POM102FINALPAPER

Production and Operations Management 102 Section K
Angelo Ramon A. Tanchoco (MWF 9:30-10:30 AM Class)
January 29, 2015

Fried Sapin-sapin

Group Members:
Ereneta, Paolo
Flameno, Fiel
Gallega, Ralph
Galvez, Enrico
Jeng, Erika
Sayosa, Danette

Table of Contents
I. EXECUTIVE ABSTRACT 3
II. BUSINESS MODEL 3
1. Value Proposition 3
2. Revenue Streams 4
3. Customer Segments 4
4. Customer Relationship Management 5
5. Channels 11
6. Key Activities 11
7. Key Business Partners 12
8. Cost Structure 12
III. OPERATIONS STRATEGY 14
1. Industry and Market Assessment 14
2. Product and Service Design 15
Cost Estimates and Pricing Schemes 22
3. Supply Chain Design 22
a. Inbound Logistics 22
b. Process Design 29
c. Facilities Design 31
e. Outbound/Return Logistics 40
f. Support Activities 40
g. Organization and Management. 42
h. Financial Management 44
IV. SUMMARY 44
V. BIBLIOGRAPHY 46

I. EXECUTIVE ABSTRACT

The Fried Sapin-sapin is a modern twist to the popular Philippine delicacy originating from the northern province of Abra. It is a rice cake made up of glutinous rice, coconut milk, and is composed of four layers: yam, aniseed, coconut and pandan, making it a beautiful, colorful sight. This layered rice cake is covered with pancake batter and then deep fried to golden brown giving it a light, spongy, and slightly crisp golden exterior. The snack bar is delicious, quick, easy, convenient, and can also substitute a meal. The product will soon be available in grocery stores, supermarkets, and convenience stores across Metro Manila, Philippines and California, USA. With this new twist to the legendary and already popular Sapin-sapin, the Fried Sapin-sapin will be in high demand to the middle class Filipinos in the Philippines and in the USA, as it is a new, innovative, product that fits the palettes of those who love and miss the flavor of local food and simply adore deep fried treats. With the increase in demand for local delicacies, growing economy, and very high consumer confidence, it is the perfect time to introduce Fried Sapin-sapin to the Philippine market as it will definitely yield profits for the long term.

II. BUSINESS MODEL
1. Value Proposition

Sapin-sapin is a famous Philippine delicacy from the northern province of Abra. Its name comes from the word “sapin,” which means layers. This is contributed to the fact that the dessert is made up of layers and layers of glutinous rice topped with “latik,” or toasted coconut. The dessert traditionally has four colorful layers: purple from purple yam, orange from aniseed, white from coconut, and green from pandan. All these layers put together are topped with toasted coconut, and the Sapin-sapin is formed. However, the group wants to reinvent the traditional Sapin-sapin and give it a delicious twist. Instead of just preparing it the traditional way, we will deep fry the Sapin-sapin in a coconut batter. This will make the Sapin-sapin crunchy in texture on the outside yet still be able to keep its soft and sticky texture on the inside. This fried Sapin-sapin will be produced as snack bars and can be bought in convenience stores and groceries. By doing so, a traditional Filipino delicacy is transformed into something easy-to-eat and on-the-go, in order to cater to those who have no time to make this Filipino favorite. These people have a limited time to eat tend and tend to rush, forget, or even skip their meals. The fried Sapin-sapin snack bar is a hearty alternative to satisfy their cravings, while still going on with their busy lifestyles.

2. Revenue Streams

The value-added that will be given to customers is the convenience and accessibility of being able to get one’s hand on the product. A product, which is so tedious and time consuming to make, is brought to the groceries for access and convenience. It is turned into a snack bar, which makes it ready to eat and on-the-go. By having it conveniently placed in stores abroad, specifically in the United States, consumers will be able to satisfy their cravings right away for fried Sapin-sapin. Through this, consumers wouldn’t need to go to the country just to have a taste of it.
In addition to this value added, it is also the unique flavour and the preparation of the product and of course the trend and the favor of consumers of fried foods. The way Sapin-sapin will be prepared which is through frying, is something new. It is a unique way of experiencing an already popular Filipino dessert. Consumers will be able to have Sapin-sapin in a way they normally don’t and have a variation from what’s being sold in most local stores. Aside from this, majority of the foods nowadays are fried, and having Sapin-sapin done in this way will cater as well to this particular taste of customers that do crave for such. There has been various foods done in this manner such as Oreos which were called wicked Oreos and this transformed the simple Oreo into a new kind of dessert or snack. By doing so, this brings a special twist to the food which customers like especially with the frying being put in the process.
Basically consumers are paying money for this different and unique kind of Sapin-sapin and the same time it’s accessibility and convenience in order to satisfy consumer cravings for it. These are the value-added to the product that customers are paying for on top of the costs for manufacturing and production of fried Sapin-sapin.

3. Customer Segments

The target market for Fried Sapin-Sapin are members of the Lower Middle to Middle Class (Classes C1 and C2) earning an average Php 700,000 a year or less, living in the city, of all ages, and both genders. The market size for local delicacies is growing, and is evident with the success of Dolor’s Kakanin. Dolor’s Kakanin, a restaurant that is most popular for their sapin-sapin (labeled the best by shootfirsteatlater.com), were able to extend their reach and grow from Malabon City to currently owning multiple branches located in areas such as Congressional QC, West Service Road, Sucat, Bagong Bario Caloocan, San Juan, Landmark Food Center Trinoma, Landmark Food Center Makati, SM Supermarket Weekend Bazaar – SM Makati, SM Megamall, SM Fairview, SM Southmall, and SM Manila. Although there were no public financial statements online, it is evident that the business is profiting due to the increase in branches all over the Philippines.
The economy of the Philippines is also growing. From an estimated GDP of USD 250.18 Billion in 2013, it has increased by approximately 9% to USD 272.02 Billion in 2014. This growth in economy has led to increased consumer confidence. According to Nielsen, Filipino consumers are 3rd most confident in Southeast Asia. Philippines’ confidence score increased from 116 in the first quarter to 120 in the second quarter of 2014. This growth in demand for local delicacies, growing economy, and increase in consumer confidence, makes it perfect for fried Sapin-sapin to enter the market.
This product will be exported to the U.S.A. With Filipinos remaining 2nd largest Asian population in the country, numbering at roughly 4.3 million, the market is very large. Moreover, the fried Sapin-sapin snack bar’s batter was originally inspired by U.S.A.’s product, the Fried Oreo, making it clear that the fried Sapin-sapin is a food that will fit the taste of both their culture. By exporting the product there we will be able to satisfy the Filipino-American consumers that miss home and want to eat, or in some cases even try, a local delicacy with an American twist.
4. Customer Relationship Management

Through proper customer relationship management, the group aims to retain and gain customers over time. With this in mind, customer relationship management becomes very important and essential for the long term growth, profitability, and success of the business. It is necessary to ensure that only good quality, delicious, healthy, well packaged Fried Sapin-Sapin snack bars are sold in order to create good brand image and reputation. In order to retain these customers quality has to be maintained, so that the products may meet or exceed customer expectations.

Another method to gain and retain customers is to construct and maintain an online presence since there are currently 38 million internet users in the Philippines. This is imperative as it allows the business to be able to both reach out to consumers with no knowledge of the product, and to maintain good relationships with loyal customers through various social media. According to research by Hubspot, Mashable, and Forbes: consumers are 71% more likely to make a purchase based on social media referrals; as of June 2011, there were 213,000,000 fans of Facebook Pages; 81% of US respondents indicated that friends ' social media posts directly influenced their purchase decision; and 49% of consumers use Facebook to search for restaurants. Thus, the use of social media is an easy method for communication between the consumers and the business. This allows them to find out more about the product, news, promos, etc.

