of these trees are planted. The Guimaras Island is famous for producing the sweetest

mangoes in the world. Guimaras mangoes are reportedly served at the White House and

Buckingham Palace. Guimaras' largest event of the year is The Manggahan Festival (the

Mango Festival). The varieties of mangoes produced are also best for making dried mangoes,

jam and other delicacies.

Sibunag is one of the municipalities of the Guimaras Province. It is a 5th class

municipality in the province of Guimaras, Philippines. According to the 2000 census, it has a

population of 20,104 people in 3,843 households, and it has 14 barangays with in the

municipality.

Sampling Design

There is no specific number of sample populations that the proponents required. They

look at the adequacy of the information that the members of the enterprise can supply.


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Data Collection

The respondents of the study included the coop members of the Sibunag Ati Community

Development Cooperative (SACDEC). The choice of the number and type of respondents was

based on the respondents ability to provide adequate data and information of every company

that is needed in the study and not necessarily in conformity to a particular sampling technique

as the design of the study is basically descriptive.

The primary data was obtained through an accumulated interaction with the members of

the cooperative. Every time the proponents go to the place, interactions and unstructured

interviews are done for data gathering.

The secondary data that focused on some other details about Guimaras and Sibunag

are taken from numerous publications as well as internet sources.

Data Analysis and Interpretation

The data generated from unstructured interviews and conversations were coded,

categorized, and presented in appropriate tables accompanied by narrative explanations.

Descriptive and statistical analysis of primary data was made with the aid of certain statistical

techniques. Descriptive analysis of the data was done using frequency distribution and

percentages.


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Conceptual Framework

Input Throughput Output

Definition of Terms

For the readers to fully understand the study that has been conducted here are some

terms that may appear vague to them:

1. Raw Materials refer to things that are used to produce the final products of

SACDEC.

2. Buri are long narrow stripped of palm. Additional accessory in the making of

the final output.

3. Nito An additional accessory in the making of the final output.

4. Pandan Primarily use in the making of shoulder bags and other native

materials.

5. Abaca one of the raw materials used to make the products; these plants yield

fiber.

6. Dye the solution or substance that is used to color the outer portion of the

products.

Raw Materials

Buri

Nito

Pandan

Abaca

Dye

Water

Thread

Equipments andManpower

Sewing Machine

Cutter

Coop Members(Ati or Ita)

Products

Native Products


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7. Water were dye is soaked to produce the desired color and apply to the final

products.

8. Equipments and Manpower is indicated by the sewing machine, dryer, cutter,

and the members of the cooperative.

9. Sewing Machine the machine used for sewing the zippers and edges as well

to apply designs to the products.

10. Cutter is a sharp materials used to cut the raw materials into strips.

11. Cooperative Members (Ati or Ita) black people of Sibunag, Guimaras

composing the Sibunag Ati Community Development Cooperative.

12. Products the final material that results from weaving the materials.


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Company Profile

History

SACDEC (Sibunag Ati Community Development Cooperative) is a group composed of

indigenous people of Ita community in Liningwan, Sibunag Guimaras. It was formed through

the full cooperation of the Ita in the area. The chief executive officer of the cooperative was

Pastor Dennis Bautista with his associates, Mrs. Gemma Valenzuela (Marketing in-charge),

Mrs. Marita Magbanua (Quality Control), Mrs. Norilyn Bautista (Bookkeeper), Mr. Ode Inagan

(Audit Inventory), Lydia Arevalo (Treasurer) and Mrs. Jenelyn Chavez (Purchaser). The

cooperative is located at Sibunag Public Market, Liningwan Maabay Sibunag Guiamaras.

SACDEC is known to generate income through their native products that were weaved

and made into materials like bags, wallets and purses. It was fully assisted by TSKI (Taytay sa

Kauswagan Incorporated), a micro financed community development institution. It started its

operation with a capital of Php 7,500.00 in August 15, 2007 with 27 members. This capital was

used to buy the raw materials like buri, pandan, nito and abaca that they need to make the final

products. Materials were purchased from nearby town and to the wild of the said place where it

was abundant except for abaca which was purchased in Janiuay, Iloilo.

