Electric Motors and Iron Castings case study by Dragon Sourcing by john williams

Dragon Sourcing - éž&#x2122; ćş? Delivering sustainable sourcing value from emerging markets

Electric Motors and Iron Castings Case Study

Client Introduction & Project Objectives: - To cover 2 categories in targeted Country. Client Introduction: Our client is a global leader in advanced pumps solutions and trendsetter in water technologies, presented in 56 countries and with the decades of company’s history on the market. 

Project Objectives:  Identify manufacturers in supply market of Russia for below categories:

Russia

1) Low Voltage Electric Motors; 2) Grey and Nodular Iron Castings. 

Final deliverables: STAGE 1 • • •

Supplier database RFI analysis report Supplier profiles and ranking

STAGE 2 • •

NDA Analysis Signed NDA’s from the shortlisted suppliers.

STAGE 3 • •

Quotes from the suppliers, Ex works, DDP price analyses

Approach & Schedule. Supplier Pre-Qualification: Stage 1 - RFI process only. No.

Steps

Demand Analysis Work with client to define and understand the products and requirements (volumes, materials, production technology requirements, Quality tests, Standards, etc.)

 Kick-Off Report

Supply Market Analysis Identify long list of potential suppliers in the selected markets (Russia) by leveraging B2B Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References.

 Supplier Long List

Telephone Pre-screening Selection of suppliers to be included in the RFI process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, minimum company size, quality certifications, interest in participating, innovations etc to be defined by the client).

 Shortlist for RFI process

Develop RFI document Prepare an RFI template, with an aligned Balanced Scorecard that has the objective to pre-qualify the capabilities of the suppliers, including: Background, Financial, Client and product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology capability.

 RFI Template  Balanced Scorecard

Conduct RFI Administration The RFI is translated to the local languages as relevant, and distributed to the relevant suppliers, with telephone follow-up to push for maximum participation.

• Completed RFI’s

Analyze RFI Responses Analysis of RFI responses and preparation of a report which profiles & objectively ranks the suppliers by capability including a recommendation for those to be audited.

 RFI Report  Supplier Profiles  Proposed Shortlist for Audit.

Deliverables

Approach & Schedule, Supplier Pre-Qualification: Stage 2 (NDA Process) & Stage 3 (RFQ process). No.

Stage 2: NDA Process

NDA Process NDA Administration with the shortlisted suppliers from the RFI process.

 Signed NDA’s from suppliers.

No.

Stage 3: RFQ Process

Deliverables

Develop RFQ document Prepare an RFQ template based on the product specification that has the objective to collect Ex Works and DDP price, packing, loading volumes, sampling, incoterms and other relevant information.

 RFQ Template

Conduct RFQ Administration The RFQ is translated to the local languages as relevant, and distributed to the relevant suppliers, with telephone follow-up to push for maximum participation.

• Completed RFQ’s

10.

Analyze RFQ Responses Analysis of RFQ responses and preparation of a report with Ex Works and DDP price analyses from each supplier.

 RFQ Report analysis.

Deliverables

Demand Analysis. Approximate yearly volumes were collected from the client at the beginning of the project.

Estimated Estimated Yearly Volumes Yearly Spend

Category

Items

LV Electric Motors

Low Voltage Electric Motors

Units

XXX

â&#x201A;Ź XXX

Iron Castings

Grey and Nodular

Tons

XXX

â&#x201A;Ź XXX

Agenda 1.

STAGE 1: RFI PROCESS

STAGE 2: NDA PROCESS

STAGE 3: RFQ PROCESS

Dragon Sourcing has developed online software “Global Sourcing Platform” (GSP) to manage sourcing projects locally as well internationally. The GSP provides: •

A central database of suppliers

•

Management of sourcing projects from start to finish

•

Tools to facilitate supplier research, telephone pre-screening, RFI-RFQ & qualifying supplier.

