Rural Women

1
JANUARY 2004
The Artisan-Owned Direct Distribution Model
Rural Womens Artisans Cooperative
art camp méxico
www.lumika.org
AODD
Taxco
Fashion Jewelry
Development
Tecalpulco
Community
Cash
Inventory
Production
Export
Marketing
Sustainability
Publicity
Reliability
Shipping/Fulfillment
Service
Quality
Socio-economic
Internet
Social Projects
Technology
Free / Fair Trade
Modern
Sales/Support
Digital
TAXCO, MEXICO
Original Design
Direct Distribution
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T H U N D E R B I R D
DIGITAL DIVIDE
I begin with two words that all men have uttered
since the dawn of humanity thank you. The word
gratitude has equivalents in every language and
in each tongue the range of meanings is
abundant. (Octavio Paz Nobel Lecture Nobel
Lecture, December 8, 1990)
This presentation was made in the Digital
Partners Social Enterprise Laboratory (SEL).
Along with the entrepreneurs, a student team from
Thunderbird, The American Graduate School of
International Management and a group of business
industry advisors contributed to its development.
Work on the presentation spans from December
2002 to April 2003. Without the assistance of Art
Camp, this work would not have been realized
thank you.
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table of contents
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who are artesanas campesinas?
Artesanas Campesinas (Artcamp) is a for profit
enterprise with a social mission. Artcamp is a
rural women artisans cooperative from the
Municipality of Taxco, Guerrero, Mexico
(southwest of Mexico City), specializing in
handcrafted jewelry production.
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What is artcamps mission vision?
Artcamps
mission is to connect the rich handcrafts
tradition of their community with the present day
markets of the world. In doing so, they aim to
provide a sustainable flow of income into a
region that sees many of its men leaving town to
find work.
vision is to be a model for other low cost native
craft enterprises both in Mexico and abroad.
Their goal is to share their knowledge in
inventory and distribution management, technical
infrastructure, and marketing with other artisans
so that too can become more creative, efficient,
and productive.
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what is artcamp?
Artcamp SC de RL (Artesanas Campesinas) is
legally established under Mexican law as a
producer cooperative. The Constitution of our
Cooperative defines the various committees
participating in decision making Admission and
Exclusion of Members Committee Organization of
Work Committee Education Committee Social
Prevention Committee Safety and Hygiene
Committee Capacitating and Training
Committee Conciliation Committee
Artcamps story goes back to the times of their
mothers and grandmothers. They are country of
women mostly from villages near Taxco, especially
Tecalpulco. Their grandparents fashioned
elaborate tin mirrors and frames. In the 1970s
and 1980s, they created abalone jewelry in alpaca
metal. The elaborate floral encrustations were
well-accepted and sold around the world. At
that time, the community artisans were extremely
successful. Buyers came from all over the world
to purchase the handcrafted jewelry of
Tecalpulco. Unfortunately, their markets
collapsed in 1990. Suddenly, their pieces were
no longer valuable. Additionally handcrafts
products were flooded into the world market from
places like China, India, and Bali. Despite the
downturn, they sought out new forms of
production, styles, and customers. From a
centrifugal casting machine (left by a small
foreign-owned factory), they built the base of
their cooperative effort to create employment.
They focused on finding ways to be more efficient
in their production that would translate into
higher customer satisfaction in the quality of
their products. Focusing on quality and customer
design preferences is their strategy for
differentiating themselves from a cheap handcraft
substitute The cooperative sponsored the
donation of ophthalmic medical equipment from
the United States to the local Adolfo Prieto
Hospital, and assisted in a project to develop
abundant clean water for Tecalpulco.
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project location
GUERRERO
GUERRERO
Profile
Profile
region
region
Tecalpulco is on a high hilltop looking out over
an enormous vista in all directions. The blue
tile dome of the temple shines under the radiant
orb of Mexico. Legends say they came centuries
ago by underground cavern. The rivalry with
low-lying Taxco El Viejo goes back in time.
Tales say that the Tecalpulcans won the right to
their hilltop for having hung the bell in Taxco
El Viejo's temple by the powers of heroic
pre-Columbian magic. From the Zocalo at the
center of Tecalpulco looking north, far away
against the dark mountains one can see a crease
of lights or white shadows Taxco. A part of the
city is visible at a distance, way above. Taxco
is at 5800 feet altitude Tecalpulco 4600. This
is the southern drop off of the great central
altiplano, the northern Guerrero escarpment.
The Tecalpulcans are indigenous native Mexican
country people, rainy seasonal farmers. Most
families plant corn, beans, and squash in the wet
months of summer. In the dry months of December
through May, the fields are a dusty desert
parched with thorny bush vegetation. The natives
are adept rock masons. The builder surveys the
rocks strewn on the ground, he picks up the one
he sees will fit, packs it into the place where
it will go and proceeds to select another. In
mortarless construction, the rocks need to be
expertly tied together and balanced all this,
the village stone-worker does in single vision
never does he pick up a stone, then put it down,
look around for another. Hernan Cortez, the
Conqueror of Mexico, opened the first silver mine
in Taxco in the early 1500s. The mines have been
in production, now, for five hundred years.
Guerrero
population
population
180,645
height
height
1.430 metros
temperature
temperature
22º C
altitude
altitude
5,800 feet
source
source
Guerrero Mayors Office 2002
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history
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history
The 1990s fashions changed and the curtain rung
down on the handcrafts of Tecalpulco. The
nineties didn't want flowers or pretty things.
It wanted tatoos, virtual entertainment, and
Nike. At the same time, ferocious costume
jewelry competition came in from the Asia,
gaining market share over the traditional export
and domestic markets of the Mexican artisan.
Every year the abalone jewelry was harder to
sell, and the buyer would pay less for it, than
the year before. Many local artisans gave up
jewelry making, but many don't know how to do
anything else. Gradually the young and active
ones have gone North. Others, forced by the
necessity of providing for their families, have
surrendered to the tombs of the mine.
The Artesanas Campesinas initiative was born in
response to the extremely difficult and dangerous
situation the artisan communities of Tecalpulco
discovered themselves in after the men had mostly
disappeared to the US labor market and the women
and children for the most part remained to
manage.As poor as we are, we are working
towards a bigger dream that of a much better
world for our sons and daughters a world of
ever-refreshed hope, and of new possibilities.
The Artcamp rural womens artisans cooperative
is a positive effort to re-connect with
successful traditions of handcraft jewelry
production in order to bring about a renaissance
