Technical Appraisal Final

I. Introduction After identification of the target market, and analysis and evaluation of the different factors that influence the proposed business, EALA Inc. brings form and structure to the proposal by identifying its technical aspects. The

proposal

involves

the

establishment

of

PantSaloon,

a

boutique

specializing in the customization and tailoring of jeans for the fashionable young Filipino. It will be positioned as a specialty shop that offers a twist to the basic jeans by allowing it to be customized according to one’s own style and whim, as well as assuring its customers of a perfect fit all the time. This principle is the central focus of the entire technical process. From the raw material selection and design conceptualization to the actual production process and visualization of the structural designs and perspectives, everything about PantSaloon would translate to comfort, fashion and individualism. The initial stage of PantSaloon’s business plan involves opening its first store at J&R Commercial Center in Katipunan. With over 75 fabrics, 11 cuts, 16 pocket types, 4 waistband types, and infinite possibility of designs, PantSaloon will produce 600 different jeans per month, meeting about 6.37% of the projected demand. PantSaloon shall strive to acquire a larger share in the big “pie” over the years, as the business gradually makes a name in the jeans market. With much care and consideration given to the plans, projections, procedural requirements and legal practices needed in setting up the store, EALA Inc. deems PantSaloon technically feasible and operational in the market.

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A. Executive Summary Through the analysis of the crucial processes and costs involved in production flow, human resources management, store operations and construction, and legal requirements to be complied with before operation, EALA Inc. endeavors to determine the technical feasibility of PantSaloon. What the group has done is to study the process of manufacturing jeans, and from here build the production program which PantSaloon shall adhere to in its quest to produce perfectly-fitted jeans. In the course of building this production program and establishing PantSaloon’s own production process, decisions on outsourcing, supplier selection, and equipment to be used had to be made. The first major decision was whether to outsource tailoring services, or to hire personal tailors and invest in jeans manufacturing equipment to produce the jeans. A cost-benefit analysis on these two options led to the conclusion that hiring in-house tailors and investing in equipment, while more costly, is better for the business in the long run because it will enable the business live up to its promise of producing high quality and perfectly fit jeans, with quality control better exercised when production is done in-house. Purchasing of materials will also be done by PantSaloon. This is also to ensure that only the best materials are used in the production of jeans. Also pursuant to its commitment to quality, tailors, cutters, and designers shall undergo a strict selection process and a more rigorous training. Only the most precise and meticulous tailors and cutters shall be hired, while the most dedicated, professional, flexible and creative designer will take on the job of assisting the customers in conceptualizing their jeans. Accordingly, the store structure has also been designed to reflect what the PantSaloon experience would be all about. The group plans to maximize 25 square meters of less expensive but well-visited leased space in J&R

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Commercial Center, located just beside Shakey’s and McDonalds-Katipunan. An all-white industrial interior, complemented with splashes of color shall further enhance PantSaloon’s idea of adding twist to something basic. Designed with modern minimalist comfort, the space will cater to the needs of its customers, their companions, and the store employees. Construction and renovation costs would reach approximately P 293,629.00 while total monthly operating costs are estimated to amount to P 316,266.67. Before the business can be fully operational, the mayor’s office has to issue the business an official permit to operate. Before this issuance however, certain legal requirements such as barangay clearance, community tax clearance, sanitary permit, and other clearances have to be secured. Furthermore, to ensure smooth operations, the group focused on EALA Inc.’s organizational structure. Department managers, directly reporting to the Chief

Executive

Officer,

shall

have

responsibilities

specific

to

their

department. Because of this, EALA Inc. will provide these various positions job descriptions and qualifications to guarantee a dynamic group of people working for the constant growth and improvement of the PantSaloon brand. To aid in the proper implementation of individual duties, basic regulations for inventory, cash and sales management are also made available. Finally, rough estimates of all required costs were summed up to find out the initial investments and operating funds needed to run the PantSaloon boutique.

II. Plant Capacity

3

Capacity refers to the attainable rate of output that can be produced. EALA Inc.’s plant capacity largely depends on the number of jeans a tailor can make per month. PantSaloon shall invest in a total of three sewing machines, with exactly one tailor stationed at each machine. With this, a tailor can manufacture a maximum of 10 jeans per day, or 900 jeans per month (30 working days). This theoretical capacity was obtained under the assumption that all the equipment will function properly throughout the entire 8 hours of work and all three tailors will work for 7 days a week, with no day-offs. However, since the store will be giving tailors two day-offs per week, only two tailors are expected to report to work each operating day, reducing the production capacity to 67%, or 600 jeans per month. The store will maintain the production volume rate required to meet 6.37% of the projected demand throughout the ten years. The increases in demand will be offset by gradually increasing capacity utilization.

III. Total Yearly Production Schedule A. Production Volume

4

Production will be based on the projected annual demand and the computed market share in the Market Appraisal.

To get the production volume, the

projected annual demand for PantSaloon products was multiplied by the market share that EALA Inc. can meet given its present capacity. The figures are shown below: Table 1 | Production Volume 10-year forecast

Y ear

Annual Demand

2 006 2 007 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016

128,925

Production Volume Maximum capacity Present 12,312 Capacity

131,334

12,542

8,213

133,790

12,777

8,366

136,292

13,016

8,522

138,838

13,259

8,682

141,434

13,507

8,844

144,082

13,760

9,009

146,781

14,018

9,178

149,526

14,280

9,350

152,327

14,547

9,525

155,181

14,820

9,703

IV. Production Process A. Product Design

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PantSaloon believes that when it comes to jeans, fit is everything. Handmade and carefully crafted, each pair of jeans aims to provide a fusion between fashion and comfort by producing jeans that are not only individualistic, stylish and hip, but also tailored to perfection. PantSaloon will be offering jeans in every imaginable cut, fabric, color, embellishment and design, with the limit going as far as the customer’s imagination. Every pair shall be customized according to the customer’s demands, assuring them that they get the perfect fit everytime. Whether it be classic cuts or the latest in jeans design, all cuts, fabrics, styles and designs are purely the reflection of the customer’s individual taste. Jeans will be the central theme of PantSaloon’s product line, with designs as diverse and dynamic as its different customers strive to keep up with the swiftly changing world of fashion. As mentioned before, PantSaloon shall present a wide array of fabrics, cuts, styles and designs to ensure that the store has something for everyone. The challenge to PantSaloon now is to deliver every pair of jeans in its finest quality – perfect stitching, premiere fabrics, and flawless fitting that makes it distinguishable from every other pair in the market. The preproduction stage of PantSaloon’s jeans adds a service dimension to its line. Beginning with design conceptualization, the customer has the option to seek the help of an in-house designer in selection of the fabric, cut, style, color and design. After measurements are taken, a special software shall further aid in the visualization by combining the ideas and measurements, simulating the actual look of the jeans on the customer. After the design idea has been finalized, jeans undergo a meticulous cutting, sewing, washing and designing process to make sure that the jeans are no less than perfect when finished. 1. Cuts

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The cut refers to the actual shape of the jeans. It is a matter of pattern design. Not all fits work with all possible cuts. Some combinations may seem to work today (a possible trend), but in a few years, may just look funny or dated. Still, this is where the fun begins. No amount of washes or embellishments can make up for a bad cut. This is probably the most important styling decision. Leg cuts that PantSaloon will offer can be summarized as follows: •

Straight Leg Jeans: Traditional cut with a straight narrow leg that does not flare at the ankles

•

Flared Leg: Jeans narrow at the knee, and an extra wide flare at the leg. Most common leg type on low rise jeans.

•

Boot Cut Jeans: Cut to skim the thigh with a slightly flared lower leg

•

Tapered Leg: Jeans narrow towards the ankle

•

Capri: A leg cut that usually ends just below the knee or at midcalf. The term "crops" is sometimes used interchangeably with capris, but should actually refer to pant legs that fall about three fourths of the way down the calf

•

Tight / Skinny: A close fit throughout the leg

•

Stove Pipe: As the name implies, an oversized straight leg cut

•

Bell Bottoms: A wider, more exaggerated flare named and made popular in the 1960’s, often used with low rise jeans and ultra low rise jeans

•

Cropped: Jeans can be cropped any length from the midcalf to the knee. Ankle Length Cut just above the ankle is used for a summery look

•

Gaucho: Denim gaucho pants may be a passing fancy, but they sure are fun and can look great paired with the right boots.

