Dragon Sourcing - éž™ ćş? Delivering sustainable sourcing value from emerging markets
Textiles Sourcing Case Study
Agenda
1.
Sourcing Project Introduction
2.
Sourcing Approach
3.
Conclusions
2
Context Background: • Client is a professional eDistributor of sports products in the US. Project objectives: • To carry out sourcing services for textiles to achieve cost savings and identify new qualified suppliers. Geographical scope: • Vietnam, Thailand, China, Costa Rica, Guatemala and Honduras Deliverables: • RFI / RFQ Template • RFI / RFQ report • Balanced Scorecard • Supplier profiles • Recommended audit supplier list
3
Sourcing products Vest
Band
Sleeve
Jersey
Sock
Shorts
Glove
Agenda
1.
Sourcing Project Introduction
2.
Sourcing Approach
3.
Conclusions
5
1. Demand Analysis Approximate yearly volumes was collected from the client at the beginning of the project. 2015 Estimated 2016 2017 Sales Sales Target Price 2017 total No. Product Type Sales Qty. Qty. Qty. (US$/pc) spend (pcs) (pcs) (pcs) (US$) 1
2
3
4
5
6
7
Vest (including 55 SKUs) Band (including 22 SKUs) Sleeve (including 6 SKUs) Jersey (including 21 SKUs) Sock (Including 4 SKUs) Shorts (Including 5 SKUs) Glove (Including 4 SKUs)
% in total spend
251,678
259,762
230,151
19.19 ~ 57.15
193750
69%
97,882
92,123
86,960
0.28 ~ 0.66
33007
12%
46,942
53,243
44,435
0.57 ~ 1.17
27940
10%
13,025
10,791
4,050
4.39 ~ 5.27
19559
7%
3,281
2,890
1,392
2.31 ~ 3.14
3475
1.2%
Jersey; 6.94% Sock; 1.23% Shorts; 0.95% Glove; 0.52% Sleeve; 9.91%
Band ; 11.71%
Vest; 68.74% 3,858
3,181
1,002
2.68
2686
1.0%
3,406
1,966
1,947
0.70 ~ 0.84
1458
0.5%
281,874
100%
Total
Other Requirements: • 2 Client current suppliers should not be contacted : XXX Co., LTD XXX Co., LTD
6
2. Approach & Schedule RFI-RFQ process was completed in 11 weeks November September
W1 Nov.3rd
December W2 Nov.10th
W3 Nov.17th
W4 Nov.24th
W5 Dec.1st
W6 Dec.8th
W7 Dec.15th
January W8 Dec.22th
W9 Dec.29th
W 10 Jan.5th
W 11 Jan.12th
Auditing (within W12 -W13)
1. Demand Analysis 2. Supply Market Analysis 3. Telephone Pre-screening 4. Develop RFI/RFQ 5. Conduct RFI/RFQ Administration & Supplier Scorecard 6. Develop the Score card Analysis RFI /RFQ Responses
Shortlist for Audit Agreed
1
RFI/RFQ Approved
7. Suppliers Auditing (Optional)
Not started In process
2 Today
Done Delay
Note that the schedule maybe impacted by the time taken to collect category specifications, gain deliverable validation, short list suppliers, produce samples & test samples.
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3. Weekly report Weekly progress reports are sent to client every week
Textiles sourcing weekly report -week 4 480 420 360 300
413
Honduras
46
Guatemala
97
Costa Rica
46
240 180
130
120
42 52
60 0
rs lie p p Su
47 286 46
China
130
Vietnam
Thailand 14 15 48 5 23 ng
11 52
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FQ IF /R R
8
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4.Suppliers Long list building in each target Country An extensive supplier data base is built leveraging multiple sources of information
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5.Telephone Pre-screening Pre-screening process was administered to filter the potential suppliers for further next steps
No.
Textiles Criteria answer
Telephone Pre-screening Criteria
1
Are you manufacturer or trader?
Must “manufacturer�
2
Do you have an export license?
Must Yes
3
Does your facility have the ability to sublimate logos and/or imagery onto fabrics?
Must Yes
4
Is your facility a versatle sewing shop capable of producing a broad range of textle products?
5
Can your facility offer a range of packaging optons?
Must have
Must Yes
10
6.Textiles-Supply Market Analysis Supplier rejection analysis were shared to client for each step: pre-screening and RFIRFQ administration.
