Dragon Sourcing - 龙 源 Your Tailored Sourcing Approach to Asia
Gasoline Pump Case Study october 2010
Background • Client is a service company in the fuel distribution industry; namely in the sales, distribution, repair and maintenance of fuel distributors and other fuel equipment. • Across Europe, Client benefits from a recognized expertise in the fuel distribution business and therefore has developed the confidence of many important players in Europe. • Interested in identifying and qualifying new potential competitive suppliers in China for Gas Pump • Selected Dragon Sourcing as Procurement Service Provider responsible for managing the supplier sourcing and qualification process
© 2010 Dragon Sourcing. All rights reserved.
2
Dragon Sourcing covered the end-to-end sourcing process Supplier Selection and Contracting
Feasibility Analysis •
Key activities
•
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines
•
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
Conduct final negotiations and select suppliers
•
Manage supplier performance
•
•
Monitor new sourcing opportunities
Analyse supply market and identify potential suppliers Pre-qualify potential suppliers through an RFI process
•
Manage RFP process with prequalified suppliers
•
Analyse supplier responses and calculate fully delivered price (logistics, import duties,..)
•
Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
Procurement Operations
Finalise Contract
Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting
Feasibility Analysis •
Key activities
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines
•
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
Analyse supply market and identify potential suppliers •
•
•
Pre-qualify potential suppliers through an RFI process
Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)
•
Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
Manage sample development process
•
Conduct final negotiations and select suppliers
•
Finalise Contract
Manage RFP process with prequalified suppliers
•
Procurement Operations
The first step was to develop a comprehensive understanding of the functional requirements Dimension 510 mm x 440 mm x 1550 mm
Pumping unit with degazing , inlet filter (100 micron), non return valve (equivallent to Bennett) - ATEX
Frame : Thickness 1,5 mm minimum
Flowrate 80lpm with downsizing capability (50lpm)
No stainless steel
Meter 4 pistons equivallent to market leader ATEX with direct coupling on the pumping unit
Powder coating - white paint - treated against corrosion
Non return valve at the output of the meter (equivallent to York)
Drip plate at the bottom of the pump CASING
Bolt fixing inside the pump
HYDRAULICS SYSTEM
Swivel Hose connection
No Hose
Separate cladding panel up and down with tighteness at the top
No Nozzle
Door closing with key
ATEX Hang up contact
Air flow barrier for ATEX compliance
OIML 117 compliance
Noozle hang up at the top CE Marking Dual channel Pulser (eltomatic or equivallent) - 50 pulses – ATEX ELECTRONIC SYSTEM
Eex three phase motor 400V Calculator Volume - single side - 5 digits
Pump fully ATEX approved
OPTIONS
Hose mast Manual pump (see picture at the bottom of this table) Single phase motors Eex 220V ATEX
Š 2010 Dragon Sourcing. All rights reserved.
A key requirement was to identify suppliers that have ATEX and CE certification
ATEX (Appareils destinés à être utilisés en ATmosphères EXplosibles )The ATEX standard describes what equipment and work environment is allowed in an environment with an explosive atmosphere The CE(conformité européenne ) certifies that a product has met EU consumer safety, health and environmental requirements.
© 2010 Dragon Sourcing. All rights reserved.
Then, an RFI/RFP process was administered to filter out most capable suppliers
Contact Information & Intend To Respond 公司信息 及 答复意向
Gas Pump Component Name
Please, complete this "Intent to Respond" page print and fax before December 25, 2009 于12月25日前请填写此答复意向, 打印后传真
Pumping Unit
Gas Pump Descripition
Component Description
Gas Pump Component Reference
Type of Materials
Precise Is this component Description of made in your the Part factory (Y/N)
FOB Price (USD)
what kind of certificate does this component respect（ATEX,CE Etc.）
Can you provide the picture of the component?
