Supply Chain Analysis of Dried Sardines in the Bicol Region, Philippines

(1)

Supply Chain Analysis of Dried Sardines in the Bicol Region, Philippines

Viola L. Amano¹ and Julieta V. Mojados²

1 Bicol University Jesse M. Robredo Institute of Governance and Development, Legazpi City

2 Bicol University College of Business, Economics and Management, Daraga, Albay Corresponding author: [email protected]

Abstract

The study assessed the existing supply chains for dried sardines and identified areas for improvement.

The sites covered were the provinces of Camarines Sur, Sorsogon, and Masbate. There are five major supply chains for dried sardines in the Bicol region, with Granadino supply chain as the biggest. The processors generate the highest ROC while the fisherfolks incur net loss. The fisherfolks and the processors have very high-efficiency levels, while the traders have lower efficiency level. The processors are the least flexible and responsive, while the traders are the most flexible and responsive. The areas for improvement identified are the dwindling supply of fresh sardines, financial dependence of fisherfolks to traders, lack of market information of fisherfolks, difficulty of drying sardines during the rainy season, non-observance of good manufacturing practices of processors, not well-defined grading or classification system for dried sardines, unsuitable and inadequate cold storage facility, non-observance of FIFO inventory system, absence of viable industry association, and unawareness of consumers on the grading or classification of dried sardines. It is recommended that the trading center or bagsakan be established in different sardine producing areas; adequate and proper cold storage facility be provided to the processors and traders of dried sardines; formulation of grading standards be initiated by the Bureau of Product Standards of DTI in consultation with the different stakeholders, and this be made known to the consumers and be strictly implemented; strict implementation of existing policies on illegal fishing and other destructive activities be done; a collaboration of DOST and DTI in providing trainings on Good Manufacturing Practices for processors and proper inventory system for the processors and traders be carried out; DOLE in coordination with the respective LGUs could provide alternative livelihood programs/ activities during lean months, and industry associations be organized or activated by LGUs.

Keywords: Dried sardines, supply chain, supply chain analysis

Introduction

Bicol has 94 coastal municipalities with 1,067 coastal barangays. The region’s coastline measures 3,116.1 kilometers. It has four major fishing grounds:

the San Miguel Bay, Ragay Gulf, Lagonoy Gulf, and Sorsogon Bay, measuring 1,666.28 square kilometers (Joven, 2013). Fishing significantly contributes to the economy of the region. Of the recorded employment of 2.093 million in 2011, 40% were in fisheries (FSC, 2013). Fish is an essential food item in the diet of Bicolanos because fisheries habitats surround the Bicol region. This makes fisheries significant to the local economy and the national economy because it contributes to the people’s livelihood, employment, and income. The Philippine sardine industry is typified

by well-established fishing operations and multi- layer distribution systems. However, the industry’s operations are dependent on the supply, which is declining because of overfishing. In 2010, the supply of sardines was about 26% of the 1.24 million metric ton (mt) catch from commercial fisheries and 11% of the 1.18 million mt municipal fish catch. Nevertheless, the total sardine catch decreased by 24%, bringing the local production down to 109,000 million metric tons.

This led to the imposition of a “closed season” ban in the Zamboanga Peninsula so that existing stock could recover (Official Gazette, 2012). Such a ban adversely impacted the livelihood of at least 30,000 workers from fisher folks to cannery and bottler workers and other ancillary service providers.

(2)

Based on the average annual share of sardine production per region from 2003 to 2012, Zamboanga Peninsula has the highest share. It accounted for 46.67%

or 157,614 metric tons on average (PSA, 2003-2012).

The Bicol region is the second producing region with 10.82% average annual share or average production of 36,543 metric tons (PSA, 2003-2012). The three research areas in the Bicol region, particularly the provinces of Sorsogon, Camarines Sur, and Masbate, ranked fifth, sixth, and seventh, respectively. Sorsogon accounted for 3.20% of the average annual share with an average production of 10,804 metric tons (PSA, 2003-2012). Camarines Sur has 3.12% average annual share with an average production of 10,527 metric tons, while Masbate contributed 3.01% with an average production of 10,177 metric tons (PSA, 2003-2012).

Aside from canning and bottling, sardines are also processed into dried fish. This is one of the major industries in the Bicol region. Although there is no

“closed season” ban in the Bicol region, the decline in the fish catch for sardines is strongly felt, affecting the dried sardine industry. This industry is composed of micro and small-scale firms with minimal facilities and assets that have been in existence for

quite some time but have seemingly remained underdeveloped. Food safety and quality standards are not evident in the industry.

Therefore, the whole sardine industry should be examined through the supply chain lens for the whole upstream and downstream ends of the chain to be fully understood and to identify essential insights on how to address specific problems. This enabled the authors to come up with key intervention measures addressing issues such as unsustainable fishing practices, costly processing, unreliable raw materials, including food safety and quality standards.

This study was designed to assess the existing supply chain for dried sardines and identify areas for improvement. The specific objectives were to map out the specific supply chain for dried sardines; analyze the performance of the dried sardines supply chain in terms of efficiency, flexibility, and overall responsiveness;

identify areas for improvement in the dried sardines supply chain such as behavioral, institutional and process; and provide specific policy recommendations to improve the dried sardine industry.

Materials and Methods

The study used purposive sampling as it covered the major sardines-producing areas in the Bicol region.

The sites covered were Calabanga and Cabusao of the province of Camarines Sur; Bulan and Gubat of Sorsogon; and Milagros of Masbate. Figure 1 shows the study areas in the Bicol region.

Primary data were gathered through semi- structured questionnaires, which were pre-tested.

The questionnaires were designed to capture all the quantitative and qualitative information needed to provide answers to the six key questions on supply chain mapping stated as follows: (1) who are the key customers and what are their product requirements (quality standards and volume requirement)?; (2) how

Fig 1 Study Areas in the Bicol Region

(3)

do product, information, and money flow through the supply chain?; (3) what are the activities and services provided at each step in the supply chain?; (4) what are the roles of each key player involved in the chain?; (5) what are the critical issues related to logistics?; and (6) what are some external influences affecting the members of the chain? Through this, the dynamics in the chain, including the behavioral and institutional features of the transactions involved, are understood, providing a contextualized analysis.

