Dragon Sourcing - éž™ ćş? Delivering sustainable sourcing value from emerging markets
Coffee Pot Sourcing in China Case Study
Agenda 1.
Introduction
2.
Sourcing Approach
3.
Next step
2
Context Project objectives: • Primary objective is to secure savings through consolidating procurement and sourcing direct from manufacturers in China market for Home & Kitchen relating products.
Geographical scope: • China Deliverables: • RFI / RFQ Template • RFI / RFQ report • Balanced Scorecard • Supplier profiles • Recommended audit supplier list • Sampling • Contract Negotiation
3
Agenda 1.
Introduction
2.
Sourcing Approach
3.
Next step
4
Below is the Dragon Sourcing standard 3 stage process
•
Key activities
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines Analyse supply market and identify potential suppliers
•
Shortlist suppliers based on RFI/RFP process
•
Manage P/O and agree payment terms and details (L/Cs,..)
•
Audit shortlisted suppliers
•
Check in process production quality
•
Select 2-3 suppliers for sample development process
•
Conduct pre-shipment QC
•
Arrange logistics
•
Manage supplier performance
•
Monitor new sourcing opportunities
Pre-qualify potential suppliers through an RFI process
•
•
Manage RFP process with prequalified suppliers
•
Conduct final negotiations and select suppliers
•
Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)
•
Finalise Contract
•
Develop Business case and implementation plan
•
Procurement Operations
Supplier Selection and Contracting
Feasibility Analysis
Manage sample development process
5
Stage 1: Feasibility Analysis is required by client
•
Key activities
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines Analyse supply market and identify potential suppliers
•
Shortlist suppliers based on RFI/RFP process
•
Manage P/O and agree payment terms and details (L/Cs,..)
•
Audit shortlisted suppliers
•
Check in process production quality
•
Select 2-3 suppliers for sample development process
•
Conduct pre-shipment QC
•
Arrange logistics
•
Manage supplier performance
•
Monitor new sourcing opportunities
Pre-qualify potential suppliers through an RFI process
•
•
Manage RFP process with prequalified suppliers
•
Conduct final negotiations and select suppliers
•
Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)
•
Finalise Contract
•
Develop Business case and implementation plan
•
Procurement Operations
Supplier Selection and Contracting
Feasibility Analysis
Manage sample development process
6
The first step for feasibility analysis was to develop a comprehensive understanding of the requirements Product name Moka Pot
Order Volume for RFQ
Specifications
-
4 cup with gift box and insert Material: Stainless steel, magnetic stainless steel bottom Capability: 4 cup/ 6 cup Heat resistant handle With s pout Laser logo Packing: Magnetic color box, 2-3 inserts
7
500 pcs
Picture
Then an extensive supplier data base is built in GSP leveraging multiple sources of information
8
If the category has already existed in GSP, we can add suppliers by product category
9
If the category does not exist in GSP, the external website can be accessed linking from GSP and the relevant suppliers can be added as per project wise
Drag the supplier link and drop
10
After building a supplier long list, a telephone pre-screening process is carried out to select the suppliers to be included in the RFI/RFQ process
No.
Pre-screening question
Reply
1
Are you manufacturer or trader？
Must “manufacturer”
2
Can you export?
Prefer to reply “Yes”
3
Do you have export license?
Must have
Remark •Phone screening process is a filtration stage from large database of suppliers identified to discard the suppliers not able to fit in the minimum key criteria’s. •Phone screening stage should be limited to key questions only (normally 4-5 questions) •Please note, suppliers not able to answer the question for “Must have” will be considered as disqualified for next step of RFI /RFQ process. •Please specify if any key question need to be included which should be consider as a MUST criteria for the supplier.
11
After completing the phone pre-screening process, we will begin to administer the RFI/RFQ process
Business Information Production Capacity
Quotation FOB Magnetic Supplier's HS price / packing SPEC product Pic Code pcs box (in (in USD) USD)
FOB port
Packing Information Packaging Mass Sample MOQ Sample Packing dimension: Producti Lead (pcs) Fee description （L x W x H on Time time cm)
RFQ
12
G.W.
