Republic of the Philippines

Southern Luzon State University

College of Engineering
Lucban, Quezon

SUPPLY CHAIN ANALYSIS OF UNION

GALVASTEEL CORPORATION (UGC) IN
CALAMBA, LAGUNA

Prepared by:

CERRUDO, JULIUS MARK V.

JARDIN, PRECIOUS ANNE E.

ROPEREZ, DONABEL B.

ENGR. STELLA Y. DAHILIG

INSTRUCTOR
RATIONALE

Metal roof is the most widely used roofing method in the Philippines. It is cost

effective, easy to install, reflects heat, easily dismantled and easily

disposable/recyclable. Also, it is one of the fastest growing segments of home

improvement, more than quadrupling its market share over the past decade. Many

homeowners concerned with aesthetic appeal are often positively impressed with the

wide variety of contemporary styles, profiles, and vibrant colors available in modern

steel roofing. Other benefits that help make steel roofs stand out among other roofing

products, include low life-cycle cost, superior energy efficiency, and sustainability. For

anyone who wants their roof to be an asset for years to come, rather than it being a

constant source of problems, steel roofing can be a wise choice. The benefits offered by

today‘s metal roofs allow homeowners to upgrade their homes with products of lasting

value. While other roofs quickly diminish in value as they age, metal roofs provide long

lasting benefits.

Metal roof is not for productivity and profitability, it is more of creating a positive

impact to people, to the industry and the country. As much as we can, we want to do

things that will increase the quality of life, that will open more opportunities for growth,

and that will contribute in nation-building.

Galvanized steel roofing is useful in building houses and other buildings because

of lower cost than stainless, less maintenance/Lowest long term cost, long life

expectancy, coating life and performance are reliable and no other coating can provide

the same protection.

 Today, Union Galvasteel Corporation is the market leader in the manufacture

and distribution of galvanized steel and prepainted galvanized roofing. The company

has the longest and most diversified distribution network in the industry with plants,

warehouses, and sales offices in the strategic locations throughout the country. The

company manufactures galvanized roofing with different types such as: Duratile,

Durarib, Duratwin, Duracorr, Laverne, Mega Hi-Rib and Hi Rib.

The company manufactures high-quality products. It should always be relevant

and valuable, according to the needs and demands of the customers, attuned to the

changing times. More than claiming that they are all aesthetically designed for utmost

durability, the company wants the products to be versatile and flexible for various

applications. The company considers compatibility to environment and climate change,

the value for money by making products all cost-efficient, by delivering the services on

time. Also, they offer different types of roofing accessories. They challenge themselves

to always innovate to offer infinite possibilities in the construction industry.

The Company‘s slogan ‗SA TIBAY AT GANDA PANALO KA!‘ speaks of an

utmost commitment for product quality and service – that is, making lives better for

Filipinos.
BRIEF HISTORY

The company started as the Union Steel Plant Division of Bacnotan Cement

Industries, Inc. (Bacnotan), a pioneer in the Philippine Cement Industry. It began

commercial operations in 1963 with a galvanizing plant in Poro, La Union for the

manufacture of Galvanized Iron (GI) sheets, expanding to Ilang, Davao City in 1968 and

to Calamba, Laguna in 1990. In 1993, the steel plant was spun off from Bacnotan as a

separate business unit, and incorporated as Bacnotan Steel Corporation, later renamed

UNION GALVASTEEL CORPORATION (UGC). The company in 1997 established a

modern Continuous Galvanizing Line and Color Coating Line for the manufacture of

pre-painted galvanized steel coils in Calamba, Laguna.

UGC is the market leader in the manufacture and distribution of pre-painted and

other galvanized roofing, and of galvanized steel building products such as building

system components like steel decking, c-purlins, door jambs, steel trusses, pre-

engineered building structures (PEBS) and insulated panels for commercial, industrial

and residential applications. The company has the largest and most diversified

distribution network in the industry, with roll forming plants, warehouses and sales

offices in strategic locations throughout the country.

