Pallet Truck Sourcing Case Study – Dragon Sourcing by john williams

Dragon Sourcing - 龙源 Your Tailored Sourcing Approach to LCC Sourcing

Pallet Truck Sourcing - Case Study

Shanghai, 02, Aug, 2021

Agenda

Objectives and Timeline

Approach

Result

Objectives and Approach DS Approach consists in the following work steps:

Context

1.Collect detailed spend information about the nature of the products required (supplier capabilities required, specifications, volumes, drawings, and samples when relevant for all references to be included in the RFI-RFQ process) with all spend data to be provided by client 2.Identify list of potential suppliers in China/Vietnam/Malaysia to include in the RFI process by incorporating existing list of DS potential suppliers, by leveraging the web, external databases and various networks of experts 3.Carry out a phone pre-screening of the suppliers based on maximum 4-5 screening criteria per category (e.g.: min size, having certain quality certification, experience in relevant industry,…) with these criteria to be provided by client 4.Develop the RFI-RFQ – jointly with client – to include all key supplier qualification criteria (e.g.: financial, technology, corporate responsibility, quality certification, MOQ, client references…) and quotation requirements 5.Administer the RFI / RFQ process to ensure as high a return rate as 6.Analyze responses based on qualitative criteria and use a balance score card together with client to rank suppliers and recommend suppliers which client needs to take through a formal qualification process 7.Sampling (stage 2)

Objectives: • To carry sourcing services for pallet trucks in order to develop new competitive suppliers to achieve cost reduction Geographical scope: • Hand hydraulic pallet trucks - Malaysia/Vietnam • Electric hydraulic pallet trucks - China Deliverables: Stage 1 − Supplier shortlist for RFI-RFQ process − RFI-RFQ template/Balanced scorecard − RFQ analysis report − Supplier profiles report − Proposed Shortlist for sampling Stage 2: − Sampling

The RFI/RFQ process (stage 1) was scheduled for 8 weeks with a follow up report sent every Friday. Not started

Done

In progress

Milestone

Stage 2 (Sampling)

Stage 1 (RFI/RFQ)

Step

Who

Demand Analysis

Supplier identification

Telephone pre-screening

Finalize the RFI/RFQ document

Client/DS

Administer RFI/RFQ

Analyze RFI/RFQ response

W01 5/28

W02 6/04

W03 6/11

W04 6/18

W05 6/25

W06 7/2

W07 7/9

W08 7/16

W09

W10

Agenda

Objectives and Timeline

Approach

Result

Spend Analysis: 80% of the total spend (EUR 0.5 M) is covered by 14 SKU out of 99

Spend % vs SKU % 100%

Spend %

80%

80% of the spend is covered by 14 procured items (14%)

60%

40%

20%

0% 0%

20%

40%

60% SKU %

80%

100%

Spend Analysis: Top 14 spend pallet trucks #

Item code

Supplier

Lifting drive

Forecast (pcs)

Purchasing unit price (USD)

Annual Spend (USD)

XXX

hand

816

XXX

hand

690

XXX

hand

390

XXX

electric

XXX

hand

XXX

electric

XXX

hand

XXX

hand

XXX

hand

XXX

hand

XXX

hand

XXX

hand

XXX

hand

XXX

hand

XXX

2,210 • • •

Item 1/2/3 have nearly same spec so the demand can be combined Item 7/8/11/12 have nearly same spec so the demand can be combined After combination, the number of inquired items reduced from 14 to 9

XXX

Spend Analysis: For 3 representative hand pallet, due to high anti-dumping duty from China exported to Europe, we sourced from Malaysia and Vietnam. Sourcing in Malaysia/Vietnam Current Supplier Name

COO

Combined Forecast (pcs)

Current purchasing price (USD)

Annual Spend (USD)

Pallet truck (load capacity 2t or 2.5t)

XXX

Malaysia

1,896

XXX

Pallet truck, 2.5 t, VG / PU, tandem, 1150 mm

XXX

Italy

156

XXX

Pallet truck, 2.0 t, PU / PU, tandem, 2000 mm

XXX

Italy

XXX

Item code

Product description

XXX

Product pictures

2,068

XXX

Spend Analysis: For other 6 pallet trucks (2 electric trucks, 4 hand trucks), there is no anti-dumping issue from China exported to Europe so we sourced from China. Sourcing in China #

Item code Product description Product pictures

Current Supplier Name

COO

Forecast (pcs)

Current purchasing price (USD)

Annual Spend (USD)

XXX

Pallet truck type Basic with scale, 2 t

XXX

Pallet truck type X-tra B with scales, 2 t

XXX

Container tilting device

XXX

Scissor stacker, electrohydraulic, 1.0 t

XXX

LIFTER scissor lift truck, 1.0 t

XXX

Scissor stacker truck hand-hydraulic, 1.0 t

XXX

142

XXX

Supplier identification: 54 suppliers were identified from China, Vietnam and Malaysia leveraging multiple sources of information & from existing DS database.

Confidential •

Full sourcing process including building long list of supplier databasewas done online on the DS e-sourcing tool GSP

Supplier pre-screening: This process was to filter the long list of suppliers prior moving them to the ‘Administer RFI/RFQ’

RFI/RFQ administration process: For pre-screening passed suppliers, online RFI created and sent to suppliers from DS GSP platform.

Online score card created according to RFI and used to rank suppliers

Agenda

Objectives and Timeline

Approach

Result

Total 11 suppliers (10 from China, 1 from Vietnam) submitted RFIRFQ