Furthermore, through this medium they can express their opinions regarding our products and services. With this being said, the business should be able to use its mistakes and take them as constructive criticisms for the improvement of the business. It is only through this means that the group will know what the business has to change in order to satisfy the wants, needs, and expectations of the consumers.

Regulations Philippines In the Philippines, most of the laws conform to the standards set by the United States; therefore, we shall be adhering to the following laws:1
1.) Section I. Food Laws:
Republic Act No. 9711 (Food and Drug Administration Act of 2009) renames BFAD as the Food and Drug Administration (FDA) which will regulate the food,drugs and cosmetics and device companies and products. This administration will ensure the safety of such products to benefit the end consumers and to prevent sickness, diseases and harmful effects.
The two main agencies tasked with developing and enforcing food safety standards in the Philippines are the Bureau of Food and Drugs (BFAD) under the Department of Health (DOH), and the Bureau of Agriculture and Fisheries Product Standards (BAFPS) of the Department of Agriculture (DA)
BFAD’s main function is to ensure the safety, proper handling, purity and quality of processed foods, drugs, hazardous household substances and other products that will be distributed to consumers. The BFAD monitors the production and sale of processed foods and ensures that there are no mislabeled food products. Also, it ensures that imported foods are safe for consumption.
2.) Section II. Labeling Requirements
Labeling standards used in the United States are very similar and often used by Philippine food manufacturers who supply to both local markets and other countries. However, there are certain differences in some products such as bottled water and prepackaged processed meats. BFAD requires the above-mentioned imported products to have the following labels:
Name of the food;
List of ingredients used in the product (in decreasing order of proportion), including additives, flavorings and preservatives used;
Net contents and drained weight;
Name and address of manufacturer/packer or distributor, including country of origin for imported products and name and the address of Philippine importer/distributor; and
Lot identification.
Nutritional and Health Claims and Advertising: For food that is used for special dietary uses e.g., diabetic foods, must include a label of its nutrients and dietary properties. Moreover, the BFAD requires that these products are for special uses.
3.) Section III. Packaging and Container Regulations
Codex Alimentarius and USFDA regulations are used by BFAD to refer to its policy about good manufacturing practices and production of the right packaging for food use. Thus, it is very likely that compliance with Codex and/or U.S. regulations for packaged foods will in turn mean compliance with Philippine regulations.
4.) Section IV. Food Additives Regulations
Food additives must comply with the Philippine Food Act and the regulations that have been established by the BFAD for such products.
BFAD defines food additives as substances which becomes part of a processed food product or alters its characteristics. It includes products that affect the producing, processing, packaging, transporting, and/or holding of the food.
5.) Section VI. Other Regulations and Requirements
Registration of Processed Food Products: The BFAD requires the registration of food products that will be sold within the country. Registration of imported products may only be undertaken by a Philippine entity and at times, the product to be exported must first be screened. Products have been divided into two categories with distinct sets of registration requirements and procedures.
Category I includes: bakery & bakery related products; non-alcoholic beverages & beverage mixes; candies & confectionery products; cocoa & cocoa related products; coffee, tea & non-dairy creamer; condiments, sauces & seasonings; culinary products; gelatin, dessert preparation & mixes; dairy products; dressings & spreads; flour/flour mixes & starch; fish & other marine products; fruits, vegetable & edible fungi (prepared); meat and poultry products (prepared); noodles, pastas & pastry wrapper; nut & nut products; native delicacies; oils, fats & shortening; snack foods & breakfast cereals and; sugar & other related products.
United States
In the United States, we shall be adhering to the following laws:2
1.) General Requirements of U.S. Law – The U.S. Federal Food, Drug and Cosmetic Act (FD&C Act) states that importers of food products into the United States must make sure that the products are safe and labeled properly. The Food and Drug Administration (FDA) cannot sanction or license companies of imported food products. Importers can enter the U.S. market as long as companies are registered with the FDA and they inform the FDA about incoming shipments of products. However, when products arrive at the U.S. port of entry, the FDA is authorized to inspect the products and even detain certain shipments which are violate U.S. requirements.
2.) Facility Registration – The U.S. Public Health Security and Bioterrorism Preparedness and Response Act of 2002 states that companies who will handle food products to be sold in the United States register their facilities via the internet or government offices.
3.) Prior Notice of Incoming Shipments – The Bioterrorism Preparedness Act of 2002 also requires importers to inform the FDA about incoming shipments. This can be done via the FDA website.
4.) Safety and Sanitation – The FD&C Act requires imported food products not to contain any poisonous substances which may harm the health of consumers. Decomposed or filthy substances such as rodent infestation or pesticides must not be contained in the food. Moreover, in the production of the food, the working place must be sanitary so that the food will not be contaminated with filthy substances. The FDA does not require test results of food to be given to them but they accept food samples for testing.
5.) Good Manufacturing Practices – Processors of food products sold in U.S. commerce should be familiar with and employ the U.S. Current Good Manufacturing Practices for foods (GMPs). This is to ensure the cleanliness of food in all stages of production and even in the holding of it.
6.) Action Levels – Importers of certain commodities should be aware that FDA has issued "Defect Action Levels" (DALs) for some food commodities for natural and unavoidable defects, such as mold, insect filth and mammalian excreta. There is a maximum allowable amount for these substances in the food products.
7.) Retail Labeling - Provisions of the FD&C Act, the U.S. Fair Labeling and Packaging Act, and the Nutrition Labeling and Education Act require that retail packages and containers of food products sold in U.S. interstate commerce bear labels in English (Spanish acceptable in Puerto Rico) that include specific information: the identity of the product, the name and address or phone number of the responsible firm (may be the manufacturer or distributor, foreign or domestic), a list of ingredients in descending order or predominance in the product, the net weight of contents in both English and metric terms, and in most cases nutritional information. This is to ensure that consumers easily understand the substances they are consuming when purchased. Also, imported products must contain its country of origin.
8.) Nutrition Labeling – For developing nutrition labeling information, manufacturers may seek outside help and employ commercial laboratories to know the nutrient content of the food.
9.) Labeling Bulk Containers – For bulk containers of food products, the following information must be included: the identity of the product, the name and address or phone number of a responsible firm (can be the distributor, manufacturer, importer, import agent, or consignee), the net weight of contents in English measurement (pounds/ounces), a list of ingredients contained in the product, and the country of origin of the product.
10.) Standards Of Identity – The FD&C Act states that certain food have minimum ingredient requirements which must be met before food products can be sold.

5. Channels

The product will be manufactured in factories, then will be delivered to intermediaries, groceries, supermarkets, sari-sari stores and other distribution channels. Customers are able to purchase these products through these outlets. In addition, the fried Sapin-sapin snack bars will also be exported to the United States of America, then will be distributed in the same assortment of outlets as well. A website detailing the product will also be available where customers can purchase Fried Sapin-sapin online. However, this will only be available locally.

The key resources needed for this enterprise are the product ingredients, packaging, pots and pans, and food processors. The main ingredients for Sapin-sapin ranges comprises of Glutinous rice flour, Coconut milk, Purple yam, and Macapuno among the other basic components. Manpower is also needed to cook or prepare, and sell the fried Sapin-sapin in the different branches. Accountants will also be needed for preparing financial documents. All of these resources will be up to company to look for and hire or acquire.

