Your Tailored Sourcing Approach to Low Cost Countries
Aluminum die-casting case study February, 2012
Demand Analysis: heating block and meat mincer Item description
Qty per annum (in units)
Current US$ FOB purchasing price
Meat mincer in aluminum
150,000
US$ X.XX
Heating block in aluminum
500,000
US$X.XX
Š 2011 Dragon Sourcing. All rights reserved.
Product picture
Project approach Steps
April W1
1
Collect detailed spend information about the category such as technical requirements, standards applied, material specification, drawings, pictures, consolidated volume by consuming factories, and current unit prices
2
Collect one representative sample of the products to be sourced in our Shanghai, HCMC, Mumbai and Istanbul offices
3
Identify list of potential suppliers in Vietnam, Thailand, Indonesia, China and Turkey to include in the RFI / RFQ process
4
Develop the RFI / RFQ to include all key supplier qualification criteria (e.g.: financial, technology, manufacturing capability, corporate responsibility, quality‌) and quotation requirements
5
Administer the RFI / RFQ process
6
Analyze responses and use balance score carding process together with management team to rank suppliers and recommend suppliers which client needs to take through a formal qualification process
7
Jointly develop with our client the structure of the audit report
8
Carry out audits (either alone or jointly with clients auditors or buyers) for the short listed suppliers that appear attractive and competitive based on RFI/RFQ process
9
Issue audit reports and rank suppliers based on audit and price competitiveness
10
Recommend which suppliers to move to sample development stage and manage sample development stage
11
Based on sample quality select suppliers with who to enter into final contract negotiations and support the contract negotiation process
3
May W2
W3
W4
June W5
W7
W8
W9
W10
W11
W12
W13
W14
Phase 2: Supplier qualification (Optional) SCHEDULE TO BE DEFINED
Not-started
Š 2011 Dragon Sourcing. All rights reserved.
W6
July
Started
Delayed
Finished
Milestones
We identified 346 suppliers in China, Thailand, Indonesia, Vietnam and Turkey and received 27 RFI/RFQs
RFI-RFQ sent
29
Intend to respond
Intend to respond received CN 11 THAI 4 IN 3 VN 4 TUR 7
14
RFI-RFQ received
Only RFI received CN 3 THAI 2 IN 1 VN 2 TUR 6
4 © 2011 Dragon Sourcing. All rights reserved.
Suppliers initially identified CN 173 THAI 51 IN 40 VN 35 TUR 47
346
RFI-RFQ sent CN 113 THAI 45 IN 36 VN 19 TUR 32
245
197
19 Not Confirmed yet CN 14 THAI 0 IN 5 VN 0 TUR 0
13
RFI and RFQ received CN 8 THAI 2 IN 2 VN 1 TUR 0
Give up CN 88 THAI 41 IN 28 VN 15 TUR 25
2 Not received yet CN 0 THAI 0 IN 0 VN 1 TUR 1
Reasons for not participating in the RFI-RFQ: Reasons for not participate
Not sent RFI/RFQ
Don't intend to respond
5
China
Thailand
Indonesia
Viet Nam
Turkey
Total
Percentage
Contact detail not valid
22
2
0
4
15
43
43%
Only produce stamping or plastic ; focus on one Industry like automotive ;produce other metal products not alu
27
2
2
12
0
43
43%
Not interested in the project
9
0
0
0
0
9
8%
Trading company
2
0
1
0
0
3
3%
Focus on domestic market
0
1
1
0
0
2
2%
Others
0
1
0
0
0
1
1%
Sub Total
60
6
4
16
15
101
100%
Can not produce ; the products are complex; focus on other industry
44
24
18
1
6
93
47%
RFI is too complex; not interested in the project
34
9
5
2
19
69
35%
Can produce but don’t think they can meet client strict requirements
2
0
0
9
0
11
5%
Have submitted quotes to client earlier several times
0
0
1
0
0
1
1%
client’s current supplier
1
0
0
0
0
1
1%
Others
7
8
4
3
0
22
11%
Sub Total
88
41
28
15
25
197
100%
148
47
32
31
40
298
-
Total © 2011 Dragon Sourcing. All rights reserved.
China: We have received RFI/RFQ from 11 Chinese suppliers
No.
Supplier Name
Website
CECED/ Confidential RFI/RFQ letter GC Received received received (Y/N) (Y/N) (Y/N)
Province
City
1
Zhejiang
Ningbo
Both Y
Y
Y
2
Zhejiang
Ningbo
Both Y
Y
Y
3
Zhejiang
Ningbo
Both Y
Y
Y
4
Zhejiang
Ningbo
Only RFI
N
N
Heilongjiang
Jilin Liaoning Beijing Neimongu
Gansu 5
Zhejiang
Ningbo
Both Y
Y
Y
6
Zhejiang
Taizhou
Both Y
Y
Y
7
Jiangsu
Nanjing
Both Y
Y
Y
8
Jiangsu
Yixing
Both Y
Y
N
9
Jia ngsu
Suzhou
Only RFI
N
N
10
Guangdong
Foshan
Both Y
N
N
11
Shandong
Qingdao
Only RFI
N
Ningxia Gansu
Tianjin Hebei Shanxi
Shaanxi
Shandong
Henan
Jiangsu Anhui
Hubei
Sichuan
Shanghai
Zhejiang
Jiangxi Hunan
Guizhou
N
Yunan
Fuji an
Guangxi Guangdong Taiwan
6 © 2011 Dragon Sourcing. All rights reserved.
