‘Istiv’ helps improve SME productivity
Business Monday, B3-1
March 28, 2005
The program name stands for the five ideal attributes of a productive person – industrious, systematic, time conscious, innovative and strong value for work. In short Istiv.
The National Wages and Productivity Commission (NWPC), an agency of the Department of Labor and Employment tied up with 19 big corporations to assist 50 viable small and medium-scale suppliers that could benefit from its Istiv productivity improvement program.
The participants of the Big Enterprise, Small Enterprise program implemented with the Employers Confederation of the Philippines (Ecop) and the Technology Application and Promotion Institute (Tapi) of the Department of Science and Technology include Toyota Motor Philippines Corp., Ford Motor Philippines, Yazaki-Torres Manufacturing, Philippine Auto Component, Philippine Batteries Inc. and Yutaka Manufacturing Philippines, Inc.
Other participants are Nestle Philippines Inc., Unilever Foods Philippines and San Miguel Packaging Products, exporters of semiconductors and electronic components like Integrated Microelectronics Inc., SCG Philippines Inc., Fujitsu Ten Corp. of the Philippines, and Takanichi Philippines Cor., Smart Communications Co., Inc., Jolibee Foods Corp., YKK Philippines, Inc. Philippine Carpet and Express Commissary Inc.
The Istiv productivity improvement program has three modules – orientation for owners, a three-day training session for managers and a one-day training program for workers.
The participating companies will be required to formulate their productivity improvement programs, the implementation of which will be closely monitored by NWPC in the next six months.
“Our experience shows that the commitment of the owner is crucial in the success of any productivity improvement program,” said Ciriaco A. Lagunzad III, NWPC executive director. “We have had encouraging experiences all over the country.”
Below are the experiences of five beneficiaries of Istiv:
Machine shop in Cebu
Philip Tan owns Wellmade Motors and Development Corp.
His machine shop in Tipolo, Mandaue City re-manufactures metal component parts and provides specialized services such as on-site machining and hot or cold fusion welding. His main problem, common among SMEs, was frequent tardiness of his workers.
After both owner and workers have gone through NWPC’s Istiv sessions, Tan computed the lost annual earnings due to tardiness of each employee. He also quantified the business lost by the company because of their ability to deliver on time.
To solve the problem, he and his workers devised a “punctuality tracking system” where they computed the tardiness of each employee at the end of each week, month and year.
The workers contributed an agreed amount for every minute of tardiness to their Employees Welfare Fund while the management would put in an equivalent of 50 percent of the workers contribution as its counterpart.
The results were encouraging – the total tardiness of the company’s 60 workers dropped from 24,205 minutes in 1999 to 2,954 minutes in 2000 and to a negligible level by 2001.
Aside from meeting their worker schedules, the company reduced overtime by 50 percent and increased sales revenues by 14 percent.
They eventually agreed to get rid of the bundy clock and instead, each worker now fills up a daily time record based on honesty.
Last year, Wellmade Motors opened a branch in Cebu City, obtained an IS-9001 certification and was awarded by the Department of Trade and Industry as the Best and the Best Outstanding Consumer Welfare Company.
Furniture maker in Zambales
Walch Furniture and Home Furnishing Company, a leading furniture maker in San Antonio, Zambales owned by Walmin Chen Sr. used to supply furniture to the families of servicemen in the US bases.
During its heydays, Walch employed as many as 200 workers.
Walch’s market and factory disintegrated with the eruption of Mt. Pinatubo followed by the pull out of the US military bases in the early 1990s.
But that did not stop the enterprising businessman to start anew and attract the attention of families living in Metro Manila’s posh subdivisions.
Orders kept on coming. Eventually Chen felt the need to improve his operations and availed of NWPC’s Istiv services in 2003 to help him redesign his plant layout, improve his work processes, install a management control system and instill among his workers the importance of productivity.
The improved plant layout facilitated greater efficiency and minimized unnecessary movement of workers and materials in the process.
The big white board where Walch used to track job orders, deliveries and receivables and the stick-on notes containing instructions were eliminated.
Appropriate recording and reporting forms, including stock cards and item tags for the company’s products were designed. With the implementation of its 5S on housekeeping program, Walch production area became cleaner and a more pleasant place to work in.
The positive impact was immediately seen in the workers output. The 30-day production time for a cabinet- which was done by two carpenters, one carver, one sander and two varnishers – was reduced to 20-25 days.
The company, now managed by Walmin Chen’s son, is a consistent best seller in the various furniture trade fairs in Metro Manila. The company is also starting to export some of its products to the Untied States.
Food processor in Cagayan de Oro
SLERS Industries, Inc., a food processor based in Cagayan de Oro produces one of Mindanao’s leading local brands, Jamon de Cagayan.
When its owner, Mercedes Pelaez-Mejia availed of the Istiv program in 2000, her operations were saddled with poor equipment maintenance, inadequate cold storage facilities and high product wastage. To encourage better understanding on the concept of productivity among her 29 workers, the company adopted the program they called “Advance with People, Advance with Attitude.”
