CEBU-based exporters can gain huge savings in production cost if the concern on the delivery of raw materials from suppliers to factories is addressed.

In a recent value chain analysis, Philexport Cebu found that the processes and shipping costs involved in inbound logistics are some important concerns, considering that exporters have to source additional raw materials from Luzon or Mindanao if the local supply is not enough.

Sun.Star accepts donations for victims of Typhoon Ondoy

Philexport Cebu executive director Fred Escalona said some companies in China easily get their raw materials from suppliers whom they clustered near their establishments, saving them delivery and transportation costs.

While it is cost-efficient to have suppliers near production firms, Philexport Cebu information officer Jun Abines said in a separate interview, that exporters must ensure that these suppliers are aware of the requirements or demands of their market.

As an example, he cited a wooden furniture company that bought raw materials and exported finished products only to find out that the market it was targeting did not patronize wood furniture.

“It is important to understand the market first. Conduct enough market research, and then create a value chain that will respond to the market’s needs and demands. We are educating our members about the importance of innovation,” he said.

The value chain analysis is part of the sector export marketing plan (Semp) that will serve as a road map for the exporters.

Escalona said that through Semp, exporters identified problems like those related to inbound logistics and were aided in carrying out solutions.

He added that once the exporter creates market entry strategies out of Semp, it will be easy for him to reach his target market.

The export sectors that created Semp are Cebu Furniture Industries Foundation; Cebu Gifts, Toys and Housewares Foundation; Fashion Accessories Manufacturers and Exporters; Cebu Health and Wellness Council; and the Seaweed Industry Association of the Philippines.

These sector groups have been drafting their respective Semps since September with the help of local experts and staff of Philexport Cebu.

They will be presenting these plans during Philexport Cebu’s general membership meeting on Nov. 19.