of cottage industry in our locality.
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aodd
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aodd description
Goal To generate a successful model of
functional artisan-owned distribution. Looks
Like Shelves, Tables, Inventory, Shipping
Materials, Computer, Data Base, Website Product
Catalog, CDROM Product Catalog, Offset Print
Catalogs System calls for 20 30 packages to
be shipped at the same time in order to optimize
the ship/import cost. A weekly shipment 25
packages X 200usd 5000weekly sales
300,000usd/yearly sales For average under one
kilo packages, cost would be about 7usd
4usd Add 1one usdollar for the handling where
the master import is broken into individual
shipments 12usd is the estimated through-Customs
delivered price, factory-to-door.
Retailer places order from an Artcamp Catalog via
FAX or email. The incoming order is checked
against existing inventory of finished and
semi-finished pieces Parts of the order that are
not available in stock, are set into the
appropriate production sequence at this time a
determination is made of whether and how many
extra pieces to make for stock. Just so, the
production capacity of the shop is integrated
into the stock inventory position. Orders come
in and are fulfilled from the shelves and/or the
orders are set into production A modern data
base is applied to the over-all operation.
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aodd description
Our intention is to produce, now, the conditions
for the establishment of a new functional
commercial model the idea of producer-ownership.
Artisan-owned direct distribution when it has
been proven successful, will provide a valuable
tool taken into hands of 3rd World producers.This
is, indeed, an historic project, one that really
will make a difference There is NO need for so
much capital to be soaked up in USA
stockrooms. To a wholesaler, the cost of holding
inventory is a great part of his burden and
he/she always has too much of something, and too
few of some others. And the wholesaler has to
think and project sales and make up purchase
orders, and pay the stock girls and the
accountant and the life style, fixed expenses
etc.All of this burden of stock inventory and
sales projection and US dollar expenses could be
better retained by the producers who would invest
in upgrading capability. Is it not logical that
it were always cheaper to ship direct to the
final customer rather than to a foreign
warehouse, then ship again to the final
customer??? Obviously, it were always actually
less costly to ship factory-to-the-final-door.
All the costs of handling the merchandise,
counting it, organizing it, counting it again
when it goes out, maintaining all kinds of
papers.... When the Artcamp women count and pick,
making up the packing list, whether it is small
or large, we will make sure that it is done
perfectly. By making the shipping list and
invoice in a perfect manner, Artcamp obviates the
heavy fixed expense of the wholesalers in
handling, shipping and invoicing. This model is
the key to a revolutionary tool and real
advantage for the producer and for the consumer
as well as the product can be delivered at a very
good value. As the model has proven successful,
the idea is to make it available to other groups
Producers all over the world can ship their
crafts direct to the retailers, like Artcamp. The
founders and promoters of this project ought to
be proud, to play their part it is a gift of god
globalism how rare that the campesino would be a
beneficiary! The primary avenue for the
financing of the Artisan-Owned Direct
Distribution Plan is to be the old fashioned way
earning it, by proving the products in the
marketplace. Fortunately, Artcamp has come a long
way and has valid beautiful product to present.
The Artcamp website catalog , the CDROM catalog,
and one page color print brochure. Turquoise and
Onyx and Amber Bracelets, Rings, Earrings, in
Fine Pewter and .925 Silver. Candleholdres,
Astrology Runes, Abalone Shell Mosaic, Mother
of Pearl, River Shells. Even though it is far
from optimum efficiency shipping single packages
to the customers, it is a practical means to get
the project underway, in a healthy manner that
pays as it goes. It is our intention to establish
a marketing department to manage the flow of
communications with prospects and customers, and
that is another subject that is still to be
addressed in detail.
marketing operations
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aodd model
Traditional Model
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Artisan sells product to the distributor
Local distributor sells the item to an
international distributor
International distributor sells the product to
the shop
Shop sells the item to the final consumer
Consumer buys the product
New Model
E-Clients
Designers
Shops / Virtual Shops
Artisan
Final Customer
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inventory, institutional development training
Software Database Developing an accounting and
inventory tracking system in-house carries a high
cost. It is difficult and time consuming to
develop and could delay the establishment of the
AODD. Also, maintenance will need to be done on
the system throughout its lifetime in order to
trouble shoot programming errors as well as
maintain the integrity of the system.
Peachtree Accounting Software, an off the
shelf product, can be purchased for only 200.
Its setup is quick and easy and tutorials are
offered as well. This will ensure that the AODD
is established in a quick timeframe.
Through the use of Peachtree, Artcamp will be
able to track their current inventory levels as
well as past sales information by customer.
Peachtree will aid them in establishing best
seller and seasonal items. With this information
they will be able to establish restocking points
by item and plan in advance to build inventory
levels for seasonal items. They will be able
to better manage their inventory so that best
seller items are on hand when ordered by
customers. This software will also enable
Artcamp to track inventory work in process levels
so that the delivery date of any backorders can
be estimated.
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inventory, institutional development training
Basic materials and components Basic materials
and components used by Artcamp are Pewter,
Silver, Stone, Shell, Bark, Paint, Coconut. The
average cost for each item is .40 USD,
representing approximately 20 of the cost to
produce each piece. (50 Direct Labor, 30
Overhead). These basic components tend to stay
same across Artcamps products. Thus it will be
easy to maintain the needed level of raw
materials to generate finished goods. The
initial 10,000 will be used to obtain the needed
level of raw material to build up inventory
levels to meet demand. It is expected that
Artcamp will want to maintain 300 kilos of
Pewter, 10 kilos of Silver, a stock of Stone,
Shell, and other basic materials.
New lines and best sellers Under the AODD plan
Artcamp is expanding their end customers from
Tourist Trading Posts into the Retailers
throughout the United States. It is believed
that best seller items in this new market will be
different from popular items sold in the existing
market. Artcamp has 24 items planned to be sold
through AODD. Upon receiving the influx of
capital, Artcamp will build up inventory levels
in these lines to have ready to quickly deliver
to distributors, retailers, and customers.
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marketing
R E S O U R C E A L L O C A T I O N