Sapin-sapin being a local delicacy, the increase of its demand can increase the local GDP. By penetrating families, by updating the delicacy to suit their taste, the new snack bar can enter their consciousness, and not merely a delicacy for tourists to try, but also for Filipinos to appreciate. One thing that could possibly affect the enterprise is the rice industry, since the main ingredient of Sapin-sapin is rice. Fluctuations in rice production will directly affect the business; it may be so in terms of supply or price changes.

6. Key Activities

The flow of the business process begins with dealing with the suppliers. The management in charge of the supplies will be responsible for accumulating the necessary machinery, ingredients and materials for packaging. Here, supply chain performance is maximized by, firstly, categorizing the supplies into three: machinery, ingredients and (materials for) packaging. This organization will make it easier for the management to sort through their various suppliers. Another group is tasked to input it all in an inventory to keep track of the items and machines going in the business upon receiving supplies; from there, production begins. As soon as an order is made, the ingredients will undergo value-adding processes (i.e. frying and packaging) that will finally be delivered to supermarkets and other distribution channels. Upon accomplishment of the transactions, the management will finally record the sales and revenues.

7. Key Business Partners

As mentioned above, there will be three categories for the suppliers: ingredients, machinery and (materials for) packaging. The ingredients will include the sapin-sapin itself and the key ingredients for the batter, which will be incorporated into the sapin-sapin. The batter will be pancake batter consisting of flour, sugar, baking powder, salt, milk, butter, egg, coconut and vegetable oil. A primary supplier for sapin-sapin is mandatory. The batter’s supplier, given its variety of ingredients, would be ideal if it already supplies all (or most) of the ingredients for the batter. The machine category will also include the equipment needed for production such as a heavy duty deep fryer. As for the packaging materials, a supplier that specializes in non-toxic food packaging will be best.
Since the suppliers will have a great contributing factor in the product’s quality and competitive edge, the linkage or relationship to be established with them should be properly regulated. It should be not only mutually beneficial but there should be similarities in goal orientation (e.g. in customer prioritization and in corporate responsibilities).

8. Cost Structure

Ingredients
ITEM
QTY
PRICE
Glutinous Rice Flour
1 kg
Php 93.48
Brown Sugar
1 kg
Php 37.00
Coconut Milk
1 carton
Php 246.67
Jackfruit
1 whole
Php 150.00

Machinery and Labor
ITEM
QTY
PRICE
Food Processors
5 units
Php 42,900.00
Storage Tanks
2 units
Php 98,560.00
Industrial Cutter
1 unit
Php 330,000.00
Industrial Layered Steamer
1 unit
Php 4,410.00
Packaging Machine
1 unit
Php 44,100.00
Continuous Mixer
1 unit
Php 83,600.00
Continuous Deep Fryer w Strainer
1 unit
Php 154,350.00
Workers
7
Php 81,550.00/month
Barcode/RFID System
1 unit
Php 180,000.00

The company uses cost-based pricing, thus making the price of the product very competitive in the market. For this pricing strategy, the basis is the cost of manufacturing and producing the product. The price is often dictated by market conditions, which means that the floor and ceiling are the minimum and maximum prices respectively. The usage of such pricing strategy is mainly because the company wants to attract customers who are looking for affordable products.

III. OPERATIONS STRATEGY
1. Industry and Market Assessment

In 2014, there was a retail volume growth of 6% and a 7% growth in sweet and savory snacks. As a result, there was a whopping sale of Php45.2 billion. In addition, there is an increase in the variety of Philippine sweet and savory snacks. Growth of retail value sales can be attributed to extruded snacks with 10% in current terms. Local manufacturers continue to lead the sweet and savory snacks industry in the country. The Philippines continues to exhibit acceptance and loyalty to different kinds of sweet and savory snacks. Innovations can be seen through the introduction of new flavors, from both the local and international scenes, and this has been beneficial for the key players of the industry. In fact, in 2014, Universal Robina Corporation, in a joint venture with Calbee, formed Calbee-URC Inc. to produce and manufacture snacks in the Philippines. Calbee aims to increase its retail value share in the sweet and savory snacks industry. In 2014, extruded snacks had a 10% increase in current retail values sales. This can be attributed to the innovations and expansions done by the keys players in this category, including the premium-priced products. To add to this, there was an increase of 2% in the unit prices because the volatility of commodity price had influenced the unity prices of sweet and savory snack, as well as the increase in product variants.

Non-microwave popcorn takes the lead with 58% of total value sales of popcorn in the Philippines. There is little penetration from microwavables, which is why non-microwave popcorn will most likely continue its dominance. Sweet and savory snacks are very accessible in the country as they may be found in groceries, supermarkets and convenience stores. Distribution varies depending on the product, as larger outlets carry premium-priced items and smaller outlets carry lower-priced items.

In the years to come, sweet and savory snacks industry is expected to grow at 5% CAGR. Along with this, the demand for these products is expected to increase as income and population grow. The average prices of sweet and savory snacks are expected to decrease over time as producers and manufacturers opt to keep the prices low to remain competitive in the market. The entrance of Japanese producer, Calbee appears to be a threat as local manufacturers still do not know what this Japanese brand can bring to the country. As a response, local manufacturers may produce their own localized version and lower their prices.

Introduction of Filipino flavors is also another form of innovation and response to this Japanese threat. For instance, Jack ‘n’ Jill Krispy Liyempo ni Mang Juan locally produced by URC has created a big hit and has taken local taste and sweet and savory snacks to a new level. URC’s product, Jack ‘n’ Jill Krispy Liempo ni Mang Juan, is inspired by one of its own products of instant noodles, which also boat Filipino flavors. Other sweet and savory snacks include Boy Bawa, a form of corn snacks. As seen in the acceptance of the aforementioned product, it is safe to say that truly, there is a market for products with Filipino flavors in this industry.

2. Product and Service Design
Consumer Expectations and House of Quality
Consumer Expectations for the House of Quality was obtained from the survey the group conducted on the 16th -22nd of February.

House of Quality

Based on results from the house of quality matrix, it can be observed that the customer’s primary concern with the product is the quality of the ingredients used, which significantly affects taste, texture, nutritional value, calorie content, and the over-all quality of the product. Coming in second is the expiration life period, as well as the product’s corresponding shelf life, as customers typically buy these in bulk and consume them over a segmented period of time. This is followed by concerns pertaining to the different processes of making the product that can primarily affect its texture and quality. The company must ensure that these processes are consistently performed to make sure that the ingredients are handled in the best way possible; this allows the product to consistently be a highly nutritious and high-quality snack bar.

The results also showed that size and weight is not a primary concern for consumers. This further shows how some features of the competitors’ product can affect the acceptance of the company’s product to the public. Although packaging was not of significant concern to consumers, the company must keep in mind that it can still help make the product appealing to any consumer.

Order Processing

There are two different order processes: one for Metro Manila and one for the United States. The major divisions involved in the order processes are the office personnel in charge of orders, the storage warehousemen in U.S. and the Philippines, and the truck delivery workers. Please refer to the service blueprints below for deliveries and order processes in the tables on the following pages.

