Collaboration relations in the SC of the handcraft WFI

The collaboration relationship of the Misantla WFI is given by the carpentry shop-client and supplier-carpentry shop. The first is based on a system of production to order, the volume of production, and informal contracts that include the "advance" as a form of financing to execute the manufacturing operations of wooden furniture. While the second strengthens the link between the different actors in the WFI product chain to increase and strengthen their competitiveness.

The direct actors identified in the SC of the WFI are: suppliers, carpentry shops and customers. Suppliers of materials, raw materials and manufacturing services influence the manufacture of wooden furniture. The carpentry shops are responsible for manufacturing the wooden furniture and executing the internal logistics of the assembly, packaging, distribution, delivery and monitoring operations of the product to the customer. Customers initiate the make-to-order system and determine the production volume. The indirect actors identified in the WFI are: the academy, the municipal government, private transport providers and local wholesale providers, who provide advice regarding the form and application of the materials used in the manufacture of wooden furniture.

The influence of the environment that impacts the stability and competitiveness of the SC of the Misantla WFI includes economic, technological, and political-legal aspects. However, the collaborative relationship between these economic units is strengthened to a greater degree with the arrival of a new piece of furniture in the local market, which causes carpenters to unite to compete against said product.

Other factors that affect the competitiveness of the Misantla WFI have been the new production systems supported by techniques to improve their processes, government policies related to tax laws in which carpentry shops limit their contractual relationships with suppliers and customers and labor related to the high turnover of their staff due to the lack of social benefits. However, the Misantla WFI being a predominantly informal sector, the impact of these factors leads to a proportion of this industry not being able to adapt and respond to changes in its market, which causes the temporary or permanent closure of the carpentry shops and/or workshops.

Performance at the Misantla WFI

The handicraft WFI of Misantla at the date of this investigation is made up of 645 carpentry shops, of which 62.0 % are informal with sporadic opening and closing, and support of about 600 families. For 86.6 % of the carpentry shops, this economic activity is the only source of income. In this sector, 88.2 % of them have at least five employees, 7.4 % from six to ten employees and 4.4 % less than five employees. In general, the Misantla WFI is organized with an approach based on internal and support processes. While the internal processes are focused on ensuring the supply of materials, the design and development of the product, and the manufacture of the furniture, support processes are oriented towards marketing and meeting the needs of customers.

The Misantla WFI is characterized by eight direct agents for the manufacture of furniture: (1) Wood destruction workshops, (2) Carpentry shops; carpentry support workshops: (3) Sanding, (4) Turning, (5) Craft (carving), and (6) Cutting and reinforcement; and final treatment workshops: (7) Varnishing, and (8) Upholstery. The daily life of these economic units is that they are installed in residential buildings or in spaces with a tin roof. In this industrial context, transversal economic agents have been identified, which represent the supply level. In this sense, the carpentry subcontracts operations to various workshops, in which the administration of the carpentry shops or workshops falls to a single administrator or person in charge of the business since its foundation, which highlights its family nature.

Although the Misantla WFI joins for convenience when there is a need to confront mass production companies, 60.3 % of the carpentry shops fight for the local market. The remaining 39.7 % compete for the regional market. However, in general, the main administrative and technological needs are concentrated in the process, reforestation, preparation of business plans and technical assistance.

The findings of this research show that, although the largest economic contribution is made by carpentry, the largest daily cash flow is made by workshops that assist with the manufacture of furniture parts or furniture pre-finishing services, which represent 33.9 % of this local industry. This way of working is the result of 68.6 % of the collaboration agreements between carpentry shops and workshops in the handicraft furniture sector.

Internal processes of the Misantla WFI

The carpentry shops and workshops together manufacture wooden furniture predominantly in the Provençal (85 %), Colonial (10 %) and some type of Baroque (5 %) styles. In the horizontal structure of the SC, five key internal processes have been identified within the handcraft family businesses belonging to the WFI: (1) The initial link is the supply of raw materials, (2) Followed by the design and development of products, (3) Furniture manufacturing, (4) Distribution, and as a final link, (5) Marketing and services.

The elements of the SC of the Misantla WFI described in its logistics processes were identified from the contribution and collaboration of the key actors of the WFI-suppliers-carpentry shops-clients. In this way, the logistic processes allow describing and characterizing its SC (Figure 1).

Source: Self-made.

Figure 1 Internal processes of the Misantla WFI, Veracruz, Mexico. 

Industrial organization

Internal processes use operations in which process management and responsibilities are shared, which may not be programmed to meet extraordinary customer requests, which causes the need for unscheduled inputs and supply of materials whose result has impacted the increase of material inventories. The members that participate in the production-to-order system are: suppliers, carpenters, and customers through two relationships: customers-carpentry shop (customer-carpenter) and carpentry shop-suppliers (carpenter-supplier).