For some time now, Trappist which is also located in Guimaras had been SACDECs

business partner. Their finished products were delivered to this retail outlet where they are

displayed for final costumers to purchase. They also engage in direct marketing wherein they

accept direct orders from customers or through TSKI.


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Currently, there are only 16 members left with only six master weavers who make the

products. Since orders are currently increasing in number and they cant cope with the demand,

they were training additional people to help them with the job. Together with TSKI, Trappist and

other potential investors and customers, SACDEC is likely to reach the national market with

their quality native products.

Mission

To work towards an equal distribution resources and opportunity. Through a collective

polling of resources so that everyones needs are meet. By using our God given power and

ability to gain wealth, and working with our own hand that is good. That we may have something

to give to those who are in need as faithful steward of the manifold grace to God.

Vision

To see SACDEC members experience prosperity and physically healthy under Gods

sovereignty.


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Organizational Structure

The type of ownership that is being followed by SACDEC (Sibunag Ati Community

Development Cooperative) is a cooperative with 27 initial investors and a capital of Php

7,500.00. Below is the hierarchical position of the members of the organization.

Figure 1. SACDECs organizational structure.

Board of Directors


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This presents the hierarchical order of the Operations Department of SACDEC (Sibunag

Ati Development Cooperative). Since the organization has not been fully established and some

members of the cooperative are illiterate and unfortunately incapable of holding some important

responsibilities in the organization, Mrs. Gemma Chavez Valenzuela, the Marketing in-charge

also acts as the Operations Manager of the weaving/operations department. Other members

also perform multitasking.

Figure 2. SACDECs organizational structure in the Operations Department.


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Flow of Communication

For Orders and Product Making

Every time an order is placed, Mrs. Gemma Chavez Valenzuela will inform the

cooperatives auditor Mr. Audie Enagan or Lydia Arevalo so that they can give appropriate

amount needed to purchase the needed raw materials. Ms. Jenelyn Chavez, the purchaser will

then buy the raw materials like buri, pandan, nito and abaca from their respective suppliers.

During the making of the products, Mrs. Marita Magbanua, the head for quality control

operations checks the product to free it from defects at the same time assure that the quality of

the product will not depreciate as it is transferred from the production site to the final customers.

After the sale of the product, the capital used to make the products was then returned to

the cooperative that have the share of 70% from the revenue. This will be shared by the

members of the organization. The remaining 30% revenue is then given to the people who

weaved the ordered products. This is to ensure that their weavers are continuously motivated

while the cooperative is earning.

Meeting and Gathering

In most occasions, information regarding meetings and other special gatherings are

placed outside the SACDECs headquarter near Sibunag Public Market. Since the area is

frequently visited by SACDECs members, there are fewer chances that they will not know

about the meeting. Nevertheless, it is the initiative of the members of the organization to inform

their constituents in some cases.


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During the meeting, the members of the organization are updated or informed of the

current situation of the organization. This also serves as their social and interactive gathering to

maintain the strong foundation of the organization.

Meeting of the Board of Directors

Before a meeting is called by the cooperative members, a board of Director meeting is

held to address some important issues and to review the situation of the organization. It is

during this time wherein critical issues and problems regarding the organization are discussed

and if not fully solved will be partially given solution to remedy and minimize existing problems.


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Functions and Responsibilities

1. Pastor Dennis Bautista the Chief Executive Officer/ Manager of SACDEC. He is

the final decision-maker in the cooperative. He sees to it that the organization is

functioning properly and members are properly taken care of. He oversees possible

problems and remedies them. He calls and initiates meeting. Aside from his

managerial responsibilities, he also acts as agent who sells and promotes products

to prospective buyer or costumers.

2. Gemma Chavez Valenzuela the Marketing In-Charge of the cooperative. Her job

specializes in the marketing of their products. She sees to it that their products will

be available to their costumers on the time needed. She is the person to be

contacted in cases of orders made by direct costumer, the TSKI or the Trappist.