One of the measures introduced under Istiv was regular monthly meetings between management and workers.
Istiv resource persons conducted briefings on the concept of 5S, Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP) that set the quality standards on food handling and safety particularly among exporters.
The company eventually got rid of its old chest freezers and invested in walk-in cold storage facilities that had bigger capacities and better controls in setting appropriate temperatures to assure the best quality for its meat products.
SLERS benchmarked its packaging with foreign food products and invested in a vacuum packaging machine, which enabled the food processor to produce processed meats with quality comparable to expensive imported products.
From 200 kilos per man-day, SLERS’ productivity went up 50 percent to 300 kilos per man-day and its gross sales increased by 21 percent.
Boneless bangus exporter in Pangasinan
Another food processor that benefited from Istiv program is Anjo Farms, an exporter of boneless bangus operating in San Fabian, Pangasinan.
When its general manager, Jose Enrique Tanjangco, agreed to work with NWPC’s team, they identified three main areas of improvement – management control system, compliance to GMP and HACCP, and instill the Istiv attributes to its workers.
To improve its management control system, the management conducted regular meetings with the company’s 69 workers. Work control forms were introduced to generate information needed for decision-making and process and product control standards were strictly enforced.
Anjo Farms also improved its facilities and was able to obtain an HACCP certification from the Bureau of Fisheries and Aquatic Resources and Halal certification from the Office of Muslim Affairs.
With workers who can debone a bangus in one minute and 28 seconds, Anjo Farms production increased from 2,000 to 4,000 pieces per day without adding a new production line and with minimal increase in the number of workers.
Machine utilization improved from 75 to 100 percent while power consumption was reduced significantly. With better planning and coordination, raw material shortages were minimized.
The workers now operate their own canteen. Management provided them with individual lockers and a staff house where they can rest particularly on rainy days or when production is running on two shifts.
Average take home pay increased from P4,800 a month in 2002 to P7,200 in 2004. Tanjangco is confident his workers will continue to reap additional benefits from sustained productivity improvements.
Anjo Farms was awarded the Excellence in Export Golden Shell Award in 2002, Most Outstanding SME in Aqua Culture Industry and the Gawad Kapatid award by Ecop in 2003. It is exporting to US, Japan, Hong Kong, Macau, Australia, Canada and Sweden.
Coconut coir processor in Bicol
Dr. Bo or Justino R. Arboleda used to be a dean in one of Bicol’s engineering colleges until he decided to pursue the commercialization of his research on coconut by-products. Leaving the academe to venture into business, Dr. Bo organized Juboken Enterprises – derived from the names of his wife, Julie, Dr. Bo and their son, Ken – which incidentally, according to Dr. Bo, is also a Japanese word meaning “important adventure.”
Coconut husks, which were often left by farmers to rot, were decorticated. Dr. Bo developed out of the coconut fiber various products – coco-pots for seedlings, poles for orchids, liners on wire baskets to hold the soil for hanging plants, roles and car upholstery.
The sawdust is compacted to become cocopeat bricks that are now used to improve the quality of the garden soil. Its main product is a biodegradable geotextile, a mat made from coconut husk fiber that is used as anti-soil erosion material. The geotextile has promising market potentials in China.
When he started Juboken, Dr. Bo was the president-salesman-supervisor-driver rolled into one while Julie was the treasurer. Six skilled undergraduates were hired and as Dr. Bo’s business grew, they were promoted and are now supervisors and managers.
What started as a family adventure is now a community enterprise. Juboken now has 49 employees and its production is augmented by the output of 900 families in Albay who were doing piece work for the company. Aside from big companies like the Philippine National Oil Corp. (PNOC), Miescor and Coctech, Juboken also suppliers SM and exports to Germany, Japan and Switzerland.
By this time, Dr. Bo is spending more time in Manila marketing his products while his managers handle the day-to-day operations in Albay.
As his business grew, he started experiencing the usual problems in the plant site – inadequate skills of the workers, high raw material losses, poor employee attitude towards work and strong market competition.
Faced with mounting production problems, Juboken employees as well as Dr. Bo went through Istiv sessions in October 2002.
The improvements were immediately felt. Sales for the second semester of 2002 was 75 percent higher than the first semester’s while Juboken was able to double its production output without having to hire new employees. By achieving better raw materials management and zero wastage, Juboken’s cost of production dropped 12 percent.
Br. Bo now holds his “weekend coffee breaks” in Albay where he meets his employees from 4 to 6 pm to discuss production targets, analyze problems, brainstorm on issues and possible solutions, draw up incentive schemes and check the employees’ and the company’s performance.
By September 2003, the company gave a 15th month pay as incentive to the employees for meeting their production targets. His employees are increasingly getting involved in the decision making process.
Wellmade, SLERS, Anjo Farms, Walch and Juboken are among the 1,600 small and medium scale, family-owned business that were assisted by NWPC’s Istiv program, through which over 30,000 company owners, managers and workers had been trained during the past six years.