 Complete unique online platform suitable for Global Strategic Sourcing process including qualifying the supplier. 6

Approach & Schedule. RFI/RFQ processes were completed in 8 weeks as per schedule. Week Week Week Week Week Week Week Week Week Week Week 0 1 2 3 4 5 6 7 8 9 10

Step

Responsible 13-17. 20-24. 27-31. 03-07. 10-14. 17-21. 24-28. 01-05. 08-12. 15-19. 22-26 08 08 08 09 09 09 09 10 10 10 10

Kick off

Demand Analysis

Supply Market Analysis

Telephone pre-screening

Administer NDA

Develop the RFI-RFQ

Conduct RFI/RFQ Administration

Analyze RFI/RFQ Responses

Not started

Client/DS

Started

Client

Client/DS

Finished

Client/DS

Holiday

RFI/RFQ process start

RFI/RFQs received, suppliers profiles forwarded to client

Long list of suppliers, identified in targeted Country. Supply market analysis per category was shared in the weekly progress report. Process Supplier Identification

Pre-screening

Administer NDA

RFI-RFQ Administration

Steps

Iron Casting

Electric Motors

Total

300

365

xxx

• Suppliers pending for pre-screening

xxx

• NDA Sent

xxx

• Preparing NDA

xxx

• NDA Rejected to sign

xxx

• NDA Returned, signed

xxx

• RFIs sent

xxx

• Intend to respond

xxx

• Number of RFQs, sent

xxx

• Rejected to fill in RFQ/ excluded by client’s category managers

xxx

• Number of RFQs received

xxx

• Intend to respond

xxx

• Suppliers identified • Supplier passed pre-screening so far, • Suppliers failed Pre- screening so far,

• Excluded from RFI/RFQ by client’s category managers or DS. • RFIs under consideration of client’s category managers • RFIs approved by client’s category managers

*xxx – Actual data from the report 8

Iron Castings Category Pre-screening, phone-calling process was administered to filter the potential suppliers for further next steps.

*Screenshots from GSP system, Phone-screening step. 9

Phone-calling process results were shared in the weekly progress report. Process Supplier Identification

Pre-screening

Steps

Iron Casting

Electric Motors

Total

xxx

253

308

• NDA Sent

xxx

• Preparing NDA

xxx

• NDA Rejected to sign

xxx

• NDA Returned, signed

xxx

• RFIs sent

xxx

• Intend to respond

xxx

• Number of RFQs, sent

xxx

• Rejected to fill in RFQ/ excluded by client’s category managers

xxx

• Number of RFQs received

xxx

• Intend to respond

xxx

• Suppliers identified • Supplier passed pre-screening so far, • Suppliers failed Pre- screening so far, • Suppliers pending for pre-screening

Administer NDA

RFI-RFQ Administration

• Excluded from RFI/RFQ by client’s category managers or DS. • RFIs under consideration of client’s category managers • RFIs approved by client’s category managers

*xxx – Actual data from the report 10

Supplier Profile example

Post pre-screening the suppliers. RFI process was administered to filter out most capable suppliers.

*Screenshots from GSP system, RFI step. 11

Supplier Profile example

RFI process was administered to filter out most capable suppliers.

*Screenshots from GSP system, RFI step. 12

Supplier Profile example

Category specific technical questions were added in the RFI relevant to Electric Motors and Iron Castings Categories to understand suppliers capabilities and capacity.

*Screenshots from GSP system, RFI step. 13

Electric Motors Category Supply Market Analysis. Supplier rejection analysis was shared for each step, Pre-screening, RFI, NDA & RFQ administration. Example of rejection analysis Phone screening rejection reasons - Electric motors

1 1

Don't produce required products

Traders/distributors or Importers only

Produce the motors but according to local standards, no IE2 or IE3.

2 The same manufacturer doesn't have any English speaking people, ISO 14001 and has only local environmental certificates. 3

Unable to contact them 29

We are only R&D company, no direct production Duplicate suppliers

Outsource production in China Not interested to take part in the selection process 5

Not possible to respond until late November. 7

We have checked RFI/RFQ and decided not to participate in this project because of no interest in production of items, requested. We mainly produce HV Motors. Will be able to consider the project only in Mid December Excluded by client

Suppliers location example – Electric Motors Category – RUSSIA. Locations of the RFI/RFQ responders - manufacturers, highlighted on the map.

