Phenolic Resin Sourcing Project Case Study by john williams

Dragon Sourcing - 龙源 Delivering sustainable sourcing value from emerging markets

Phenolic Resin sourcing project Case Study

Agenda

Sourcing Project Introduction

Sourcing Approach

Conclusions

Objectives and approach Dragon Sourcing approach

Context Client Introduction: • Client has global network of relationships with top chemical manufacturers and raw material suppliers around the world. They are service provider for compounding materials and ingredients with head quarter in USA.

Stage 1: Supplier Pre-Qualification 1. Demand Analysis 2. Supply Market Analysis 3. Telephone Pre-screening 4. Develop RFI/RFQ 5. Administer RFI/RFQ 6. Analyse RFI/RFQ Responses

Project Objectives: • Identify and recommend new potential competitive supplies manufacturing Phenolic Resins. Geographical scope: China and India Deliverables: • Supplier database • RFI-RFQ template • RFI-RFQ analysis report • Supplier profiles with rankings • DS Recommendation on next steps © 2020 Dragon Sourcing. All rights reserved.

Remark: Whole project was done anonymously without revealing client identity to any of the supplier following as per client instructions.

Agenda

Sourcing Project Introduction

Sourcing Approach

Conclusions

Approach & Schedule, Stage1: Supplier Pre-Qualification No.

Steps in Stage 1

Demand Analysis Work with client to define and understand the product and requirements (specs, volumes, material, Production technology requirements, current unit prices, others)

• Kick-Off Report

Supply Market Analysis Identify long list of potential suppliers in the interested target countries by leveraging B2B websites, DS database, fair catalogues, Chamber of Commerce, magazines, network, references.

• Supplier Long List

Deliverables

Telephone Pre-screening Selection of suppliers to be included in the RFI/RFP process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, min company size, quality certification, Export capability, interest in participating) Develop RFI/RFQ document Prepare an RFI/RFQ document, with an aligned balanced scorecard that has the objective to pre-qualify the competitiveness and capabilities of the manufacturers, including background, financial, client and product experience, quality certification & processes, social responsibility, manufacturing/technology capability, R&D capability.

• Shortlist for RFI-RFQ process

• RFI-RFQ Template • Balanced Scorecard

Administer RFI/RFQ: The RFI/RFQ is translated to the local languages as relevant, and distributed to the suppliers, with telephone follow-up to push for maximum participation.

• Completed RFI-RFQ’s

Analyze RFI/RFQ Responses: Analysis of RFI/RFQ responses and preparation of a report which profiles & objectively ranks the suppliers by capability, including a recommendation for those to be audited.

• RFI-RFQ Report • Supplier Profiles • Proposed Shortlist for Audit.

Project was completed in 8 weeks Week 0

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Jan 15 - 17

Jan 20 – 24

Jan 27 – 31

Feb 03 – 07

Feb 10 – 14

Feb 17 – 21

Feb 24 – 28

March 02 – 06

March 09 - 13

STEPS

1. Demand Analysis

3. Telephone Pre-screening

4. Develop RFI/RFQ

5. Administer RFI/RFQ

6. Analyze RFI/RFQ Responses

Extended for Chinese suppliers.

RFI/RFQ validated

Couple of steps were extended by a week to receive maximum response from the suppliers.

Extended Week

2. Supply Market Analysis

Extended

Supplier profiles with recommendations.

Demand Analysis, Yearly volumes and spend was collected at the project kick off stage, #

SKU

Name

Packaging

Packaging Lbs

Units

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

RE01220-050 RE01221-050 RE01201-057 RE01137-057 RE01214-057 RE01202-157 RE01223-537 RE01120-275 RE01203-057 RE01132-057 RE01218-050 RE01212-050 RE01131-057 RE01121-057 RE01206-050 RE01134-275 RE01209-057 RE01213-057 RE01200-057 RE01216-057 RE01147-050 RE01257-057 RE01251-552 RE01145-057