•

Cuffed: A fold at the end of the legs. Not strictly a leg cut, but a common finish, sometimes added by the designer and sometimes by the user of the jeans for a personal touch.

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Straight Flared Boot Cut Tapered Figure 1 | Denim cuts available at PantSaloon

Tight

Capri

In keeping with the stores image of modishness and fashionability, new cuts will be added as the market’s taste evolves. 2. Fit Fit refers to the general “looseness” or “tightness” of a pair of blue jeans. Fits that PantSaloon shall offer on its opening include the following: For Men's Jeans: •

Regular / Traditional / Classic Fit: Slim seat, slim thigh, usually with tapered leg. (Western variation of this fit is same but with a boot-cut leg)

•

Loose Fit: Full seat, loose thigh, tapered leg. Lots of room to move around in for active men, and very comfortable for laid back, relaxed types. Includes anywhere from 1 to 4 inches of additional fabric in the thighs and butt.

•

Relaxed Fit: Relaxed seat, relaxed thigh, often matched with a tapered leg. Includes an extra inch in the rear. This is the style for the guy who is too busy to worry about his look and is the most popular fit for men.

•

Baggy: Refers to extra loose legs, very popular in the 1960’s with tight low rise waists.

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•

Tight / Skinny: An upcoming, edgy trend. Tight fit throughout.

Classic Fit

Relaxed Fit

Western Cut

Loose Fit

Figure 2 | Denim fit designs for men available at PantSaloon

For Women's Jeans: •

Slim Fit Jeans/Skinny: Close fit through the seat and thigh, usually accentuated by tapered leg cut.

•

Easy Fit Jeans: Similar to relaxed fit with a lower rise and more room in the seat and thigh

•

Natural Fit Jeans: Slightly fuller fit through hips and thighs

As it is with cuts, more fits will be added to PantSaloon’s portfolio in order to keep up with trends. 3. Fabrics The selected cut can only be perfected and achieved if the right fabric is selected. To avoid problems in the construction of pants, the inhouse designer must advise the customer early on which fabric will work best for the design they are looking for. Because designs are expected to be diverse, PantSaloon intends to have a wide array of

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fabrics to choose from. PantSaloon will likewise make certain that they will procure the finest fabric at the most reasonable prices. Fabric for pants can range from twill and suede, to corduroy and khaki. However, as mentioned before, special attention shall be given to denim,

as jeans

will

be

the

product

specialty

of

PantSaloon.

Specifically, PantSaloon’s fabric line will include the following: •

Canvas

•

Army

•

Denim - Ordinary

•

Denim - Stretch

•

Corduroy

•

Twill

•

Suede

Fabrics can also be selected according to their feel preference. There are those who like their jeans soft and flowing, while some prefer theirs stiff and crisp. Because of this, the texture of denim fabrics shall be given attention to because the feel of the pants is also deemed to be very important to the customer.

4. Pocket Types Some pocket type options include:

•

4-pocket: No change pocket

•

5-pocket: This is the most widely used pocket configuration, with the fifth pocket being the small coin pocket.

•

Fashion Pocket: Embellished, decorated

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•

Flap Pocket: Can be very flattering on a woman with a small rear

•

Front Patch Pocket: Attached to the exterior of the pants

•

Multi-pocket: As used in carpenter/cargo styles

•

Rear Patch Pocket: Attached to exterior of pants

•

Seamed Pocket: Pocket in inside pants, opening finished with a seam

•

Utility Pocket: As used in cargo and carpenter pants

5. Waistband and Back Yoke The waistband is made of a double layer of denim: it is more rigid, Figure 3| Pocket designs available at PantSaloon

allowing it to hold one’s tummy much like a girdle. A wider waistband will help even more.

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Jeans with waistlines that are cut higher in the back, and lower in the front, are figure-flattering. The most flattering jeans have 1% to 2% Lycra or spandex in it. This elasticity allows them to hold everything in place without totally sacrificing comfort. The back yoke allows designers to play with perceptual illusions that, if used for the right reason, can enhance the look. The size and shape of the back yoke directly affects the size and placement of the rear pockets, and this is crucial. Here are some of the options: •

Inverted Arc: Gives the illusion of a fuller rear.

•

Straight (Horizontal): This yoke line will make the waist appear wider.

•

“V” Shape: Most widely used and most flattering back yoke cut.

•

Sweet Heart: This yoke type can truly enhance a small derrière, as the cut is clearly outlining a curvy heart shape. It works very well with stretch tight jeans since it allows the pants to conform to your figure

•

Extra Wide: This cut is used to achieve the “falling pants” look. The illusion is enhanced by the placement of the pockets way below the butt. This look is great for some guys, though not very flattering to any woman’s figure.

•

No Yoke: Usually combined with seamed pockets. The garment is contoured by the use of darts. This look is very conservative, and with a proper fit can work very well for women with large rear ends.

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Inverted Arc

Straight

"V" Shape

Sweet Heart

Wide Yoke

No Yoke With Seamed Pockets

Figure 4 | Waistband and back yoke designs

6. Fly Types •

Zippered Fly

•

Button Fly With Hidden Buttons

•

Button Fly With Exposed Buttons

•

Laced Fly

7. Waist Types The most obvious variation in waist type comes in the “rise”, which means nothing more than how far below the belly button the jeans will sit. It is measured from the crotch to the waist. Some designers use this as a major styling category, because of the unparalleled popularity of low and super low rise jeans in the last few years. It is nonetheless a subcategory of the type of cut. •

Regular Rise Jeans: Waistband is located precisely on the waist

•

Low Rise Jeans: Waistband is located typically 2-3 inches below the belly button. The most popular rise in most denim brands, especially for women.

•

Super Low Rise Jeans: Dangerously low, 3-5 inches below the belly button.

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•

Brazilian Low Rise Jeans: Brazilian jeans have almost come to define a waist type of their own: Ultra Low Rise Jeans. Brazilian jeans are growing in popularity and are renowned for their daring sexy cuts, high quality, and original embellishments. They are unique and worth looking into.

Natural Waist

Slightly Below Navel

Low Rise

Ultra/ Brazilian Low Rise

Figure 5 | Waist types available at PantSaloon

8. Embellishments While there are those who are satisfied with simple, unadorned jeans, there are also those people who like embellishments on their pants. A variety of materials have been selected to provide ornamentation to jeans. These materials include the following: •

appliqués

•

patches

•

beads

•

embroidery

•

sequins

•

rhinestones

•

Swarovski crystals

•

metal studs

•

lace

9. Sample designs

14

Figure 6| medium wash peacock embroidered jeans

15 Figure 7| dark natural vintage patch bootcut jeans

Figure 8| medium wash beaded jeans

16 Figure 9| medium bootleg skull jeans

B. Raw Materials Raw materials comprise about 37 % of the total production cost, while 46 % goes to labor costs attributed to the in-house designer, jeans engineers / tailors, and cutters. The remaining 17 % shall be allocated to overhead expenses. Because raw materials are important determinants of quality, the selection of a supplier which will provide for the finest quality of materials at a reasonable price is of utmost importance to the business.

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Pants come in a variety of fabrics, and which among these fabrics to be used is actually the choice of the customer. However, not all fabrics are suitable for pants. Only when a fabric achieves an over-all tailored look does it become appropriate for pants. These fabrics include corduroy, canvas, denim, leather/suede, twill, and woolen tweed. While all these are readily available at the store, jeans are PantSaloon’s specialty. Henceforth, an extensive denim fabric line shall be arranged. Any other fabrics not immediately available in the store can be requested for or brought in personally by the customer. Likewise, threads, buttons, rivets, zippers, labels and other accessories add value to the pants. Threads to be used are those which have an established reputation of strength, buttons and rivets are those which don’t tarnish immediately, and zippers should glide smoothly. Other accessories such as beads, crystals, and embroidery shall be unique and interesting in order to maximize the possibility of making each pair of jeans unique. 1. Suppliers Suppliers of raw materials will come from Divisoria, since they have an abundance of textiles, fabrics and other materials needed in the production of jeans. Aside from the overwhelming variety, these materials also come in very affordable prices. Selection of fabric suppliers will depend primarily on the (1) quality of fabrics provided, (2) extent of fabric offerings and (3) the reasonability of the prices by which these fabrics come. Several fabric suppliers will be obtained as one supplier cannot possibly have all the fabrics needed. Also, the expected competition between them is expected to drive the prices down and give the business more bargaining power in terms of acquiring discounts on materials.