• 4 things
• Organize Product Offering
• Product Positioning Brand Development
• Pricing System
• Distribution

• 1. Organize Product Offering
• Considering ArtCamps immense product offering,
  it is necessary to group the products according
  to product groups to allow customers and
  resellers to be able to navigate the product
  offering more easily. Also, different resellers
  will be interested in different groups of
  products. An example of this would be Surf Shop
  (jewelry for young people rings, toe rings,
  bracelets, earings, etc.) versus an import store
  (table-top items, pill boxes, etc.). Based on
  the products listed on the www.artcamp.com
  website, the following is the two main product
  groupings

By separating products into groups, it will be
easier to design distribution channels around
various customer segments.
handcrafted jewelry
.925 silver jewelry
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marketing

• 2. Product Positioning Brand Image Development
• The primary elements of value for the customer
  when buying ArtCamp
• products are
• Handcrafted jewelry this means high quality
• Unique designs created by artisans
• High quality and exotic materials high-grade
  silver, abalone
• Producers are the proud community of Tecalpulco
  good cause
• Reasonable price we want this one to become the
  least important!
• By communicating these elements of value more
  clearly to customers,
• ArtCamp will develop a very distinct and valuable
  brand. The following
• will develop their brand equity
• Jewelry tags a small piece of paper tied to each
  piece (or set) of jewelry
• with the name of the person who made it and their
  picture (easily done
• with a digital camera) and with a little message.
  This communicates to
• the customer both that the jewelry has been
  handcrafted and that the
• artisan has personally designed and made this
  piece of jewelry.