Service Blueprint for Metro Manila Order Process and Deliveries
CUSTOMER
1. E-mail/Fax name of company/ distributor, # of boxes to be ordered, and account number to friedsapnsapin@yahoo.com.
2. Wait for reply via Email/Fax.
3. Receive Email/Fax. Confirm order and details such as # of boxes, terms of payment, location of delivery, account number, and bank.
4. Wait for delivery.
5. Receive delivery. Sign receipt and confirmation slip of order form.
FRONTLINE

Call handler of main office receives the call and confirms information

Truck driver/ delivery boys unload items into the destination & double check number of delivered goods.
BACKROOM

Receive e-mail/Fax in inbox by office.
Check accounting history of customer
If no record of more-than-30-day liability to us, check available # of boxes in warehouse.
Encode into order form in O.P.I.S.
Send order form to warehouseman.
Contact bank for payment notice.
Warehouseman receives and prints order form.
Warehouseman prepares the boxes, checks them out of the RFID system, and loads them into the truck.
Truck delivers the goods to address.

SUPPORT SYSTEMS

E-mail/Fax Service
Order Processing Information System, including RFID
Accounting / Finance/Purchasing System
Order Processing Information System including RFID
Phone & Telephone Service
Order Processing Information System including RFID
Trucking Services
Trucking Services
PHYSICAL EVIDENCE

Purchase Order Form (white) and confirmation form (yellow)
Sales Invoice
Delivery Receipt
Boxes ordered

Service Blueprint for United States Order Process and Deliveries
CUSTOMER
1. E-mail name of company/ distributor, # of boxes to be ordered, and account number to friedsapinsapin@yahoo.com.
2. Wait for reply via Email/Fax.
3. Receive Email/Fax. Confirm order and details such as # of boxes, terms of payment, location of delivery, account number, & bank.
4. Wait for delivery.
5. Receive delivery. Sign receipt and confirmation slip of order form.
FRONTLINE

Call handler of main office receives the call and confirms information

Truck driver / delivery boys in United States unload items into the destination & double check number of delivered goods.
BACKROOM

Receive e-mail in inbox by office.
Check accounting history of customer.
If no record of more-than-30-day liability to us, check available # of boxes in warehouse in United States.
If # of available boxes in U.S. can satisfy order, office personnel calls for confirmation.
Encode into order form in O.P.I.S.
Send order form to warehouseman in United States.
Contact bank for payment notice.

Warehouseman in the United States receives and prints order form.
Warehouseman in U.S. prepares the boxes, checks them out of the RFID system, and loads them into the truck.

SUPPORT SYSTEMS

E-mail/Fax Service
Order Processing Information System including RFID
Accounting/Finance/Purchasing System
Order Processing Information System including RFID
Phone & Telephone Service
Order Processing Information System, including RFID
Trucking Services

PHYSICAL EVIDENCE

Order Form with receipt (white) and confirmation form (yellow)
Sales Invoice
Delivery Receipt
Boxes ordered

Cost Estimates and Pricing Schemes

The price in Manila will be considerably cheaper than that in the United States because of additional importation taxes that will be imposed when being sold in the latter. The relative prices of goods in Manila are also a factor in lower pricing. In Manila, we will sell our snack bar for P50.00. In the United States, our product will be sold at $3.00 or around ₱130.00.

3. Supply Chain Design
a. Inbound Logistics

Bill of Materials

YIELDS 8 3-inch PANCAKE BATTER
1 cup all-purpose flour
1 1⁄3 tablespoons brown sugar
1 tablespoon baking powder
1 eggs, beat them separately before adding to mixture
1⁄8 cup butter, melted (1/8 of a pound)
7⁄8 cup milk YIELDS 8 PCS. OF SAPIN-SAPIN
2 cups glutinous rice flour
4 cups coconut milk
1 cup granulated brown sugar
7 oz. (1/2 can) condensed milk
1/2 cup ripe jackfruit (langka)
3/4 cup mashed purple yam
1/2 teaspoon vanilla extract
1/4 teaspoon ube extract
1 tablespoon cooking oil (or coconut oil)
1/2 teaspoon Violet food coloring
1/2 teaspoon Yellow food coloring Raw Materials: The 4 Key Ingredients
Glutinous Rice Flour
Even beyond the “best before” date which is a good 6-8 months after production, flour may still be used (as opposed to having an “expiry date”) as long as it is properly stored. With that being said, glutinous rice flour has a very long shelf life of approximately 2 years.

Peotraco Industries, Inc. will be the supplier for the said raw material. They have been in the market since 1924 and has been trusted by numerous Souteast Asian businesses. Their certifications are as follows: HACCP and ISO 9001:2008, currently working towards ISO 22000. They can be found in Gen. Concepcion Street, Bagong Barrio, Metro Manila. Their Peotraco Glutinous Rice Flour is known for its low moisture content, good absorption quality and fine texture. It is ideal for making sapin-sapin. Brown Sugar

The supplier for this key ingredient is Raw Brown Sugar Milling Co. Inc which is located in Negros Oriental, Philippines. This organization has been around since 2009. Their main markets are, other than the domestic market: North America, South America, Eastern Europe, Southeast Asia and Africa. Their unrefined brown sugar is of premium quality, with an organic certification and a GMP certification.

Brown sugar is a healthier alternative to white sugar; not to mention more economical, with less processes involved. Similar to glutinous rice flour, this ingredient lasts indefinitely when stored properly but it’s best consumed within 2 years. As a healthier alternative, it may help the marketing side of the product with lesser contributions to diabetes, obesity and tooth decay. Coconut Milk

Upon grating the meat of brown coconut, the liquid produced is called the coconut milk. Not unlike brown sugar, coconut milk is a much healthier alternative as opposed to dairy milk. (This will appeal to consumers who are against animal products, in support of the marketing side of the product.) This key ingredient is highly perishable with a shelf life of 4-6 days. Yet, with proper storage, it can go for up to 2-3 months. Even more so, its main source, the brown coconut, is available year-round. The focus, therefore, will be proper storage for this ingredient.

The supplier for coconut milk will be Asialink Marketing International, a “gold supplier” at its 7th year of trading in an online global trade site. It produces a quality, aseptically packed coconut milk which assures a good quality, free from containing extraneous materials. Jackfruit (Langka)

Federation of Free Farmers is located in Sitio. Parungao, Brgy. Sapang Bulak, Doña Remedios Trinidad, Bulacan. They have a variety of crops, among which is the Jackfruit. This supplier is chosen because of its efficiency as an organization and its quality products. FFF is one of the largest NGOs in the Philippines and has been around since 1953.

Jackfruits are able to thrive in warm and humid countries. Its growth conditions favor the Philippines, a tropical archipelago where one tree yields an annual 70-100 kilograms. This fruit is very much reliable that it became a staple for cities where food is scarce and it has been a hot item for its exporting potentials. When frozen, its shelf-life is 8-12 months. Should extreme conditions happen (drought or extreme rainfall), this ingredient will already be frozen and stored as a default means of storage. Shipping Arrangement

Orient Freight International has astounding customer reviews. One such review rated 90.53% for the organization. Proclaiming themselves as the “leading freight forwader” in the Philippines and in Southeast Asia, they have been in the industry for about 35 years now. They have trucking and land transportation, air freight forwarding and sea freight forwarding.

Freight on board (FOB) destination, where the official transaction occurs at the time of deilvery, will be strictly followed for the shipping arrangements. The suppliers themselves will be the ones responsible for shipping the ingredients to the warehouse thus minimizing the risks of shipping.
Storage Arrangement

Ingredients such as brown sugar and glutinous rice flour will be stored in an airtight container in order to minimize exposure to sunlight and unwanted gases. As for jackfruit and the coconut milk, these ingredients will be kept frozen upon storage thus needing an industrial freezer. The freezer, a Fujidenzo 8.0 Cu.ft Single Door 2-in-1 Function Solid Top Chest, will be used for this purpose.