3. Marita Magbanua the Quality Control Officer of SACDEC. She sees to it that during

production, the materials used are of good quality so that the final products will not

be affected. Before the product is turned-over to the final costumer or retailer, she

checks on the products condition and sees to it that it is properly handled during

delivery to avoid defects.

4. Jonilyn Chavez the cooperatives Bookkeeper. She keeps all of the companys

records and transactions. She keeps documentations and receipts and in case of

problems and other finance-related issues and concerns, she reports to the auditor.

5. Audie Inagan and Lydia Arevalo SACDECs Audit Inventory Officers. They oversee

the companys financial stability. They are responsible for keeping the money of the

cooperative. They report to the members everything about the financial standing of

the organization and they see to it that profits are properly distributed among the


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shareholders of the organization. In cases of new products, they are the persons

responsible in making appropriation and estimates as to the pricing of the new

product. They make sure that money is available in buying raw materials that are

needed.

6. Jenelyn Chavez the coops purchaser. She makes necessary transactions to the

supplier of their raw materials. She buys the product and negotiates to their supplier

in cases of problems and other concerns.


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Current Concern of Management

Financial

The Sibunag Ati Community Development Cooperative for two years of their existence

has been experiencing problems especially in their financial aspect. They are having a hard

time finding enough capital to start a larger production. The Php 7,500.00 starting capital is not

enough to pay for their monthly dues and the legalization process for the registration of their

business to the Department of Trade and Industry. There are also other fees that they have

incurred during their first year of operation.

Human Resource

There were 27 members in the start of the cooperative. But as years passed, this

number has continuously decreased to 16 members in year 2009. Aside from that, they lack

good and efficient weavers who are the business primary assets. For years, they have initiated

activities like training of new weavers so that the organizations business can be sustained. But

because of the lack of motivation of some members of the organization, they were not able to

train enough people who have the potential to make good quality products.

Currently, there are only 6 master weavers who actively participate in the making of the

final product of the organization. But this manpower is not enough to accommodate orders in

bulk and other deliveries demanded.

Illiteracy is also one of the problems that SACDEC is experiencing. Since some of the

members of the cooperative are unable to read or write or both, they cannot hold key positions

in the business thus there is a need for multitasking in the business.


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Operations

SACDEC is not using any advanced equipment or machinery in making their products.

The production process merely depends on the weavers. In cases when the weavers are not

available, production process is always interrupted. Also, they are not using any drying system

which is necessary in the making of the final product and they drying of the raw materials like

nito and buri solely depends on the weather condition. In cases of typhoon and rain, there is a

good chance that production would cease.

Time is also one of the concerns of SACDEC. They dont have fixed time in making of

the product. The weaving of product depends upon the availability of the weavers.

Marketing

Since they have problems in the financial aspect of the business and that the products

that they can actually supply is usually less than the actual demand, they cannot give the

products their retailing outlet, Trappist, needed. Sometimes they have problems in their

production and they are not able to deliver products either to Trappist or TSKI.


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Future Plans of the Company

Financial

Proper formula for the costing of the product should be strictly followed by the

organization to meet with the pricing of the industry. Every business transaction should be

properly kept so that they can keep track of the changes in costs and this can aid in their

decision making process.

Human Resource

Since human resource is one of the main concerns of the business, they see to it that

they are able to train and motivate existing members of the organization to weave. This will not

only increase production but increase profit as well.

New strategies were initiated by the board of directors and the CEO to motivate the

employees. They emphasized on the individual 30% share in every product sold. As additional

motivation, some of the boards of directors are present during the training and they always uplift

the confidence of their trainees especially those who are easily depressed.

While training some of the members to weave, it is wise to invest some time on

educating some members of the cooperative to read and write. This will help them fully

understand the constitution and by-laws of the organization and with understanding comes

responsibility.


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Operations

SACDEC plans to increase the number of their output by at most 50% per month

considering that in most cases they are not able to meet demands by their customers. By

increasing the number of weavers through training more SACDEC members to weave, they can

increase the number of production at the same time the profit of the organization.

