Dragon Sourcing - 龙 源 Your Tailored Sourcing Approach to LCC Sourcing
Powder Coating Strategic Sourcing - Case Study
Shanghai, Apr 22nd , 2016
Agenda
1.
Objectives and Timeline
2.
Approach
3.
Results
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2
Objectives and approach Context 1.
Objectives: • Carry out sourcing service to identify competitive and qualified suppliers, for the following categories: – Coating
2.
3.
Geographical scope: • 150KM range from client factory 4.
Deliverables: • Supplier database • NDA signed copies • RFI-RFQ template • RFI-RFQ analysis report • Supplier profiles and ranking • Suppliers pre-audit reports (optional)
5. 6.
7. 8. 9.
© 2016 Dragon Sourcing. All rights reserved.
3
DS Approach consists in the following work steps: Demand Analysis: define and understand products and requirements (specs, volumes, materials, production technology requirements) Supply Market Analysis: Identify long list of potential suppliers in China by leveraging B2B Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References. Telephone Pre-screening: Selection of suppliers to be included in the RFIRFQ process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, minimum company size, quality certifications) Develop the RFI-RFQ: Document prepared together with client to pre-qualify the competitiveness and capabilities of the suppliers, including: Background, Financials, Client references and Product experience, Quality certification & processes, Social Responsibility, Manufacturing technology capability, R&D capability Administer the NDA: NDA template authorized by client that will be distributed to the suppliers who is willing to attend the RFI-RFQ. Administer the RFI-RFQ: Distributed to the suppliers who passed the pre-screening section, with telephone follow-up to push for maximum participation. Develop a balance score with client, evaluating suppliers maturity according to RFIRFQ Analyze RFI-RFQ Responses: profiling & objectively ranking suppliers by capability, and recommending those to be audited. Pre-audits (optional): Carry pre-audits of recommended suppliers in order to identify those to have you audit.
DS has taken about 9 weeks to deploy Strategic sourcing following DS methodology on coating project. M1
Steps
Owner
0
Kick off meeting
Client/DS
1
Data collection pack analysis
Client/DS
2
Identify list of potential suppliers
3
Develop the RFI/RFQ, introduction letter to include all key qualification criteria.
Client/DS
4
Conduct first phone screening of supplier database to send introduction letter.
DS
5
NDA administration
DS
6
Administer RFI/RFQ process to ensure as high a return rate as possible.
DS
7
Develop balance score card to evaluate suppliers
Client/DS
8
Recommend suppliers to audit according to RFI/RFQ analysis
Client/DS
M2
M3
W
W
W
W
W
W
W
W
W
W
1
2
3
4
5
6
7
8
9
10
DS
Toda Š 2016 Dragon Sourcing. All rights reserved.
4 Not started
Started
Finished
Holiday
Milestone
Agenda
1.
Objectives and Timeline
2.
Approach
3.
Results
Š 2016 Dragon Sourcing. All rights reserved.
5
Demand analysis – Coating: 2 products with total spending around 8M RMB/year Products
1
2
Material
Spring steel
Q345B
Weight
0.8 Kg
6 Kg
Dimension
200*100*50mm
300×170×16mm
Painting Requirements
Phosphate
Ball Blasting + Pre-treatment
Painting Thickness
>90μm
90μm～130μm
Salt Spray Test （GB/T 10125 & GB 6461.4）
≥240H, class 7 (<0.5%)
≥240H, class 7 (<0.5%)
Adhesion Test
Class 0
Class 0
Hardness Test
-
〉2H
Photo
© 2016 Dragon Sourcing. All rights reserved.
6
Total 103 suppliers identified, 5 potential suppliers RFIRFQ & 1 client current suppliers RFIRFQ received.
Total number of suppliers
103
Supplier called
103
Shortlisted supplier after call
6
NDA Sent
6
NDA Received
6
RFIRFQ Sent
6
RFIRFQ received
5
RFIRFQ received of current supplier
1
Š 2016 Dragon Sourcing. All rights reserved.