Example for Pre-screening rejection analysis
8 9
4
3 2 44
11
6
Example for RFI rejection analysis
10
7 8
Manufactuer but not producing as per the technical requirement Unable to contact them/ Company shutdown Traders/distributors or Importers only, Cannot export Not Interested Duplicate suppliers Stopped Producing
9
Cannot produce liquid flled transformers Not interested to contnue Do not wish to fll the RFI template Cannot produce within the given output voltage range. Need drawings/technical specs to review frst
11
7.Send RFI/RFQ through GSP to client for Review 1/2 RFI process was administered to filter out most capable suppliers
12
7.Administer RFI/RFQ Through GSP 2/2 After Client approved the RFI/RFQ, it was sent to suppliers through GSP
13
8.RFI process was administered to filter out most capable suppliers 1/2
Su
14
ple m a x ile e f o r rP pplie
8.RFI process was administered to filter out most capable suppliers 2/2
Supplier Profile example
Sup
r plie
15
has
cer t i ubm to s
ct & u d o , pr s e t a t i fi c
f
s ure t c i ry p o t c a
9.Draft score and send it to client for review 1/3 The RFI-RFQ responses are analyzed using a score card validated by the client
C lie
16
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st u j d na t ca
c ti o e s h eac
n
ing ght i e w
9.Score card 2/3 The RFI-RFQ responses are analyzed using a score card validated by the client Business information
Weight of criteria 5% 5% 5% 5% 5% 5% 5% 5%
Sales distribution
5%
Industry mainly serve Customer reference Export license Do you have experience in producing soccer items(Jerseys,shorts.socks,captain arm bands, comp sleeve, scrimmage vest? If yes, how many years ?
10% 15% 15%
Scoring Max Score per criteria 1=After 2011,2=Between 2000 to 2010,3=Before 2000 3 1 = below 20,2 = 21 - 50,3 = 50 - 100,4 = 100+ 4 1 = below 3 years,2 = 3 - 10 years,3 = 10+ years 3 0=Trader/Distributor/Others ,1= Manufacture 1 1= only FOB,2=Can offer FOB & CIF,3= Can offer all: FOB, CIF, DAP & DDP 3 1=Less than 1 M US$,2= 1 - 3M US$ ,3= 3 - 5 M US$ ,4=above 5 M US$ 4 1 = below 20,00 (m²),2 = 20,01- 5,000 (m²)3 = 50,00-10000 (m²),4=10000(m²)+ 4 0 = Others,1 = State owned,2 = Foreign investments/ Joint Venture/Public limited,3 = Private 3 1= 70% or more to domestic market,2= 50% or more sales to export market 3 3= 70% or more export to EU+ North America 0= No info or others,1=Same as client 1 0=Not provided ,1=Local /domestic customers,2= International customers3= clients from client industry 3 0=No,1=Yes 1
15%
0=No,1=Yes
Year Founded Number of Employees Years of export experience Company type what incoterms can your company quoted and operate? Sales revenue in 2016 in US$ Square meters(m²) of the work floor Ownership
Production
Does your company have have production operating instruction on site? Does your company have have production/service traceability system? Does your company have have a formal/documented inventory management system ? Does your company use ERP system? How many pieces of textiles does your company produce per year? Is your facility a versatile sewing shop capable of producing broad range of textile products? Does your facility have the ability to sublimated logos and /or imagery onto fabrics? Percentage of your turn from soccer textiles ?% Can your facility offer a range of packaging options ?
Quality management
20%
1
Weight of criteria 5% 0= No,1= Yes
Does your company have equipment maintenance program in place? Does your company have production and safety training for each worker?
Weight of the section
Scoring
Max Score per criteria 1
5%
0= No,1= Yes
1
5% 5%
0= No,1= Yes 0= No,1= Yes
1 1
5%
0= No,1= Yes
5% 10%
0= No,1= Yes 1=<=300000,2=<=500000,3=>=500000
15%
0=No,1=Yes
15% 15% 15%
0=No,1=Yes 1=<= 10%,1= <=20%,3>=20% 0=No,1=Yes
Weight of criteria
re c Sco Scoring
ar
Weight of the section
1
le mp a x de
1 3
30%
1 1 3 1
Max Score per criteria
what performance does your company achieve on average in out going quality measure(%rejected ?
15%
0=5%-10%,1=3%-3%,2=1%-2%,3<=1%
3
Does your company have incoming material inspection and report?
15%
0= No,1= Yes
1
Does your company have a documented company-wide quality manual?
15%
0= No,1= Yes
1
Does your company have clear and systematic procedure to collect,register,handle and solve customer complaints?
15%
0= No,1= Yes
1
Does your company have daily on line quality inspection and report?
20%
0= No,1= Yes
1
Does your company have final products inspection and report?