Thailand: We have received RFI/RFQ from 4 suppliers
No.
7
Supplier Name
Province
City
1
Nakornprathom
Aomyai
Both Y
Y
Y
2
Bangkok
Bangkok
Only RFI
Y
Y
3
Bangkok
Bangkok
Only RFI
N
N
4
Samut Sakorn
Amphur Muang
Both Y
N
Y
Š 2011 Dragon Sourcing. All rights reserved.
Website
CECED/ Confidential RFI/RFQ letter GC Received received received (Y/N) (Y/N) (Y/N)
Indonesia: We have received RFI/RFQ from 3 suppliers
No.
Supplier Name
Website
RFI/RFQ Received (Y/N)
CECED/ GC received (Y/N)
Confidential letter received (Y/N)
Both Y
Y
Y
Province
City
1
West Java
Tangerang
2
West Java
Tangerang
-
Both Y
Y
Y
3
West Java
Bekasi
-
Only RFI
N
N
Tangerang
Š 2011 Dragon Sourcing. All rights reserved.
8
Bekasi, Bandung, Karawang Timur, Karawang Barat
Vietnam: We have received RFI/RFQ from 3 suppliers
No.
Supplier Name
Website
RFI/RFQ Received (Y/N)
Confidential CECED/ letter GC received received (Y/N) (Y/N)
Province
City
1
Dong Nai
Bien Hoa
Only FRI
N
Y
2
HCM City
HCM City
Both Y
Y
Y
3
HCM City
HCM City
Only RFI
N
N
HCM City Dong Nai
© 2011 Dragon Sourcing. All rights reserved.
9
Turkey: We have received RFI from 7 suppliers
No.
10
Supplier Name
CECED/ GC received (Y/N)
Confidential letter received (Y/N)
Province
City
1
MARMARA REGION
BURSA
Only RFI
N
N
2
MARMARA REGION
BURSA
Only RFI
N
N
3
MARMARA REGION
ISTANBUL
Only RFI
N
N
4
MARMARA REGION
ISTANBUL
Only RFI
N
N
5
MARMARA REGION
IZMIR
Not received yet
N
N
6
MARMARA REGION
KOCAELI
Only RFI
N
N
7
MARMARA REGION
KOCAELI
Only RFI
N
N
© 2011 Dragon Sourcing. All rights reserved.
Website
RFI/RFQ Received (Y/N)
RFI score sum up for 9 Chinese suppliers according to the scoring category RFI score sum up (not including the score of price competitiveness) 100
93 88
87
86
84 76
Score on 100
75 54.8 50
54.8 47
44 38
38 26 25
0 Company Background
Business Information
Production & Technology
Quality management
Cooperation
Total
Remark: -The Chart’s legend is ordered by the ranking of the RFI score. -We remove the score of “corporate responsibility” and split into other categories -We indicate the highest and lowest score on the chart to see the gap among suppliers and we found the gap between highest and lowest score on each category are quite big even more than 50%.
11
© 2011 Dragon Sourcing. All rights reserved.
RFI score sum up for 4 Thailand suppliers according to the scoring category RFI score sum up (not including the score of price competitiveness) 100 81 75
Score on 100
65 56 50
50
54
53
44
38
38
38
32 25
0 Company Background
12
Š 2011 Dragon Sourcing. All rights reserved.
Business Information
Quality management
Cooperation
Cooperation
38
RFI score sum up for 3 Indonesia suppliers according to the scoring category RFI score sum up (not including the score of price competitiveness) 100
93 87 75
Score on 100
75
68
65
55 50
50
50 38
35 21
25
0 Company Background
13
Š 2011 Dragon Sourcing. All rights reserved.
Business Information
Quality management
Cooperation
Cooperation
RFI score sum up for 3 Vietnam suppliers according to the scoring category RFI score sum up (not including the score of price competitiveness) 100
100 81 74
75
Score on 100
64 55 50 50
44
43 38
38
25
0 Company Background
14
Š 2011 Dragon Sourcing. All rights reserved.
Business Information
Production & Technology
Quality management
Cooperation
RFI score sum up for 6 Turkey suppliers according to the scoring category RFI score sum up (not including the score of price competitiveness) 100 85
Score on 100
75 57
56
57
51
50
44
43
37
37
25 11 0 Company Background
15
Business Information
Š 2011 Dragon Sourcing. All rights reserved.