And GSP can track all the steps including phone screening process, RFI-RFQ process and so on
13
The RFI-RFQ responses are analyzed using a score card validated by the client
Business information
Production Capacity
14
RFI Score card analysis 16 suppliers’ RFI have been ranked Weight
Supplier 1 Supplier 2 Supplier3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9
Supplier 10
Supplier 11
Supplier 12
Supplier 13
Supplier 14
Supplier 15
Supplier 16
Business information
30%
20
26
21
21
24
24
19
20
15
19
7
12
16
23
13
15
Quality and social responsibility
30%
22
23
29
21
17
16
15
18
17
7
18
18
14
7
12
6
Production capability
40%
35
23
17
23
21
21
26
20
24
26
22
17
16
15
18
21
Total
100%
77
72
67
65
62
61
60
58
56
52
47
47
46
45
43
42
Supplier 4
Supplier 5
Supplier 8
Supplier 9
Supplier 12
Supplier 13
Supplier 1
Supplier 2
Supplier 3
Supplier 6
Supplier 7
15
Supplier 10
Supplier 11
Supplier 14
Supplier 15
Supplier 16
RFQ analysis FOB price summary, total 8 suppliers quoted for Moka Pot. Supplier FOB Price
Product Specifications Supplier 1
Supplier 2
Supplier 3
Supplier 4
Supplier 5
Supplier 8
Supplier 10
Supplier 16
#
RFI Score
77
72
67
65
62
58
52
42
1
Moka pot 3 or 4 cup
$18.00
$12.15
n/a
$7.75
$11.20
$12.20
$16.80
n/a
2
Moka pot 6 cup
$18.26
$13.08
$10.20
$8.21
$13.00
$13.20
$18.8
$8.58
Supplier 1
Supplier1 0
Supplier 2
Supplier 8
Supplier 5
Supplier 10
Supplier 4
16
Supplier 1
Supplier 8
Supplier 2
Supplier 5
Supplier 3
Supplier 16
Supplier 4
Recommended suppliers for sampling 2017 Turnover #
Supplier
City
Province
RFI score
Priority
Potential saving
(M USD) 1
Supplier 1
Xiamen
Fujian
77
2.5
1
18,285
2
Supplier 3
Nanjing
Jiangsu
67
12
1
14,700
3
Supplier 10
Taizhou
Zhejiang
52
1.5
1
17,400
4
Supplier 2
Yongkang Shi
Zhejiang
72
18
2
-
5
Supplier 4
Yongkang Shi
Zhejiang
65
2.5
2
-
6
Supplier 5
Shenzhen
Guangdong
62
10
2
-
7
Supplier 8
Yongkang Shi
Zhejiang
58
2.6
3
-
17
Summary of sample cost and sample lead time for recommended suppliers of moka maker Product Specifications #
1
2
Supplier 1 Supplier 2 Item FOB Sample Lead FOB Sample Lead price cost time price cost time 15 Moka pot 3 or 4 $18.00 $30 working $12.15 $29.50 2 days cup day 15 Moka pot 6 cup $18.26 $30 working $13.08 $29.50 2 days day
Supplier FOB Price with Sample info Supplier 3 Supplier 4 Supplier 5 FOB Sample Lead FOB Sample Lead FOB Sample Lead price cost time price cost time price cost time n/a
n/a
n/a
$7.75
$15.00 7 days
$11.20 $100.00 7 days
FOB price
Supplier 8 Sample Lead cost time
$12.20 $15.00 7 days
FOB price $17
Supplier 10 Sample Lead cost time $30 710DAYS
$10.20 $100.00 5 days
18
$8.21
$15.00 7 days
$13.00 $100.00 7 days
$13.20 $15.00 7 days
$18.8
$30
Stage 2: Supplier Selection and Contracting
•
Key activities
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines Analyse supply market and identify potential suppliers
•
Shortlist suppliers based on RFI/RFP process
•
Manage P/O and agree payment terms and details (L/Cs,..)