Tesco Multisales Inc. will be the supplier of containers for the other raw materials. From their shipping packaging, they will be transferred into these airtight containers. For example, Peotraco Glutinous Rice Flour is shipped in its transparent plastic packaging (see photo below). Upon reaching the warehouse, it will be tranferred to the industrial HDPE plastic container in order effectively minimize sunlight and air exposure. The environment’s temperature will be kept at a good 21°C (room temperature.) with low and minimal lighting.

They have been around since 1992 and they specialize in plastics packaging. They use 100% pure virgin materials (mainly HDPE, PVC, PP and LDPE) in all their products unless their client indicates otherwise. The following containers to be ordered from Tesco are:

Upon following all the said storage arrangements, the following shelf lives of the key ingredients will be achieved: INGREDIENT
SHELF LIFE
Glutinous Rice Flour
2 years
Brown Sugar
2 years
Coconut Milk
2-3 months
Jackfruit (Langka)
8-12 months (a general rule for all frozen fruits)

Inventory Management
Record Accuracy and Control of Inventory The warehouse will be built in such a way that each ingredient has a designated shelf space which are labeled accordingly. As an order arrives, an assigned worker will monitor all the inflows of the ingredient. Upon recording, the raw materials will be given a bar code with the aid of an RFID or radio frequency system. The BCI RFID-Inventory will be used for this purpose.

The received orders will then be transferred into its designated shelf space and a worker will be responsible for when it’s finally taken out for production. Once taken out, its bar code will be scanned for the records. There will be one worker assigned to supervise the entire process in order to decrease the chances for error. Also, there will be someone in charge of maintaining cleanliness and orderliness of the entire warehouse.

For security purposes, the warehouse will be a restricted area and will be equipped with CCTV cameras. Only those who work there will be allowed to enter, provided that they have a valid ID. These workers will still be asked to log the times they enter and exit the warehouse just to keep track of accountability. Cycle Counting As an extension for the process of recording, this method will also be applied for a more accurate data for inventory. This will help to verify existing records and to pinpoint certain imprecisions. A need for new tasks may arise and be addressed whenever there is a constant imprecision in the recording.

According to the ingredient’s shelf life, cycle counting will be conducted every month (shelf life of raw material: 1-3½ weeks), every quarter (shelf life of raw material: 1-4 month(s)) and semi-annually (shelf life of raw material: 5 months onwards). Lead Time Shelf life and distance from the supplier’s location to the warehouse in Laguna are primarily taken into consideration in setting up the lead time. Glutinous rice flour, whose shelf life is 2 years, will be coming from Metro Manila. Brown sugar has, similarly, 2 years of shelf life although its origin will be from Negros Oriental. Coconut milk is conveniently from Metro Manila as well, its shelf life 2-3 months (frozen). Lastly, jackfruit which has 8-12 months of shelf life (frozen) will be coming from Bulacan. Thus, the following lead times are: INGREDIENT
LEAD TIME
Glutinous Rice Flour 7 days or 1 week
Brown Sugar 18 days or 2½ weeks
Coconut Milk 7 days or 1 week
Jackfruit (Langka)
11 days or 1½ weeks

b. Process Design

Manufacturing Process

Two workers will load the Jackfruits inside the food processor, after manually removing the seeds and skin. The Jackfruit shreds will then be added into one food container or cylinder along with the yellow food coloring, while another worker loads another container with Mashed Purple Yam, Ube extract, and violet food coloring. These will be added to what would be the different layers of the Sapin-sapin. In three separate food mixers, the glutinous rice flour, sugar, condensed milk, coconut milk, and vanilla extract will be mixed thoroughly. The additives prepared earlier shall be incorporated into two of the mixing containers (facilitated the workers), while leaving the other mixing container free of any additional coloring or flavoring. A fourth food mixer will contain flour, sugar, salt, baking powder, beaten eggs, melted butter, and milk. This batter will be used later on. These will then be poured into greased trays by the workers in preparation for steaming. After steaming, these separate layers will be stacked on top of another, in such a way that one finished pile contains one layer of each color or flavor; each will have one violet, one yellow, and one white layer. After which, these trays will be placed into the freezer for controlled malleability to prepare for cutting. A worker will manually feed the cooled Sapin-sapin into the food cutter, which will create rectangular or bar-shaped pieces of Sapin-sapin. These bars will then be coated with the batter from the fourth mixer, in preparation for deep frying. After the excess oil is drained, workers will facilitate loading these deep-fried, batter-coated, Sapin-sapin bars into the packaging machine.

Flowchart

Capacity Planning
*2500 bars for one month
Machine
Ingredients
Actual Capacity
Industrial Mixer
-Pancake Batter
-Sapin-sapin with
-and without additives
-102.98kg
-138.79
-114.07
Large Scale Food Processor
Jackfruit
19.53kg
Freezer
Steamed Sapin-sapin
2500 bars
Steamer
Sapin-sapin
938 trays
Deep-Fryer
Sapin-sapin with batter
2500 bars
Cutter
Uncut Sapin-sapin slabs
313 slabs
Packaging Machine
Deep fried Sapin-sapin bars
2500 bars

Equipment and Machinery
Industrial Food Processor

Stainless steel body with dismountable mixer and blade. This will be used to shred the meat of the Jackfruit.
Large-Scale Mixer

This machine will be used to thoroughly mix each layer of Sapin-sapin, as well as the pancake batter that will be used to coat them. The additives from other containers and cylinders will be poured in manually by workers.
Freezer

This is where the Sapin-sapin layers will be stored after steaming. Cooling the layers is necessary due to the delicacy’s very soft consistency. In order for the layers to be cleanly and uniformly cut, a colder temperature will somehow stiffen and give temporary structure, before it returns to its original texture.
Steamer

This is where the trays of each layer for the Sapin-sapin will be cooked by steaming (with water). Each layer will first be steamed in separate trays simultaneously, to eventually be stacked or compiled before cooling.
Continuous Deep Fryer

Runs on gas. This will be where the coated Sapin-sapin will be deep-fried. It will also strain out the excess oil in preparation for packaging.
Cutter

The blades of this food cutter works like a guillotine. The slabs of Sapin-sapin will be moving slowly on a conveyor belt, while the blade drops and goes back up as the food advances. The blades will horizontally cut long pieces of Sapin-Sapin, while the slitter blade cuts these strips into shorter, manageable pieces.
Packaging

The finished Sapin-sapin bars will then be fed into this equipment for final packaging before shipping to the various locations. The small 60-gram bars will be packed in pillow cases to seal in the freshness of each bar.

Equipment suppliers
1. Industrial Food Processor - GRT BC06
2. Large-scale mixer - Zhengzhou MG Industrial CO. Ltd.
3. Freezer - Fujidenzo 8.0 Cu.ft Single Door 2-in-1 Function Solid Top Chest
4. Steamer - Quickly Food Machinery Inc.
5. Continuous Deep-Fryer - Baoding Jiali Food Machine Co. Inc.
6. Cutter - Zhucheng Xinzhengda Machinery Co. Ltd.
7. Packaging machine - Shanghai Dichuang Packaging Machine co. These brands and specific machines do their job while not having to spend too much/ It is worth the money spent on them and it is enough to get the job done and to reach demand quota monthly. Most of these machinery are shipped from China because that’s where most of the economical suppliers come from. If ever expansion is considered, these suppliers offer bulk discounts on machineries. Alternatives could be European-made brands like Ultrasonic and Silverson. These are way pricier, but the quality is also of greater calibration.

