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ABSTRACT
Medium and Small Enterprises (MSEs) in the countryside due to their remote location find it difficult to obtain market information and to promote their livelihood, often relying on existing local markets where margins are often cut in order to compete. They are also not fully aware of market standards, quality control, costing, and cost-effective production techniques making it hard for them to penetrate bigger markets because of low production capacity and low quality. Their mostly seasonal production leads to large labor turnover resulting in unskilled labor.
On the other hand, domestic and export market needs have changed significantly, having far-reaching consequences to MSEs. Consumers are now more price and quality conscious, implying the need for products to be made in a cost-effective manner. Buyers require smaller quantities and faster delivery which means a shorter production lead time for MSEs. MSEs costs are generally higher with traditional competitors and with increasing production and labor costs, MSEs target the higher-end of the market. This involves introduction of changes to design and production practices, suggesting the need for new equipment, new or upgrading of skills, and more efficient product development.
Hence, product development plays an important role in addressing the concerns stated. This means that this activity should look beyond design skills and consider the wider picture of how the market and development components involved will be dealt with through the set-up of a holistic and intensive approach. This entails phases designed to slowly prepare MSEs on the path to self-reliance and sustainable livelihood, involving design consultants and other specialists who will be able to answer the different requirements of the program. Furthermore, design consultants who desire to respond to this challenge should have a working knowledge of the materials-to-market chain, be able to assess the capabilities of the producers, study the marketability of products and linkage with suitable buyers, and address the needs of production, costing, and quality.
However, many MSEs do not have access to a variety of business support providers,
including product development activities, are inexperienced at managing them,
and can not afford the costs. The traditional response has been to provide them
with highly-subsidized services which from experience, is not the ultimate solution
due to the MSEs over-dependency on such assistance. Therefore instruments for
intervention should facilitate the MSEs incorporation in the mainstream by linking
with buyers or working with buyers so that costs of product development can
be shared by both the bigger company and the small producer.
By looking at this approach as more than trading but as a "development process of enlarging the range of people's choices by expanding their opportunities and realizing their potential," 1 it is envisioned that product development programs will serve as the initial step in realizing viable community-based craft enterprises that will be able to contribute to economic and social change.
Prepared by:
Vina Domingo