Table 1 Respondents of the study

Areas Respondents

Fisherfolks Processors Traders Camarines Sur

Calabanga 13 8 3

Cabusao 5 2 0

Sorsogon

Bulan 14 9 1

Gubat 0 0 2

Masbate

Milagros 29 29 4

TOTAL 61 48 10

As shown in Table 1, the respondents were taken from the top sardine-producing provinces for Tunsoy and Tamban sardines in the provinces of the Bicol region, namely, Camarines Sur, Sorsogon, and Masbate. The chain master model is a supply chain in which one dominant firm, the chain master (or channel captain), specifies the terms of trade across the entire supply chain. The supply chain’s performance is driven primarily by the coordinating skill of this firm.

Considering the nature of the dried sardine market within the three provinces identified in the project, a Chain-master Model was used as a framework to trace the supply chains across the study area. This entailed identifying the members of the supply chains, flow of products, information and payments, activities and services conducted by supply chain members, critical logistic issues, key decision-makers, and external influences. The supply chain traced was based on the dominant traders (buyers) of dried sardines in the covered areas or the traders with trading and storage facilities.

Results and Discussion Supply Chain Mapping

There were five supply chain maps developed.

These were the Granadino Supply Chain, the Asis Supply Chain, the Vergara Supply Chain, the Escandor

Supply Chain, and the Fidelson Supply Chain. The supply chain maps are presented in Figures 2 to 6.

Key Customers and Product Requirements in the Dried Sardines Supply Chain

The Granadino supply chain has the highest volume of dried sardines supplied to its key customers, who were retailers of dried sardines in the different parts of the province of Albay (Table 2). The dried sardine requirement was 5,100 kilograms per week.

The highest volume of requirements can be explained by the broad market coverage of the supply chain.

Table 2 Product requirements and key customers by supply chain Supply

Chain

Product Requirements

(kgs per month) Key Customers Granadino 5,100 Retailers of the whole provice

of Albay

Retailers of Daraga and Oas, Albay; Legazpi and Tabaco City; Cumadcad, Sorsogon Asis 3,800 Wholesaler of Balot, Tondo,

Manila

Vergara 3,000 Retailers of Catanduanes;

Legazpi, Tabaco and Naga City; Pili, Camarines Sur Escando 1,000 Retailers of Irosin, Juban,

Casiguran, Sorsogon;

Sorsogon City

Fidelson 1,000 Retailers of Irosin, Juban, Bacon, Casiguran, Sorsogon;

Sorsogon City

The Asis supply chain has 3,800 kilograms of dried sardines supplied to retailers in some of the towns and cities in the province of Albay. The key customers in this chain were the retailers in Daraga and Oas, Albay, and Legazpi and Tabaco City. Retailers in Cumadcad, Sorsogon were also supplied by this chain.

The key customers of the Vergara supply chain are a wholesaler in Balot of Tondo, Manila, and retailers in the province of Catanduanes; Cities of Legazpi, Tabaco, and Naga; and Pili, Camarines Sur. These customers required 3,000 kilograms of dried sardines every week.

The volume traded in the Escandor and the Fidelson supply chains per week were 1,000 kilograms each. The key customers of both chains were the retailers in Irosin, Juban, and Casiguran, Sorsogon, and Sorsogon City. The retailers in Bacon, Sorsogon were also key customers of the Fidelson supply chain.

(4)

Table 3 shows the quality specifications of buyers for dried sardines. The quality specifications were size, stainless color, clear eyes, and saltiness. All of these characteristics were demanded by the buyers in the Granadino supply chain, while the size was not specified by the buyers in the Asis, Escandor, and Fidelson supply chains. Only saltiness was specified by the buyers in the Vergara supply chain. This reveals the varying requirements of the clients. This indicates the

need to standardize and clearly define the quality of dried sardines. This can be done with the assistance of DTI through the Bureau of Philippine Standards, and DOST through Industrial Technology Development Institute. The standards ensure that goods or services produced in a specific industry come with consistent quality and are equivalent to comparable products or services in the same industry.

EFREN MORINES JOMAR MORINES JOSELITO BARALLA DAISY MENDIORO ANTONIO VILLAMOR GINO BARALLA RENANTE MORINES JOSE BALASABAS BILLY BALASABAS ISIDRO BARALLA

FISHERFOLKS/PROCESSORS Milagros, Masbate

ISAAS OLBEDO ANGEL OLBEDO REYNALDO ROS ROEL A. CANONES LARRY A. CANONES FISHERFOLKS/PROCESSORS

Milagros, Masbate ELMO CABALLEROS

Milagros, Masbate

MILAGROS PELOTIN Milagros, Masbate

RENATO C. LUMA ANTHONY GRAPILO RICO BARTOLATA WILLIAM ARISALA EDWIN D. TEMPLO JESUS GLIANE CHARLIE HILARIO RONALDO D. GUŇA JOSE ANGELES ARLAN E. BUENAFLOR ANTONINO HIPOLLE WILFRANDO POBLETE RONNEL LIZANO EDUARDO CAGUITE FISHERFOLKS Bulan, Sorsogon

ROMEO GIMENA RICO BARTOLATA ORO GOJO JESUS GLIANE MELY ROSE DIAZ EDWIN MORATA PROCESSORS Bulan, Sorsogon

RAMON GLIANE CHARLIE HILARIO RICARDO GLIANE PROCESSORS Bulan, Sorsogon

ROMEO GIMENA TRADER Bulan, Sorsogon

ELIZEO G. HERMIDA GREGORIO P. DARIGIN RUSTOM G. HERMIDA VIRGILIO DASIGAN RAMIL H. TABINAS SANDY B. DUALAN OLIVER H. TABINAS MARIO DANABAR AIDA S. FERNANDEZ JOSE BRONDIAL JR REYNALDOAANGELES RODULFO GARCIA GLEN M. TOLEDO PERLITA AGUILAR FERNANDO P. SANCHEZ JOEL DELA CRUZ BERNARBE DEL VALLE NESTOR DELA CRUZ FISHERFOLKS

Calabanga & Cabusao, Cam. Sur

(MASBATE CITY)

ROBERTO CARIŇO CYRIL M. BREMON REYNALDO DALURO

DOMINGO E. OLLETA VICENTE J. MEDROSO SR HONESTO J. MEDROSO RONNIE E. MEDROSO FELIX B. PIAMONTE JR PROCESSORS

Calabanga & Cabusao, Cam. Sur JOSEFINA PALADO

TRADER Calabanga, Cam.Sur ROLLY I. DELA CRUZ JOY C. ROSERO EDDIE A. SURIGAO RONILO GUARINO LYNDON A. ANTOZADA RICKY BALASA RICKY T. ARBOLADO GUALBERTO T. ARBOLADO NOE A. ANTOZADA MERLITA I. DELA CRUZ PAMPILA A. ARBOLADO FISHERFOLKS AND PROCESSORS