The first client-carpenter relationship begins with the client's order with which the elaboration of the furniture is determined. The informal face-to-face contract is the mechanism to establish the price, the purchase guarantee and the delivery compliance by the carpenter. The price of the furniture is determined by the carpenter as he considers, among other criteria, the style and design of the furniture, the wood, the size of the piece, the final treatment, the time for delivery and the means of transport for the reception of the good by the customer. The purchase and manufacturing guarantee begins with the equivalent of 50 % of the furniture price as a form of capitalization for the acquisition of raw materials and materials in order to start the elaboration of the furniture. The difference in the payment of the final product is made when the furniture is delivered within the terms agreed between the parties (informal contract).

The second supplier-carpenter relationship is based on shared cooperation to maintain the supply of raw materials and materials in the first step of the SC of the industry. This carpenter-supplier relationship ensures the availability of the necessary inputs.

The relationships described have in common the carpenter, who is the channel through which the flow of materials, money and information between suppliers, the manufacturer and customers is carried out. However, when the demand exceeds the carpenter's production capacity, he can subcontract one or more of the operations with other carpentry shops or workshops -associative integration- to fulfill the orders. Although this subcontracting scheme benefits production capacity, the lack of working capital can impact the manufacture and finishing of the furniture, from the purchase of low-quality wood, the variation in the sale price of the furniture from carpenter to carpenter and, as a result, the increase in the price of furniture, which translates into a competitive disadvantage for the SC in this sector.

Raw material supply

Depending on the type of furniture to be manufactured, the supply of wood is not limited to the purchase of virgin wood or chipboard, but also includes the acquisition of fixing elements, adhesives, sandpaper, varnishes, dyes, among other structural materials for the manufacture of furniture or wooden accessories. The purchase of wood is carried out through four mechanisms: (1) Direct purchase from the owner of the trees, (2) Purchase of dry wood from the owners of cut trees, (3) Purchase from intermediaries, and (4) Purchase from small dedicated businesses to wood processing. On other occasions, the purchase can also be made between workshops and carpentry shops when there is pressure to obtain the wood.

On the other hand, the purchase of materials that add value to the wooden furniture, is customary to be carried out in generic and specialized hardware stores in the town; efforts have been made to guarantee supply through the selection of suppliers to minimize shortages of tropical wood such as cedar (Cedrela odorata L.) and mahogany (Swietenia macrophylla King), which are used in the Misantla WFI. The drying process is carried out by direct exposure to the sun.

Design and development of products

The WFI in Mexico is based on the family tradition, and its origin goes back to the European continent. Adapting the design is a necessary step due to the changing market conditions, for example, of the WFI of the states of Jalisco, Veracruz, Durango, Chiapas and the central states (Puebla, State of Mexico and Querétaro), today its designs in other communities of the country. This identity of cultural expression is not alien to the Misantla WFI, with a long family tradition of up to five generations, which has gone from adopting designs to adapting cultural projects, generating identity. Thus, the Misantla WFI outstands by the manufacture of Provençal (85 %), Colonial (10 %) and other styles of the Colony such as Baroque (5 %), furniture made of cedar wood (95 %), mahogany (4 %) and precious tropical woods such as palo amarillo (Tecoma stans (L.) Juss. ex Kunth), rosadillo (Astronium graveolens Jacq.), and melina (Gmelina arborea Roxb. ex Sm.) (1 %), of local origin.

The specialization of the Misantla WFI has required the development of the skills of the carpenter-handicraftsman to the degree of designing, manufacturing and using their own tools in manufacturing their furniture, and thereby highlighting the identity of the wooden furniture as a distinctive sign. However, this highly handicraft sector restricts its participation into mass production markets, from the little or inexistent flexibility to adjust its processes to new market trends. In general, with its current level of integration -based on individual and not collective efforts-, as well as small or no ability for self-management, the level of competitiveness of the Misantla WFI is limited compared to low-cost markets. In particular, because this WFI has not developed capacities related to the design of wooden furniture with cultural identity.

Manufacturing: Furniture assembly

In the Misantla WFI, 72 % adapt their operations to the type of furniture requested by the client under the scheme by orders and, based on these, production, supply of raw materials and materials are planned. This manufacturing system is highly dependent on handicraft labor, due to the fact that the machinery used is improvised or of obsolete technology, in which 90 % of the workshops adapt and adopt technologies for their operation. As a result, the manufacturing process is supported with hand tools and production is focused on the local and regional market. This manufacturing context highlights the need for technological adoption to improve productivity, be it by product focus or customer service.