250 pcs
500 1000 pcs pcs
Casing
Product and price information
Flow Meter Valve
Dragon Sourcing Ltd. 龙源有限公司 To: Email : Tel number : Fax number :
Swivel Hose Connection
Jacy (先生）
Manual Pump
jacy@dragonsourcing.com
Three Phase motor
021-6141 3974 021-6141 3966
Mechanical Calculator
Dual Channel Pulser
Electronic calculator with 5 digit display screen
General Information
Total Price (USD)
Supplier Name CONTACT INFORMATION Contact Person Title Email Tel Fax Mobile phone Alternative Contact Person Title Email Tel
Yes / No
What kind of certification do you have (ISO, Environment friendly, etc) Do you have certificiate: ISO 9000? Do you have certificiate: ISO 9001? Do you have certificiate: ISO 14000? Other company certifications do you have?
Date of Certificate
Certifying Org.
Quality Management
Certificate Name Date of Certificate
Certifying Org.
1-
BUSINESS INFORMATION Is your company a manufacturer, Which year was your company founded? What is the workfloor size (m²)? How many employees do you have? Capital in million RMB
% of turnover exported to
Quality Control
Contact detail information
Business information
Domestic
Europe
© 2010 Dragon Sourcing. All rights reserved.
USA
Other
Carton meas. (LXWXH in cm)
Qty/ctn (pcs)
20'c QTY (ctn) without pallet
20'c QTY (ctn) with pallet
40'c QTY 40'c QTY (ctn) (ctn) with without pallet pallet Packaging
During the tender process, the suppliers’ willingness to collaborate and to provide complete and accurate information was also assessed
Gas PumpProject ProjectControl – Control Sheet Non-food Sheet - PP Trolley Supplier Contact Information Supplier Name
City
Region
1st 2nd RFP Follow Follow Sent Up Up Date
Supplier 1
Shen- Guang21-Nov zhen dong
Supplier 2
Wen- Zhelin jiang
Intend to Respond Received
Date
Date
Date
N/A
N/A
20-Nov
Remark
very professional and spontaneous
RFP Received Equivalent FOB US$ product Small
FOB US$ Middle
FOB US$ Large
FOB US$ per set
FOB Port
20-Nov
US$5.40
US$7.60
US$9.00
US$20.00
Shenzhen
US$50.00
15th Feb.07
20-Nov
US$6.48
US$9.12
US$10.80
US$24.00
Ningbo
US$100.00
60-90 days
Professional supplier,
17-Nov 20-Nov 21-Nov 20-Nov with a competitive
Sample Producti Charge per on Lead set Time
price; cooperative
Supplier 3
Shen- Guang17-Nov 18-Nov zhen dong
18-Nov
very professional and spontaneous
18-Nov
US$6.75
US$9.50
US$11.25
US$25.00
ShenUS$100.00 zhen
45 days
Supplier 4
Deqing
22-Nov
good supplier, supportive;
22-Nov
US$7.02
US$9.88
US$11.70
US$26.00
Ningbo
US$50.00
85 days
4-Dec
US$6.21
US$8.74
US$10.35
US$23.00
Ningbo
US$100.00
45 days
Supplier 5 Rui-an
Zhejiang
17-Nov 20-Nov
Zhejiang
17-Nov 20-Nov 21-Nov 20-Nov
© 2010 Dragon Sourcing. All rights reserved.
Missing information received by 22-Nov
7 suppliers specialized in gas pumps replied to the RFI-RFQ questionnaire.
Selection of Potential Suppliers 35
Sending & Follow up of the RFIRFQ
PreSelected Suppliers
RFI-RFQ Collection
16 suppliers did not have the capability or were not specialized to manufacture gas pumps
19
10 suppliers did not reply to Intent-toRespond Possible Reasons: - Cannot make required products - Do not have Export License - Minimum Production Capacity - Not interested to cooperate 2 suppliers did not successfully complete The questionnaire
9 7
Identified Suppliers
Sent RFI-RFQ
Š 2010 Dragon Sourcing. All rights reserved.