Operators and Personnel
1. Large-scale mixer operators- These workers will be in charge of transferring the ingredients, and everything else that goes through the industrial mixers. They will also be in charge of pouring in the mixture into individual trays.
2. Ingredient handlers- These laborers will be in charge of preparing every ingredient before the manufacturing process begins. They will be the ones responsible for the preparation of the Jackfruits and the measurement of each ingredient to be used, so that they can be easily accessible to just mix and use without the need to weigh everything in between the process.
3. Industrial food processor- This will be operated by the ingredient handlers in charge of the Jackfruits.
4. Steamer- Workers will be handling the trays and loading them into the steamer. After which, they will also be the one assembling each layer of Sapin-sapin before storing them into the freezer.
5. Food cutter- The food cutter operators will take the cooled trays and feed its contents into the machine. They will be handing these cut bars to the mixer operators for pancake batter coating.
6. Deep fryer and Packaging- After coating the batch of Sapin-sapin, the deep fryer operators will obtain the tray from the mixer operators who just finished coating each bar with pancake batter. They will then feed each bar into the continuous deep fryer, and they will guide the finished bars to the pillow packaging machine, after which the bars are ready for boxing and distribution. A. Facilities Design

Location

For the location of our production facility we’ve decided to set it up in a place that will be easily accessible to both places we’re planning to export it to which is Metro Manila and to a nearby port to bring the good all the way in the US, specifically California. With this taken into context as well as the majority of the key ingredients coming from Metro Manila and Bulacan, the factory will be located in Bulacan where majority of the key ingredients is conveniently located. By having the factory placed here, there will easily be an easier time to transport goods to the outlets in Metro Manila wherein we are planning to sell our products and as well as receiving our key ingredients due to the distance between the places. Moreover, with the factory being placed here, our products will be transported to the Port of Subic despite being farther compared to the Port of Manila due to the heavy congestion in the Port of Manila. Doing so, it will be easier to transport our goods to the Port of Los Angeles wherein in we will be having a rented warehouse to store the goods then transported all over California. As seen from this, having the factory in Bulacan will make it very accessible to the key ingredients as well as the distribution to Metro Manila and the Port of Subic.

The main office will then be located in Makati due to it being a central business district in Metro Manila. In addition, the placement of the office in Makati will make it accessible to other offices of involved channels of production, distribution and other related establishments. Since we will be having our products in groceries and other outlets in Metro Manila, having the office in Makati will be a good option and choice.

Demand Forecast

The product fried sapin-sapin belongs to the category of Others Snack Bars among the different categories under Snack Bars. Based on the data in Euro Monitor it can be seen that for the Philippines, the sales of snack bars in the country has been constant throughout the years. From here we can see that there is a constant demand throughout for the category of snack bars

Table 1. Forecast Sales of Snack Bars by Category in the Philippines: Volume 2011-20163

2011
2012
2013
2014
2015
2016
Breakfast Bars
-
-
-
-
-
-
Energy and Nutrition Bars
0.2
0.2
0.1
0.1
0.1
0.1
Fruit Bars
-
-
-
-
-
-
Granola/Muesli Bars
15.4
15.4
15.4
15.4
15.5
15.5
Other Snack Bars
-
-
-
-
-
-
Snack Bars
15.6
15.5
15.5
15.5
15.5
15.6 Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

In order to get the forecast of demand for fried sapin-sapin, we shall use the following formula:
Demand Forecast =
(Average Volume Demand of Country) x (Percent of Target Population x Target Market Share)

Based on the data found in Euro Monitor International’s forecasted sales for snack bars, the average forecast sales of snack bars by volume for the Philippines and will be 15.53 tons. The calculations can be seen below:

For the Philippines (in tons):
15.6 + 15.5 + 15.5 +15.5 + 15.5 + 15.6 = 15.5333333 or 15.53 tons 6
Converting 15.53 tons to grams:
15.53 tons x 1,000,000 grams = 15,530,000 grams
1 ton

To get the percent of target population’s demand, which is coming from Metro Manila from this overall forecast demand of volume of the whole Philippines, 15,530,000 grams will be multiplied to 12% as seen below:

15,530,000 grams x 12 % = 1,863,600 grams for the target population of the Philippines

The target will be 15% of the market in the Philippines because despite being a snack bar there are still a lot of competitors in other categories. We then multiply the grams demanded of our target population in the Philippines to the target percent of market share which is 15 %, it will result to what we see below:

1,863,600 grams x 15% = 279,540 grams

Table 2. Forecast Sales of Snack Bars by Category in the United States: Volume 2011-2016

2011
2012
2013
2014
2015
2016
Breakfast Bars
58.8
59.7
60.6
61.2
62.3
62.6
Energy and Nutrition Bars
66.4
69.2
70.8
71.9
73.2
75.1
Fruit Bars
25.9
25.3
24.7
24.1
23.5
22.9
Granola/Muesli Bars
93.9
96.9
98.3
100.1
102.3
104.4
Other Snack Bars
17.3
16.9
16.5
16.4
16.6
16.7
Snack Bars
262.2
267.7
270.9
273.6
277.8
281.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

For the United States, the average forecast volume demand of snack bars for the whole country is shown below:

For the United States (in ‘000 tons):
262.2 + 267.7 + 270. 9 + 273.6 + 277.8 +281.5 = 272.2833333 tons 6
Converting 270,616,667 tons to grams:
272.2833333 tons x 1,000,000 grams = 272,283,333.3 grams 1 ton

Since we are targeting those in California, specifically Filipinos, we multiply this to the percent of the Filipino population in California, which is only 4%, we get:

272,283,333.3 grams x 4% = 1,089,113 grams

In California, our target market share will be 30 percent because this will cater to the Filipinos who are already familiar with the product and want a taste of it. We then multiply the grams demanded of our target population in the US to the target percent of market share of 30%, which will result to the demand of our snack bar to be 209,114 grams, as seen below.

1,089,113 grams x 30 % = 326,733.9 grams

Summing up the forecast demand of our snack bar in both Metro Manila and California, we attain a total forecast demand of:

Forecast Demand of the MNL + Forecast Demand of CAL. = Total Forecast Demand
1,863,600 grams + 326,733.9 grams = 2,190,333.9 grams

Our snack bar will be sold at 60 grams each; hence, the total number of snack bars demanded per annum in the next 5 years would be equal to:

For the Philippines:

1,553,000 grams = 25,883 snack bars 60 grams
For the United States:

209,113.6 grams = 3,485 snack bars 60 grams
For both the Philippines and the United States:

1,762,113.6 grams = 29,369 snack bars 60 grams

Capacity Plan

The group plans to maximize the capacity of our exports in California where there is a high population of Filipinos living there and at the same time satisfying our projected market share in Metro Manila among those who are into snack bars. For our break-even analysis, the fixed costs will comprise of the following:

Table 3. Fixed Cost Components and Prices
Component
Fixed Cost in ₱
Warehouse Rent in the United States
155,500.00
Depreciation of Building in Bulacan
70,338.00
Depreciation of Machinery & Equipment
280,500.30
Electricity Expenses
110,000.00
Communications Expenses
315,000.00
Salaries & Wages
144,000
Total Fixed Costs
1,075,338.30

In order to compute for the break-even quantity analysis, first we will be getting the weighted contribution of snack bars in both Metro Manila and in California as seen below together with its costs.
Table 4. Weighted Contribution Computation and Components
Item (i)
Selling Price (P)
Variable Cost (V)
(V/P)
1-(V/P)
Annual Forecasted Sales (₱)
% of Sales
Weighted Contribution (1-(V/P)) x % of Sales
Snack Bar sold in the Philip-pines
₱50.00
₱20.00
0.4
0.6
₱1,294,150.00
.7407
0.44442
Snack Bar sold in the United States
₱130.00
₱ 30.00
0.2308
0.7692
₱453,050.00
.2593
0.19945356

₱1,747,200
1.00
0.64387356

Upon computing the weighted contribution of snack bars to be sold in the Philippines and of snack bars to be sold in the United States, we shall use the equation below to derive the break-even profits (BEPs) and break-even point in units (BEPx):

,

Where F = fixed cost, V = variable cost per unit, P = price per unit, W = percent each product is of total dollar sales, and i = each product.