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However, for other materials such as threads, buttons, zippers, and embellishments, only a couple of suppliers will be selected, since product offerings are similar and the price differences are insignificant. The only difference between suppliers lies in the depth of their product lines, and hence, the two suppliers with the most complete and diverse lines would be selected. The following are some of the possible suppliers who can provide the necessary materials needed for production input: Table 2 | Possible suppliers

MATERIAL Fabrics

SUPPLIER M & P Commercial Good Morning Textile Bull Magic Merchandising

Supplies

Marwin Trading Fashion Rev

ADDRESS 107 Ylaya Center market, 593 CM Recto Ave, Divisoria Pasilio C, Stall no. 72-74, Ent. 577-585, CM Recto Ave., Divisoria Pasilio A, Stall No. 14-16, Ent. 488-491, CM Recto Ave., Divisoria 601 CM Recto Ave., Tondo, Manila 577 General Shopping Center, Divisoria Pasilio S Stall No. 9, 14, 16, Yangco Market, Divisoria

Embellishmen ts

Carolina’s Lace Shoppe

Label

Los Amigos & Sons, Inc.

928 Ilaya St. Tondo, Manila

Paper Bags

Plaza de Amigos

LS -03 Tutuban Prime Block Center, Tondo, Manila

CONTAC T NO. 2474617 2452478 2455194 2450142 2452517 2450128 2418284 2431740 2450267 2445266 2450252 2522122 2534928 09178117500

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Credit terms and discounts on transactions between PantSaloon and all the abovementioned suppliers will be included in the terms of agreement between the company and the respective supplier, and determined on a per transaction basis. Fabric purchases will be in portions, because purchases requirements depend on the demand for these fabrics. However, should one fabric prove to be more popular than others, a larger amount will be bought so discounts on bulk purchases can be availed of. Purchases of the remaining materials will be in bulk, since their suppliers don’t engage in anything but wholesaling. Furthermore, it would be more practical to buy them in large quantities as they are materials that are hardly dependent on the customer’s preference. C. Production Arrangements 1. Cost Benefit Analysis In-house manufacturing Advantages. PantSaloon promises its customers a perfect fit all the time, and it is important for the business to get everything right in order to preserve the integrity of its name. The main advantage of inhouse manufacturing for the business is the close supervision of the pants-making process. Being a business that banks primarily on quality, this is a very important consideration. Closely supervised manufacturing will allow for constant quality checks to ensure that the jeans are being made exactly the way the customer wants it. Since PantSaloon is in the business of customizing, none of its products are mass produced. Because of this, attention to detail is necessary, and in-house manufacturing paves the way for meticulous monitoring of products.

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Aside from excellent quality control, in-house manufacturing also provides control over deadlines and production schedules. Delays can be avoided, since everything that needs to be delivered is on hand. Also, worries over late deliveries can be completely eliminated. The production schedule can move exactly as planned or be changed immediately to meet deadlines, since all aspects of production are under the control of the management. Lastly, in-house manufacturing will benefit PantSaloon by eliminating the costs that subcontractors can impose in production orders. Such costs include delivery, labor and overhead costs that the company might incur. Disadvantages. The main disadvantage of in-house manufacturing would be the large initial investment costs, as well as the operating costs that the business would need to sustain. Establishing in-house manufacturers would require the business to procure sewing machines, edging machines, buttonholing machines, and other materials needed for manufacturing jeans. Not only would this constitute a big part of the capital, but it would also result to added warehousing, inventory and maintenance costs. It would also require the company to hire in-house tailors, designers and cutters, whom the company will have to compensate with salaries and benefits. All these things would translate to substantial increases in overhead costs for the company. Outsourcing Advantages. Outsourced production will rid the business of the costs brought in by purchasing and maintaining equipment and other auxiliary materials such as thread, etc. It would also reduce overhead costs of the business, since expenses for electricity, warehousing, and inventory will not be shouldered by the company. There would also be

21

a significant cut in the salary expenses allocated for tailors and cutters, as the business would no longer need to hire them. Furthermore, costs of training will be completely eliminated. Disadvantages. Once labor is outsourced, the business automatically puts product quality at risk. Without the direct supervision that inhouse manufacturing offers, jeans may not be manufactured as well as the customers expect to since quality cannot be constantly monitored. This would translate to repair costs and revenue losses because of discounts offered for substandard products. Also, delays on delivery could result because subcontractors have a tendency to go beyond the expected deadline. This is fatal to the business’ goal of maintaining customer loyalty, since prompt delivery is essential to any service-oriented enterprise. Analysis Because PantSaloon banks highly on the quality of jeans it produces, the company deems in-house manufacturing more suitable for its operations. While investment costs could pile up initially, the long-term benefits of in house manufacturing far outweighs the initial outlay. Furthermore, since PantSaloon promises to produce jeans that are exactly to the customer’s liking, attention to detail is necessary, and this can only be done properly if the company engages in in-house manufacturing.

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Table 3| Cost Benefit Analysis Pre- production

IN HOUSE PRODUCTION

SUBCONTRACTING

DIFFEREN CE Production Post

Production

INITIAL CASH OUTLAY Materials purchase Leasehold Improvements Pre-washing and drying Working Tables and chairs (subcontract) Equipment Design conceptualization Materials selection Sewing Machines Measurements Edging Machine Design simulation and adjustment Buttonholer Final design Supplies L-square curved ruler Figure 10| Product Flow scissors

Serging Cutting 5,710 5,710 0 Sewing Seam finishing 30,000 Topstitching 0 Closures and Hems 15,000 Additional designs 0 inspection 5,000 Quality 50,000 0 Production adjustments Costing and pricing 220 0 220 600

Training Costs TOTAL INITIAL CASH OUTLAY

Storage 0Delivery 5,710 Fitting Alterations Final delivery0 0 0

0

0 1,040

0

15,000 71,750

0

50,000

0 0

1,040

0

15,000

0

71,750

OPERATING COSTS VARIABLE COSTS Direct Materials Fabric

31,124

31,124

0

Thread

264

0

264

Zipper

1,962

0

1,962

Buttons

210

0

210

Rivets

325

0

325

Labels

3,000

Total Direct Materials

3,000

0

36,885

34,124

2,761

0

50,000

-50,000

Indirect Labor (washing)

15,000

15,000

0

Total Variable Cost

51,885

99,124

-47,239

48,000

0

48,000

Direct Labor

FIXED COSTS Direct Labor Factory Overhead Factory Supplies embellishments Depreciation of Equipment Utilities Repair and Maintenance Insurance Total Factory Overhead Total Fixed Cost TOTAL OPERATING COSTS

3,000

3,000

0

416.67

0

416.67

9,090

6,630

2,460

0

0

0

1,875

0

1,875

14381.67 62,381.6 7 114,266. 67

9630

4,751.67

9,630

52,751.67

108,754

5,512.67

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Costing

a. Pre-production. The pre-production stage involves all the necessary procedures before the actual construction of the jeans. The first two procedures involve materials preparation, the first of which is the purchase of materials from the suppliers. As mentioned in the preceding sections, all materials other than fabric will be purchased in bulk. This is followed by pre-washing, since denim has a tendency to shrink, stretch and fade when washed. This also removes any sizing, which can cause skipped stitches, and softens the fabric. (If the label on the end of the bolt indicates the fabric is Sanforized, then the fabric has been treated, and the shrinkage will not exceed 1% in any direction). Pre-washing shall be outsourced, as this is the norm in the jeans manufacturing industry. When

a

customer

enters

the

store,

the

service

begins

by

conceptualizing the design. Design conceptualization includes the selection of cut, style, wash, and embellishment of the jeans. The customer may already have a design in mind, or he or she may want to consult with the in-house designer as to what cut and style would best enhance the customer’s figure.

