SUPPLY CHAIN ANALYSIS OF UNION

GALVASTEEL(UGC) IN CALAMBA,
LAGUNA
GROUP 9
 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
• 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.
 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 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.
 SUPPLIERS
DISTRIBUTORS
Substrate Suppliers Roll Forming, warehouse
and sales office

TRANSPORTATION
CONSUMERS
China

MANUFACTURING PLANT

Chemicals Suppliers

TRANSPORTATION

Paint Suppliers
Thailand

DESIGN OF THE SUPPLY CHAIN

 SUMMARY

Supplier 6

Manufacturer 1

Distributor (Warehouse and

sales office and 26
Roll forming Plants)

Consumer 50+
 NETWORK DESIGN

• 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 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 sub
• . 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 itemsstrate
which is imported from China
• 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.
• 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

• . 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

• 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
• 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
• 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.
• 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.