SP-6701 Resin - 50# Bag SP-1068 Pellets - 50# bag SP-1044 Resin - 55.115# Bag HRJ-1367 Resin - 55.115# Bag SP-560 Resin - 55.115# Bag SP-1045P Resin - Pastille Form SP-6877 Resin - 537 lb drum FRJ-425 Resin - 275# Drum SP-1055 Resin - 55.115# Bag HRJ-11041 Resin - 55.115# Bag SP-6700 Resin - 50# Bag SP-25 Resin - 50# Bag HRJ-10518 - 55.115# Bag FRJ-551 Resin - 55.115# Bag SP-1077 Resin - 50# Bag HRJ-1166 - 275# Fiber Drum SP-134 Resin SP-553 Resin - 55.115# Bag SP-103 Resin - 55.115# Bag SP-6600 Resin - 55.115# Bag HRJ-11995 Resin - 50# bag Rezilite 888 - 25 kg bag SRF-1524 Resin - 250 kg drum HRJ-11331 Resin - 25kg bag

SP-6701 Resin - 50# Bag SP-1068 Pellets - 50# bag SP-1044 Resin - 55.115# Bag HRJ-1367 Resin - 55.115# Bag SP-560 Resin - 55.115# Bag SP-1045P Resin - Pastille Form SP-6877 Resin - 537 lb drum FRJ-425 Resin - 275# Drum SP-1055 Resin - 55.115# Bag HRJ-11041 Resin - 55.115# Bag SP-6700 Resin - 55.115# Bag SP-25 Resin - 50# Bag HRJ-10518 - 55.115# Bag FRJ-551 Resin - 55.115# Bag SP-1077 Resin - 50# Bag HRJ-1166 - 275# Fiber Drum SP-134 Resin SP-553 Resin - 55.115# Bag SP-103 Resin - 55.115# Bag SP-6600 Resin - 55.115# Bag HRJ-11995 Resin - 50# bag Rezilite 888 - 25 kg bag SRF-1524 Resin - 551.15# Drum HRJ-11331 Resin - 25kg bag

50 50 55.115 55.115 55.115 55.115 537 275 55.115 55.115 55.115 50 55.115 55.115 50 275 55.115 55.115 55.115 55.115 55.115 55.115 55.115 55.115

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Total

XXX

Annual Volume Cost in $US (Lbs) XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX

Spend in $US XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

$ XXX

Dragon Sourcing has developed an online sourcing tool (GSP) to manage sourcing projects end to end. The GSP provides: •

A central database of hundreds

of thousands of suppliers

•

Management of sourcing projects from start to finish.

•

Tools to facilitate supplier research, pre-screening, RFI-RFQ administration & qualifying supplier through ranking process and generating supplier profiles.

 Complete unique online platform suitable for Global Strategic Sourcing process.  http://gsp.dragonsourcing.com

â&#x20AC;&#x2019; As a first step, extensive supplier data base was built leveraging multiple sources of information & from existing DS database.

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‒ Pre-screening process was initiated after receiving client validation, ‒ This process was to filter the long list of identified suppliers prior moving them to the RFI-RFQ step

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‒ Supply market analysis was shared in the weekly progress and final RFQ report.

China

India

Total

• Suppliers identified

108

• Supplier passed pre-screening so far,

• Suppliers failed pre- screening so far,

• Number of RFI-RFQ sent

• Don't intend to respond

Process

Supplier Identification

Steps

Pre-screening (Completed)

RFI-RFQ Administration (Completed)

• Number of RFI-RFQ received

port e R l Actua e h t from Data XX

Phenolic Resins Supply Market Analysis, Supplier rejection analysis were shared for each step, Pre-screening and RFI-RFQ administration.

Example for Pre-screening rejection analysis

Only producing polymer wax, polymer resin or others. Suppliers not resumed office due to outbreak of coronavirus Cannot export Company shutdown Traders/distributors or Importers only. Only producing modified resins in lump form

Example for RFI/RFQ rejection analysis

7 12

Not interested to continue Producing phenolic resins in different grade used in plywood, ink, colours industry Cannot meet the technical requirement / quality standard Producing Rosin modified Phenolic Resin Disclosed now, Trading Company.