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After the design has been selected, materials for the construction of the jeans will be selected. Fabrics will be catalogued so that the customer can actually get a feel of the fabric. Threads, buttons, zippers and embellishments can be selected by the customer in a separate catalogue. During this procedure, the designer advises the customer on which fabric will work for a particular design, and which materials would adhere to the selected fabric. This is to minimize adjustments and reproductions during the production process. After the materials to be used are finalized, measurements of the customer are taken twice. The first measurement involves the customer trying on the “dummy jeans” which is an oversized pair of jeans, which the tailor will use to determine the tightness or looseness of fit that the customer wants. The tailor tapes the jeans according to the desired fit, and afterwards proceeds to take the 7 key measuring points for jeans.

1 – crotch 2

–

length 3 – waist 4 – hips 5 – thighs 6 – knee 7 – hem

3

2 Figure 11| 7 Key Points for 5Measuring Pants

25

1

4

6

7

After the key measurements are taken, the tailor then encodes the design, material and measurements into the special computer software to simulate the over-all look of the jeans on the customer. Final adjustments on the design are made at this point, after which the design is finalized and submitted to the cutter to start the production process. The customer is also given a specific finishing date, when he or she would come back to claim and fit the jeans. b. Production The production process begins with serging or cutting the fabric in a zigzag manner to avoid raveling. The jeans shall then go to the master cutter and be cut. When cutting out the pattern, a withnap cutting layout is used, and facings are cut from lining or contrast fabric in order to reduce bulk. Sewing immediately follows after cutting. All projects, especially those involving denim, begin with new needles as denim dulls needles quickly. The heavier the denim, the larger the needle required. Table 4 | Required needles

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Heavyweightdenim

100/16

Mediumweight denim

needle 80/14 needle

Lightweight

75/11 needle

Denim needles, having longer, sharper points that penetrate the close weave of cloth more easily, and larger eyes that accommodate decorative topstitching thread, will be purchased for best results. As for threads, polyester or cotton-wrapped polyester thread will be used for standard sewing, while decorative threads will be used for topstitching. Denim is actually sewn like any other firmly-woven fabric. However, it frays easily so seam finishing is essential to the process. To seam finish denim pants, a test seam is stitched to determine the best stitch size. Heavier fabrics need fewer stitches per inch than lighter weight versions. Heavy denim is sewn with about 10 stitches per inch and lighter denim with about 12 stitches per inch (3 mm). For even feeding of the fabric, thread tension and presser-foot tension is reduced slightly. Denim can be sewn with a standard 5/8" (1.6 cm) seam. However, most denim garments feature flat-fell and topstitched seams. Stretch denim requires a stretch stitch. The most popular denim seam is the flat-fell seam because it’s very durable and gives a nice, clean finish on the inside of the garment. Topstitching gives denim its trademark look, as well as decorative appeal. Heavy contrasting threads such as buttonhole twist or decorative thread designed for topstitching will be used. After topstitching, attention is now given to closures and hems. Machine worked buttonholes, zippers, and decorative snaps are the

27

most popular types of garment closures on denim. Hems are most often stitched by machine with one or two rows of narrow topstitching. All other additional embellishments and finishing touches are added to the jeans before they undergo the first quality inspection. With quality inspection, the jeans are closely scrutinized and examined for any damages or diversions from the fit and design that the customers specified. Production adjustments follow, with all imperfections ironed out and fixed to get the jeans as close as possible to perfection. Only after these tedious processes shall the costing and pricing of the jeans be done. The total costs for constructing every pair of jeans including direct and indirect raw materials, labor and overhead are computed to determine the price. A gross margin of 35% of manufacturing costs will be added to the total costs to determine the final selling price of every pair of jeans. c. Post Production After the jeans are priced, they will be stored in the storage units located within the store premises. No more additional warehousing is needed, as these jeans will not be stored for long periods of time. When the customer comes back on the specified delivery date, jeans are given out for fitting. Because PantSaloon assures that jeans are always a perfect fit, any flaws duly faulted to the failure of the business to meet quality standards shall be altered for free, and the jeans will be sold for 50% off the original sale price. Once the alterations are finished, the jeans can finally be taken home and enjoyed by the customer. Table 5| Production Schedule

Steps

DAYS 1 2 3

4

5

Design conceptualization Materials selection

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Measurements Design simulation and adjustment Serging Cutting Sewing Seam finishing Topstitching Closures and Hems Additional designs Quality inspection Production adjustments Costing and pricing Storage Delivery Fitting Alterations Final delivery

3. Costing Table 6| Direct materials

Fabric Canvas Army Denim - Ordinary Denim - Stretch Corduroy Twill Suede

Thread white colored

Cuts (1.25 yards per cut)

kinds 10 4 9 8 22 20 5

3 3 3 3 3 3 2

unit price 108 120 108 76.8 120 100 154

35 31

unit per yard

per roll

total order

unit

total

37.5 15 33.75 30 82.5 75 12.5

yards

4050 1800 3645 2304 9900 7500 1925 31,1 24

4 4

rolls

140 124 264

100

pieces

530

Zipper 7"

5.3

per piece

29

8"

5.5

YKK 7" YKK 8"

180 114

per dozen

100

550

3 3

540 342 1,96 2

Buttons USA Metal

per order

60 90

2 1

orders

120 90 210

Rivets

per 65 order

5 orders

325

Labels

per 0.6 piece

5000 pieces

3,00 0

per 150 piece 220 220 30

4 pieces 1 1 2

250

2

Table 7| Supplies

Shears L-square Curved Ruler Tape Measure Embellishments Dummy Jeans

30

600 220 220 60 3,000 500 4,600

Table 8| Monthly Production Costs

Variable Direct Materials Fabric Thread Zipper Buttons Labels Rivets Total Indirect Labor (Washing) Total Variable Costs Fixed Direct Materials embellishments Direct Labor (wages) tailor cutter Total Direct Labor Indirect Labor designer Rent Expense Depreciation of Equipment Utilities electricity water Transportation Repair and Maintenance Total Fixed Costs Total Production Costs

31,124 264 1,962 210 3,000 325 36,885 15,000 51,885 3,000 36,000 12,000 48,000 20,000

8,390 700

68,000 12,500 416.67 9,090 3,000 0 96,006.6 7 147,891. 70

31

V. Store Operations A. Organizational Structure

Chief Executive Officer

Finance Manager

Accountant

Human Resources Manager

Cashier

Operations Manager

Designer

Cutter

Marketing Manager

Jeans Engineers

Market Researcher/ Purchaser

Figure 12| EALA Inc. Organizational Structure

1. Functions Chief Executive Officer General Function: in-charge with the overall management of the firm Duties and Responsibilities:

•

Formulates overall policy for PantSaloon

•

Sets goals and objectives for the company

•

Acts

as

the

primary

decision-maker

regarding

ideas

and

suggestions proposed by the managers •

Conducts regular meetings with managers to discuss business issues as well as to ensure smooth operations of the business

•

Keeps Board of Directors and stock owners posted on the status of the business

32

Finance Manager General Function: In-charge of investment and financing decisions for EALA Inc. Duties and Responsibilities: •

Takes charge of the budgeting, capital allocation, and cost control

•

Handles credit management

•

Forecast funds

•

Allocates dividends and incentives

•

Prepares long-range plans which include capital budgeting decisions

on

expansion,

replacement,

etc.,

and

cost

appropriations •

Determines the financing mix and sources of funds optimal to the needs of the firm

•

Coordinates with the accountant and cashier regarding the firm’s financial status

Accountant General

Function:

In-charge

of

generating

financial

reports

and

documents to the stockholders and regulatory agencies Duties and Responsibilities: •

Handles bookkeeping responsibilities

•

Prepares financial statements

•

Prepares payroll for employees

•

Handles the receivables and payables account

Cashier General Function: In-charge of daily sales transactions Duties and Responsibilities:

33

•

Gives receipt to customer after every payment of purchase

•

Calculates daily sales

•

Assists Operations Manager in generating monthly sales report

•

Turns over daily sales to the Finance Manager

•

Acts as receptionist inside the store

Human Resources Manager General Function: In-charge of all Human Resources activities which include recruitment and selection, training and development, performance appraisal, compensation, benefits and incentives regulation, among others Duties and Responsibilities: •

Administers recruitment and selection of employees

•

Conducts examinations and interviews for applicants

•

Implements personnel rules and regulations

•

Conducts performance appraisals

•

Approves staff loans

•

Manages work hours, day-offs, and leaves of employees

•

Spearheads planning of recreational activities for the employees

•

Studies current wage levels in the industry

•

Ensures compliance with labor laws regarding compensation and benefits

•

Decides on resignation or termination of an employee

Operations Manager General Function: In-charge of the overall management of the production and operations Duties and Responsibilities: •