Intent-to-Respond
Replied RFI-RFQ
Model Pictures
Supplier list and their location in China
Heilongjiang
Supplier
CE
ATEX
Province
Supplier 1
Y
Y
Zhejiang
www.chinalanfeng.com
Supplier 2
Y
Y
Zhejiang
www.chinahongyang.com/
Supplier 3
Y
Y
Henan
Supplier 4
Y
N
Zhejiang
www.chinarealtech.com/
Supplier 5
N
N
Zhejiang
www.datianmachine.com/
Supplier 6
N
N
Fujian
www.rxfueldispenser.com/
Jilin
Shanghai Hebei Neimongu
Gansu
Shandong
Ningxia Gansu
Shaanxi
Liaoning
TIANJIN BEIJING
Shanxi
Website
Henan
Anhui
Jiangsu
www.censtar.com/
SHANGHAI Hubei Sichuan
Zhejiang
Jiangxi Guizhou
Hunan
Fujian Taiwan
Yunan
Guangxi Guangdong
© 2010 Dragon Sourcing. All rights reserved.
We collected detailed component costs breakdowns
Gas Pump
Casing
Pumping Unit
Flow Meter
Valve
Swivel Hose Connection
Three Phase motor
Dual Channel Pulser
Mechanic al Calculator
Electroni c calculator
Manual Pump
Total
Supplier 1
151.00
65.00
60.00
15.00
7.00
31.00
10.00
35.00
106.00
5.00
485.00
Supplier 2
138.00
90.00
50.00
20.00
8.00
40.00
20.00
95.00
135.00
80.00
676.00
Supplier 3
190.00
130.00
100.00
35.00
9.00
50.00
27.00
4.00
102.00
10.00
657.00
Supplier 4
200.00
133.00
70.00
25.00
4.00
127.00
25.00
50.00
212.00
20.00
816 .00
Supplier 5
250.00
144.00
60.00
30.00
13.00
110.00
20.00
60.00
200.00
30.00
917.00
Cheapest Price Most Expensive Price
Š 2010 Dragon Sourcing. All rights reserved.
Logistics costs were tabulated to offer expected landed prices in Europe. DDP Quotation EURO 1200 1100 1000 1000 900
900 910
850 800 800
800 800
750
760 750
Supplier Wenzhou Realtech 2
Censtar Supplier 3
600 600 600
400
200
0
Supplier Zhejiang Lanf 1eng
Rongxing New Supplier Century 4
Supplier Supplier China Hongyang Zhejiang Datian
5
No Hose and Nozzle
Š 2010 Dragon Sourcing. All rights reserved.
6
Supplier Beijing Sanki 7
Complete Pump
Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting
Feasibility Analysis •
Key activities
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines
•
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
Analyse supply market and identify potential suppliers •
•
•
Pre-qualify potential suppliers through an RFI process
Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)
•
Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
Manage sample development process
•
Conduct final negotiations and select suppliers
•
Finalise Contract
Manage RFP process with prequalified suppliers
•
Procurement Operations
A scorecard was created to benchmark the capabilities of the 7 suppliers
Company Background
Business Information
Human Resources
Corporate Responsibility
Inventory Management
Production & Technology
Quality Management
Cooperation
Price Competitiveness
Total
Supplier Name
Rank Weight 0.05
Weight 0.15
Weight 0.10
Weight 0.05
Weight 0.05
Weight 0.20
Weight 0.20
Weight 0.10
Weight 0.10
Over 1.00
Supplier 1
0.04
0.14
0.08
0.05
0.04
0.18
0.16
0.10
0.00
0.78
1
Supplier 2
0.05
0.11
0.10
0.05
0.05
0.13
0.20
0.10
0.00
0.77
2
Supplier 3
0.05
0.15
0.08
0.05
0.04
0.14
0.15
0.09
0.00
0.74
3
Supplier 4
0.03
0.12
0.05
0.05
0.05
0.15
0.14
0.10
0.00
0.69
4
Supplier 5
0.05
0.09
0.09
0.05
0.05
0.12
0.16
0.08
0.00
0.68
T-5
Supplier 6
0.04
0.08
0.07
0.05
0.05
0.16
0.15
0.08
0.00
0.68
T-5
Š 2010 Dragon Sourcing. All rights reserved.
