Dragon Sourcing - 龙 源 Your Tailored Sourcing Approach to LCC Sourcing
Sourcing program for Fan induction motors Case Study
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. Supplier Scorecard 6. RFI/RFQ Analysis 7. Recommendations and Next steps
1. Executive Summary: Project Objectives & Scope To identify, evaluate high quality and competitive suppliers for fan induction motors to achieve a cost saving and expanding the supplier base to increase competition for Client business in the following 8 countries: • China • India • Indonesia • Malaysia • South Korea • Thailand • Turkey • Vietnam We preformed a prescreening process of potential suppliers by telephone interview, RFI/RFQ, and Balanced Scorecard to fully understand to the market situation of production.
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. Supplier Scorecard 6. RFI/RFQ Analysis 7. Recommendations and Next steps
2. Approach & Schedule (1/3) Stage 1: Supplier Identification
No.
Step
Deliverables
1.
Demand Analysis Work with Client to define and understand the categories and requirements (specs, volumes, materials, standards, production technology requirements).
Project Requirement Questionnaire Kick-Off Report
2.
Supply Analysis Identify long list of potential suppliers in the countries in scope by leveraging B2B Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References.
Supplier Long List
3.
Telephone Pre-screening Select suppliers to be included in the RFI-RFQ 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)
Shortlist for RFI/RFQ
4.
Develop RFI/RFQ Prepare an RFI/RFQ document, with an aligned Balanced Scorecard that has the objective to prequalify the capabilities of the suppliers, including (but not limited to): Background, Financial, Client and product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology capability, R&D capability, cost breakdown structure.
RFI/RFQ Template Balanced Scorecard
2. Approach & Schedule (2/3) Stage 2: Supplier Pre-Qualification
No.
5.
Step
Administer NDA (Optional) Administration and chasing for completion of an NDA with suppliers that have been preselected
Deliverables
Completed NDAs
Conduct RFI/RFQ Administration The RFI/RFQ is translated to local languages, as necessary, and distributed to the potential suppliers, with repeated telephone follow-ups to push for maximum participation and completion.
Control Sheet Completed RFI/RFQs
7.
Analyse RFI/RFQ Responses Analysis of RFI/RFQ responses and preparation of a report which profiles & objectively ranks the suppliers, including a recommendation of those that should be audited.
RFI/RFQ Analysis Report Supplier Profiles Proposed Shortlist for Audit and/or sample making
8.
Supplier Audit (Optional) Audit selected suppliers from short list, finish audit report and negotiate price for final bidding.
Audit report
9.
Contracting management (Optional) Go sampling or test to confirm the final supplier, and prepare contract, negotiate contract terms with suppliers to finalize.
Contract
6.
2. Approach & Schedule (3/3) Not started In process
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.
Step
Who
1
Demand Analysis: technical requirements, standards applied, material specification unit prices and annual volumes.
Client
2
Identify list of potential suppliers in the 6 countries to include in the RFI/RFQ
DS
3
Telephone pre-screening
DS
4
Finalize the RFI/RFQ
Client/DS
5
Administer RFI/RFQ
DS
6
Develop balance score card to evaluate suppliers according to RFI/RFQ
Client/DS
7
Analyze responses and select suppliers for audit phase
Client/DS
8
Carry out technical and social audits of pre-selected suppliers
Client/DS
W01
W02
W03
W04
W05
W06
W07
W08
W09
W10
W11
W12
Milestones W13
W14
Out of scope for this initial phase Today
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. Supplier Scorecard 6. RFI/RFQ Analysis 7. Recommendations and Next steps
3: Demand analysis Fan Motors (127V or 220 V) with copper, aluminum or copper/aluminum winding. • • • • • • • • • • • •
Motor type: Permanent capacitor: (4 poles) Direction of rotation: Clockwise from shaft end Thermal cutoff: 130℃, 2A 250V Jacketed with 4 conductors according to UL758, style 2103; Conductors cross section: 22 AWG with 26*ø 0.12 bare copper wires; Conductors insulation : PVC 105℃;300v,0.4mm thickness; Copper wires helical twisting path: 20 to 25mm; External jacket: PVC 105℃, 300v, thickness: 1.0+/-0.1 Black color; Outside cable diameter: 5.9+/-0.1mm Conductors helical twisting path: 50 to 70mm There must be talc between conductors and external jacket the motor construction shall comply with current version of IEC 60.335-1 and IEC 60.335-2-80
3: Demand analysis Estimated Annual demand represent 7.7 M USD for 2 Million pieces Part number Drawing:
TS30
TS40
VA3B
Total
Fan Motor TS30 alu
Fan Motor TS40 alu
Fan Motor VA3B
-
Market :
Brazil & Columbia
-
Winding:
copper, aluminum or copper/aluminum
-
Voltage: 127V or 220 V
127V
220V
127V
220V
127V
220V
-
Incoterm:
FOB
FOB
FOB
FOB
FOB
FOB
-
Target Price (USD/pc)
3.7
3.7
4.25
4.25
3.4
3.4
-
Yearly demand (Million pcs):
0.21
0.09
0.7
0.3
0.49
0.21
2
Total spend(M USD):
0.78
0.33
2.98
1.28
1.67
0.71
7.74
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. Supplier Scorecard 6. RFI/RFQ Analysis 7. Recommendations and Next steps
4: Sourcing process Total 78 RFI/RFQs sent out and 14 RFQs received.
