Cotton Bags for Luxury Retail Brand Case Study

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Delivering sustainable sourcing value from emerging markets

Cotton Bags For Luxury Retail Brand

Case Study

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

2

• Client Introduction & Project Objectives, • Dragon Sourcing approach in 4 steps  Client Introduction: Client is a leading French luxury brand selling high end footwear, bags and life style products.

Client want to qualify a price competitive supplier from emerging market in a short period of 4 weeks able to offer cotton bags for life style product range.  Project Objectives: Identify and qualify list of potential manufacturers in India by leveraging DS database and finding new suppliers by running Request for Information/Request for Quote (RFI-RFQ) process through procurement and sourcing direct from manufacturers for 11 SKU’s of cotton bags.  Supplier key requirement: Supplier should have experience in developing cotton bags for luxury brands, must be able to offer saving, export capability and able to develop samples.  Quality Management and Social compliance certification will be considered as advantage.

Stage 2 • SUPPLIER PREQUALIFICATION

Stage 1

• SAMPLING

Stage 4 • FACILITY AUDIT

Stage 3

• CONTRACT

- Total 11 SKU’s with and without gusset styles were included for RFI-RFQ process with estimated volume to half a million pieces.

Sizes of Pouches (mm)

100% Soft Cotton - 1 side Brushed - Inside the Dust Bag

Height

Width

Gussets

Estimated Quantities in PCS

150404

650

650

190

37,700

POUCH 2

XX

XX

XX

XX

XX

POUCH 3

XX

XX

XX

XX

XX

POUCH 4

XX

XX

XX

XX

XX

POUCH 13

XX

XX

XX

XX

XX

POUCH 5

XX

580

350

-

XX

POUCH 6

XX

XX

XX

-

XX

POUCH 7

XX

XX

XX

-

XX

POUCH 8

XX

XX

XX

-

XX

POUCH 9

XX

XX

XX

-

XX

POUCH 12

XX

XX

XX

-

XX

Description

Reference#

POUCH 1

Product Pictures

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

5

- Sourcing Approach,

1.

STAGE 1: Supplier pre-qualification

2.

STAGE 2: Sampling

3.

STAGE 3: Facility Audit

4.

STAGE 4: Contract

- Following steps were covered under stage 1: Supplier Pre-Qualification No.

Step

Deliverables

1.

Demand Analysis Work with client to define and understand the Products and requirements (specs, volumes, current unit prices, delivery destinations of delivery/consumption). Collect samples of the products in order to ensure potential suppliers fully understand them

• Kick-Off Report

2.

Supply Market Analysis Identify list of potential manufacturers in India leveraging DS database and finding new suppliers.

• Potential Supplier List

3.

Telephone Pre-screening Selection of manufacturers to be included in the RFI/RFP process by telephone pre-screening based on agreed simple criteria e.g. capability to make the product, can export, quality certifications, interest in participating, etc.

• Shortlist for RFI-RFQ process

4.

Develop RFI/RFQ document Prepare an RFI/RFQ document that has the objective to pre-qualify the competitiveness and capabilities of the manufacturers, including: background, financial, client and product experience, quality certification & processes, social responsibility, manufacturing/technology capability, R&D capability.

• RFI-RFQ Template

5.

Administer RFI/RFQ: The RFI/RFQ is distributed to the relevant manufacturers, with telephone follow-up to push for maximum participation.

• Completed RFI-RFQ’s

6.

Analyze RFI/RFQ Responses: Analysis of RFI/RFQ responses, estimation of logistics costs, and preparation of a report, which profiles & objectively ranks the manufacturers by capability and competitiveness, including a recommendation for those to be audited.

• RFI-RFQ Report • Supplier Profiles • Proposed shortlist for sampling and audit.

- Stage 1: Supplier Pre-Qualification timeframe.

- Project was completed within 4 weeks as per schedule.

Steps

Week 1

Week 2

Week 3

Week 4

1. Demand Analysis

2. Supply Market Analysis

3. Telephone Pre-screening RFI/RFQ approved

1 4. Develop RFI/RFQ

5. Administer RFI/RFQ

6. Analyze RFI/RFQ Responses

Supplier profiles with recommendations.

2

Not started

Done

In process

Delay

- Stage 1- Supply Market Analysis: - Process metrics follow up as per Country wise.

1. Selected list of potential suppliers were added according to the category specific information, 2. Pre-screening was performed to filter the list of suppliers’ with the specific key requirement on this project.

3. RFI-RFQ process was run with selected suppliers qualifying to the client requirement.

STEPS

India

Potential suppliers added to the project

20

Suppliers passed pre-screen process based on must have criteria’s

5

RFI/RFQ Sent

5

Intend to respond

5

RFI/RFQ Received

5

RFI Score

90

RFI Ranking

1/5

- Stage 1 - Supplier profile’s were shared with the client with our ranking,

HUMAN RESOURCES Quality Control Technical Staff Sales & staff / R&D Engineer Management 20 10 20

COMPANY INFORMATION Company Name

DS/SY/003

Factory Address

XX

City

XX

Province

XX

Country

India

Company Website

XX

Employee No.

Business Type: Manufacturer, or trader ?