9 12

Post pre-screening the suppliers, RFI-RFQ process was administered to filter out most capable suppliers.

ides l s few e l p exam e l i f Pr o r e i l p Sup

Post pre-screening the suppliers, RFI-RFQ process was administered to filter out most capable suppliers.

slides w e f e ampl x e e l i r Prof e i l p p Su

â&#x20AC;&#x2019; Category specific technical questions were added in the RFI relevant to the Phenolic Resin to understand supplier production capability and capacity.

ides l s few e l p exam e l i f Pr o r e i l p Sup

Suppliers Assessment, Suppliers were assessed and ranked based on the Company profile, Scoring and ranking of the suppliers are done on the GSP,

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Minimum price Below Average Above Average Maximum price

‒ Price analysis was done for the 30 suppliers responded to the RFQ.

Price given are in lbs (pound)

#SKU

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

# RFI Ranking from total 20 suppliers

8/20

7/20

13/20 17/20

4/20

1/20

20/20 15/20 16/20

6/20

2/20

12/20

18/20

10/20

5/20

Supp Supp Supp Supp 11 Supp 13 Supp 14 Supplier name Supp 1 Supp 2 Supp 3 Supp 4 Supp 5 Supp 6 Supp 7 Supp 8 Supp 9 10 12 15 No. of SKU's offered 17 12 9 9 9 8 5 4 3 2 13 2 2 2 1

19/20 11/20 14/20

9/20

3/20

Supp 16 1

Supp 17 1

Supp 18 1

Supp 19 1

Supp 20 1

Country

India

China

India

China

India

China

India

China

India

China

Annual Volume (LBS) 112,700 88,350 54,178 54,123 52,084 XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX

FOB Price $0.87 $1.03 $1.08 $0.94 $1.08 $0.87 $0.94 $0.87 $0.98 $1.08 $0.94 $1.03 $0.90 $0.94 $0.96 $0.96 $0.95

FOB Price $ 1.02 $ 0.99 $ 0.99 $ 0.99 $ 0.99 $ 0.99 $ 0.99 $ 0.99 $ 1.20 $ 1.02 $ 0.99 $ 1.02

FOB Price $1.10 $1.10 $1.10 $1.10 $1.10 $1.10 $1.10 $1.10 $1.10

FOB Price $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX -

FOB Price $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ Xx -

FOB Price $ XX $ XX $ XX $ XX $3.81 $ XX $ XX $ XX -

FOB Price $ XX $ XX $ XX $ XX $ XX -

FOB Price $ XX $ XX $ XX $ XX -

FOB Price $ XX $ XX $ XX -

FOB Price $ XX $ XX -

FOB Price $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX $ XX

FOB Price $ XX $ XX -

FOB Price $ XX -

fro a t a D

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ort p e r l ctua

Logistics cost was considered from FOB China & India to DDP XXX, USA.

 Loading on container on manufacturing site

EXW Price

 Container transportation to China & India seaports.  Export documents expenses, transportation & other taxes  Handling & loading of the container on the vessel

FOB Price

 Sea freight from China & India FOB port to destination port New York- USA.  Additional fees (BAF & CAF)  Insurance cost based on the CFR value.

 Destination port handling cost & terminal charges

 Haulage cost to final  Custom Clearance destination Charges Port  Fuel taxes Security, etc.  Import duty  Port Infrastructure fees

 Loading cost on truck

DDP Price

Delivered Duty Paid price

Lowest DDP price Below client DDP price Above client DD price

‒ DDP price comparison & savings analysis were shown to the client. # RFI Ranking Price given are in lbs (pound)