Manages the store’s daily operations

•

Generates monthly reports on sales, inventory, utilities, and other necessary items concerning the store

•

Receives and records incoming supplies delivered to the store

34

•

Acts as the cashier whenever the cashier is out

•

Assists the cashier and designer in dealing with customers in periods of high customer traffic

•

Performs quality checks

•

Updates finished jeans checklist on a daily basis

•

Ensures that store personnel act according to EALA Inc. rules and policies

•

Generates monthly reports on store employees attendance

•

Performs necessary sanctions for store employees’ offenses in tardiness and absences by issuing memos or by oral reprimand

Designer General Function: In-charge of conceptualizing designs for PantSaloon Duties and Responsibilities: •

Studies the latest trend in denim jeans

•

Submits designs subject to the approval of the managers

•

Handles pre-production procedures such as getting customers’ measurements and recommending fabric type and style of the jeans as well as post-production procedures like checking the fit of the jeans to the customers and deciding whether it needs alteration

Cutter General Function: In-charge of cutting the fabric for each denim jeans to be sewed Duties and Responsibilities: •

Cuts the fabric for each jeans after the customer’s vital statistics are measured

•

Assists the designer in getting customers’ measurements in case of high customer traffic

Jeans Engineers / Tailors

35

General Function: In-charge of sewing denim jeans Duties and Responsibilities: •

Sew denim jeans

•

Assist the designer in getting customer measurements

•

Alter denim jeans whenever applicable

Marketing Manager General Function: In-charge of marketing activities for PantSaloon Duties and Responsibilities:

•

Formulates marketing strategies such as product, pricing, place and promotional strategies for PantSaloon to gain a favorable share of the market

•

Evaluates PantSaloon products’ market performance

•

Studies PantSaloon’s competitors

•

Analyzes marketing opportunities for PantSaloon

•

Determines the type/s of promotional activities

•

Determines the most appropriate marketing communication medium in order to increase market awareness and market performance

•

Identifies the cost of advertising and promotional activities

•

Estimates the growth in sales after executing promotional program

•

Performs cost-benefit analysis on promotional expenditures and increased sales expected as a result of such

•

Compares target and actual sales

•

Monitors sales and expenses

Market Researcher / Purchaser General Function: In-charge of doing marketing research for PantSaloon and purchasing supplies needed for the production of denim jeans Duties and Responsibilities:

36

•

Assists and coordinates with the marketing manager in studying and investigating PantSaloon’s closest competitors

•

Forecasts appropriate pricing scheme

•

Assesses demand and supply forecast

•

Handles purchasing of raw materials

•

Ensures the replenishment of production supplies

2. Qualifications Since the business is just starting, the qualifications of the officers would be simple enough for them to do their functions in the organization. Chief Executive Officer •

Male/female

•

Must be a graduate of any business course

•

Should be knowledgeable in the apparel industry

•

Work experience is an advantage

•

Must possess excellent communication skills in English and Filipino

•

Must have strong leadership and decision-making skills

Finance Manager •

Male/female

•

Must be a graduate of any business course, preferably major in Finance

•

Must

be

familiar

with investment

management

and

analysis •

Must

be

familiar

with

financing,

loan

and

credit

management Accountant •

Male/female

37

•

Must be a Certified Public Accountant

•

Must be hardworking and willing to work long hours if necessary

Cashier •

Male/female

•

Must have attained at least 2 years of any college or vocational course

•

Must possess good communication skills in English and Filipino

•

Must be customer-oriented and with pleasing personality

•

Must be trustworthy in handling daily sales

Human Resources Manager •

Male/female

•

Must be a graduate of Psychology, Behavioral Science or any business course

•

Must be knowledgeable in employee relations, in making compensation packages, and in other HR functions

•

Must have strong leadership qualities

Operations Manager •

Male/female

•

Must be graduate of any undergraduate degree, preferably any business course

•

Must possess excellent communication skills in English and Filipino

•

Must have strong leadership skills to manage subordinates

•

Must be customer-oriented

38

•

Preferably has knowledge and experience in apparel business

•

Must be willing to work long hours if deemed necessary

Designer •

Male/female

•

Must be graduate of Clothing Technology or any related course

•

Must be creative and full of innovative ideas

•

Must be customer-oriented

•

Work experience is an advantage

Cutter •

Male/female

•

Highly-skilled in cutting fabrics for denim jeans

Jeans Engineers / Tailors •

Male/female

•

Highly-skilled in denim jeans production

•

Work experience as a tailor is an advantage

•

Must be able to meet deadlines

Marketing Manager •

Male/female

•

Must be graduate of any business course, preferably major in Marketing

•

Must be familiar with the apparel industry

39

•

Knowledgeable

in

advertising

and

marketing

communications strategies, consumer behavior, product and brand management, distribution management, and other marketing principles •

Must be updated with the latest fashion in denim jeans

•

Must possess excellent communication skills in English and Filipino

Market Researcher / Purchaser •

Male/female

•

Must be graduate of any business course, preferably major in Marketing and/or Operations

•

Knowledgeable in market research methods and consumer research studies

•

Knowledgeable in purchase and supplies management

3. Recruitment and Training EALA Inc. assumes that the incorporators themselves will occupy all top positions, and all other unoccupied positions will be filled in by hiring people. Interested applicants must first submit a copy of their updated resume, which the HR Manager will go through to select potential hires. Chosen applicants will then be asked to appear for an initial interview. Shortlisted interviewees will undergo one-week training to further hone their skills, as well as be briefed with the company’s mission, vision, policies and guidelines. Those applicants whose workmanship and work ethics are at par with PantSaloon’s standards shall be hired. All newly hired applicants will be asked to submit NBI, Police, and Barangay Clearances. They must also have their SSS numbers and submit a medical certificate stating that they are fit to work.

40

4. Compensation and Benefits The company shall follow the compensation package outlined below: Table 9| Compensation Package

Position

Monthly Compensation 35,000 plus shares in the

CEO

PHP

Operations Manager

company PHP 25,000

Finance Manager

PHP 22,000

Human Resource Manager

PHP 22,000

Marketing Manager

PHP 22,000

Accountant

PHP 18,000

Cashier

PHP 12,000

Market Researcher

PHP 18,000

Jeans Engineers

PHP 12,000

Master Cutter

PHP 12,000

Designer

PHP 20,000

Salaries will be paid every 15th and 30th of every month. Salary increases will be dependent on the current year’s performance. As mandated by the Philippine government, all employees are entitled to SSS, PhilHealth, Pag-ibig Fund and ECOLA. Other compensation benefits such as holiday pay and service incentive leaves will be applied based on the rules and regulations stipulated on the Labor Code of the Philippines. Jeans engineers or tailors are entitled to two days off from work. The schedule was designed to ensure that there are at least two tailors present in the store every working day. On the other hand, the operations manager, cashier, designer and master cutter are required to report seven days a week. All employees are entitled to a sick leave of seven working days.

41

B. Daily Operations To give time for store preparation and clean up, the call time for all employees is 30 minutes before the opening time. During weekdays, the store opens at 11:00 am, while store hours begin at 10:00 am on weekends. At these hours, the Operations Manager, cashier and designer are expected to be at the reception area, attending to customers. In the meantime, the cutter and two jeans engineers are expected to be found at the workroom behind the store, making the jeans. The Operations Manager, Designer, and Cashier also double as receptionists as they are expected to cheerfully greet all customers who enter the store. They are all obliged to ensure the comfort of the customers by assisting them in whatever way possible. The store’s policy will be on a first come first served basis. This means that the customer who arrives first shall be first in line with the designer’s or cashier’s services, whichever he or she might need. Once a customer gets his consultation turn with the designer, the first matter of consideration will be the cut and style, followed by selection of fabric. The fabric is selected from a fabric catalogue so that the customer is able to get the feel of the fabric. He or she will also be advised as to what fabric will work best for the selected cut and design. After the fabric has been selected, any additional designs shall be selected. The designer shall then take the measurements of the customer, and encode the design, fabric and cut to the special software program that simulates the over-all look of the jeans. Tailors/jeans engineers can also take the measurements of the customer when store traffic is high. The design undergoes necessary adjustments before finalized and submitted to the master cutter.