Milagros, Masbate MARLYN DELA CRUZ Milagros, Masbate

SUPPLY CHAIN OF JOEL GRANADINO Fig 2 Granadino Supply Chain

(5)

Fig 3 Asis Supply Chain EFREN MORINES

JOMAR MORINES JOSELITO BARALLA DAISY MENDIORO ANTONIO VILLAMOR GINO BARALLA RENANTE MORINES JOSE BALASABAS BILLY BALASABAS ISIDRO BARALLA

FISHERFOLKS/PROCESSORS Bangad, Milagros, Masbate

ELMO CABALLEROS TRADER Milagros, Masbate City

RAMON GLIANE RICARDO GLIANE CHARLIE HILARIO PROCESSORS Bulan, Sorsogon

ROMEO GIMENA ORO GOJO JESUS GLIANE MELY ROSE DIAZ EDWIN MORATA PROCESSORS Bulan, Sorsogon

ELIZEO G. HERMIDA RUSTOM G. HERMIDA RAMIL H. TABINAS OLIVER H. TABINAS AIDA S. FERNANDEZ REYNALDO ANGELES GLEN M. TOLEDO FERNANDO P. SANCHEZ BERNARBE DEL VALLE GREGORIO P. DARIGIN VIRGILIO DASIGAN SANDY B. DUALAN MARIO DANABAR JOSE BRONDIAL JR.

RODULFO GARCIA PERLITA AGUILAR JOEL DELA CRUZ NESTOR DELA CRUZ FISHERFOLKS Calabanga, Cam. Sur

(MASBATE CITY) RENATO C. LUMA

ANTHONY GRAPILO RICO BARTOLATA WILLIAM ARISALA EDWIN D. TEMPLO JESUS GLIANE CHARLIE HILARIO RONALDO D. GUŇA JOSE ANGELES ARLAN E. BUENAFLOR ANTONINO HIPOLLE WILFRANDO POBLETE RONNEL LIZANO EDUARDO CAGUITE FISHERFOLKS Bulan, Sorsogon

FELIX B. PALMONTE JR.

DOMINGO E. OLLETA PROCESSORS Calabanga, Cam. Sur

SUPPLY CHAIN OF MAYUMI ASIS Table 3 Quality specifications of buyers for dried sardines by supply chain

Item Supply Chain

Granadino

(%) Asis

(%) Vergara

(%) Escandor

(%) Fidelson

(%) Quality Specification:

Size (basis of classification) 25.00 0.00 0.00 0.00 0.00

Stainless color 75.00 33.33 0.00 50.00 50.00

Clear eyes 25.00 66.67 0.00 100.00 100.00

Not very salty (based on color and eyes) 50.00 33.33 100.00 0.00 0.00

(6)

Key Processes and Activities Along the Supply Chain There are several processes and activities that flow along the dried sardines supply chain, starting from the source of raw fish (fisherfolks) to the processors then to the traders. The activities start with fishing, which is the most critical since the quantity of fish caught determines the volume of dried sardines.

Sardine fishing activity. All of the fisherfolks in the five supply chains conducted their fishing activity in the municipal waters. This means that they conducted

their fishing activity in marine waters 15 kilometers from the coastline using fishing vessels weighing three gross tons or less based on RA No. 8550 or “The Philippine Fisheries Code of 1998” (FRMP, 2000). In terms of sardine species catch by the fisherfolks, 100%

of the fish catch were Tamban or Indian sardines (Sardinella longiceps). Only 14% of the fisherfolks in the Asis supply chain and 10% in the Granadino supply chain were able to catch Tunsoy or fimbriated sardines (Sardinella fimbriata).

RODULFO GARCIA PERLITA AGUILAR JOEL DELA CRUZ NESTOR DELA CRUZ FISHERFOLKS Calabanga, Cam. Sur

HONESTO J. MEDROSO RONNIE E. MEDROSO RUBEN OLALO PROCESSORS Calabanga, Cam. Sur

SUPPLY CHAIN OF MARIA JOY VERGARA Fig 4 Vergara Supply Chain

(7)

On the source of financing, majority of the fisherfolks in the Granadino supply chain borrowed their capital. Most of the fisherfolks in this supply chain were from Milagros, Masbate, wherein they practiced amohan or a financier system. The amo or financier was a trader. On the other hand, all of the fisherfolks in the Fidelson supply chain owned their capital investment.

The rest of the fisherfolks have mixed sources of financing, primarily out-of-pocket expenses. Along with selling, fisherfolks in Milagros, Masbate (44.83%

in Granadino and 23.81% in Asis) sold their catch sardines in dried form. Fisherfolks from Bulan,

Sorsogon, and Calabanga and Cabusao, Camarines Sur sold raw sardines in banyera (50 kgs container) in fish trading center or bagsakan. In terms of selling arrangement, the raw sardine undergoes a bidding process or price negotiation with buyers in the trading center or bagsakan. In contrast, the dried sardines of fisherfolks from Masbate were sold to the traders as payment for a loan. Price was set by the trader.

Processing Activity. This involves series of activities, as shown in Figure 7. The activities start with the receiving of materials like raw sardines and salt.