Printiingin-house / outsource Number of sewing machines Monthly production capacity for cotton bags

Others

47

ANNUAL TURNOVER Total sales turnover (in M USD)

2018

2017

USD XX M

USD XX M

MAIN MARKET

COMPANY BACKGROUND

Year Founded

Factory Workers 450

1999

% of Sales

Europe (%)

US (%)

Asia (%)

Domestic (%)

45

XX

XX

XX

TOP 3 CUSTOMER

Manufacturer Customer Name

In house 300 Machines

0.5 M pcs of cotton bags

Rest of the world (%) XX

Top 3 Customers

Industry

Country

% of Sales

Type of Product

XX

Luxury Retail

USA

18

Table Linen

XX

Luxury Retail

US & France

5

Cotton bags

XX

Retail

NL

9

Dust bags

CERTIFICATIONS

Export License ? (Y/N)

Yes

Certificate

Y/N

Date of Certificate

Date of Expire

Be able to export to Europe? (Y/N)

Yes

ISO 9001:2008 Quality management systems

Yes

07.09.2018

12.07.2021

XX

XX

Export Experience (Years) Work Floor Size ( Square meters) Total Employee Number

20 Years 15,000 Sqm 547

Ccorporate Social Responsibility Yes SA 8000

QUALITY CONTROL MANAGEMENT General Production Defective Rate (% rejected)?

Accept 3rd party QC? (Y/N)

1.2 % Yes

- Stage 1 - Supplier factory picture were shared with the client for overview of the supplier facility.

FACTORY PHOTOS Factory overview

Inside the factory floor

Production floor

Sewing Workshop

Printing Workshop

Lab & Testing

Warehouse

Showroom

- Price analysis was done for all the 5 suppliers,

Descriptio n POUCH 1 POUCH 2 POUCH 3 POUCH 4 POUCH 13 POUCH 5 POUCH 6 POUCH 7 POUCH 8 POUCH 9 POUCH 12

1 2 3 4 5 Supplier name DS/TH/001 DS/EZ/002 DS/SY/003 DS/MA/004 DS/PP/005 FOB Client FOB Price in Difference FOB Price in Difference FOB Price in Difference FOB Price in Difference FOB Price in Difference Ref # Buying Price $US (%) $US (%) $US (%) $US (%) $US (%) ($) 150404 XX $ 1.71 27% $ 2.28 2% 13% - 16 % - 31 % $ 2.02 $ 2.70 $ 3.05 XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX XX XX $ XX XX $ XX XX XX XX XX $ XX $ XX $ XX

Descriptio Client spend Quantities n in $US POUCH 1 POUCH 2 POUCH 3 POUCH 4 POUCH 13 POUCH 5 POUCH 6 POUCH 7 POUCH 8 POUCH 9 POUCH 12

Shortlisted for sampling.

37,700 XX XX XX XX XX XX XX XX XX XX

Total spend in $US Saving Value

$ XX XX XX XX XX XX XX XX XX XX XX Current spend $ XX

Supplier 1: Spend in $US XX XX XX XX XX XX XX XX XX XX XX

Savings in $US $ 23,299 XX XX XX XX XX XX XX XX XX XX

Supplier 2: Spend in $US $ 85,956 XX XX XX XX XX XX XX XX XX XX

Savings in $US $ 1,810 XX XX XX XX XX XX XX XX XX XX

Supplier 3: Spend in $US $ 76,116 XX XX XX XX XX XX XX XX XX XX

Savings in $US $ 11,649 XX XX XX XX XX XX XX XX XX XX

Supplier 4: Spend in $US $ 101,790 XX XX XX XX XX XX XX XX XX XX

Savings in $US - $ 14,024 XX XX XX XX XX XX XX XX XX XX

Supplier 5: Spend in $US $ 114,985 XX XX XX XX XX XX XX XX XX XX

Savings in $US - $ 27,219 XX XX XX XX XX XX XX XX XX XX

Supplier 1 Total saving Supplier 2 Total saving Supplier 3 Total saving Supplier 4 Total saving Supplier 5 Total saving total spend % total spend % total spend % total spend % total spend % $ XX 28.6% $ XX 6.2% $ XX 18% $ XX - 15. 8% $ XX - 23 % $ XX

$ XX

$ XX

$ XX

$ XX

- Sourcing Approach,

1.

STAGE 1: Supplier pre-qualification

2.

STAGE 2: Sampling

3.

STAGE 3: Facility Audit

4.

STAGE 4: Contract

- High quality samples were developed from the shortlisted suppliers within short period of time,

DS/TH/001

DS/EZ/002

DS/SY/003

Samples were developed for selected styles with and without gusset, Example of the developed sample from one the style.

- Sourcing Approach,

1.

STAGE 1: Supplier pre-qualification

2.

STAGE 2: Sampling

3.

STAGE 3: Facility Audit

4.

STAGE 4: Contract

- Post sample development, plan was framed to audit the recommended supplier.

- Following sections were covered in the hybrid model of audit process,

** Dragon Sourcing has experienced team for performing Technical and Social Corporate Responsibility (CSR) audit or hybrid model combing both.

- Supplier business license and certification’s were collected during the audit process and shared with the client,

- Supplier scoring with overall comments and corrective action plan was shared with the client,

- Sourcing Approach,

1.

STAGE 1: Supplier pre-qualification

2.

STAGE 2: Sampling

3.

STAGE 3: Facility Audit

4.

STAGE 4: Contract

- Recommended supplier was passed in the audit, - Proforma Invoice was raised to the client under buy/resell model,

- Purchase order was awarded to the shortlisted supplier post negotiation,

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

22

Conclusions  Whole project was carried out in 8 weeks (4 week for supplier qualification and another 4 weeks for sampling, supplier facility audit and contract)  Shortlisted suppliers for sampling were credential with the certification and production capability as per client mandatory requirement.  High quality samples were developed following original sample within a short period of time.

 Client was happy with the quality and workmanship of the samples developed and finalized one supplier for next step.  Audit was immediately planned and the supplier facility was approved based on the audit results.  Audited supplier was awarded with the contract post price negotiation, production lead time, payment terms and others.  Overall based on DS strategic sourcing process, It helped client to place order on time with high savings and samples to showcase.

24