In the manufacturing process of the Misantla WFI, four basic processes are identified, and three sub-processes that can be carried out inside and outside the carpentry, such as turning, carving and upholstering of furniture. In the SC, the following are identified for this industry: suppliers (forest industry, blacksmithing, dyes), subassemblies (carpentry shops workshops), and assembly workshops (carpentry shops). Among suppliers, the wood industry stands out, in which the raw materials are precious woods, agglomerates, laminates, boards, plywood, fittings, varnishes, solvents, paints, sealants and adhesives, as well as hardware stores, wood warehouses, which are part of the productive structure of the supply of raw materials and materials that make this industry operational.

The manufacturing processes of the Misantla WFI depend on the skill of the carpenter with long processes, high generation of raw material waste and materials during the manufacture of the pieces. The low collaboration between carpentry shops-workshops is related to the low technological level in the manufacture of furniture. The technology for manufacturing is limited and in the carpentry shop machinery or tools are improvised for the elaboration of the furniture, which shows technically unstructured and unbalanced processes, to which must be added the high turnover among its artisans. The common denominator of "low access to technology" impacts the productivity of this industry, due to the informality in which it works. All these factors place the Misantla WFI at a competitive disadvantage compared to similar or substitute products.

Distribution: Furniture transport company-client

At the Misantla WFI, the furniture distribution process distinguishes three types of transportation service: with the furniture manufacturer's own fleet, transportation by a third party -carried out by private transport, courier or parcel companies-, and the transport carried out by the client himself.

Transportation with its own fleet is expensive for the Misantla WFI due to the improvisation of its own fleet, either because it has excess or insufficient capacity, which causes a double haulage, or because it generally carries out this activity exclusively for the client, with absence of a distribution program and route planning.

The transport with third parties is used for the shipment of handicrafts and decorative furniture, as it is contracted by the producer or charged to the client. The outsourcing of transport is an alternative for the transport of the Misantla WFI, although the characteristics such as solid furniture, assembled in a single piece and a large volume of space in the container, make the shipment more expensive.

The third form of furniture distribution is a distribution scheme generally carried out as a result of negotiation between the producer and the client, with delivery of the furniture in the carpentry shop itself.

Commercialization

The commercialization or marketing of the Misantla WFI, as for the handicrafts segment, is carried out mainly among carpentry shop-intermediary-client, through direct and indirect channels. In direct channels, the final consumer purchases the furniture directly from the carpentry, while, in the indirect channel, there are intermediary agents between production and consumption.

In the artisan IMM in Mexico, 43 % of this sector sells its furniture with the benefit of greater participation in income and assumes the negotiation problems with the client (^{Camargo, 2017}; ^{Bailón et al., 2019}). While, in the Misantla WFI, 57 % of the carpentry shops sell their products directly to the final consumer upon request. The lack of a marketing strategy encourages many carpentry shops to sell their products at a price to intermediaries and assume the cost-benefit of this commercial relationship, as a strategy for growth and positioning in the market.

Another of the strategies in this sense that is used in the WFI of Misantla is the direct exhibition of the product in the workplace, exhibition in an established commercial premises or in a furniture store, and in a minimum proportion, in electronic media or platforms digital, as well as local, regional, and eventually out-of-region furniture exhibitions; in them, only a proportion of less than 1 % of artisans from the entire industry participate with their own economic resources.

Currently, the sale process of wooden furniture in the Misantla furniture sector focuses mainly on local, state and in certain cases, national clients. In a strict sense, the sales process is carried out by each carpentry with the means and resources at their disposal, and they are reduced to the relationships they have developed over time, and word-of-mouth advertising among their clients.

After sales service

The after-sales service associated with the WFI handicraft in Misantla includes the installation, maintenance and repair of the wooden furniture. After-sales service is provided for one year for manufacturing defects or damage to accessories during delivery-transportation of the product or due to improper customer handling of both home and office furniture; it consists of the specialized support of cupboards, doors, sheets, inking, varnishing, repair and placement.

After the year of sale, the WFI after-sales service is offered 365 days a year at the customer's expense, and is the means to prolong the useful life of the wooden furniture, where 90 % of the time, the service is performed at the customer's home. In the case of furniture repair, the craftsman or the client moves the furniture from the client's home to the workshop where the service will be performed.

Competitive factors and advantages

Even though the WFI carpentry shops and workshops in Mexico show trends that incorporate specialization and modernization throughout the SC (^{Palos et al., 2008}; ^{Quintero and Martínez, 2015}), the truth is that the WFI settled in rural communities are limited to maintaining relationships of association for convenience, which limits their competitive position beyond their local sphere of influence. Despite the competitive disadvantages of this handicraft sector, the strategies identified in the SC of the Misantla WFI show that the sector carries out activities to improve the efficiency of its production processes, as well as collaboration and customer service.

Figure 2 describes the strategies considered by the SC handicraft for the Misantla WFI. These strategies are aimed at strengthening the operations involved in the links that make up both the productive system and the SC agents from the individual to the collective, based on the addition of value throughout the links of the SC.

Figure 2 Strategies present in SC of the Misantla WFI, 2010-2022.