Fig 5 Escandor Supply Chain

RENATO C. LUMA ANTHONY GRAPILO RICO BARTOLATA WILLIAM ARISALA EDWIN D. TEMPLO JESUS GLIANE CHARLIE HILARIO RONALDO D. GUŇA JOSE ANGELES ARLAN E. BUENAFLOR ANTONINO HIPOLLE WILFRANDO POBLETE RONNEL LIZANO EDUARDO CAGUITE FISHERFOLKS Bulan, Sorsogon ROMEO GIMENA

ORO GOJO JESUS GLIANE CHARLIE HILARIO PROCESSORS Bulan, Sorsogon

RICARDO GLIANE RAMON GLIANE MELY ROSE DIAZ EDWIN MORATA RICO BARTOLATA PROCESSORS Bulan, Sorsogon

RODULFO GARCIA PERLITA AGUILAR JOEL DELA CRUZ NESTOR DELA CRUZ FISHERFOLKS Calabanga, Cam. Sur REBECCA DE LOS SANTOS

PROCESSORS Cabusao, Cam. Sur

SUPPLY CHAIN OF ARSENIO ESCANDOR

(8)

The next activity is brining (Plate 1), wherein the raw sardines are mixed with salt in the lamaan or container or concrete tank. The ratio used by most processors is one kilogram of salt for every 1.8 kilograms of raw sardines. This activity would last for 12 hours. Washing of fish follows to reduce its saltiness and remove the blood. For processors located near the sea, the brined sardines are washed with salt water and fresh water for the other processors. The sardines are then arranged in the kapil or bamboo matting and sun-dried for 1.5 days (Plate 2). Spraying of saltwater is done while being sun-dried to remove blood. If sun drying is done less than 1.5 days during the rainy season, air drying is done for 12 hours. The dried sardines are then visually classified as lapad for big sizes; TM for medium sizes;

TA for sizes which cannot be classified as lapad or TM;

and TR for rejects such as beheaded sardines and small

sizes (Plate 3). The classified sardines are then packed in carton boxes or wooden crates. After grading, the dried sardines were packed in a big plastic bag and put in bamboo crates, carton boxes, or wooden crates (Plate 4). However, the usual packaging material was wooden crates because of their durability. Storing is the last activity.

GMP (Good Manufacturing Practice) is an essential (hygiene and sanitation) requirement for all food processing and manufacturing companies. The processors did not observe the good manufacturing practices for the processing of dried sardines. Plate 5 shows the common scenarios in the processing of dried sardines. The processors do not care much about sanitation and good housekeeping. The processing areas are unsanitary, wherein their pets can roam around freely. The containers used in brining are not cleaned.

RENATO C. LUMA ANTHONY GRAPILO RICO BARTOLATA WILLIAM ARISALA EDWIN D. TEMPLO JESUS GLIANE CHARLIE HILARIO RONALDO D. GUŇA JOSE ANGELES ARLAN E. BUENAFLOR ANTONINO HIPOLLE WILFRANDO POBLETE RONNEL LIZANO EDUARDO CAGUITE FISHERFOLKS Bulan, Sorsogon

ROMEO GIMENA ORO GOJO JESUS GLIANE CHARLIE HILARIO PROCESSORS Bulan, Sorsogon ROMEO GIMENA

TRADER Bulan, Sorsogon

SUPPLY CHAIN OF ROMUALDO FIDELSON Fig 6 Fidelson Supply Chain

(9)

The brined solution is continuously used, and salt was just added for the next batch.

The packaging areas are not secured and, at the same time, used as a storage area for salt and other raw materials. It is also used as a parking area.

One of the ways to source out raw sardines was to catch the sardines that will be used in drying. This was the practice in Milagros, Masbate. The fisherfolks themselves were the processors. Another way was to procure the sardines from the fish port or bagsakan thru bidding.

The bidding was done by whispering (bulung) the bid price to the seller. This was practiced in Bulan, Sorsogon, and Calabanga, Camarines Sur. The last way was establishing a regular source or suki.

The processors in the Granadino supply chain utilized the three ways in sourcing out the raw sardines. However, majority have their own source of raw sardines since the fisherfolks from

Masbate were the processors themselves. This was also true in Asis supply chain. The processors in Vergara supply chain, who were from Calabanga, Camarines sur mainly sourced out from the fish port and bid for the raw sardines. Most of the processors from Escandor and Fidelson supply chains obtained their raw sardines from the fish port and bid for them. Only a few have a regular source or suki. This reflects that the manner of sourcing out raw sardines depends on the practice of the place of the processors.

The average volume of raw sardines procured per month was highest in the Granadino supply chain, amounting to 3,855 kilograms. The lowest average volume procured per month was 530 kilograms in Vergara supply chain. The Granadino supply chain indicated the highest procurement volume since it consisted of processors from the three provinces, while the Vergara supply chain reveals the lowest because it was limited to processors in Calabanga.

The average price per kilogram of raw sardines from the different supply chains ranging from P25.00 to P33.00. The lowest price for raw sardines reported was P15.00 per kilogram in Milagros, Masbate. This can be attributed to the absence of a fish port or

“bagsakan.” To increase their income, fisherfolks just processed their own catch and sold it dried. The highest

price of P33.00 per kilogram of raw sardines was indicated by processors in Calabanga, Camarines Sur.

The price was highest because of the bidding system practiced in the fish port or bagsakan. The manner of payment for the procured raw sardines was cash in all supply chains. However, most of the processors in Granadino indicated credit because they can only get their payment for the raw sardines upon collection of the dried sardines they sold on credit to the traders. It can be recalled that processors from Milagros, Masbate processed their own catch and sold it dried.

The processors sold their dried sardines to their regular buyers or suki, who were most of the time their financier. In Masbate, they call them the amo.

The other processors sold to their regular buyers since communication, information flow, and payment were easily arranged as well as the transport of the products. All processors in the Vergara, Escandor, and Fidelson supply chains and some in Granadino and Asis negotiated with their regular buyers every time they sell their products. Negotiation was easily done since communication through the cellphone was usually practiced if they cannot talk to them personally.

However, the majority of the processors in Granadino and Asis supply chains sold their dried sardines as payment for their loan to their amo or financier traders.

Prices were not negotiated since the amo or financier traders were the ones who set the price.

Fig 7 The process flow of dried sardines

(10)

The processors’ average selling price per kilogram of dried sardines depends on the quality grade based on the size of the dried sardines. Dried sardines are classified as Lapad, TM, TA, and TR (Plate 6). Lapad has the highest price among the four classifications, followed by TM then TA and the lowest was TR. The highest average price per kilogram for all the quality grade classifications was reflected in Vergara supply chain. Lapad was priced at P115.00, TM P100.00, TA P90.00, and TR P50.00. Granadino and Asis supply chains showed the lowest average price per kilogram.

Trading Activity. The trading activity is handled by the traders. All of the dried sardine traders were wholesalers and retailers at the same time. This means

Plate 1 Brining in the “Lamaan” of the Fresh Sardines

Plate 2 Drying of the Brined Sardines

Plate 4 Packaging of Dried Sardines Using Bamboo Crates, Carton Box and Wooden Crates

Plate 3 Classifying According to Quality Grades of Dried Sardines

(11)

they sell to other traders as well as to consumers. The quality specifications of the traders were size, color, clear eyes, saltiness, and aroma. The size of the dried sardines was the primary basis for classifying them as Lapad, TM, TA, and TR. The color required was a stainless color which reflects the cleanliness and freshness of the sardines used. Clear eyes are indications of the preferred saltiness for the dried sardines. The aroma also indicates the freshness of the dried sardines.