Product Sizing Charts/Information one of the
difficulties of selling products (especially
jewelry and clothing) to customers via the
internet is the fact that the customers cant
actually see the products and may have some
apprehension about whether or not the product is
available in the right size. A simple sizing
chart should be developed so that customers have
less fear that the product will be too small or
too large for them. Product Display for
Retailers this could be a small rack, designed
by ArtCamp for sale to retailers and wholesalers
that would allow them to display the jewelry more
easily for their customers. This is a way for
ArtCamp to control the presentation of their
products to the final customer. It also denotes
that ArtCamp products are of high quality. A
high profit margin on this product display would
not be necessary. E-brochure about the materials
and designs of the products ArtCamps products
can be further differentiated by explaining more
clearly to customers about the grade of silver or
precious stone, and where the unique designs come
from. This can be done by developing an
e-brochure that could be e-mailed to customers
and included on the web-site as a downloadable
file.
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marketing

• 3. Pricing System
• Since there is difficulty in maintaining prices
  when dealing with different customers (wholesale
  distributor
• versus direct sales to retailer), a pricing
  system should be developed. The main
  considerations for this
• system are shipping costs, order quantities, and
  customer type. The pricing is developed using
  the following
• steps
• Establish a catalog price that includes all costs
  of material, labor costs (based on the amount of
  time it takes to make each piece), overhead
  charge (this is warehouse cost generic shipping
  cost) and big profit margin for ArtCamp. This
  profit margin will then decrease depending on who
  the customer is and the size of the order. Also,
  from the customers perspective, the price
  reflects the quality of the jewelry.
• Design a discount structure for different types
  of customers. This can be done by relating
  discounts to order quantities or by assigning
  special discounts depending on the customer.
  This second method is more difficult to manage
  when the customer is located far from Tecalpulco.
  
• If shipping cost is included in the price of the
  product, then ArtCamp should design this into the
  pricing system. This will make one-piece orders
  very expensive for the customer. Another
  alternative is to remove the shipping cost from
  the price of the product and charge the customer
  separately for it. In this case, there should be
  more than one method of shipping offered to the
  customer (DHL, or regular mail).
• (Since we do not have specific pricing
  information for the products, we are not
  recommending a specific pricing scheme. We do
  recommend, however, that ArtCamp not be afraid to
  establish a pricing scheme that allows them to
  make a profit on any order regardless of the size
  and who the customer is.)
• The goal in developing a pricing system is to
  remove as much negotiation as possible when
  dealing with any type of customer, wholesale
  distributor or direct to retailer.

4. Distribution A strategy for each distribution
channel must be developed to make sure ArtCamp
can support and develop each customer group among
the three types of channels it wishes to use
(wholesale / distributor, direct-to-retail,
direct to customer). A target percent for each
channel must be defined. These targets are
direct to retail to 40, direct to customer to
10, while decrease the proportion of the
wholesale/Distributor channel to 50.
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marketing

• Artcamp needs to implement the distribution
  strategy below to achieve this target.
• Wholesale/DistributorConsidering the difficulty
  to negotiate with wholesalers and distributors,
  Artcamp should decrease the channel but they
  might not be eliminated soon. By providing them
  displays for the products, Artcamp can control
  the brand image, though it is still difficult to
  control the retail price through this channel.
• Direct-to-RetailBy using the existing address
  list of the 3000 retailers, Artcamp can send
  e-brochures and promote products periodically.
  So far Artcamp does not store the contact records
  with retailers, but they need to store the data
  and keep stronger relationship with retailers. To
  inform retailers of the Artcamps high quality
  products is the most urgent task to realize AODD.
  When they inform, Artcamp should emphasize the
  merit for retailers when they directly purchase
  products.
• Direct-to-Customer (via the Internet)Because of
  the shipping cost, to sell directly to customers
  does not yield high profit. But currently
  customers buy the double priced products at
  retail shops, which purchase the products from
  wholesalers. Considering this fact, to purchase
  products directly through the ArtCamps website
  gives customers a big advantage regarding the
  price. To increase this channel, ArtCamp can
  advertise on popular websites.

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timeline
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resource allocation
summary
Three cash disbursements
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resource allocation
R E S O U R C E A L L O C A T I O N
budget2004
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