When the business profit can sustain the needed expenses of the cooperative, it is

during this time that they will incur additional investment for machineries and equipments which

they can use in the faster production of their product such as drying and cutting equipments.

Also, in the future, it is expected that they can have their own manufacturing factory wherein

they can make products in bulk. Though machines are already present, it is still advisable that

they employ quality control personnel to see to it that the quality of the products made passes

the industry standards.

Marketing

They expect to have more retailing outlets wherein they can display their products for the

costumers to see. Since they are presently engaging in direct marketing, it is best that they

continue establish this connection with them and retained their loyal customers.

Someday, they hope in engaging into product exportation when they have constant

production and enough raw materials and equipments to make the product.


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SYSTEM DOCUMENTATION

Products Manufactured

SACDEC is an outlet of our indigenous brothers and sisters to showcase their talents and

skills in handiworks and weaving. Even before SACDEC has been fully established, the

Liningwan Ati Community in Sibunag has already started weaving as part of their hobby and

recreation which is a good way of socializing among the members of the community and in

establishing the spirit of camaraderie between them.

It also serves as their primary source of income by creating native products through the

use of available materials like buri and nito. During their free time they spend their time weaving

some products which they can think of like wallet, coin purse and bags. Even though they are

not in the production site, they are still able to do their respective weaving responsibilities since

their product is human labor dependent and does not depend on any machines and equipment.

SACDEC produces high quality buri, nito, pandan and abaca products promoting Sibunag

Itas cultural heritage and handicraft traditions. Not only this, the products are durable and earth-

friendly since it does not contain any harmful chemicals that can destroy the environment. Aside

from that, raw materials are identified to be biodegradable.


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Wallets and Coin Purses

The wallets that they are making are good not only for females but also for males

(unisex). These said wallets can also hold IDs, cards (ATM, privilege and others), and even

your important small papers and documents.

The coin purse also varies in sizes and colors. It depends on the customers preferences

as to the choice of color and design.

Other Products

Other handicrafts that they produce are placemats, hats, cellular phone holders, wine

holders, and bags that can hold big sizes materials. They also produce traveling bags which are

mostly made to order.

Table 1

Product prices. (Prices may vary without prior notice)

Items Price (in Php)

Bags 300.00

180.00

Wallet 130.00

100.00

50.00

Coin Purse 15.00

5.00

Placemat 45.00

30.00

Hat 150.00


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Plant Size and Location

Guimaras Map

Figure 2

Panay Map


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Guimaras is an island province of the Philippines located in the Western Visayas region.

Among the smallest provinces, its capital is Jordan. The island is located in the Panay Gulf,

between the islands of Panay and Negros. To the northwest is the province of Iloilo and to the

southeast is Negros Occidental. Guimaras was a sub-province of Iloilo until it was made an

independent province on May 22, 1992. http://en.wikipedia.org/wiki/Guimaras

Guimaras Island

Figure 3

Guimaras Map


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Guimaras is composed of 5 Municipalities namely, Jordan, Buenavista, Nueva Valencia,

Sibunag and San Lorenzo. SACDEC (Sibunag Ati Community Development Cooperative) is

located at the municipality of Sibunag, Guimaras.

Municipality of Sibunag Guimaras

SACDEC was established at Maabay Sibunag Guimaras. Sibunag was created by virtue

of RA 7896, one of the two youngest municipalities in the Province of Guimaras established in

1995. Sibunag was named after its main river; abound with spellbinding folk tales and legends.

Legend also says that Sibunag, son of deity & mortal was stolen when only a baby. He was

cared for and raised by a fairy. His numerous and amazing adventures and romance found

niche within the hearts of the folklore waters. The Municipality of Sibunag is situated southeast

of Guimaras Island facing Negros Occidental and separated by Guimaras Strait.

http://guimaras.gov.ph/homepage/sibunag/

Figure 4

Sibunag Map


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SACDEC Location and Production Site

There are two (2) headquarters or production site of SACDEC. One is located in

Liningwan Maabay Sibunag Guimaras near the public market of Sibunag and the other is at the

Chavez compound.