42

Only after performing all these services, shall the designer move on to the customer next in line. The cashier situated at the cashier’s counter is first expected to show the voucher to the customer and confirm item/s listed in the receipt. Once the customer agrees, the cashier tallies the amount and announces the total payment required.

As soon as the customer hands the payment to the

cashier, the cashier should read out to the customer the amount of the transaction and the payment received. The cashier should count the change out loud to the customer. The copy of the voucher is kept for recording of daily sales. After payment, the items will be placed inside a paper bag and the cashier should thank the customer. This way the buyer will recognize PantSaloon to be a boutique that has honest, warm, and courteous employees. During lunchtime, the employees will take turns at having lunch. If there is no customer to assist, all employees in the store are expected to keep the place neat, clean, and orderly. The store closes at 8:00 pm on weekdays and 8:30 pm on weekends. Before leaving, the store must be cleaned and the cash must be balanced by the cashier. The cash for the day will be handed to the Operations Manager who will, in turn, deposit it in the bank. If, for any reason, the cash is not balanced then it should immediately be reported to the manager. 1. Scheduling Scheduling is one of the most important tasks of store management, yet it is often one of the most neglected. Many Operations Managers simply repeat the same schedule each week, neglecting to analyze changes in store traffic For PantSaloon, all store employees are required to report thirty minutes before the scheduled opening time. This is to provide ample

43

time for cleaning, stock replenishment, and cash wrap counter preparation. Furthermore, breaktime during lunch should also be scheduled to ensure that there are employees to attend to customers during the lunch hours.

Table 10 | Sample Weekly Schedule for PantSaloon employees

Mon

Tue

Wed

Thu

Fri

Sat

Sun

OC

OC

OC

OC

OC

OC

OC

OC

OC

OC

OC

OC

OC

DO

Designer

OC

OC

OC

OC

OC

OC

OC

Cutter

OC

OC

OC

OC

OC

OC

OC

Jeans Engineer 1

OC

OC

DO

OC

OC

DO

OC

Jeans Engineer 2

OC

OC

OC

DO

OC

OC

DO

Jeans Engineer 3

OC

DO

OC

OC

DO

OC

OC

Operations Manager Cashier

Table 11 | Lunch Break Schedule

Time In Weekdays

11:00 am

Weekends

10:00 am

Lunch 11:00-12:00 / 12:001:00 11:00-12:00 / 12:001:00

Time Out 8:00 pm 8:30 pm

Table 12 | Sample lunch break schedule

11:00 am - 12:00

12:00 nn -1:00

nn

pm

Operations Manager

X

Cashier

X

Designer

X

Cutter Jeans Engineer 1

X X

Jeans Engineer 2

X

Jeans Engineer 3

X

44

2. Policies on Tardiness and Absences All employees will be required to be at the store at 10:30 am during weekdays and 9:30 am during weekends. They would be considered late if they come 15 minutes after the call time. Any fraction after that, they will be considered under time and there would be a corresponding deduction from their pay. An overtime cannot offset an under time. An employee will only be allowed to be late for a maximum of three times per month. Should they exceed, a memo will be issued to call their attention. In the event that they would absent themselves from work, they must call before or one hour before the call time to inform the Operations Manager of their absence. All store employees will only be allowed a maximum of one absence every month. Should the maximum be reached, a memo will be issued to call their attention. An absence without leave will be considered a serious offense. A memo will be issued upon returning to work. 3. Uniform and Dress Code The Operations Managers and all store staff will be provided with official uniforms. Uniforms will vary and will depend on the season and budget. These employees are expected to wear their uniforms at all times. The store staff will enjoy free uniform privileges. The prescribed color and style of shoes will be provided by the employee themselves. Stockings shall be worn when the uniform consists of skirt. Female staff should maintain their hairstyles neatly combed and make-ups should be appropriate for daywear and theme of the season. Accessories should be minimized. Body marks, including tattoos, body paints or stickers are not allowed. 4. Inventory Management Since all of PantSaloon’s products are custom-made, fabrics will be the only items in the business’ inventory. Even then, the fabrics that the

45

store shall keep in its inventory will only be for purposes of keeping safety stocks. When the store runs out of a certain kind of fabric, the purchaser is in-charge of replenishing this stock. The average rate of replenishment is once a month, because the amount of fabric kept in storage is a close approximation of monthly demand. Finished goods shall be kept in the finished good inventory for an average of one day, as the jeans are expected to be finished a day before the customers are expected to claim them. These finished jeans are labeled by customer’s name, and are neatly arranged in storage cabinets supervised by the operations manager until such time that they are claimed. The storage area shall also house the supplies and utility equipment of the store. A checklist of finished items shall be kept on hand, and updated at the end of the day to keep track of the jeans that have already been claimed. This way, it would be easier for the boutique to keep track of its inventory. 5. Cash Management For the first few years of operations, PantSaloon shall make use of vouchers / sales invoices as proofs of payment. Payments will be in cash, and kept at a safety deposit box placed under the careful supervision of the cashier. The store will have an opening fund in the safe of P2,000 in different denominations: Table 13 | Opening Fund

Denominations

Total

P 1.00

Quantitie s 100

P 5.00

10

P50

P 10.00

5

P50

P 20.00

15

P300

P 50.00

10

P500

P 100.00

5

P500

P 500.00

1

P500

P100

46

This opening fund, counted and managed by the Operations Manager, will be used in the daily operations of PantSaloon. In the meantime, the cashier will record the cash at the end of each operating day. The same thing will apply to daily sales receipts. Substantial amounts of cash would not be allowed to accumulate, so the Operations Manager shall be responsible for depositing the cash in the bank under the store’s bank account. This account will serve as the depository of all sales. 6. Sales Management A daily sales report is made to keep track of merchandise and account for every peso received. This report would aid the Operations Manager in monitoring what items are in demand and what are slow-moving. Orders for stocks and sales trends can be easily determined because of this. The boutique will be able to order those materials that are fastmoving and will not have the error on ordering those that are hardly saleable. 7. Store Expenses Rental. Monthly rental statements will be issued by the building operator to the operations manager, who in turn is responsible for checking the accuracy of all the information and figures written on the statement. Affixing his signature on the bottom portion of the statement signifies that the statement has been screened and reviewed.

The rental statement is finally faxed to the Accounting

Department for payment processing.

47

Electricity and Water. The electricity and water charges will be incorporated in the rental statement. The operations manager ensures that the consumption readings of each are reviewed and tallied against the previous month’s reading. Petty Cash. A petty cash fund of P500 shall be allocated for the business. They are not required to finish up the entire funds, and are even encouraged to minimize spending, without sacrificing operational efficiency. Replenishment of Store Supplies. The quantity ordered to replenish supplies must be enough for a month’ supply. Hence, the average monthly consumption for each supply will be monitored in order to peg a safe reorder point. Table 14| Monthly General and Administrative Expenses

Office Supplies petty cash Others Salaries CEO Operations Finance Marketing HR Accountant Market Researcher

500 500 35,00 0 25,00 0 22,00 0 22,00 0 22,00 0 18,00 0 18,00 0

Table 15| Operating Costs Insurance

Communications Production Utilities Variable Electricity (Office) Fixed Water Total Total Administrative Costs Administrative TOTAL MONTHLY OPERATING COSTS

1,000

162,000 1,875 1,500 51,885 1,500 96,006.6 5007 147,891. 168,375 67 168,375 316,266. 67

48

VI. Structural Requirements A. PantSaloon Boutique Layout Design Concept: Adding interest to basics The interior of the store will be ultra modern and dominantly white, to make the place look more expansive. However, to break the monotony and add accent and interest to the space, splashes of bright and cheery colors such as orange and neon green shall be added, via the store accessories and furniture. White also projects an image of easy sophistication, and cleanliness. Being a neutral color, it can be easily made attractive by adding points of interest. The same applies to PantSaloon’s jeans – a splash of color is all you need to make something basic stylish, individualistic and interesting. Rationale: Utmost comfort and sophistication for the valued customer Since the target market of PantSaloon is the higher end market, EALA Inc. aims to imbibe a sense of modern luxury into its interiors. EALA Inc. wants to achieve a clean and organized look for PantSaloon by adopting a minimalist attitude in its choice of interiors. To add interest and comfort however, unique pieces that are still comfortable have been selected. More importantly, EALA Inc. wants a space that would allow them to serve their customers in the best way possible. Design Style: Modern Industrial Style Simple lines, neutral colors and geometric figures have been selected to achieve the clean and organized look.