7
Score card Business information
Registered capital?
Turnover in 2015?
Nature of the company How many years since the founding of the company?
How many square meters(m²) does your factory occupy ?
How many square meters(m²) does your warehouse occupy ? How's your enviromental approval upon on the sqm that allowed?
Profile of Top Customers Subtotal Production capability
Weight of criteria 15%
12%
6%
10%
12%
12%
23%
10%
Scoring 0= Less than 5 Million 1= 5-10 million 2= 10-20 Million 3= More than 20 million 0= Less than 20 million 1= 20-50 Million 2= 50-100 million 3=100-200 million 4=More than 200 Million 1= Private, 2= State owned 3= Joint venture 1= Less than 5 years 2= 5 to 10 years 3= More than 10 years 1= Less than 4000sqm 2= 4000-5000sqm 3= 5000-8000sqm 4= More than 8000sqm 1= Less than 1000sqm 2= 1000-2000sqm 3=> 2000-3000sqm 4= More than 3000sqm 1= Less than 0.2m sqm 2=> 0.2m-1m sqm 3> 1m sqm 0=Not provided 1=Small local customers 2=National customers 3=International ustomers
100% Weight of criteria
Does your company have automatic coating line which includes pretreatment?
15%
How many coating lines does your company have?
15%
Scoring 0=No 1=Yes 1=1 coating line 2=2 coating lines 3=More than 2 coating lines
© 2016 Dragon Sourcing. All rights reserved.
Max Score Weight of per criteria the section
How many pieces can your company coat annualy?
15%
How much capacity do you have to accept new orders?
15%
3
4 How many sand blasting machines does your company have? 3
Can your company do simple packing for client? Subtotal
3
Quality system
35% 4
4
3
20%
20%
30%
Does the supplier have ISO 9001?
15%
Does the supplier have ISO 14001?
15%
Does your company have final inspection and report?
25%
How long do you keep QC record form?
15%
Subtotal
100%
Cooperation
Weight of criteria 50%
1 45%
Completeness of RFI/RFQ
50%
3 Subtotal
8
4 45%
3
1 45%
Weight of criteria
Does your company have experience of GB/T 10125 and GB 6461.4?
Cooperation during RFI/RFQ
4
100%
3 35% Max Score Weight of per criteria the section
1=Less than 0.1M 2=0.1M - 0.5M 3=0.5M - 1M 4=More than 1M 1=Less than 20% 2=20%-50% 3=50%-80% 4=More than 80% 0= No blasting machines 1= 1 blasting machine 2= 2 blasting machines 3= More than 2 blasting machines 0= No 1= Yes
100%
Scoring 0= No 1= Yes
Max Score Weight of per criteria the section 1
0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= less than 1 year 1= 1 year 2= 2 years 3= More than 2 years
1 1
15%
1
3 15%
Scoring
1= Poor 2= Satisfactory 3= Excellent 1= Poor 2= Satisfactory 3= Excellent
Max Score Weight of per criteria the section 3 5% 3 5%
Company profile Supplier 1(1/3) COMPANY INFORMATION Supplier 1 xxx Suzhou Jiangsu xxx CONTACT PERSON INFORMATION xxx Quality Manager xxx Xxx xxx
Company Name Address Town Province Company Website Contact Person Title Email Tel Mobile phone
BUSINESS INFORMATION What date was your company founded? How much is your registration capital (RMB)?
QUALITY CONTROL What quality and environmental registrations do you have?
1998 2 Million
Certifying Org.
Date of Expiry
ISO 9001
Yes
1999/3/11
Zhongwulian
2016/3/18
ISO 14001
Yes
2014/4/22
TUV Nort
2017/4/21
2014 19
2013 23
2012 21
Yes
Beijing Shidai
Salt spray test instrument
Yes
Shanghai Jinghua
Impact resistance test
Yes
Beijing Shidai
Adhesive attraction test
Yes
Beijing Shidai
Does your company have dependant quality department? How many employees of the quality department?