Diagram 1. Site Location

Public Market

SACDEC Headquarter

Chavez Compound

Cell

Site


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Accessibility and Availability of Raw Materials

Raw materials like buri, nito and pandan used in the making of the final product is

available for purchase in the neighboring towns of Guimaras. Since most of these

aforementioned materials are growing in the wild, SACDEC has the initiative to just pluck them

in places available to save cost. Otherwise they have to purchase them from places where this

are available.

In the case of abaca, the TSKI has to buy them in Janiuay Iloilo and transport them in

Guimaras to SACDEC where they have to repurchase the material and use them for weaving.

Other important materials include thread, clothe, dye and water. Thread, clothe and dye

are often purchase in Guimaras itself and since the water used has no specifications, tap water

available in the locality is used to clean the raw materials.

Proximity of Distribution Outlets

The distribution center of Guimaras is at Trappist, Guimaras. They also distribute their

products in nearby towns. Trappist Monastery is located at San Miguel, Jordan Guimaras. Its

gifts shops and stores are located within compound of the monastery. It sells monastic

processed products like mango jams, dried mango, guava jelly, kamyas prune, ginger tea,

homemade cookies, religious souvenir items, products made of coconut shells and other things

produced by the cultural minorities assisted by Trappist monks.


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Combined Fuel and Transportation Cost

Individual Orders/Special Orders

In cases wherein there are made to order products or special orders, the

customers are directed to go to the SACDEC headquarters to transact. In most

cases, the arrangement with regards to the transportation of the product would

be of the customers expense. Otherwise stated, special negotiations would take

place.

Through TSKI

There are also cases wherein TSKI (Taytay sa Kauswagan) would accept

orders directly from customers and forward the request to SACDEC for the

making of the product. In this event, SACDEC will deliver the products to TSKI

but transportation cost in delivering the product will be refunded by TSKI.

Trappist

Trappist is the retail outlet for SACDECs products. In this case, delivery

of product to Trappist will all be shouldered by SACDEC.

Purchase of Raw Materials

When purchases of raw materials are made in the neighboring town,

SACDEC will have to shoulder the expenses in transportation and purchases.

But in the case of abaca which is located at Janiuay Iloilo, TSKI buys the product


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and the only transportation cost that SACDEC has to incur is the cost from

Sibunag to TSKI in Guimaras.

Production Process

Types of Processing System Used

SACDEC uses a combination of batch processing and Just in time system in the

production of their products. Batch processing system means producing large quantity of

products during the production process. It is visibly evident during the peak season for

SACDECs products. Since they knew that during summer there are many tourist and

customers, they see to it that months before April and May they have produce a number of

wallets, pouch and bags during the months of January, February and March. They make a

schedule of output that they have to finish for a certain period of time. For the months of

January they have already started making wallets and by the months of February and March

other native products are weaved until they reach the number of target output.

But most of the time, they use Just-in time system due to the lack in their financial

aspect, they make the products as they are demanded by the target market. These are in cases

when special orders are place by some clients. As walk-in customers demand the production of

certain products for that period, they would shift their attention in the making of that product.

One good example is the travelling bag that was ordered last July 2009. A customer from

Manila ordered 50 pieces of travelling bag from the weavers and since there are only six

weavers and they have few time to make the output, they all shift their attention and focus their

attention in producing travelling bags. At most cases, the weavers prefer this kind of scenario


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Segregating the

material

Straightening

and stripping

the material

Boiling the

material

with dye

Finished

products

Weaving

the

material

Drying the

material for

weaving

Purchasing of

raw materials

Boiling the

material in the

water

Adding vinegar

and papaya for

bleachingWashing the

material with

water

Exposing the

material under the

heat of the sun for 1

day

Soaking the material

in the water for 1

night

Washing the

material with

water to release

the greenpigment and

drying the

material

Segregating the

material

Straightening

and stripping

the material

Boiling the

material

with dye

Finished

products

Weaving

the

material

Drying the

material for

weaving

Purchasing of

raw materials

Boiling the

material in the

water

Adding vinegar

and papaya for

bleachingWashing the

material with

water

Exposing the

material under the

heat of the sun for 1

day

Soaking the material

in the water for 1

night

Washing the

material with

water to release

the greenpigment and

drying the

material

because it gives them the assurance that their woven products are sold and that they can earn

profit immediately.