Quality management
Cooperation
Cooperation
Average score for each country
RFI average score for each country 100
Score on 100
75
67
64
63
53
52
50
Average score
25
0 China
Vietnam
Indonesia
Thailand
Remark: -We use the same tool to scoring the 5 countries’ suppliers. -The average score of China is the highest 67 points but close to Vietnam and Indonesia. -Thailand and Turkey get the lower score below 60 points.
16
Š 2011 Dragon Sourcing. All rights reserved.
Turkey
Meat mincer FOB price and mould cost comparison for 8 Chinese suppliers and 1 Indonesia supplier.
Meat mincer FOB price and mould cost comparison 25.00
We have cross checked the price with this supplier, they can’t decrease in order to assure the quality
20.00
120000 111325 20.66
100000
86026 15.00
US$/set
Pls see below remark area
10.00
7.95
Pls see below remark area
7.52
40000
6.18
33300 27604
5.00
9.10
8.67
8.66
8.50
7.69
60000
23636
21900
22859
20000 14262
0.00
0
N/A
Client
Chinese Chinese Chinese supplier 1 supplier 2 supplier 3
Chinese supplier 4 FOB price
17
Š 2011 Dragon Sourcing. All rights reserved.
Chinese supplier 5 Mould cost
Chinese Chinese Chinese supplier 6 supplier 7 supplier 8
Indonesia supplier
us$/set
77672 80000
15.36
Heating block FOB price and mould cost comparison for 8 Chinese suppliers
FOB price and mould cost comparison 6.00
30000 5.25 27540
5.00
25000 4.45 3.85
3.00
15062
15000
2.49
2.42
2.27
3.22
3.06
2.92
20000
2.00
10000
5800
5370
1.00
5400 3910
0.00
0
Client
18
Chinese supplier 1
Chinese supplier 2
Š 2011 Dragon Sourcing. All rights reserved.
5431
5000
4190
Chinese Chinese Chinese supplier 4 supplier 5 supplier 3 FOB price Mould cost
0
Chinese supplier 6
Chinese supplier 7
Chinese supplier 8
US$/set
US$/set
4.00
Heating block FOB price and mould cost comparison for 2 Thailand suppliers, 2 Indonesia suppliers and 1 Vietnam supplier FOB price and mould cost comparison 6.00
35000
4.91
5.00
30000
29500
US$/set
Indonesia
Thailand
3.00 2.27
2.2615000
15500
2.47
22176
Vietnam 3.4421000
20000
2.66 15000
2.00 10000 1.00
0.00
5000
Client
19
0
N/A
Š 2011 Dragon Sourcing. All rights reserved.
FOB price
Mould cost
US$/set
25000 4.00
China Recommended Chinese suppliers to take through audit process. Country
China
Supplier name
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Supplier 5
Supplier 6
Province
Zhejiang
Zhejiang
Zhejiang
Guangdong
Jiangsu
Zhejiang
RFI/RFQ received
Both Yes
Both Yes
Both Yes
Both Yes
Both Yes
Both Yes
Main Product
Reason for recommending
SHARP products, motorcycle accessories, lamp accessory, Medical device • Very aggressive & cooperative for doing business with client • Know mould very well. • High RFI score but quotation is too high
RFI score
86 points
RFI ranking
No.1 in 9 ranked Chinese suppliers, and all 25 ranked suppliers for 4 countries
RFQ score
0 point
Boiler parts, Motorcycle Aluminum die casting accessories, Auto parts
OEC: Auto parts, furniture, lamp accessories
Motorcycle accessories,
Did-casting products
Lamp, gasoline engine accessories
• The factory capability seems good • High RFI score • Have long experience on die casting products
•The factory capability seems good • Very aggressive & cooperative for doing business with client • Good RFI score
• The factory capability seems good • Good RFI score • The price of meat mincer is good and heating block very close to current price
• Very aggressive & cooperative for doing business with SEB • Main products are exported • Quotation is O.K.
• Very aggressive & cooperative for doing business with SEB • Good price
82 points
75 points
73 points
63 points
60 points
No.2 in 9 ranked No.3 in 9 ranked Chinese suppliers, Chinese suppliers, and all 25 ranked and No.4 in all 25 suppliers for 4 ranked suppliers for countries 4 countries 0 point 0 point (The price is higher (The price of meat but not too much) mincer is too high)
20 © 2011 Dragon Sourcing. All rights reserved.
No.4 in 9 ranked No.5 in 9 ranked Chinese suppliers, Chinese suppliers, and No.6 in all 25 and No.10 in all 25 ranked suppliers for 4 ranked suppliers for 4 countries countries 0 point (The price are 38 points very close to current price)
No.6 in 9 ranked Chinese suppliers, and No.11 in all 25 ranked suppliers for 4 countries 50 points