All of these characteristics were demanded by the traders in Granadino supply chain, while the traders in Asis supply chain did not specify size. Only saltiness was specified by the traders in Vergara supply chain, while color, clear eyes, and aroma were specified by the traders in Escandor, and Fidelson supply chain.

This reveals the varying requirements of the traders.

This indicates the need to standardize the quality of the dried sardines. This can be done with the assistance of

DTI through the Bureau of Philippine Standards, and DOST through Industrial Technology Development Institute. The standards ensure that goods or services produced in a specific industry come with consistent quality and are equivalent to comparable products or services in the same industry. Standardization also helps in ensuring the safety, interoperability, and compatibility of goods produced.

All traders from the different supply chains procured dried sardines from the processors who were their suki or regular source. This is understandable because they usually give cash advances to these processors. This is reflected in the buying arrangement of the traders to the processors. The majority of the traders from the Granadino and the Asis supply chains provided cash advances to the processors. These were paid upon delivery of the dried sardines. Negotiation with the source was the only buying arrangement made by the traders in Vergara, Escandor, and Fidelson supply chains. This was also practiced by the traders in Granadino and Asis supply chains.

Most of the traders just stored the dried sardines in their stall. Some traders rented cold storage in ice plants. The cold storage was located within the Ice Plant in Masbate City (Plate 7). It measured 10m x 12m. The temperature maintained was -4°C. The trader rented the space in the ice plant on a per square meter basis.

Using this kind of storage, the dried sardines can be stored for a year. However, the quality of the product was not maintained. Wooden pallets were used to stock the dried fish products, which protect them from the water on the storage area floor. Water was usually an

Plate 5 Bad Manufacturing Practices in Processing Dried Sardines

Plate 6 Quality Grades of Dried Sardines

(12)

inch high. The stocks were not filed properly. First-In- First-Out (FIFO) inventory system was not practiced.

Dried fish products and fresh fish were stocked in the cold storage at the same time. Anyone can enter the cold storage. Wearing of proper clothing when entering the area was not imposed. With the improper storage and handling, the traders experienced losses of 25% on average due to spoilage.

Among the traders, only Mr. Romualdo Fidelson of Gubat, Sorsogon, established his own cold storage

unit (Plate 8). However, he was still experimenting on the technical aspects of the storage since he has no idea yet of what temperature to maintain to ensure the most

extended shelf life of the dried sardines. He was not practicing the FIFO inventory system. But unlike the cold storage in Masbate, this storage unit was dry, more orderly, and clean.

Product, Information and Payment Flow

Product Flow. The product flow started at fisherfolks level wherein their fresh catch was either processed by the fisherfolks themselves or brought to bagsakan (trading center) where bulungan system was practiced (Figure 8). A prevalent method of selling the catch not tied to a particular buyer was through whisper bidding or bulungan, a silent auction carried out at different times of the day. This mainly was participated in by non-suki processors. The winning bidders pay for a catch in cash. In many cases, though, a registered broker took charge of paying the fisherfolks in cash, charging 5% of the total amount of catch in return for paying cash. This occurred when bidders do not have sufficient money to pay the fisherfolks.

Another form of selling the catch was through an amo or financier. These were processor-traders who owned motorized banca and employed resident fisherfolks to operate them. The system was called amohan, and this was common in Masbate. They granted loans to fisherfolks on the condition that they will deliver their catch to them as payment for debts. In many cases, a patron-client relationship existed between the amo and the fisherfolks. During bad times when fisherfolks run out of money for their family’s needs, they asked

Plate 7 Cold Storage Inside the Ice Plant

Plate 8 Cold Storage of Fidelson in Gubat, Sorsogon

(13)

their amo for loans. These loans were also repaid from their share of the catch. The traders benefit from such a relationship by an assured supply of dried sardines.

The fresh sardines acquired through the bulungan or amohan system were processed for three (3) days by the processors. The processing recovery was 50% on average from fresh to dried sardines. The dried sardines were classified according to grades (Lapad, TM, TA, or TR) for delivery to trader-wholesalers. The wholesalers double-check the classification of dried sardines as to Lapad, TM, TA, or TR. Some wholesalers sell directly at their own stores, while others deliver the products to the retailers. During peak months, traders stored their dried sardines in cold storage.

The traders transported their products to the retailers either by door-to-door delivery, pactora or onboard freight system. Pactora system was commonly used for transporting goods in the islands of Masbate and Catanduanes. The retailer would take the goods from the port to their business location. Since the risk was higher, the wholesalers only transacted with their trusted suki or loyal client. The retailers, on the one hand, sell dried sardines according to classification.

The consumers were from the whole province of Albay;

Sorsogon City, Bulan, Irosin, Juban, Casiguran, Bacon, and Cumadcad in Sorsogon; Naga City and Pili, in Camarines Sur; Catanduanes; and in Balot, Manila.

Information Flow. Basic information that flowed along the network players were price information, supply, technical, and marketing information. The

information came in at the fisherfolks level was the selling price of fresh catch, frequency of delivery, volume requirement for fresh catch and fishing, and post-harvest techniques (Figure 9). Price information varies depending on the system of selling being adopted in the area. In bagsakan, or the trading center, the selling price of fresh sardines was set through bulungan system where the highest bidder wins. In amohan, the amo sets the price for the fresh sardines. The fisherfolks under the bagsakan system are better off than those in the amohan system since the latter has no full access to price information. They were at the mercy of their amo, who set the price for the fresh catch. They supplied their catch by “entire lot” or pakyaw basis. Technical fishing information was based on the fisherfolks own experience and lacked training support from government agencies.

At the processor’s level, information flow was on buying price, source of fresh sardines, volume requirement for raw sardines, the volume of dried sardines produced, processing technology, frequency of delivery, and quality specification. The technical information on the processing of dried sardines was based on one’s experience of the processors. Good manufacturing practices were not observed. The volume of dried sardines produced was also dependent on the availability of the fresh catch. In areas where amohan system was practiced, an amo – processor was assured of supply of fresh sardines. In bulungan system, the processor has to win the bidding to acquire fresh catch to be processed. Supply information such

Fig 8 Product Flow of Dried Sardines

(14)

as volume and delivery time were facilitated through text messaging and other direct information. The processors’ marketing information was based on their own experiences.