The company is owned by PHINMA CORPORATION, a highly diversified holding

company with interests in enterprises involved in housing; steel roofing products,

energy, education, and business process outsourcing. PHINMA was founded in 1956 by

a group of prominent businessmen and industrialists led by Amb. Ramon V. del

Rosario, Sr., Don Filemon C. Rodriguez, and Mr. Ernesto O. Escaler.

 SUMMARY
Supplier 6

Manufacturer 1

Distributor (Warehouse and sales office

and 26
Roll forming Plants)

Consumer 50+

NETWORK DESIGN

As a professionally managed company under Philippine Investment

Management, Inc. (PHINMA), Union Galvasteel Corporation pursues its mission of

manufacturing excellence and customer satisfaction by running its business according

to highest ethical standards, good corporate governance while at the same time

responsive at the interests of its stakeholders- the consumer, stockholders, its

employees and public in general.

The manufacturing facilities are environment friendly operations and are

continuously improved to keep up with environmental standards. In line with their policy

to produce and market products and provide services that consistently meet

international standards and ensure customer satisfaction. Their commitment to total

customer satisfaction is its basis Quality Policy. Thus, while product quality is important

for attracting customers, they believe that efficient services are the key to retaining

them. It is in this area where it has a comparative advantage and effectively different

from the rest of the field- customer service being a core value in all levels of the

organization.
 The main plant of UGC is located in Calamba City, Laguna which consolidates all

manufacturing operations, designed to accommodate and deliver specific market and

customer requirements. It houses the newly-expanded Color Coating Line (CCL) and

the Polyurethane (PU) Lines, which supplies the entire distribution network in the

industry. All in all, to date, UGC has 14 Rollforming Plants, 8 warehouses and 4 sales

offices. in strategic locations throughout the country located in Laguna, Nueva Ecija,

Pangasinan, La Union, Isabela, Lucena, Cavite, Butuan, Bicol, Bacolod, Iloilo, Cebu,

Tacloban, Aklan, Davao, Mizamis, Zamboanga, Ozamis City, General Santos, Cagayan

De Oro, Pampanga, Laoag, Benguet, Ilocos Sur, Batangas, Rizal and Bukidnon. The

researchers conduct an interview with Engr. Romy Ebuenga, one of UGC‘s lead men

because the HR office refers researchers to him because of busy works. According to

him, because of lower price offered by other competitors they have to make competitive

strategy so they practiced global sourcing. The substrate which is the main component

of the product purchased by global sourcing since they believe that they can lessen the

cost than producing the raw materials needed but still they are producing some of it in

which they believe they have the best quality. A primary reason that many firms

purchase from foreign suppliers is to lower the price of materials. Price generally is an

important factor when purchasing standard materials and supplies that do not impact

the competitive position of the firm. Many factors can contribute to cheaper materials

from overseas suppliers—for example, cheaper labor costs and raw materials, favorable

exchange rates, more efficient processes, or intentional dumping of products by foreign

suppliers in overseas markets. Additionally, the quality of overseas products may be

better due to newer and better product and process technologies. Further, while foreign
suppliers may be located farther away, they may be able to deliver goods faster than

domestic suppliers due to a more efficient transportation and logistical system. Foreign

suppliers may even maintain inventory and set up support offices in the host country to

compete with domestic sources and to provide better service. (Wisner J.D.et al., 2012)

In addition, according to him the percentage between the global source substrate

and the company produce are 60 percent and 40 percent respectively. Currently they

have four suppliers for the substrate which is imported from China. Raw materials like

the paint and the other chemicals used are purchased from a fixed supplier but they are

the one producing their own galvanizing agent in which has the high quality and passed

the company standards. The technology they have is that highly mechanize machines

which is now capable in handling multiple production. They are still having human

intervention or manual operations in making their products. The company has a daily

capacity of 25,200 Linear Meter and daily dispatching of the produced items.

They have two trailer trucks and use five other trucking services from other

trucking company. They use periodic systems in counting inventory specifically monthly.

They are currently using pull-based supply chain and push-pull based supply

chain.