300
297
297
9 13
9 13
Fan Induction Motors Malaysia
Indonesia
India
Thailand
Turkey
Vietnam
China
South Korea
250 87
87
200
150
18 8
18 8
31
31
100 118
118
50
0
13
13
Number of suppliers identified
Number of suppliers called
78
78
2 2 15 5 3 5
2 2 15 5 3 5
42
42
14
4 Supplier passed phone screen
4 Number of RFI/RFQ sent
1 0 1 1 8 1 Number of RFI/RFQ received
4: Sourcing response Supplier Name Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9 Supplier 10 Supplier 11 Supplier 12 Supplier 13
Country China China China China China Malaysia China China Indonesia Thailand Turkey China Vietnam
China 8
Turkey 1
Score 73.6 69.3 69.0 65.9 63.6 61.8 61.5 58.1 51.6 46.3 40.6 34.2 7.3
South Korea 1
Vietnam 1
India
Thailand 1 Malaysia 1
Indonesia 1
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. Supplier Scorecard 6. RFI/RFQ Analysis 7. Recommendations and Next steps
5: Supplier scorecard Company Profile Company founded years Registered capital? (USD) Turnover in 2013 ? (USD) Workfloor size (M2) Employees number How many people speak english? Export licence Export experience Have subsidiaries in other countries? Supply products to SDA industry? Percentage of turn over coming from SDA industry Have SAM /international customers? Work with Client group before? % of export Profile of Top 3 Customers Subtotal Production capability Main type motor How many fan motor assembly lines? Monthly production capacity of fan motors Current free monthly production capacity? All production processes in house? Outsourced process or component Aluminum winding experiance RD team exist and size # of workers with 5 years experience Equipment list available Preventative maintenance programme Maintenance cycle: Documented Inventory Managemnt System ERP system FIFO Subtotal Quality system
Certificates
ISO 9001 ISO 14001 CE UL OHSAS18001
Any other certificate? ROHS REACH Incoming material QC Daily on-line QC 100% QC for finished goods? Final products inspection and report Average reject rate On line reject rate in 2013 PPM customer in 2013 Warranty term Accept 3rd party QC QC records Test equipment in house Subtotal
Weight of criteria 5% 5% 5% 5% 10% 10% 5% 5% 5% 10% 5% 10% 5% 10% 5% 100%
Scoring 0= Not provide; 1= Less than 5 years; 2= 5 to 10 years; 3= 10 to 20 years; 4= Above 20 years 0= Not provide;1= Less than 5 Million; 2= 5-10 million; 3= 10-20 Million; 4= More than 20 million 0= Not provide; 1= Less than 5 million; 2= 5-10 million; 3= 10-30 million; 4= More than 30 million 0= Not provide; 1= Less than 10000 M2; 2= 10000 to 20000 M2; 3= Above 20000 M2; 0= Not provide; 1= Less than 200 staff; 2= 200-500 staff; 3= 500 to 2000 staff; 4= More than 2000 staff 0= No; 1= 1 to 3 people; 2= 4 to 10 people; 3= Above 10 people 0= No; 1= Yes; 0= No experience; 1= 1 to 5 years; 2= 5 to 10 years; 3= More than 10 years; 0= No; 1= Yes; 0= No; 1= Yes; 0= No; 1= less than 10%; 2=10% to 30%; 3= 30% to 50%; 4= Above 50% 0= No; 1= Yes; 0= No; 1= Yes; 0= No export; 1= less than 20% export; 2= 20% to 50% export; 3= Above 50% export 0= Not provided; 1= Only small local customers ; 2= Some national customers; 3= Some international customers
Weight of criteria
Scoring
Max Score per criteria 4 4 4 3 4 3 1 3 1 1 4 1 1 3 3 40 Max Score per question