BEPs = = = ₱ 32,562,914.99

289432.2136

43,298.59546 units or 43,299 unites per year

Our monthly break-even point in units will result to:

=

Facility Layout/Workplace Design

The factory as mentioned earlier will be located in Bulacan. It will have various stations for the various steps with corresponding equipment in making the product and will be organized in such a way that is efficient. The various entrances and exits as well will be accessible to the areas needed for both workers and employees such as for example the transportation of finished goods to the trucks. The workers in the factory will be assigned to a certain task each. The design of the place will also cater to the workers in making sure that they will be productive and that their needs are taken care of. They will have their own bathrooms, locker rooms, and break area. Aside from the factory, there will be an office as well for the employees. Employees will also have separate entrances and still have access to the factory in order to check on the production of the factory. To entertain guests, there will be a waiting area as you enter the offices. In order to ensure security, there will be guards placed at the gates of the factory as well as in the entrance for the factory workers in making sure that everything and everyone is safe. For further details, please refer to the facility layout below.

Facility Layout

Ergonomics, Occupational Health, and Safety

The daily uniform of all workers, which will be provided for by the company, would comprise of a matching set of long sleeve shirt and pants, rubber shoes, an ID, a hairnet, and gloves. Each worker will be trained on his/her given tasks and usage of equipment and briefed on the various regulations and protocols in the facility before being approved for work in order to maintain safety and ensure efficiency of production. They will also have medical tests and check ups to make sure that they are capable for work.

As soon as the workers arrive there will be a guard at their entrance in order to check in on their IDs before allowing them to proceed. They will then proceed to go their locker rooms to change into their uniforms and leave their belongings. Before proceeding to work, they will have to mark their time cards and their will be a supervisor to ensure that they are in proper uniform and have done the preparations necessary such as washing their hands in order to make sure that there is cleanliness in the workplace. As the workers are working, the supervisor will also be there to check on them and be there in case anything goes wrong in the facility.

The supervisor will also be the one to signal the breaks of the employees and they will be have to proceed to the tables in their locker room area in order to eat their meals. The supervisor will also make sure that after their breaks, the workers have washed their hands and are still in the wearing the necessary attire such as the hairnet and gloves. After their work, employees will then have to change out of their uniforms and before leaving the facility; their bags and belongings will be inspected to make sure nothing is stolen.

d. Production Schedules

The quantities of the dry ingredients obtained from suppliers should be enough for a month’s worth of production, to ensure maximum freshness, so that a new supply could come in monthly. A weekly replenishment of sources however would be preferable for the more perishable ingredients, such as the Jackfruit. These procedures do not only just provide consumers with the optimum taste and flavor of their deep-fried Sapin-sapin, but it ensures food and health safety as well. This is a favorable course of action for both ends. For the storage of these raw and dry ingredients, they will be in air-tight containers, and in their original packaging. These ingredients shall remain unopened until the time they are to be used for actual manufacturing. This is to avoid contamination and quality degradation of these food products. These ingredients shall be consumed within the same month they are purchased. These ingredients, once used for manufacturing shall be measured in such a way that every package of raw material that is opened will be consumed within the same production day. This is done to minimize waste and maximize quality. All the personal handling the ingredients shall follow a strict dress code and other protocols involving proper health, sanitation, and hygiene. Any employee who is in violation to any of these rules will not be allowed to handle the ingredients or to enter the production facility.

e. Outbound/Return Logistics

After inspection of quality finished products, it will then be packaged in boxes and assigned new bar codes (this time for the purpose of storing finished products ready for shipping). This RFID will be eliminating any need for manual recording. Its investment will, therefore, be more practical as it is replacing the need for numerous workers who would have been assigned to record exhaustively. A database will be accompanying these bar codes upon scanning. It will take note of the quantity of the products per box, the date of production, the location of storage in the warehouse and (if any) special requests of a client.

It will then be moved into the warehouse, specifically the space allotted for finished products that are ready and waiting to be shipped. As for the database, it will have a very limited access. Only assigned workers are given access to it in order to track accountability for inaccuracy or malicious manipulations. These employees are tasked to edit information when necessary. For example, when a box is transferred to a different shelf in the warehouse, the assigned employee will edit the location of that box by matching its bar code and updating it with the new location. Another employee will be tasked to add important shipping information to respective boxes. Upon taking out the box, this employee will update its information in the database, adding its shipping destination, shipping fees and tracking number. Should there be any returns, another worker is responsible for updating the database and adding a “returned” to the data of the box, stating the reason for the client returning the goods. With this method, it will be easier to spot common and consistent problems in returned goods and thus it is easier to address whatever problems that arise.

f. Support Activities

Billing and Collection

After the agreed Purchase Orders, the company will issue a Sales Invoice that indicates the price and discount given to the customers depending on the amount of order they will order. Customers who will also be paying full payment in advance for at least half a month will be granted a 5 % discount on the overall bill. Late payments however, will cost customers a penalty fee of 2% and 4% respectively. Other than these terms, when the customer pays on the exact date, no discounts or penalty charges will given to the customer. For the collection, the company will use bank transfer for inflow and outflow of cash. Customers can deposit their payment to our bank account and should keep the deposit slip as a sign of proof. The customer will then send this deposit slip via email/fax to our office so that the company can verify this order. Despite the incomplete process billing verification and alike, the company will ship its orders to the customer upon the agreed date of delivery.

Waste Management

The wastes that could possibly be produced during or after the product’s production process would be mixed and unmixed raw materials, defective and damaged packaging, dry papers, and rejected processed bars. The company’s management must obtain the area’s garbage collection schedule in order to make sure that they will be able to dispose of the waste properly and regularly. This involves the preparation of different segregated bins to be ready for pick up by the area’s garbage collection personnel. An effective and efficient waste management program ought to be implemented in order to help protect the environment from any waste they will produce, which is also their corporate social responsibility. There will be an inventory manager who will keep track of all the materials, whether to be disposed of or reused. A report will be submitted to the purchasing officer for feedback. Unmixed raw materials will be segregated into two groups. The first group will be raw materials that can still be used to produce more snack bars. The second group, the unusable raw materials that are left will be placed in the compostable bin. The mixed raw materials that can no longer be used for production will be placed in another compostable bin as well. Defective packaging or containers will be grouped together in a separate bin and should also be included in the inventory manager’s report before being disposed. The workers would also have to collect all defective processed snack bars and quantify them in inventory as well. These finished goods may be sold at a lesser value (depending on the quality) so that the company could incur fewer losses. However, expired bars will be disposed accordingly. For liquid substances, however, the company must ensure that no solid substances are left within the liquid. This will be properly disposed by leading directly to the sewer. All solid wastes will be collected based on the area’s schedule for garbage collection.

g. Organization

Our group prefers using a relatively flat organization chart in contrast to the standard hierarchical standard present in most organizations. We have used several assumptions in the making of this decision. First off is that we are a relatively small or young company. This would imply that having a large and complicated hierarchy and organizational structure could be detrimental to our efficiency. Also, a related issue would be the distance between top management and lower-level staff. In contrast, having the standard organizational structure for our small company would distance people from one another. This is not so much of an issue with larger companies, but for a small company such as ourselves, it is imperative that we keep strong, direct bonds with one another in order to move forward and promote internal growth.