EXISTING PROBLEMS AND LIMITATIONS OF THE SUPPLYCHAIN

Suppliers are unreliable

Union Galvasteel runs for many years, but they still encountered some problems

that need to be solved, one problem is their supplier. Loyalty with supplier is a must in
supplier partnership, but in their case their supplier of their main components of the

products (substrate) are easily captive with those buyer who have strong partnership.

Based on our interview, although they are practicing global sourcing the problem is that

their supplier has different customer all around the world because of this they cannot

guarantee the supply of the substrate. They sometimes don‘t have production because

of problem in supplier with no supply. To cope with the demand they sometimes have to

choose in over 40 suppliers but their standards in choosing the best supplier will depend

on the strategy or the company focuses This situation can leads to more complex

problem since the main raw materials of their product is the substrate. If their no enough

supply of that product it can affect the production that leads to domino effect from the

process of manufacturing to the end of supply chain.

Inaccuracy of Inventory

The current practice use in finished goods inventory is the periodic system. They

conduct monthly monitoring of finished goods and they put stickers, but because

stickers can be easily detached resulting lost and not accounted for in the inventory

management system. Stock outs are shortages in inventory that can result from

inaccurate records.

PROPOSED IMPROVEMENT

Today, procurement is used as a competitive weapon that distinguishes

successful, highly profitable companies from others within the same industry. Effective

use of procurement strategies can not only provide customer satisfaction but higher
revenue. According to Kraljic, in his seminal article, ―Purchasing Must Become Supply

Management‖, the firm supply strategy should depend on two dimensions: (1) profit

impact and (2) supply risk. According to Kraljic‘s framework, supply risk ―is assessed in

terms of availability, number of suppliers, competitive demand, make-or-buy

opportunities and storage risks and substitution opportunities,‖ On the other hand, profit

impact ―is determined based on impact on company growth or contribution to revenues‖.

UGC problem is the unreliable supplier of consistent fixed of supply and one of the

functions of procurement team is to ensure the supply to cope the consumers demand.

The substrate which is used to produce all the products of the company has the lack of

supply. Basically, a no supply of substrate represents a stop in production meaning

substrate is a high risk material in terms of its availability and contributes to a large

amount of profit. This kind of item according to Kraljic‘s matrix is a Strategic item. By

definition, strategic items have a high supply risk and impact on profit. Based on

Kraljic‘s matrix the most appropriate supply strategy for these items is to focus on long-

term partnerships with suppliers. Suppliers will not only provide you with the goods and

services you need to run your business - they can also be an important source of

information, advice and trade credit.

A good relationship with suppliers is a vital part of business success

The company should talk to their suppliers regularly and avoid rush orders wherever

possible – they can cause significant stress in your business and put a strain on the

relationship with your suppliers. Provide adequate lead times and share information.

But, it's not prudent to rely on one supplier. So keep a backup or multiple suppliers on

hand. A proper supplier relationship management model will ensure the long-term
success of your organization. Supplier relationship management models are designed

to make the relationship you have with your suppliers more successful.

The management is putting stickers in every finished products that leads to an

inaccurate inventory because stickers can be easily detached and lost.

According to article of Paul Truijillo, poor inventory management leads to a

loss of customers and revenue. Taking better care of the inventory with dedicated

inventory management with barcodes should be a priority and can help the company

to function efficiently. Using barcodes in inventory management will improve your

day-to-day operations. Union Galvasteel must implement inventory management with

barcode because inventory items will have a unique barcode label and informations

can be added to certain items in inventory and associated data can be recalles with

one quick and simple scan. Barcodes eliminates errors because it is properly

recorded. Lastly, inventory tracking with barcodes saves time. When the inventory

items are not organized with an automated system, employees will spend too much

time writing and recording inventory, as well as physical searching for items in the

warehouse to shift.
References:

Levi D.S., Kaminsky P., Levi E.S., “Designing and managing the Supply Chain”, Third

edition, (n.d.),

Wisner J.D., Keah-Choon T., Tang K.L.”Principles of Supply Chain Management”, Third

edition, Western, a part of Cengage Learning, 2012, p.64

https://www.entrepreneur.com/amphtml/206530

https://www.techfunnel.com/fintech/best-supplier-relationship-management-models-for-
procurement/