A Study on the Current Procurement Practices of Wooden Casket Manufacturers in Barangays San Vicente and Poblacion, Sto. Tomas, Pampanga: Focusing on Strategic Sourcing of Wood

Date

12-2016

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Melodee Marciana E. De Castro

Committee Member

Jeanette Angeline B. Madamba, Rachelle A. Mariano, Agnes T. Banzon, Dinah Pura T. Depositario

Abstract

Caskets are known as unsought goods, which results to buyers not being financially prepared when time comes for its purchase. Manufacturers of wooden caskets in Sto. Tomas, Pampanga continue their production so as to support its demand despite the substantial decrease in supply of wood.

This study sought to describe and analyze the current sourcing and procurement strategies of wooden casket manufacturers in two barangays in Sto. Tomas, Pampanga. Specifically, the objectives of the study were: 1) to profile the casket-making businesses in barangays San Vicente and Poblacion, Sto. Tomas, Pampanga; 2) to discuss wooden casket supply chain and current sourcing practices of wooden casket-manufacturers; 3) to assess the profitability of casket enterprises; 4) to evaluate opportunities, threats and problems faced by wooden casket-manufacturing enterprises; and 5) to propose recommendations to improve wooden casket supply chain and their sourcing practices.

Primary data was gathered through assisted survey and interviews with both wooden and metal casket makers, funeral homes and wood suppliers. Secondary data like journal articles, news reports, and annual statistical reports were obtained from both published and unpublished materials and from the World Wide Web.

A total of 36 casket manufacturers (of which 34 were sole wooden casket producers) served as respondents for this study, wherein 72 percent were male. Their age ranged from 25 to 78 years old, and only three among the respondents were not married. Among the interviewees, five practiced forward integration through running a funeral home business. To enhance analysis of relationships in the supply chain, two funeral homes and one wood supplier were also interviewed.

Wooden casket manufacturers in Sto. Tomas practiced outsourcing for their wooden materials due to difficulty to backward integrate. Respondents either applied multiple sourcing (having several suppliers for a particular material) or dual sourcing (having two suppliers – one supplies 70% of a particular material, while the remaining 30% is supplied by the other) in acquiring their wooden material supplies.

Based on the supply chain map among key players, the following problems in the chain were identified: 1) unstable supply of wood and its increasing price; 2) inconsistent quality of wooden inputs; 3) flooding in the area of production; 4) absence of quality control; and 5) bad debts from funeral homes and customers.

For the cost and returns analysis, three enterprises (sole wooden casket producer, sole metal casket producer, and producer of both) were compared. Producing both metal and wooden caskets was the most profitable compared to producing only a single type of casket. Though wooden caskets were sold at lower prices, casket manufacturers in Sto. Tomas still continue to produce this type due to its higher demand.

The industry key strengths were identified as: 1) strategic location; and 2) wooden casket makers have mastered the craftsmanship of making wooden caskets through the years. Key weaknesses were identified as: 1) caskets are known as unsought goods; 2) weak quality control practices; 3) absence of associations or strategic alliances among wooden casket makers; 4) informal agreements between wooden casket makers and funeral homes; and 5) insufficient funds to take advantage of discounts in raw materials. This study identified the key opportunities as: 1) the sure market for caskets; 2) presence of alternative raw materials; and 3) technological improvements in tools and equipment. Lastly, the threats to the industry were: 1) having weak barriers to entry; 2) continuous change in taste and lifestyle of Filipinos; 3) depleting volume of wood; 4) presence of healthcare improvements; 5) funeral homes that do not pay debts; and 6) flooding caused by heavy rains.

In conclusion, this study discovered that the issues prevalent in the casket industry were: price wars that led to continuous cost and price cuttings; bad debts of funeral homes; and flood and termite infestation that damaged wooden materials, and finished and unfinished caskets.

Hence, to improve sourcing and procurement activities, it was recommended for the LGU to: 1) improve infrastructures in the area and come up with a flood mitigation plan; 2) provision of legal counseling and conduct seminars on good business practices; and 3) establish a consolidation center for form lumber supplies. It was recommended for wooden casket manufacturers in the area to: 1) provide an elevated stock room for the raw materials and finished or unfinished caskets; 2) establish strategic alliances among wooden casket makers; and 3) use alternative wooden resources as replacement for newly processed form lumber.

Language

English

LC Subject

Coffin industry, Wood--Quality

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2016 M17 R438

Notes

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Document Type

Thesis

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