Silver metal shall accompany the

white walls and furniture, while bright orange and green items shall accent the white scheme. The flooring caps off this theme by applying acrylic emulsion to the floor finish.

49

Design Objectives: •

To be able to meet all the client’s necessities and wishes

•

To be able to come about with a design that would attract customers in and keep them coming back

•

To be able to translate the concept of the clothing line to the boutique’s interior

•

To be able to design a space that would make for comfortable fitting of jeans

•

To be able to make a design that would cater to the comfort of both clients and employees

•

To be able to create a vibe conducive for generating creative ideas for jeans

1. Initial Location PantSaloon shall be located at the second level of J & R Commercial Center in Katipunan, Quezon City. The proposed space, 25 square meters big, is currently unoccupied and is available for leasing anytime.

Figure 13| Front View of J & R Commercial Center

50

Figure 14| Proposed Shop Location

51 Figure 15| Floor Plan of J & R Commercial Center 2nd floor

2. Proposed Layout The proposed layout of PantSaloon is designed to maximize the ease of movement within the store. To maximize the limited floor area, the furniture

52

shall be pushed away to the sides to make room for movement across the store.

Also, furniture will be kept at a minimum, extending only to the

receiving/waiting area sofas and table. Lighting. The lights that will be installed inside the store are bright white lights that further accent the whiteness of the scheme. They will also help in getting an accurate view of the jeans, and provide further contrast to the colored pieces of furniture within the store. Moreover, a square glass floor lamp shall be situated at one corner of the sitting area to serve as additional lighting, accent piece and decoration. All the lights will be strategically positioned to highlight the different portions of the store. Display Area. PantSaloon shall utilize its suspended cabinets, industrial rack and center table for displays. The suspended cabinets shall showcase folded fabrics, while the display racks underneath it will contain finished jeans that the customers can actually emulate. The center table at the sitting area shall hold the swatches of fabric, catalogued in a unique and creative manner to also serve as decorative pieces. Fitting Rooms. The fitting area is situated at the leftmost corner of the store covered by an attractive cloth. Inside the fitting room is a hanging full length mirror so the customer can see the jeans in its totality. A floor-to-ceiling mirror wall shall be situated at the opposite side of the fitting room so that the customer may see the jeans from all angles at the same time, if he or she wishes. Warm white lighting shall be utilized inside the fitting room to accentuate the color of the skin, making the customer look better. The fitting room should be comfortably big, so that customer will have room to move around and turn without feeling cramped. The hooks by

53

which they would hang their clothes would likewise be big and ample, so that the customer does not run out of space to hang their clothes. Waiting Area. The store’s main attraction, facilities-wise, is its sitting area. Composed of colorful sofas, stylish center table and a floor lamp, the sitting area will function as the designer’s consulting area, as well as a place where other customers can comfortably wait for their turn. The sitting area will be the store’s centerpiece, embodying the vibe and character that PantSaloon wants to suggest. Cashier Counter. The cashier counter shall contain the logo of the store, and be located at the right of the customer upon entering the store. The counter is strategically positioned to observe all the activities happening within the store. It will contain the cash safe, vouchers and the phone, for entertaining store inquiries. Work Area and Stockroom. The work area and stock room shall be located at the back of the store concealed from the customer’s view by a curtain wall. All the equipment for working and storage are pushed to the sides, thereby facilitating free movement within the work area. Added Features. Mannequin displays and hanging jeans shall be placed at the display mirrors on the rightmost side of the entrance door, as these are the only places where displays can be actually placed. The displays will include uniquely designed jeans that are sure to attract the attention of passersby, enticing them to come into the store and see what PantSaloon has to offer them.

54 Figure 16| Proposed Floor Plan of PantSaloon

3. Construction of the Boutique The construction of the boutique would take about 22 days to finish. EALA Inc.’s contractor, JGC Trading and Construction, presented a schedule of construction and itemized costing for the materials an labor to be used in furnishing and refurbishing the store. Needless to say, the prepared schedule took into consideration the rules of the

55

building operators on construction that is, contractors will only be allowed to work from 8pm to 12 mn, or four hours every day. Lastly, the calculated costing for the construction would reach P293, 629. Table 16| Construction Costs

Materials Cost qty A. General Requirements Mobilization/ Demobilization 1 Power and water consumption 1 Permit and Fees 1 Hauling and Lifting 1 Final cleaning/ clearing 1

u nit

unit

total

Labor Cost unit

TOTAL

total

lot

5,000

lot lot lot lot

15,000 10,500 8,900 5,000 44,400

B. Demolition Requirements 1 Concrete 2.6 m2 1 Wood 6.8 m2 Hauling and Disposal of Debris 1 lot

350

4,410

4,410

150

2,520

2,520

2,500

2,500 9,430

7,400 5,000

25,900 11,000

2,700

7,700

2,000

3,500 48,100

6,000 15,75 0

18,000

2,100

6,600

2,500

5,500

2,500 90

5,500 210 72,560

C. Carpentry Requirements Cashier counter Floating shelves

1 6

18,50 0 1000

18,50 0 6000

Storage cabinets

2

2500

5000

Worktables

1

1500

1500

7,40 0 833 1 350 2 000

D. Painting requirements Ceiling - enamel Walls - semi gloss latex

25 m2

480

175 m2

120

1200 0 2100 0

Cashier counter - duco

1

4500

4500

Storage cabinets - duco

2

1500

3000

Floating shelves - duco Worktables - flat

6 1

500 120

3000 120

240 90 2 100 2 500 2 500 90

36,750

56

E. Wall finishing Working area partition (fabric) Fitting room partition (fabric) Mirror on plywood backing F. Floor finishing Cement laying Acrylic emulsion Carpet roll G. Ceiling works Flat ceiling using 1/4 plywood

1 lot

1480

1480

500

500

1,980

1 lot

1000

500

500

1,500

11 m2

950

1000 1045 0

380

4180

14,630 18,110

25 m2 25 m3 6 .25 m4

150 200

50 100

1250 2500

5,000 7,500

850

3750 5000 5312. 5

100

625

5,938 18,438

25 m2

480

1200 0

240

6000

18,000 18,000

12.5

2500

1000

3,500

4000

4000

50 6 000

6000

10,000 13,500

12,33 0

12,33 0

9,850

22,180

lot pc 5 s.

4,500

4,500

2,150

4,650

275

1,375

1

lot

7,500

1 .92 m2 1 lot

3,500 900

H. Bathroom Requirements Tiling 200 pcs Sink and Toilet Installation 1 lot I. Electrical Works Wiring and Conduit

1

Switches and Outlets

1

Fluorescent- Cove Light Panel Box and Accessories J. Other Finishes Laminated Cashier countertop Aircon provisions TOTAL

lot

9,85 0 2,15 0

750

2,125

7,500

150 4,50 0

4,500

12,000 40,955

6,720 900

1,05 0 500

2,016 500

8,736 1,400 10,136 293,62 9

57

Table 17| Construction Schedule

1

2

3

4

5

6

7

8

9

1 0

Duration: 22 Days 1 1 1 1 1 1 2 3 4 5

1 6

1 7

1 8

1 9

2 0

Demolition Requirements Concrete Wood Hauling and Disposal of Debris Carpentry Requirements Cashier counter Floating shelves Storage cabinets Worktables Ceiling works Flat ceiling using 1/4 plywood Electrical Works Wiring and Conduit Switches and Outlets Fluorescent- Cove Light Panel Box and Accessories Panting requirements Ceiling – enamel Walls - semi gloss latex Cashier counter - duco Floating shelves - duco Storage cabinets - duco Worktables – flat Floor finishing Cement laying Acrylic emulsion Carpet roll Wall finishing Working area partition (fabric) Fitting room partition (fabric) Mirror on plywood backing Bathroom Requirements Sink and Toilet Installation Tiling

58

2 1

22

B. EALA Inc. Office Layout The office of EALA Inc shall be located at the 4th floor of 33 P. Burgos St. corner G. del Pilar Street, West 10th Ave., Caloocan City. The building is conveniently located along the boundaries of Quezon City, Malabon, Navotas and Manila. It is also 45 minutes away from Katipunan, where the store will be located. The total space area available for occupancy is 36.7 square meters. 1. Proposed Layout The office space is intended for conducting business transactions, generating reports, receiving customers and job applicants, and providing storage for documents essential to EALA Inc. Because of this, the office space shall be divided into 4 areas: conference, computer, receiving and storage. The office unit is already furnished with wall paper, air conditioner, cabinets, and tables. Additional fixtures and furniture, office equipment included, shall be acquired for usage in company transactions.