Supplier name

1 8/20

2 7/20

3 13/20

4 17/20

5 4/20

6 1/20

7 20/20

8 15/20

9 16/20

10 6/20

11 2/20

12 12/20

13 18/20

14 10/20

15 5/20

16 19/20

17 11/20

18 14/20

19 9/20

20 3/20

Supp 1 Supp 2 Supp 3 Supp 4 Supp 5 Supp 6 Supp 7 Supp 8 Supp 9 Supp 10 Supp 11 Supp 12 Supp 13 Supp 14 Supp 15 Supp 16 Supp 17 Supp 18 Supp 19 Supp 20

No. of SKU's offered

Country

India

China

India

China

India

China

India

China

India

China

Client DDP DDP Price/ Price Lbs

DDP Price

$1.04 $1.21 $1.27 $1.11

$1.19 $1.16 -

$1.28 -

$ XX $ XX $ XX -

$ XX -

$XX $ XX $ XX -

$ XX -

$ XX $ XX

$ XX -

$1.27 $1.04 $1.11

$1.16

$1.28 $1.28 $1.28

$ XX $ XX -

$ XX -

$ XX $ XX -

$ XX -

$1.04 $1.15 $1.27 $1.11 $1.21

$1.16 $1.16 $1.16 $1.16

$1.28 $1.28 $1.28

$ XX $ XX $ XX

$ XX $ XX -

$ XX $ XX

$ XX -

$ XX $ XX $ XX $ XX

$1.07 $1.11 $1.14 -

$1.16 $1.39 $1.19 -

$1.28 -

$ XX

$ XX $ XX

$ XX

$ XX $ XX

$ XX

$XX -

$ XX

$ XX -

$ XX

$1.14 $1.13

$1.16 $1.19

$1.28

$ XX $ XX -

$ XX -

$ XX $ XX $XX

Annual Volume (LBS)

#SKU

1 2 3 4

RE01220-050 RE01221-050 RE01201-057 RE01137-057

112,700 88,350 54,178 54,123

5 6 7 8 9 10

RE01214-057 RE01202-157 RE01223-537 RE01120-275 RE01203-057 RE01132-057

52,084 XX

$ XX $ XX $ XX $ XX $ XX $ XX

11 12 13 14 15

RE01218-050 RE01212-050 RE01131-057 RE01121-057 RE01206-050

XX XX XX XX XX XX

$ XX $ XX $ XX $ XX $ XX $ XX

16 17 18 19 20

RE01134-275 RE01209-057 RE01213-057 RE01200-057 RE01216-057

XX XX XX XX XX

$ XX $ XX $ XX $ XX $ XX

21 22 23 24

RE01147-050 RE01257-057 RE01251-552 RE01145-057

XX XX XX XX XX

$ XX $ XX $ XX $ XX $ XX

XX XX

$ XX $ XX

Shortlisted Could be considered Not shortlisted

Suppliers location – China ‒ Manufacturer locations of the suppliers as per country wise were highlighted in the map RFI Scoring

Supplier name

City

Province

XXX

Shanghai

XXX

Shandong

XXX

Jiangsu

XXX

XXXmp

Exa

XXX

rC o f le

, nly o Shandong a XXX hin XXX

Guangxi

XXX

Shandong

RFI Score

RFI Ranking

Supplier company profiles as per ranking wise was shared in the final report.

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Agenda

Sourcing Project Introduction

Sourcing Approach

Conclusions

Conclusions  Whole project was carried out in 8 weeks with total 108 suppliers identified  20 suppliers responded to the RFI-RFQ document.  Most of the suppliers were failed as they were producing phenolic resin for different applications other than rubber. Many Chinese suppliers were not reachable and/or not interested to continue which seems impact due to Coronavirus situation which had started in China over this period.  All the recommended suppliers were top ranking suppliers with substantial savings.  Savings were achieved from several suppliers with highest saving of US$ 1.21 M from Indian supplier based on 17 SKU’s.  As a next step, Dragon Sourcing recommended to send original samples to shortlisted suppliers & collection of available samples & sample development from same set of suppliers.  Overall based on the DS Report, It helped client to shortlist and possibly partner with most potential suppliers from the target countries.