Descriptive and Illustrated Procedures

Buri, Pandan, NitoMaterial Used

Diagram 2. Showing the process for making the final product


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Working Plant Layout/Facilities Design

Diagram 3. Working Plant Layout SACDEC Headquarters


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Diagram 4. Working Plant Layout Chavez Compound


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Raw Materials and Supplies

List of Raw Materials and Costs

Most of the raw materials that are being utilized in the making of several products were

mainly from the Guimaras province. Guimaras being endowed with fertilize and healthy soil is

good for plants to live. It has a tropical climate with dry seasons that made it easier for plants to

grow.

It helps its people to have some of its needed materials in producing their goods and

products. Buri, pandan and nito are some of the naturally given gifts of the land to its people.

Since SACDECs products are mainly dependent on these materials, these provides easy

accessibility for SACDEC to have them on as demanded.

Abaca however is bought in the town of Janiuay Iloilo. TSKI (Taytay sa Kauswagan Inc.) a

micro financed community development institution helps SACDEC obtain these materials

through some of their employees. Ms. Chlowe Inagan, a TSKI representative assigned to assist

SACDEC starting July 4, 2009 is the person responsible to buy the abaca from Iloilo and

brought it to SACDEC for utilization.

Raw Material Unit Price

Buri 1 paklang P 10.00

Nito 100 pieces / 1 bundle P 70.00

Pandan 100 pieces / 1 bundle P 25.00

Table 2

Prices of Raw Materials


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Sources and Suppliers

There are no specific suppliers or sellers of the raw materials because just like buri and

pandan they may get it in the wild of Sibunag and also they purchased some of the raw

materials to the private growers or private people who planted the said plants and sell it. And

sometimes they buy it in their local market. But the abaca, the TSKI buy it in Janiuay, Iloilo and

bring it to them.

Volume Required at Various Phases of Operation

The number/volume required of materials that are being utilized depends on the product

(its size and style). And the following table tells the number of days that will take in making the

products.

Product Number of Days

1. Wallet 2

2. Envelope 2

3. Bags 2.5

4. Coin purse 2

5. Belts 2

6. Cellular phone casing 2

7. Placemat 2

8. Wine bag 2

9. Laptop casing 2.5

10. Sling bag 2.5

Table 3. Days allotted for Production


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Physical Inventories/ Inventory Turnover

SACDEC sees to it that when it is near peak season, they have already prepared a

number of products that they are going to sell. They have target output even before they started

making the products. Inventories are kept in the headquarters. But most of the time, SACDEC

uses Just-In-Time method in the making of their product. When the orders come, they have to

finish it as soon as the raw material is ready and dry. They do not have to worry of their

inventories (like controlling it) because the number that they will made is slightly the same with

the number that a customer orders.They maintain one product in their store to be a sampleproduct to their next clients.


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Utilities

The utilities that SACDEC mostly utilized are oil, water, gas, a small amount of vinegar

and light.

Utility Use / Function

Oil Use for the maintenance of the

materials and equipments with

metals.

Water It is being consumed during the

boiling of the raw materials such

buri and pandan.

Gas It is needed in lighting and having a

flame if they will boil some of its

materials.

Vinegar During the boiling process, the

water is added with vinegar in order

to whiten or for bleaching purposes.

Light It is use to dry up the materials.

Table 4. Utilities and Uses


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Machinery and Equipment

List and Number of Machinery and Equipment

SACDEC produces bags, mats, wallets manually or through their bare hands. Sewing

machine is the only equipment that they have and they use it for placing zippers and stitches.

They do not have these hi-tech, big and heavy machines / equipments. With the skills of their

hands, they produce good quality products that they can be proud of.