20%
0= No,1= Yes
1
Weight of the section
30%
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9.Score card 3/3 The RFI-RFQ responses are analyzed using a score card validated by the client
Social Responsibility Do you adhere to all rules and regulations in respect to child labor? Are the working hours specified in the employment contract? Do you comply with the regulations in regard to working hours? Do you adhere to all rules and regulations in respect to environmental issues? Do you adhere to all rules and regulations in respect to health and safety issues? Subtotal
Certificate, documents and pictures Please upload your company's business registration certificate Please upload your company's SA 8000 certificate Please upload your company's SIO 14001 certificate
Weight of criteria 25% 25% 25% 25% 100% Weight of criteria 5% 10% 10%
Please upload your company's SA 8000 certificate
10%
Please upload your company's Sates 16949 certificate
10%
Please upload your company's presentation
15%
Please upload your company's pictures of entrance,workshop,machine,test lab, warehouse and office
20%
Please upload your company's ISO 9001 certificate
20%
Scoring
Max Score per criteria
0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes
Weight of the section
1 1 10% 1 1 ă&#x20AC;&#x20AC;
ă&#x20AC;&#x20AC;
10%
Scoring
Max Score per criteria
Weight of the section
0=not provided ,1=uploaded and clear to read 0=not provided ,1=uploaded and clear to read 0=not provided, 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read
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1 1 1 1
r e ca r o Sc
de
pl xam
e
1 1 1 1
10%
10.Textiles-RFI score and ranking 27 suppliers responded to the RFI-RFQ
Textiles-Supplier Score and ranking 100
Certfcate,documents and pictuers
Social Responsibility
30.00% Quality system
Producton
Business informaton
%Cost saving
80
20.00%
60 10.00% 40 0.00%
20
0
r X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X ie l li li li li li li li li li li li li li li li li li li li li li li li pp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp u S S S S S S S S S S S S S S S S S S S S S S S S
19
-10.00%
11.RFQ analysis 1/4 Supplier Geographic Distribution: 27 RFQ received in 5 countries Supplier map
China:18 RFI/RFQ received Guatemala :4 RFI/RFQ received
Vietnam:1 RFI/RFQ received
Honduras :No RFI/RFQ received
Thailand:2 RFI/RFQ received
Costa Rica :2 RFI/RFQ received
12.RFQ analysis 2/4 27 RFQ received in total, 3 suppliers quoted all items No. of SKU quotes per supplier Product
No. of SKU
Vietna m
China
Thailand
Guatemala
Costa Rica
Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X Player Gloves
4
4
Referee Shorts
5
5
Referee sock 3 stripes Referee sock 2 stripes
2
2
2
2
Referee Jersey
21
21
21
21
21
21
21
21
DLX Scrimmage Vests 39
39
39
39
39
39
39
39
8
8
8
8
8
8
8
8
8
8
8
8
8
8
DLX Numbered Vests Numbered Vests
4 5
5
4
5
5
2
5
4
4
5
5
5
5
5
5
5
4 5
5
5
5
5
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
21
21
21
21
21
21
21
39
39
39
39
39
39
8
8
8
8
8
8
8
8
8
8
1
1
1
1
1
1
1
3
3
39
21
21
21
21
39
39
39
39
8
8
8
8
8
8
8
8
8
8
39
Black Arm Band
1
1
1
1
Internatonal Captain Arm Band
3
3
3
3
3
3
3
3
3
3
Reflectve Captain Arm
2
2
2
2
2
2
2
2
2
2
2
2
2
Captain C Band
4
4
4
4
4
4
4
4
4
4
4
4
4
Captain Arm Band
12
12
12
12
12
12
12
12
12
12
12
12
12
Compression sleeve
6
6
6
6
6
6
Total SKU
117
117
81
83
81
22
4
76
5
85
81
61
25
113
30
113
6 111
85
117
22
97
44
60
Supplier Quoted all item
21
Supplier Quotations lower than client target price
117
81
107
21 39
43
39
85
12.RFQ analysis-3/4 Based on cost savings and RFI score, 5 suppliers were shortlisted for auditing and sampling, (4 in China,1 in Vietnam) #
Client total spend USD 281,874 Supplier
1
Supplier x
2
Supplier x
3
Supplier x
4
Supplier x
5
Supplier x
6
Supplier x
7
Supplier x
Cost Sub-category cost Saving/U saving SD REFEREE SHORTS REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF JERSEY DLX SCRIM VEST REF SOCK 3 STRIPE REF SOCK 2 STRIPE DLX SCRIM VEST DLX Num Vest Num Vest REF SOCK 3 STRIPE