5% 8% 12% 15% 5%
1= Only other motors; 2= Only Fan motors; 3= Fan and other motors 1= less than 3; 2= 3 to 5; 3= Above 5; 1= Less than 100K pcs; 2= 100K to 200K pcs; 3= 200K to 400K pcs; 4= Above 400K pcs; 1= Less than 100K pcs; 2= 100K to 200K pcs; 3= above 200K 0= No; 1= Yes;
3 3 4 3 1
5%
1= Main parts outsourced; 2= some important parts outsourced; 3= Less important parts outsourced;4= No outsourced;
4
0= No; 1= Yes; 0= No; 1= less than 5; 2= 5 to 10; 3=10 to 20; 4= above 20 1= Less than 100 staff; 2= 100-200 staff; 3= 200 to 500 staff; 4= above 500; 0= No; 1= Yes; 0= No; 1= Yes; 1= Yearly; 2= Monthly; 3= Weekly; 4= Daily 0= No; 1= Yes; 0= No; 1= Yes; 0= No; 1= Yes;
1 4 4 1 1 4 1 1 1 36
10% 5% 5% 5% 5% 5% 5% 5% 5% 100% Weight of criteria 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 10% 5% 5% 5% 5% 100%
Scoring 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 0= No; 1= Yes 1= above 0.3%; 2=0.1% to 0.3%: 3= 0.05% to 0.1%; 4= Less than 0.05% 1= above 0.3%; 2=0.1% to 0.3%: 3= 0.05% to 0.1%; 4= Less than 0.05% 1= Above 1000; 2= 500 to 1000; 3= 300 to 500; 4= less than 300; 1= less than 1 year; 2= 1 to 2 years; 3= 2 to 3 years; 4= above 3 years; 0= No; 1= Yes 0= No; 1= Yes, less than 1 year; 2= Yes, 1 to 3 years; 3= Yes, above 3 years; 0= No; 1= Have less than 8 devices; 2= Have 8 to 10 devices; 3= Have 10 to 13 devices; 4= Have all devices
Max Score per question 1 1 1 1 1 1 1 1 1 1 1 1 4 4 4 4 1 3 3 35
Weight of the section
20%
10% Weight of the section
50%
30% Weight of the section
30%
30%
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. Supplier Scorecard 6. RFI/RFQ Analysis 7. Recommendations and Next steps
6: RFI/RFQ analysis DS suggest send samples to selected suppliers with good RFI scores and quotes close to Client prices
6: RFI/RFQ analysis – RFI scoring
Agenda
1. Executive Summary 2. Approach & Schedule 3. Demand Analysis 4. Sourcing Response 5. RFI/RFQ Analysis 6. Supplier Scorecard 7. Recommendations and Next steps
7. Recommendations and Next steps Overview: • Turkey: Only 1 supplier quote and price is much higher than Client, suppliers confirmed Turkey is mainly import from South Asia; • India: No quote received, supplier mainly produce industrial motors. • Thailand: Only 1 quote received and price is much higher than Client, and not quote all motors. • Vietnam: All suppliers reject quote without sample, only 1 supplier provide price range for reference and similar to Client price. Seems suppliers have ability to produce but very weak on R&D; • Indonesia: Only 1 supplier quote and price much higher than Client; • Malaysia: 1 supplier quote much higher price than Client, another supplier quote very good price but as found totally collect price from a China supplier (same one as DS sourced in China); • South Korea: The quote is much higher than Client, suppliers suggest buy from China; • China: Some suppliers quote very good price with potential 15% savings(1.2M) totally. Suppliers request for samples to make accurate quotes. Next steps: 1. DS suggest send samples to good RFI/RFQ potential suppliers to ask for accurate quote. 2. Vietnam looks is a potential supply market, suggest send samples to suppliers to ask for quote. 3. Audit selected suppliers.