They also have these boxes of different sizes (made of wood) serve as the frame or the

basis that give shape to what they are making.

The other things that they use are cutters, scissors, thread, needles.


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Material Use / Function

Sewing Machine Attaching the zippers in the products they are

making and also for connecting the linen and

the product.

Wood Boxes They are use for framing or giving shape / or

the base of the item.

Cutter This thing is made of a block of wood with

metals on top (cutter) that is use for stripping /

cutting the raw materials such as pandan.

Scissors An edge tool having two crossed pivoting

blades that is use for cutting.

Threads A fine cord of twisted fibers used in sewing

and weaving.

Needles A sharp pointed implement that is steel. The

thread as its pair, the two are use in sewing

and connecting materials.

Table 5. Material and Function

Maintenance and Turnover

The cooperative, SACDEC, uses oil as maintenance and as or preventing of building up

of the rust to the metals of the sewing machine and the cutter.


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Worker-Machine Chart/Assignment

In using the sewing machine, the only equipment, there is no problem with regards to it

because there are only few who knows how to use it so in assigning the machine to the worker

is not so difficult.

Production Capacity and Schedule

Production Capacity

SACDEC produces made to order products such as bags, pouch, wallets and etc.

However, on these products lines only the wallets has the stable demand every month and

making it their regular production output. SACDEC delivers 5 pairs of wallet to Trappist twice a

month and the remaining output would then be disposed on individual orders. Due to these

concerns, the group decided to measure output on the basis of the number of wallets produced

per month.

o Design Capacity

If there are 6 operating days in a week (26 days in a month) with 4 hour

shift per day, each laborer will be expected to finish 4 wallets per day.

Calculating the design capacity would result to:

Design Capacity:

4 wallets/ day * 26 days * 6 laborers= 624 wallets/month


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Production Output/ Schedule

Weavers produce .5(1/2) wallets per day. Below is SACDECs production schedule.

Fridays is market day, considered their time to purchase and process the materials.

SACDEC Production Schedule

(Saturday, Monday, Wednesday)

Hour

Weaver 1 2 3 4 5

A

B

C

D

E

F

Weaving Cutting Breaking

Table 6

SACDECs Production schedule on Saturday, Monday and Wednesday


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SACDEC Production Schedule

(Sunday, Tuesday, Thursday)

Hour

Weaver 1 2 3 4 5

A

B

C

D

E

F

Assemble Sewing Breaking

Table 7

SACDECs Production schedule on Sunday, Tuesday, Thursday


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Efficiency Measures

Capacity Utilization

Capacity Utilization = Actual output / Design capacity

78 wallets per month / 624 wallets per month = 13 %

Efficiency = Actual output / Effective capacity

78 wallets per month / 468 wallets per month = 17 %

As the result of the capacity utilization equation above shows, only 13% of the design

capacity was utilized. The low utilization level that they have in their operations is a result of the

unfixed time scheduling for members and undefined target production level per shift. Recall that

on the above article, actual output is only .5 (1/2) wallet per day instead of 4 wallets per day

design capacity.

Product Input- Output Transformation

9 * 8 wallets are made of buri, nito and outlined by cloth. For making 6 wallets

for 2 weeks, the first thing a weaver does is to first process 2 buri leaf packs. As shown

in the diagram 2 on the following page, the buri is first stripped from its leaf pack and

then boiled into a big pot. Stripping the leaves often last for about 20 minutes while

boiling ranges from 10 to 20 minutes. Then a bottle vinegar and papaya leaves are

applied while boiling to bleach the buri. Remove from fire and rinse with cool water then

expose it under heat of the sun for a day. Then soak on a basin of water for one night.

The next day, rinse it till all its liquids are gone, and then dry. After it has been

thoroughly dried, separate the leaves, straighten then strip. This step takes about 30 to


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45 minutes. The next process would be boiling the buri with dye for about 5 minutes and

then dry. It would then be ready for weaving. Next, weave the buri and nito. Cut the

edges. Assemble and sew it with cloth linings.