•
Audit shortlisted suppliers
•
Check in process production quality
•
Select 2-3 suppliers for sample development process
•
Conduct pre-shipment QC
•
Arrange logistics
•
Manage supplier performance
•
Monitor new sourcing opportunities
Pre-qualify potential suppliers through an RFI process
•
•
Manage RFP process with prequalified suppliers
•
Conduct final negotiations and select suppliers
•
Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)
•
Finalise Contract
•
Develop Business case and implementation plan
•
Procurement Operations
Supplier Selection and Contracting
Feasibility Analysis
Manage sample development process
19
1st round sample – All 7 suppliers are selected for sampling - Supplier 1’s sample pictures 6cup moka maker SS 304/1.2MM up bottle SS 430/2MM down bottle Overall
Lid
Handle
Upper part
Boiler
Bottom
20
1st round sample – All 7 suppliers are selected for sampling - Supplier 2’s sample pictures 6cup moka maker 6cups upper part:304/1.0MM boiler:430/1.0MM lids:304/0.8MM Overall
Lid
Handle
Upper part
Boiler
Bottom
21
1st round sample – All 7 suppliers are selected for sampling - Supplier 3’s sample pictures 6cup moka maker ss304 upper body, ss430 boiler Overall
Lid
Handle
Upper part
Boiler
Bottom
22
1st round sample – All 7 suppliers are selected for sampling - Supplier 4’s sample pictures 6 CUP moka maker 304/0.8 mm upper part and 430/0.7mm lid 430/1 mm lower part . Induction bottom Overall
Lid
Handle
Upper part
Boiler
Bottom
23
1st round sample – All 7 suppliers are selected for sampling - Supplier 5’s sample pictures 6cup moka maker SS201,0.5mm Overall
Lid
Handle
Upper part
Boiler
Bottom
24
1st round sample – All 7 suppliers are selected for sampling - Supplier 8’s sample pictures 6cup moka maker， upper part 304/0.8 mm, boiler 430/1 mm Overall
Lid
Handle
Upper part
Boiler
Bottom
25
1st round sample – All 7 suppliers are selected for sampling - Supplier 10’s sample pictures 6cup moka maker upper pot:304 Stainless Steel lower pot:430 Stainless Steel Overall
Lid
Handle
Upper part
Boiler
Bottom
26
After testing of the 1st round sample, 2 suppliers are selected by the client for requoting + answering the modification questions and finally supplier 4 is selected for 2nd round sample
Supplier
Water filling line(Boiler)
Modification request Coffee funnel easily Gap between inside wall removable and bottom(Upper part)
Hinge design
Supplier 2
No need, water can't exceed the valve
Yes, add a spring( material 304)
Yes, add a lid
No, can not improve
Supplier 4
No need, water can't exceed the valve
Yes, add a spring( material 304)
Yes,add a lid
Yes, we can
Updated Price Supplier
4 CUP
6 CUP Product unit price Gift box Price
Sample fee
Lead time
Product unit price
Gift box Price
Supplier 2
$11.97
$1.00(estimated)
$12.90
$1.00(estimated)
USD 148
1 week
Supplier 4
$7.65
$1.50(estimated)
$8.85
$1.50(estimated)
USD 153
2 weeks
27
2nd round sample from supplier 4 according to client’s modification requirement 1st round sample
2nd round sample
1st round sample
2nd round sample
1st round sample
2nd round sample
Spring
Add a spring ( material 304) for coffee funnel easily removable
Add a lid to avoid Gap between inside wall and bottom (Upper part)
No spring
1st round sample
2nd round sample
Gift box is required for the 2nd round sample
Change the hinge design
28
No packaging
Agenda 1.
Introduction
2.
Sourcing Approach
3.
Next step
29
Next step • Send the 2nd round sample to client for testing • Final price and contract term negotiation with supplier 4
30