Thesis, Graduate (Master in Management)--University of the Philippines Mindanao, April 2015.

This paper should be well kept and should not be disclosed to the general public.

Business entities that are actively engaged in trading of many goods are plagued with numerous logistical and operational problems. Davao Golden Hardware (Golden) is one of the largest hardware stores in Davao City. Its clients range from both private and public entities. In the midst of intensifying competition, Golden seeks to leverage its internal strengths to attain competitive advantage in the market. It currently struggles with inefficient warehousing operations and delivery delays which incur loss of sales and deadweight costs. This paper evaluates the performance of the Operations Department of Golden and how it relates to the performance of the company. Internal data were gathered through financial documents, internal reports, company memos, and interviews with company stakeholders and customers. Operations comprise the majority of Golden's employees. It has an average of 50% annual deficit from its P 10 million budget. Its inventory system requires upgrading to prevent mismatches between actual figures and the figures from Sales and Purchasing Departments. Its fleet requires upgrades and an increasing maintenance costs. Golden moderately responds to the changes in the External Environment with an EFE score of 2.39 but it has a below-average response to maximizing its internal strengths and addressing its weaknesses. In the next years, it is expected that the ASEAN countries will have more economic integration, Mindanao peace process will come into fruition, and technology in business operations will exponentially develop. These offers opportunity for business entities to source cheaper and better construction materials, serve an increasing demand for infrastructure developments, and optimize business operations. Golden has responded well into developing trade linkages as well as expanding its market share in the Philippines. However, it is slow to adapt to the newer technologies that can increase Golden's efficiency. With an increasing profit margins and sales, Golden is capable of investing in improving its internal processes to improve its competitiveness in the market. Retrenchment strategies are recommended to maintain Golden's market leadership. Some of the options include manpower training, increase warehouse and fleet capabilities, and outsource portions of its Operations Department to a third-party logistics provider that is more capable than Golden in the field of Operations. This paper finds that outsourcing initiative to be the best option. By outsourcing its warehouse operations and delivery fleet, Golden will be able to save P4.8M annually compared to expanding its operations using its current set-up. This potential savings is due to the competitiveness of logistics providers in operations. Since Golden is competitive at trading focused on purchasing and selling, operations management is overlooked. Having a third-party company to handle portions of its operations. Golden will be able to free up its resources to other initiatives and save from expenses due to engaging in activities which it does not have any competitive edge in. The chosen logistics provider will ensure that deliveries are made on time, product inventory reports are accurate and synchronized, and product locations are optimized. This is expected to decrease the loss of sales due to errors in inventory reports and delivery delays. Furthermore, Golden will be able to lower its prices as portions of its direct costs and fixed costs are now lower than its current state. To fund its initiative, Golden will liquidate its assets such as vehicles and equipment, this will minimize fuel and maintenance costs. The proceeds of this sale will be used to fund the monthly fee of the logistic provider as well as fund for the training of retained employees and compensation for employees who cannot be accommodated by the logistics company. This initiative involves constant monitoring and full cooperation of the company stakeholders. A monthly meeting will be conducted to fine-tune the initiative, provide feedback, and execute corrective measures. After a year of implementation, Golden management will decide whether to continue with the outsourcing initiative. The success of the initiative will be measured by performance matrix involving delivery performance, cost savings, and inventory management. This initiative will provide a blueprint for companies seeking to improve its operations to attain and maintain above average returns in the market.