At the wholesaler’s level, information was focused on buying price, volume requirement and volume traded for dried sardines, source of dried sardines, frequency of delivery, and quality specifications. The buying price for dried sardines was set by the wholesaler. It was then negotiated by the retailers. Both the wholesalers and retailers were aware of the quality specifications

for dried sardines. The retailers specify the volume and quality requirements for the product.

The consumers were unaware of the grade of the dried sardines since the products were not labeled.

Visual inspection was enough to determine whether the dried sardines are of good quality. If it is stainless and the eyes were not too white, the products are not salty and usually coming from Masbate. If the dried sardines had no scales, they were from Calabanga, Camarines Sur. Each consumer has his own preference. However, the most preferred products are from Masbate.

Fig 9 Information Flow of Dried Sardines

Fig 10 Payment Flow of Dried Sardines

(15)

Payment Flow. Due to the various selling system, the mode of payment for the catch of the fisherfolks was also varied. For the bulungan system or silent auction, the winning bidders paid for a catch in cash. Another form was the amohan or financier system, and this is common in Masbate. They grant loans to fisherfolks.

The fisherfolks, in turn, are required to deliver their catch to them as payment for debts. In the payment flow (Figure 10) along the dried sardines supply chain, the processors received cash advances from traders. The cash advances were deducted after the sale of the dried fish. Majority of the transactions between processors and traders were partial payments for high volume and would be paid in full after a week. For Masbate area, payment was through cash transfer. For a lesser quantity of dried fish, payment was always in cash.

The majority of the transactions between wholesalers and retailers were partial payments which were paid in full within 3-5 days. However, there were cases of bad debts, and the wholesalers had no means of collecting the payments once the retailers refused to pay. This happened because their patron- client relationship was built on trust. As such, no legal documents would serve as evidence to pursue a legal case against these retailers. On the level of consumers, the transactions were always on a cash basis (M. Asis, personal communication, June 21, 2013).

As reflected in Table 4, all fisherfolks from the different supply chains incurred a net loss from their fishing operation. The lowest net fishing loss of P2.05 was incurred by the fisherfolks in Granadino supply chain, while the highest net fishing loss of P53.36 was incurred by fisherfolks in Vergara supply chain. The

fisherfolks in Granadino supply chain were mostly from Milagros, Masbate. Due to dwindling sardines catch, the fisherfolks from this town only conducted their fishing activity when there was an indication of fish catch so they were able to minimize their loss.

On the other hand, the fisherfolks in the other supply chains always conducted their fishing activity even though they experienced low fish catch. In the process, they incurred so much cost on fuel and labor costs.

The Return On Cost (ROC) indicates that for every P100.00 of cost, the fisherfolks from Granadino supply chain incurred net loss of P7.58; P42.41 for fisherfolks in Asis supply chain; P61.79 in Vergara supply chain;

P8.26 in Escandor supply chain; and P11.89 in Fidelson supply chain. This shows the poor condition of the fisherfolks. Instead of generating net income, they obtained net loss, which was the main reason why some of them cannot pay their debts. The leading cause of this was the dwindling sardines catch. Most of the fisherfolks pointed to the illegal fishing activity as the cause of the dwindling fish catch.

As reflected in Table 5, the highest Return on Cost (ROC) of the processors was in Granadino supply chain with 55.05% and the lowest was in Fidelson supply chain with 11.93%. This means that for every P100.00 of total cost, the processors in Granadino supply chain generated net processing income of P55.05 and P11.93 for processors in Fidelson supply chain. Although Granadino supply chain was one of those with the lowest sale per kilogram of dried sardines, its cost was the lowest. This can be attributed to the low price of raw sardines, rental of processing area, labor, barangay clearance, transportation, and communication. The

Table 4 Cost and return of fisherfolks by supply chain (per kilogram)

Item Supply Chain

Granadino Asis Vergara Escandor Fidelson

Cash Return

Sales ₱ 25.00 ₱ 25.00 ₱ 33.00 ₱ 28.00 ₱ 28.00

Total cash returns 25.00 25.00 33.00 28.00 28.00

Cash Cost

Operational expenses 22.16 34.23 72.64 25.93 26.82

Labor expenses 3.32 6.01 9.43 0.97 1.37

Transaction cost 1.30 2.63 2.64 2.47 2.32

Total cash cost 26.78 42.87 84.71 29.37 30.51

Non-cash Cost

Depreciation cost 0.27 0.54 1.65 1.15 1.27

Total non-cash cost 0.27 0.54 1.65 1.15 1.27

Total Cost 27.05 43.41 86.36 30.52 31.78

Net Fishing Income/(Loss) (2.05) (18.41) (53.36) (2.52) (3.78)

Net Cash Income/(Loss) (1.78) (17.87) (51.71) (1.37) (2.51)

Return on Cost (ROC) -7.58% -42.41% -61.79% -8.26% -11.89%

(16)

lowest ROC was obtained by the processors in Fidelson supply chain because of the very high cost of processed dried sardines. This was due to the high cost of raw sardines, rent of production area, labor, transportation, and communication.

The cost and return analysis reveal that the processors were better off than the fisherfolks in the different supply chains. They obtained net profit from their operation, which indicates their profitability. The practice of the fisherfolks in Masbate to sell their fish catch as dried sardines is a good practice because of the value added to their sardines. This practice can be replicated in other areas to improve the income of the fisherfolks.

Table 6 reflects the cost and return per kilogram of sardines traded. The highest ROC of 18.46% was obtained by the traders in Granadino supply chain while the lowest was 1.45% for traders in Escandor supply chain. This means that for every P100.00 of total cost, the traders in Granadino supply chain generated P18.46 of net trade income while the traders in Escandor supply chain only obtained P1.45 net trade income. The highest net trade income of the traders in Granadino supply chain was caused by the lowest total cost brought by the lowest cost of dried sardines. In contrast, the traders in Vergara supply chain incurred the highest total cost due to the highest cost of dried fish.

The cost and return analysis reveal that the traders were better off than the fisherfolks in the different supply chains. They obtained net profit from their operation which indicates their profitability. However, the ROCs of the traders were lower compared with the ROCs of the processors. This means that the processors have higher profitability than the traders. The higher costs of dried sardines as well as the losses incurred, were some of the reasons for the lower profitability of the operation of the traders. The average loss due to spoilage was 25%. These were due to improper inventory management and storage facility.