59

TP

Office

Figure 17| Proposed Office Layout of EALA1234 Inc.

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Table 18| Costing of Office Investments

EXPECTE OFFICE EQUIPMENT

Qty.

COST

TOTAL

D LIFE

4 in 1 office machine (printer, scanner, copier, fax)

1

12,000.00

12,000.00

5 years

Computer Set

2

30,000.00

60,000.00

5 years

P 72,000.00

TOTAL

EXPECTE FURNITURES & FIXTURES

Qty.

COST

TOTAL

D LIFE

Filing cabinets

2

2,500.00

P 5,000.00

10 years

Conference chairs and tables (set)

1

20,000.00

20,000.00

10 years

Sofa leather

1

4,000.00

4,000.00

10 years

Office tables

2

2,500.00

5,000.00

10 years

Office chairs

4

1,000.00

4,000.00

7 years

Fire extinguisher

1

1,700.00

1,700.00

10 years

TOTAL

P 39,700.00

Straight line method shall be used to depreciate the aforementioned items. Except for the computer set and 4-in-1 office machine, all other items shall be given an expected life of ten years. While the company believes that the furniture and fixtures would be durable enough to last for the specified durations, the specified office equipment would only last half as long because of the need to keep up with the fast-paced change in technology. The risk of obsolescence therefore is also higher for equipment rather than for furniture and fixtures.

VII. Business Requirements

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The following permits have to be processed: 1. Barangay Clearance 2. Mayor’s Business Permit 3. DTI Certificate of Registration 4. DOLE Registration 5. BIR Registration 6. BIR POS Permit law requires the execution of the Articles of Incorporation so as to endow the 7. BIR Authority to PrintThe corporation the capacity to transact the business for which it was created. Articles of Together with the Treasurer’s Affidavit and upon payment of filing and publication fees, the Securities and Exchange Commission shall then issue the Certificate of Incorporation thesecured business entity. While the following permitsIncorporation have to to be from the City / Municipality:

1. Building Permit 2. Electrical Permit Barangay Clearance 3. Wiring Permit Fee: P400.00

4. Occupancy Permit

The business must then secure a certification from the barangay to where it will operate. The Barangay Clearance shall include the name of the owner, the name, nature, and address of the establishment, and the date when the form has been approved by the Barangay Chairman.

5. Locational Clearance 6. Sanitary Permit The Community Tax Certificate can be obtained from the Bureau of Internal Community Tax Revenue after accomplishing the Application of Registration and payment of Certificate 7. Certificate of Fire Safety AnnualInspection Registration Fee and Documentary Stamp requirements. 8. Certificate of Electrical Inspection The Community Certificate can be obtained from the Bureau of Internal Coordinate with building operators forTax the following: Sanitary Permit Revenue after accomplishing the Application of Registration and payment of Annual Registration Fee and Documentary Stamp requirements. 1. Final building inspection

2. Permit to Move-in 3. Overtime / Work Permit The establishment must then be registered to specific zoning areas as assigned Locational by the Local Zoning Board in the Planning Department of the City/Municipality. 4. Permit to Pull-out Garbage Clearance Upon application and approval, the business shall be classified as belonging to Fee: P425.00

Fire Clearance Fee: P356.10

the Residential, Commercial, or Institutional Zones, whichever it is deemed included.

As persuant with the fire safety and and protection requirements of the Fire Code of the Philippines (PD-1185), the business must obtain a Fire Safety Inspection Certificate before it could operate. The building or occupancy must be inspected and should be subject to the recommendation and approval from the Chief Inspector of the Municipal Fire Marshal.

A. Requirements for Businessmust Application The establishment then request for a certification of tenancy from the Building building or mall to where it shall locate its business at. The certificate should Administrator’s To be accomplished include at thetheBusiness Permit and Office name of the stall and the levelLicense where it is placed, the space code and Certificate the its approximate floor area.

Permit to Operate

Upon completion of the necessary requirements presented above, the documents shall then be presented to the Business Permit and License Office for further 62also inspection and assessment. Required Taxes and Regulatory Charges must be accomplished before the the Municipal Administrator, through the authority of the Mayor, could grant its approval in the issuance of the Permit to Operate.

Table 19| City/Municipal Taxes, Fees, and Charges

Assessments Local Taxes Local Business

Reference

Amount Due

Sec. 15-19,37&44, RCMM Sec. 34, RCMM

63

Tax on Delivery Vans/Trucks

Sec. 19(25), RCMM

Tax on Signboards/ Bill Boards

Sec. 40, RCMM

Regulatory Charges Mayor’s Permit Fee

Sec. 105, RCMM

450.00

Garbage Charges

Sec. 63, RCMM

100.00

Delivery Vans/Trucks Permit Fee

Sec. 105(b), RCMM

Business Registration Plate

180.00

Inspection Fees Sanitary Inspection Fee

Sec. 109, RCMM

Building Inspection Fee

P.D. 1096

Electrical Inspection Fee

P.D. 1096

Mechanical Inspection Fee

P.D. 1096

Plumbing Inspection Fee

P.D. 1096

Signboard/Billboard

Inspection

Fee

Sec. 105(b), 13, RCMM

36.00

175.00

50.00

Penalty (Surcharge & Interests) ** Mode of Payment: QUARTERLY ** To be paid for Current License Period

B. Leasing Requirements a. Legal Requirements (Corporation) 1. Articles of Incorporation and By-Laws

64

2. Board Resolution authorizing the Contract of Lease and designating the Authorized Signatory 3. Community Tax Certificate of the Corporation and the Authorized Signatory 4. Registration of Business Name with DTI 5. Certificate of Registration with BIR 6. Business Permit b. Technical Aspects 1. Floor Plan 2. Ceiling Plan 3. Front Elevation 4. Longitudinal Section 5. Cross-Section 6. Perspective 7. Signage 8. Electrical Load Schedule 8a. Electrical Layout 8b. Lighting Fixture 8c. Power 8d. Signage 9. Color Scheme 10. Scope of Work

Table 20| Initial Investment Costs

Registration Fees SEC BIR DTI Business Permit Total Registration Fees

3,189 500 515 7,472 11,676

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Fixed Assets Office Equipment 4 in 1 machine Computer Set Furniture and Fixtures Cabinets Chairs and table Sofa Fire extinguisher Leasehold Improvements Total Office Assets Store Equipment Sewing machine Edging machines Buttonholers Jeans software Computer set Chairs and worktables Phone Safety deposit box Furniture and Fixtures Display materials 2-seater sofa Chair Center table Floor lamp Lighting system Fire extinguisher Air conditioning unit Leasehold Improvements Vehicle Total Store Assets Total Fixed Assets

Initial Advertising Costs Print Materials Ribbon Cutting Total Initial Advertising Costs Initial Working Capital Current Assets Cash on Hand Supplies Materials

12,000 60,000 2,500 29,000 4,000 1,700 15,000 124,200 30,000 15,000 5,000 20,000 30,000 5,710 2,000 1,700 15,000 6,000 2,000 4,000 1,500 8,000 1,700 17,000 293,629 300,000 758,239 882,439

80,500 30,000 110,500 500,000 53,500 39,885

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Prepaid Rent Total Current Assets Production Costs Variable Indirect Labor (Washing: Outsource) Total Variable Costs Fixed Direct Labor (wages) Indirect Labor (Designer) Rent Expense Utilities Transportation Repair and Maintenance Total Fixed Costs Total Production Costs Administrative Costs Office Supplies Salaries Insurance Communications Utilities Total Administrative Costs Total Initial Working Capital TOTAL INITIAL INVESTMENT COST

75,000 668,385 15,000 15,000 48,000 20,000 12,500 9,090 3,000 0 92,590 107,590 1,000 162,000 1,875 1,500 2,000 168,375 944,350 1,948,965

67