Yes
Yes, 8 persons
How many square meters(m²) does your factory occupy ?
6000
Does your company have incoming raw material inspection and report?
Yes
How many square meters(m²) does your warehouse occupy ?
250
Does your company haveIn-process quality control and inspection and report?
Yes
How many employees do you have?
78
Yes
How many employees can communicate in English?
Does your company have final inspection and report?
1
How long do you keep QC record form?
Do you have European / international customers? If yes, which ones?
xxx
Which industry sector do you serve for?
Who are your top 5 road delivery Clients? 1 2 3
10 years
CORPORATE RESPONSIBILITY
Metal surface process
Do you have experience in serving railway industry clients?
Instrument description and brand
Coating thickness test instrument
Does your company have experience of GB/T 10125 and GB 6461.4?
Private 2015 21
Date of Certificate
Do you have the instrument in house?(Yes or No)
What's the nature of your company? (Private, state owned, joint venture, etc） What is your turnover in million RMB ?
Yes / No
Do you sign contract with all employees?
Yes
Does your company pay social insurance for all employees?
Yes
How many hours per week, including overtime are your employees working on a regularly scheduled basis?
50h
Does your company have social audit by your client? If yes, What's their name?
Yes
Yes Customer name
Industry
country
% of sales
Xxx Xxx xxx
Elevator Train Train
Swiss Germany China
40 25 25
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9
Company profile Supplier 1 Production Does your company have automatic coating line which includes pre-treatment?
Yes
How many coating lines does your company have?
2
How many pieces can your company coat annually?
20 Million
How much capacity do you have to accept new orders?
30%
How many sand blasting machines does your company have?
5
Can your company do simple packing for client?
Yes
Do you have equipment list? (Yes/No)
Yes
How many people do you have in these positions?
Worker
Engineer
R&D
Quality Control
Management
Sales
50
3
0
8
12
2
How long does your employee work in your company in average?
6 years
1 shift, 8 hrs
How many shift does your company work? How many hours one shift?
Š 2016 Dragon Sourcing. All rights reserved.
10
Company profile Supplier 1 Factory Overview and Qualification Pictures
Business registration
Tax registration
Organization Code certificate
Factory entrance
Sand blasting machine
Pre-treatment
Phosphorylation
Coating workshop
Finished goods warehouse
Laboratory
Office
Office
Š 2016 Dragon Sourcing. All rights reserved.
11
Agenda
1.
Objectives and Timeline
2.
Approach
3.
Results
Š 2016 Dragon Sourcing. All rights reserved.
12
Product price comparison, two suppliers are more competitive, 11-29% potential saving. Product unit price without VAT 2.50 2.13 2.00 1.81
1.52 1.50
1.12 1.00 1.00 0.82
0.50
0.00 Supplier 1
Š 2016 Dragon Sourcing. All rights reserved.
Supplier 2
Current
Supplier 3
13
Supplier 4
More competitive than current
Supplier 5
Cost breakdown analysis to evaluate supplierâ&#x20AC;&#x2122;s quotation. Cost breakdown Sand blasting
Powder
Labour
Coating
Gas/Coal/Electricity
Management
Gross profit
2.50
2.00
RMB/PC
1.50
1.00
0.50
0.00 Supplier 1
Supplier 2
Š 2016 Dragon Sourcing. All rights reserved.
Current
Supplier 3
14
Supplier 4
Supplier 5
Supplier RFI score and unit price combination to recommend suppliers. Suppliers RFI score & product unit price comparison RFI Score
Product 2 12.00
85 79
80
10.00
70 70
65 60
60
RFI score
60
8.00
50
6.00 40 30
4.00
20 2.00 10 0
0.00 Supplier 1
Š 2016 Dragon Sourcing. All rights reserved.
Supplier 2
Current
Supplier 3
15
Supllier 4
Suplpier 5
Recommend to audit
RMB/PC
90
Product 1