Efficiency Level of Sardines Supply Chain

Efficiency is a level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of outputs (Productivity Commission, 2013). It relates to the use of all inputs in producing any given output, including time and energy. Efficiency is an important attribute because all inputs are scarce. Time, money and raw materials are limited; thus, it makes sense to try to conserve them while maintaining an acceptable level of output or a general production level. Being efficient simply means reducing the amount of wasted inputs.

Table 7 depicts the efficiency level of the key players of the five (5) chains in the Bicol region. Each chain was composed of three key players, namely fisherfolks, processors, and traders. Among the key

Table 5 Cost and return of the processors by supply chain (per kilogram)

Items Supply Chain

Cash Returns

Sales ₱ 89.00 ₱ 89.00 ₱ 98.00 ₱ 97.00 ₱ 97.00

Total Returns 89.00 89.00 98.00 97.00 97.00

Cash Costs

Salt 3.35 3.33 3.40 3.33 3.33

Raw sardines 49.99 49.97 66.00 55.90 56.00

Rental of production area 1.04 2.11 0.00 7.04 6.62

Labor 1.84 3.44 8.60 13.24 13.88

Land-rights 0.26 0.00 0.00 0.00 0.00

Payment for Brgy clearance 0.01 0.03 0.00 0.09 0.08

Transportaion 0.70 1.10 0.00 3.59 3.56

Communication 0.05 0.11 0.38 0.35 0.33

Total Cash Costs 57.24 60.09 78.38 83.54 83.80

Non-cash Cost

Total Non-cash cost 0.16 0.49 0.13 2.98 2.86

Total Costs 57.40 60.58 78.51 86.52 86.66

Net Processing Income 31.60 28.42 19.49 10.48 10.34

Net Cash Income 31.76 28.91 19.62 13.46 13.20

Return on Cost (ROC) 55.05% 46.91% 24.82% 12.11% 11.93%

(17)

players, the fisherfolks and the processors registered 100% efficiency levels in every chain. However, the fisherfolks generated the ROC of -61.79% to -7.58%

because they did not have control over the prices of their fresh catch. This implies that they were at the mercy of either amo or financier for amohan or financier system or bidders for bulungan or whisper bidding system. When asked about increasing the price of their catch, fisherfolks were incapable because of their arrangement with their amo and others were dependent on the price offered by the bidders.

They have very limited resources and would not want to waste any of these. In fact, most fisherfolks found ways to further maximize the use of their resources by adopting ‘wait and see” style in fishing, particularly in Bulan, Sorsogon, and Masbate. This helped them save on fuel and other operating expenses.

Moreover, the majority of the fisherfolks in Masbate opted to venture on processing their fresh catch to augment their income, while some were compelled to shift to other alternative sources of living.

In each chain, the processors got a very high- efficiency rating of 100%. They were also the highest income earners among the key players attaining ROC ranging from 11.93% to 55.05%. This connotes that processors have been efficient in using their resources and were generating good profits. While conducting the study, it was observed that the processors did not only maximize the use of their resources but, in fact, overused them by recycling some materials in processing the dried sardines. They did not have insight

on good manufacturing practices, particularly on proper sanitation and proper waste disposal. Their only concern was to meet the specifications required by the traders, such as clear eyes and “stainless” or shiny color.

There were no standard quality requirements and grading system adopted by the dried sardine industry.

The processors have mastered the nuisances of processing dried sardines since they had been in the fish drying business for the past 15 to 19 years. They did not incur spoilage losses because they delivered the dried sardines to the traders right after processing.

The traders registered relatively lower efficiency levels among the key players in the five (5) supply chains in the Bicol region ranging from 99.66 to 99.76%. These values showed that though the traders earned considerable amount of profits they incurred inefficiency cost due to spoilage. They claimed that significant quantity of dried sardines got spoiled when humidity was high. Moisture accumulated in the dried fish would cause growth of organisms which spoiled the products resulting to wastage. If this happened, the products would not be saleable anymore. It was observed that the traders were leasing spaces in ice plants which were not suitable for dried fish causing spoilage. The team also observed that in all ice plants or warehouse, the dried sardines were not stocked properly. FIFO inventory system was not observed.

Anyone can enter the cold storage. The traders lacked proper and adequate storage facilities and training on proper handling of inventories.

Table 6 Cost and return of the dried sardines by supply chain (per kilogram)

Items Supply Chain

Cash Returns

Sales ₱ 91.00 ₱ 92.00 ₱ 102.00 ₱ 97.00 ₱ 97.00

Total Returns 91.00 92.00 102.00 104.00 104.00

Cash Costs

Dried Fish 69.50 75.00 87.00 91.00 91.00

Labor 2.84 3.55 2.17 3.00 3.00

Transportation 2.08 2.63 6.67 5.00 5.00

Communication 0.35 0.32 0.07 0.20 0.20

Total Cash Costs 74.77 81.50 95.91 99.20 99.20

Non-cash Cost

Losses from wastage 0.26 0.20 0.30 0.25 0.25

Total Non-cash cost 2.05 2.97 0.30 3.31 3.13

Total Costs 76.82 84.47 96.21 102.51 102.33

Net Trade Income 14.18 7.53 5.79 1.49 1.67

Net Cash Income 16.23 10.50 6.09 4.80 4.80

Return on Cost (ROC) 18.46% 8.91% 6.02% 1.45% 1.63%

(18)

The computed values generally show that the fisherfolks and processors were all efficient in using their resources, but the fisherfolks were losing because they had no control over the price of their fresh catch.

The traders were earning relatively good profits but were burdened by spoilage.

Supply Chain Flexibility

This section analyzes the flexibility of the supply chains in meeting the product requirement of the customer at the right time and with the least cost.

Flexibility is defined as the ability of the supply chain to respond to changes in the environment to meet customer requirements (Stevenson and Spring, 2007).

The flexibility of the five supply chains was analyzed based on volume flexibility and delivery flexibility.

Volume flexibility refers to the ability of the supply chain to effectively increase or decrease aggregate production in response to customer demand (Cleveland et al., 1989). On the other hand, delivery flexibility is the capability of the supply chain to adapt lead times to the customer requirements.