Another assumption is that our product is relatively new in the market. This would imply the need for change and evolution of the product to better fit the final consumer. In line with this, it is imperative and absolutely necessary to put communication as a top priority within the company. Having a flat organizational structure, which means fewer management levels between top management and lower-level staff, reinforces strong communication and allows the proactive involvement of all members of the company. This can definitely help the top management create more realistic goals, as well as being able to communicate problems much more easily, quickly, and efficiently to other departments. This added flexibility and independence for each department can work greatly towards everyone’s own benefit. This means that departments can easily implement changes they see as critical or important, avoiding delay and unproductivity. The key positions located within this structure would be the following: Head of Strategy Research and Development, Head of Information Technology, Head of Production, Head of Marketing, and Head of Logistics & Production.

The head of Strategy, Research and Development is integral to the overall formulation of the product and subsequent future product improvements or extensions. This department is most involved with the planning of product lines. Also under this department is After Sales. The input generated from the After Sales department is critical to the future work done by the entire department. In essence, both divisions work hand in hand to produce a better product that would best satisfy the consumer.

The head of Information Technology on the other hand has the important task of producing or maintaining the database of the company. The company itself is extremely reliant on this database system. It is imperative that this department has a strong presence and will be able to actively tackle problems that will arise in the future. They are also in charge of keeping and maintaining the various RFID-related technologies in check. Extending forward, they are also in charge of teaching personnel on how to use all of these technologies and provide knowledge on simple troubleshooting. The head of this department needs to be knowledgeable in all of these technologies and must have experience with possible technological innovations.

The head of Marketing is in charge with all advertising and promotions. He is also responsible for increasing the brand equity of the company, and enhancing and strengthening the product itself. The group is well aware that none of this is achievable in a short-term time period, thus is it extremely important that the head of this position is well-aligned towards the long-term achievement of the company’s goals.

The head of Logistics & Production is in charge of not just the overall production of goods, but also the overall logistics of the company. This would include delivery and business decisions. It is imperative that he has a drive for efficiency, as well as efficacy. Knowledge on all the relevant processes involved in line with production is also necessary.
h. Financial Management

In order to execute the proposed and detailed business plan, the company needs several investments. In order to be able to invest the company also needs a large amount of working capital. This working capital will be borrowed from the bank through a loan and will be used: to pay for pre-operational expenses by purchasing fixed assets such as equipment, machinery, RFID/Barcode system, etc.; as well as pay for operational expenses such as paying utility bills, rent, salaries, direct material costs, and other expenses in the running of the business. These expenses will be minimized in order to fully pay the loan in a shorter period of time to decrease interest expenses, which will lead to more profit in the long term. Furthermore, the company will invest heavily on trainings for both the direct and indirect labor of the business. A higher skilled labor force will ensure smooth, efficient and quality production of goods. Not only is this needed in order for us to meet the required amount of Fried Sapin-sapin bars we need to produce on a daily basis according to demand, but also to ensure quality, and the minimization of defects which will also decrease expenses and chances of recalls that will ruin the brands image. On the other hand, this will increase our sales in the long term due to good brand image and reputation.
IV. SUMMARY

The demand for snack bars is increasing both in the USA and the Philippines. The demand for local delicacies in the Philippines is growing as well. With these two facts in mind and the large markets present: Filipinos residing in California, USA, and the middle classes C1 and C2 of the Philippines, the entrance of Fried Sapin-sapin will prove to be another contender in the snack bar industry of both countries. Exporting Fried Sapin-sapin was a logical move since the 2nd largest population in the USA is Filipinos, numbering roughly at 4.3 million people.
In order for the business to be successful the company has to maintain good relationships with it’s suppliers and customers. In order to gain customers and maintain good customer relationships we have to ensure that we are producting top of the line high quality products to ensure good reputation and image, creating loyalty from the customers. Services must also be top par. Both services and products should meet or exceed customer expectations. Communication with the customers through various social media and creating an online presence in order to hear their opinions and what they think of the products and services is important, and if bad, should be taken as constructive criticism. Communication is also key in maintaining a good relationship with the suppliers, as the business will be mutually beneficial to both parties. Having similar goal orientations such as customer satisfaction prioritization and corporate social responsibility also allows smooth operations.

Through house of quality we determined high quality ingredients for the products were a primary concern to the customer, which is why we chose suppliers that have very good reputation regarding the quality of their products despite some of their distances from the factory. Peotraco Industries, Inc., Raw Brown Sugar Milling Co. Inc, Asialink Marketing International, and Federation of Free Farmers are our suppliers and have been in their respective industries for years, are very trusted by many other companies, and have a very good reputation. The location of the factory was determined by the factor rating method, however we also took into account all locations of the suppliers and the port for exported products. The location of the warehouse in California was simply decided because of its relative close proximity from the receiving port.

Fresh, high quality raw ingredients will be agreed upon between company and supplier to be delivered straight to the factory for manufacturing. The food processors, cutters, steamer, continuous mixer, continuous deep fryer, and packager are also quality equipment and machinery that are energy efficient. Since demand was roughly 30,000 snack bars per annum, thus approximately 2,500 bars per month, we decided on a small scale operations with seven workers to minimize initial pre-operational and operational expenses as we will be gathering capital mostly through a loan. This will decrease interest expenses. We will increase the size of operations as demand and sales increase over time.

For corporate social responsibility the products are packaged using eco-friendly materials. The waste management program being implemented will maintain hygiene in the factory during operations but at the same time promote environmental friendliness. Machines will always be checked on and maintained as back up equipment aren’t available yet due to already high initial expenses. Despite not having back up machinery yet, the equipment are not pushed to their capacity limit with a manageable demand of only roughly 100 snack bars produced a day, thus can last for a long time. Backups will be bought as sales increase.

Upon receiving payments for x amount of units of the Fried Sapin-sapin bars, the product will be given to the customer. Although, there will also be credit options available to the customers. Payments from the US will be received through bank transfer services. The company’s after sales services will also be constantly available for the customers who aren’t satisfied with the product.

After calculating gross sales through the forecasted demand, costs of goods sold, operational expenses, and pre-operational expenses, at the end of one year running the business we expected a gross profit of nearly Php 100 Thousand. Taking into account total expenses however, we calculated to be at a net income loss of roughly Php 2.2 Million. However, we should take into account that most of these expenses are investments and actually fixed assets for the long term run operations of the business, thus making gross profit the better number in evaluating the business. However, the selling prices of Php 50 locally and P130 in the US can be increased for more profit. Overall, the company will inevitably make profit through Fried Sapin-sapin in the long run.

V. BIBLIOGRAPHY

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