Moscow

Kamensk-Ural’skiy

Mednogorsk

Supplier Location Marked

Electric Motors Category

Executive summary was shared with Result & Recommendation.

Example of the executive summary Manufacturers which provided RFI+ RFQs within project schedule: 1. Supplier 1 – Profile to download; 2. Supplier 2 – Profile to download; 3. Supplier 3 – Profile to download. •

RFQs can be downloaded from profiles directly.

• Detailed lists of manufacturers on all the steps can be found in detailed Progress Excel report: Client’s summary file IC EM categories Final

Agenda 1.

STAGE 1: RFI PROCESS

STAGE 2: NDA PROCESS

STAGE 3: RFQ PROCESS

Executive summary on the RFI and NDA Processes results were shared with the client in terms of weekly progress report. Process Supplier Identification

Pre-screening

Administer NDA

RFI-RFQ Administration

Steps

Iron Casting

Electric Motors

Total

xxx

365

xxx

• Suppliers pending for pre-screening

xxx

• NDA Sent

• Preparing NDA

• NDA Rejected to sign

• NDA Returned, signed

• RFIs sent

• Intend to respond

• Number of RFQs, sent

xxx

• Rejected to fill in RFQ/ excluded by client’s category managers

xxx

• Number of RFQs received

xxx

• Intend to respond

xxx

• Suppliers identified • Supplier passed pre-screening so far, • Suppliers failed Pre- screening so far,

• Excluded from RFI/RFQ by client’s category managers or DS. • RFIs under consideration of client’s category managers • RFIs approved by client’s category managers

*xxx – Actual data from the report

Agenda 1.

STAGE 1: RFI PROCESS

STAGE 2: NDA PROCESS

STAGE 3: RFQ PROCESS

Electric Motors Category Ex Works and DDP price analyses were done based on the actual suppliers prices.

RFQ, EXW Price in EUR € 2 000

€ 1 805

€ 1 800 € 1 600 € 1 400 € 1 200 € 1 000

€ 842

€ 936

€ 842

€ 936

€ 936 € 788

€ 800 € 589

€ 553

€ 600

€ 578

€ 324

€ 400

€ 173

€ 200

€ 57

€ 74

€ 73

€ 59

€ 85

€ 176

€ 103

Item 1

Item 2

Item 3

Item 4

Item 5

Item 6

Item 7

Item 8

Item 9

Item 10

Item 11

Item 12

Item 13

€-

Supplier 1

Supplier 2

Supplier 3

Iron Castings and Electric Motors Categories RFQ rejection analysis was shared with the client in terms of weekly, progress report. Process Supplier Identification

Pre-screening

Administer NDA

RFI-RFQ Administration

Steps

Iron Casting

Electric Motors

Total

xxx

365

xxx

• Suppliers pending for pre-screening

xxx

• NDA Sent

xxx

• Preparing NDA

xxx

• NDA Rejected to sign

xxx

• NDA Returned, signed

xxx

• RFIs sent

xxx

• Intend to respond

xxx

• Number of RFQs, sent

• Rejected to fill in RFQ/ excluded by client’s category managers

• Number of RFQs received

• Intend to respond

• Suppliers identified • Supplier passed pre-screening so far, • Suppliers failed Pre- screening so far,

• Excluded from RFI/RFQ by client’s category managers or DS. • RFIs under consideration of client’s category managers • RFIs approved by client’s category managers

*xxx – Actual data from the report

Conclusions  Whole project was carried out with 365 suppliers identified; with 37 RFIs received as long as signed NDAs & 6 suppliers finally responded with the RFQ document for both categories.

 As per instructions from client, the whole project was finalized during 10 weeks in comparison to standard 12 weeks period, because of high level of urgency to get results and start audits.  The producers, recommended by DS corresponded to the technical requirements of client and had all the necessary certificates.  DS recommended № of suppliers for visit/auditing with showing exact location of each manufacturer on the map.  The contact information about all the producers, identified, rejected, passed on all the selection steps, was forwarded to client.  Client visited DS recommended suppliers, responded to the RFQ process based on the stringent qualification process.