Among the supply chain players, the processors were the least flexible in terms of volume and delivery flexibility. Processors cannot increase production to take advantage of market demand due to the seasonality of sardines catch and the absence of inventory since

they immediately deliver their produce to the traders.

The traders were the most flexible among the supply chain players in terms of volume and delivery because they have inventory of dried sardines. They can increase or decrease the volume of dried sardines traded, most especially with a proper storage facility. The traders can minimize or maximize the volume of production of their processors depending on their capability and capacity to operate and finance the production. The flexibility of the traders depends on the processors. The processors provided them with dried sardines supply and the traders provided them with the capital they need.

Supply Chain Responsiveness

Responsiveness of a supply chain refers to the satisfaction of its customers with product attributes like quality, volume, price, and promptness of delivery in terms of delivery volume and schedule (Holweg, 2005). Dried sardines have no defined quality standard.

The quality specifications were size, stainless color, clear eyes, and saltiness. These were determined by visual inspection only. Quality grades which are based on size are not well disseminated to direct customers since the dried sardines were not properly labeled.

Among the supply chain players, the least responsive were the processors because they cannot

Table 7 Efficiency level of key players in the dried sardines supply chain in Region V

Key Players

Particulars Revenues

₱/kg Actual Cost

₱/kg

Net Income (Loss)

₱/kg

Cost of Inefficiency

₱/kg

Potential Cost₱/kg

ROC(%) Efficiency Level (%) Granadino

Fisherfolks 25.00 27.05 (2.05) 0.00 27.05 -7.58 100.00

Processors 89.00 57.40 31.60 0.00 57.40 55.05 100.00

Traders 91.00 76.82 14.18 0.26 76.56 18.46 99.66

Asis

Fisherfolks 25.00 43.41 (18.41) 0.00 43.41 -42.41 100.00

Processors 89.00 60.58 28.41 0.00 60.58 46.91 100.00

Traders 92.00 84.47 7.53 0.20 84.27 8.91 99.76

Vergara

Fisherfolks 33.00 86.36 (53.36) 0.00 86.36 -61.79 100.00

Processors 98.00 78.51 19.49 0.00 78.51 24.82 100.00

Traders 102.00 96.21 5.79 0.30 95.91 6.02 99.69

Escandor

Fisherfolks 28.00 30.52 (2.52) 0.00 30.52 -8.26 100.00

Processors 97.00 86.52 10.48 0.00 86.52 12.11 100.00

Traders 104.00 102.51 1.49 0.25 102.26 1.45 99.76

Fidelson

Fisherfolks 28.00 31.78 (3.78) 0.00 31.78 -11.89 100.00

Processors 97.00 86.66 10.34 0.00 86.66 11.93 100.00

Traders 104.00 102.33 1.67 0.25 102.08 1.63 99.76

(19)

immediately satisfy the quantity requirements of the customers. This was due to the seasonality of sardines catch which was compounded by the dwindling volume of sardines catch caused by destructive fishing activities. Moreover, the processors do not store their produce. They immediately deliver their dried sardines to the traders because of cash advances. They were also constrained by the capital provided by the traders. The most responsive were the traders because they have the storage facility so they can build their inventory. They can immediately satisfy the quantity requirements of the customers. They have the final say on the quality of the dried sardines supplied by the traders and these quality grades were not known to the final consumers.

Logistics Issues and Concerns

Logistics refers to the management of the flow of dried sardines and information from the source of fresh sardines (fisherfolks) to processing or drying and finally to the point of consumption by which the consumers are supplied with the desired products.

It, therefore, entails the integration of information, transportation, and packaging, among others. It is an essential aspect of the supply chain that attaches value of time and place utility. Logistic arrangements hope to encourage efficiency in all the activities from input sourcing to product distribution.

Areas of Improvement

Dwindling supply of raw sardines. This problem is caused by illegal fishing activity by non-residents of the municipality. BFAR personnel as well as the LGU, were not able to control these illegal activities because of inadequate resources such as motorboats and fuel (Z. Cabalres, Personal Communication, April 11, 2013).

BFAR personnel have no police power, so they need the assistance of the PNP to apprehend the culprits.

Sometimes the culprits have high-powered firearms so that the Bantay Dagat team cannot apprehend them.

Financial dependence of fisherfolk-processors to traders. This tied up the fisherfolk-processors to the trader so they cannot scout for a higher price. They get the price set by the trader. In coordination with the respective LGUs, DOLE could provide alternative livelihood programs/activities during lean months to fisherfolks. In this manner, the fisherfolks will earn money for their needs and will not resort to credit from traders which will tie them to unreasonable trading terms.

Lack of market information of fisherfolks. The fisherfolks were price takers and cannot negotiate for better price. Even the fisherfolks who sold in bagsakan just relied on the highest bid which may not necessarily be the right price for the sardines. Trading centers or bagsakan be established in the different sardine producing areas to provide a broader market to the fisherfolks. The fisherfolks can avail fair and reasonable prices through the bidding system either through whisper bidding (bulungan) or open bidding;

Difficulty of drying sardines during rainy season. The volume of sardine catch is seasonal. In times when peak season (high sardines catch) occurred during rainy days, drying of brined sardines was a problem. This also affected the quality of the product.

Non-observance of Good Manufacturing Practices of processors. The LGU was not very strict in this aspect because of the lack of manpower to monitor the processors. Collaboration of DOST and DTI in providing trainings on Good Manufacturing Practices (GMP) for processors and proper inventory system for the processors and traders should be carried out. This will enlighten the processors on the dangers of microbial contamination that may cause harm to consumers. Likewise, this is one way of prolonging the shelf-life of the products.

Not well-defined grading/classification system for dried sardines. The dried sardines were visually classified as lapad, TM, TA, and TR. These classifications are not well defined.

Unsuitable and inadequate cold storage facility.

Some traders rented cold storage in ice plant which is unsuitable since it does not maintain the moisture content desirable for dried sardines. This incurred trader’s losses which amounted to 25% on average.

Adequate and proper cold storage facility should be provided to the processors and traders of dried sardines so they can produce in bulk during the peak season and sunny days without fear of spoilage. Inventory of dried sardines can already be built-up during the sunny days when drying is not a problem.

Non-observance of First In First Out (FIFO) inventory system. Stocks inside the storeroom or cold storage were not properly labeled to indicate the date of arrival of the stocks to practice FIFO method of inventory management. The training on proper inventory system will educate traders to practice FIFO to have longer shelf-life for the products