1,183 1,832 807 6,599 35972 333 358 24,498 2,492 2,670 1,136
%Cost Saving 44% 74% 81% 34% 21% 13% 36% 14% 23% 28% 46%
REF JERSEY
11,864
61%
REF SOCK 3 STRIPE REF SOCK 2 STRIPE International arm band Reflective Arm Band Captain C Band Captain arm REFEREE SHORTS REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF JERSEY International arm band Reflective Arm Band Captain C Band REF JERSEY Black arm band International arm band Reflective Arm Band Captain C Band
569 165 1,315 459 3,062 3,891 181 665 457 2,549 1,400 317 3,669 8,543 115 978 297 3,821
23% 17% 47% 75% 37% 21% 7% 27% 46% 13% 50% 42% 44% 44% 5% 35% 38% 46%
Total cost %Total saving cost saving USD
RFI score
Score ranking
Short listed
Short listed reason
Remark
46,393
16.45%
67
21
Yes
Have the biggest cost saving,5 items have cost saving
Vietnam
30,351
10.77%
84
5
Yes
5 items have cost saving, Vest have bigger cost saving
China
13,000
4.61%
92
1
Yes
The biggest cost saving, The highest RFI score,REF JERSEY have the biggest cost saving
China
9,461
3.35%
73
13
Yes
China
11787
3.27%
8543
3.03%
72
16
5211
1.85%
79
10
22
27
24
Short list supplier
China
Yes Yes
China
4 items have cost saving, arm band have bigger cost saving
China
12. RFQ analysis-4/4 Based on cost savings and RFI score, 5 suppliers were shortlisted for auditing and sampling, (4 in China,1 in Vietnam)
#
8
Client total spend USD 281,874
Supplier
Supplier x
9
Supplier x
10
Supplier x
11
Supplier x
12
Supplier x
13
Supplier x
14
Supplier x
15
Supplier x
16
Supplier x
Total cost %Total Cost Sub-category cost %Cost saving Saving/U cost saving Saving SD saving USD REFEREE SHORTS REF SOCK 2 STRIPE REF JERSEY International arm band Captain C Band REFEREE SHORTS REF SOCK 3 STRIPE REF SOCK 2 STRIPE International arm band Reflective Arm Band Captain C Band REF SOCK 2 STRIPE International arm band Reflective Arm Band Captain C Band Compression Sleeve REF JERSEY REF SOCK 3 STRIPE REF SOCK 2 STRIPE Player Gloves REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF SOCK 2 STRIPE
81 221 1,334 1,104 2,304 321 129 178 851 93 2,001 197 683 52 787 1,279 2,144 333 294 601 226 326 119 294 40
3% 22% 7% 40% 28% 12% 5% 18% 30% 10% 24% 20% 24% 5% 9% 5% 11% 13% 29% 41% 9% 33% 5% 29% 4%
6378
1.78%
3,573
1.27%
2,998
1.11%
2,144
0.76%
627
0.22%
601
0.21%
552
0.20%
413
0.15%
40
0.01%
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RFI score
Score ranking
Short listed
Short listed reason
Remark
76
12
Yes
China
68 84 63 No RFI 84 80 78 71
19 3 22 4 8 11 17
China
Short list supplier
Yes
Yes
Yes
Good RFI score,Quoted all Item,5 items have cost saving,Compression Sleeve have the biggest cost saving
China
China China China Guatemala China China
Agenda
1.
Introducton
2.
Sourcing Approach
3.
Conclusions
24
Conclusions
Whole project was carried out 11 weeks in Vietnam,Thailand,Costa Rica,Guatemala,Honduras and China 1) In total 413 suppliers were identified,141 suppliers passed phone screening, 27 RFI/RFQ received (Vietnam 1, Thailand 2 ,China 18, Guatemala 4, Costa Rica 2) 2) Textiles have 14 sub-categories :Player Gloves, Referee Short, Referee Sock 3 Stripes, Referee Sock 2 Stripes, Referee Jersey, Dlx Scrim Vest, Dlx Num Vest, Num Vest, Arm Band Blk, Intl Captain Band, Reflective Arm Band, Captain C Band, Captain Arm Band, Comp Sleeve,In total 117 SKUs 3) Only 3 suppliers quoted all SKUs, most of the suppliers tend to specialize in specific sub-categories Savings reached 17% and 5 suppliers were shortlisted for sampling and auditing (4 in China, 1 in Vietnam) The next steps Include: a. On-site audit to verify their production capability, quality and management b. Sample making to ensure supplier meet client requirements c. Place trial production orders to verify suppliers’ capabilities regarding production quantities
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