Diagram 5. Process of Making a Wallet

Purchase materials (buri, nito, zipper,cloth, thread)

Process the buri and dry

Weave

Cut and assemble the parts

Sew the lining


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Wastage and Reject Levels

The current 6 weavers of SACDEC are considered experts of the craft. Due to

this, reject probabilities are very slim from 1 to 2 rejects a month or at zero level. On the

other hand, wastages are inevitable. Excessive allocation of materials increases

wastage level. Example in single buri pack only three 9 * 8 wallets could be made. And

on single wallet, 45 Nito stems are utilized.

The materials are therefore not efficiently used in the case of nito since there is

an excessive use of such material for a single wallet.

Waste Disposal

Alternative Usage of Waste Materials

The raw materials that are being utilized by the Sibunag Ati Community Development

Cooperative (SACDEC) in the making of their products are identified as biodegradable. Waste

or unusable materials like excess buri, nito, pandan and abaca are either thrown in compost

bins to serve as fertilizers or use as wood-alternative which they use in cooking their food.

Other materials like dye wrappers and the like are thrown in trash cans classified as non-

biodegradable. Also, the used water use to clean and dye the raw materials is use in watering

the plants.

Proper consideration with regards to the environment has been properly considered by

SACDEC in disposing of their waste materials.


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In cases wherein the product has slight defects and does not pass quality control,

SACDEC chooses not to sell their products rather buys it at the amount enough to compensate

the materials used.

Disposal System

The excess materials used in the making of the native products made of buri, nito,

pandan and abaca are either thrown in compost bins and use fertilizers or wood-alternative.

Diagram 6: Disposal System

Excess MaterialsUsed

Thrown in CompostBins

Used as Wood-alternative

Finished Product

Fertilizer


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Production Cost

Operating Cost

SACDEC rents two stalls on their municipal markets. No transportation costs are

incurred for transferring products to these stalls since the houses of the members are near the

market. For made to order products, freight cost are paid by the clients. SACDEC currently

owns 4 sewing machines used for lining cloth to the wallet. This 2 are granted by Taytay sa

Kauswagan (TSKI) and the other 2 are from DOLE. SACDEC does not have fixed salaries for

the members. When sales are collected 95% of it is divided to the members and 5% of it is left

for the cooperative account. Hence, SACDECs monthly operating costs are as follows:

Rent expense @ P120 each: P240

Electricity: P10

Machine maintenance: P 50

Fixed and Variable Cost

o Total Cost

TC = FC + v * Q


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Cost Schedule

Variable Cost

Direct labor per wallet P 0

Direct materials

Buri (P10/3 wallets/leaf pack) P 3.33

Nito (45 pcs. * P.75) 33.75

Cloth ( P25 / 14 wallets/cloth) 1.79

Zipper(P 200/100 m / 1 meter/ 4wallets) .50

39.37

Indirect Materials:

Thread (P 65 / 150 wallets) P 0.43

Dye ( 2 leaf pack * P2) 4

Vinegar ( 2 leaf packs * P 10 / bottle) 10

Papaya Leaves 0___

14.43

Variable cost per wallet P 53.80

Fixed cost

Selling Expenses

Rent P240

Electricity 100

P340

Administrative

Maintenance (P150 for 3 months) 50

Total fixed cost P390

TC = P390 + P53.80 * 78 wallets

= P4586.40

o Percentage Cost

Fixed Cost = P390/P4,586.40

= 9 % of the total cost


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Variable Cost = P4,196.4/P4,586.5

= 91 % of the total cost

52 % of the total cost comes from variable cost. 63 % of the variable cost comes from

purchase of nito. To reduce variable cost the first thing that needs to be corrected is to increase

the efficiency of nito usage. Since in every 9 * 8 wallet, 45 nito stems are utilized.

Break-even Points in Units

Contribution Margin

Selling price per wallet P 130

Variable cost per wallet 53.80

Contribution margin per unit P 76.20

Break-even Point in units = Fixed Costs /Contribution Margin per unit

= P390/76.20

= 5 units

sacdec - operations management

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