The supplier selection relied on the short-listed suppliers’ offers, company profiles and quality of design Human Resources
Supplier
City
Province
FOB price
Departments
250 1 2 3 4 5 6
Wenzhou Zhengzhou Wenzhou Wenzhou Xiamen Wenzhou
Zhejiang Henan Zhejiang Zhejiang Fujian
US$ 870 US$ 900 US$ 1500
500 US$ 860 US$ 880 -
1000 US$ 820 US$ 850 -
US$ 1088
Zhejiang
English Speakers (Y/N)
Quantity
US$ 1050
US$ 1000
Date of certificate N/A
Certifying organization
ISO 9000
EWC
Certificate
Sales & management
Casing
12 Y
ISO 9001
Y
Y
Pumping Unit
ISO 14000
N/A
R&D staff
15 N
Flow Meter
Y
Others
Quality Control
10 N
Factory Workers
300 N
Valve
Y
Hose Connection
Y
Hose
N/A
Manual Pump
Y
Corporate Responsibility Adhere to all rules and Child labor regulations in respect to Environmental issues (Y/N)
Y Y
Inventory Management Formal & documented Inventory Management System (Y/N) Inventory records computerized (Y/N) Inventory records available in realtime (Y/N) FIFO process (Y/N)
N Y Y Y
Product certification Certificate ATEX
Date of certificate Y
CE
Y
OIML
Y
Others
UL
Certifying organization
Inspection Process
Single Phase Motor
N
Formal QC criteria for in-house quality control? (Y/N)
Y
Three Phase Motor
N
Do you have online inspection? (Y/N)
Y
Dual Channel Pulser
Y
What performance do you achieve on average in out going quality measures (% rejected)? QC Equipment
Mechanical Calculator
Y
12-
Electrical Calculator with 5 digit display screen
Models designed by the 7 suppliers
Š 2010 Dragon Sourcing. All rights reserved.
Quality & Environmental Registration
Parts Produced In-House (Y/N) Y
Health and safety issues Y
US$ 1000
Quality Control
Production & Technology
People in Each Position
Y
34-
N/A
0.01%
Based on the scorecard, we selected 4 suppliers for auditing‌which led to the selection of the final supplier Supplier Ranking 1.00
Price Competitiveness Cooperation
0.90
Quality Management
0.80
Production & Technology
0.70
Inventory Management
0.60
Corporate Responsibility
0.50
Human Resources Business Information
0.40
Company Background
0.30 0.20 0.10 0.00
Supplier 1
Supplier 2
The suppliers DS & client visited
Š 2010 Dragon Sourcing. All rights reserved.
Supplier 3
Supplier 4
Supplier 5
Supplier 6
Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting
Feasibility Analysis •
Key activities
•
Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines
•
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
Analyse supply market and identify potential suppliers •
•
•
Pre-qualify potential suppliers through an RFI process
Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)
•
Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
Manage sample development process
•
Conduct final negotiations and select suppliers
•
Finalise Contract
Manage RFP process with prequalified suppliers
•
Procurement Operations
A production plan was built to monitor the order and to schedule timely quality inspections • Based on the claimed production capacity, Dragon Sourcing and supplier agrees on the production schedule
• Develop a detail QC criteria with the client
• DS staff chose randomly several gas pump to test the performance
© 2010 Dragon Sourcing. All rights reserved.
QC Reports provided detailed information concerning production quality and led to corrective action plans Pictures of Defective Non return valve to be inserted
Non return valve included with the pumping unit. Deliverable: pumping unit+ 1st seal+non return valve+ 2nd seal+bolts and screws (correct lengths) For the first order, it will be an external valve in brass. For future orders, it will be an internal valve. Oil gun switch with Atex sticker + certificate
Follow the reference pictures. Sticker must include: everything in the green circle and the Atex number of the switch manufacturer (not the pump Atex number)
Š 2010 2009 Dragon Sourcing. All rights reserved.
Cable gland to include ATEX and CE markings
Follow the reference pictures. Sticker must include: everything in the green circle and the Atex number of the switch manufacturer (not the pump Atex number) All glands must be replaced both at top and bottom. Change the number of glands from 6 to 8
Change the number of glands from 6 to 8 (add 1 small and 1 big)
Conclusions • Found a capable supplier, who can respect all European standard at a price point within the client’s target • It’s the first complete gas pump sourced from china for the European market • Built a long-term/ exclusivity agreement with the supplier • We trained the supplier to enable him to meet all European standards • Successfully delivered production orders
© 2010 Dragon Sourcing. All rights reserved.