Sheet Metal Fabrication & Machining Parts Case Study by john williams

Dragon Sourcing - 龙源 Delivering sustainable sourcing value from emerging markets

Sheet Metal Fabrication & Machining Parts. Case Study

Agenda

Sourcing Project Introduction

Sourcing Approach

Conclusions

Objectives and Approach Contex

Client Introduction: • Client is a leading European Company into designing and manufacturing of cooling systems for diesel engines, hydraulics equipment, generators, gearbox systems, etc. for wind turbines. Project Objectives: • Identify and recommend new potential competitive supplies manufacturing Sheet Metal Fabrication &/or Machining Parts.

Geographical scope: • Mainly Chennai city and covering south of Indian state “Tamil Nadu”. • DS extended the scope to cover some potential suppliers from bordering states as well.

Dragon Sourcing approach Stage 1: Supplier Pre-Qualification 1. Demand Analysis 2. Supply Market Analysis 3. Telephone Pre-screening 4. NDA 5. Develop RFI/RFQ 6. Administer RFI/RFQ 7. Analyse RFI/RFQ Responses Deliverables: • Supplier database • Signed NDA’s • RFI-RFQ template & analysis report • Supplier profiles with rankings • DS Recommendation on next steps

Demand Analysis, Total 10 styles were selected for this project. Sheet Metal Parts with 1100 PCS and Machined Components with 1400 PCS each.

Technical: Annual Weight (KG) Volume (PCS)

Category

Item Name/Description

SKU #

Finish

Sheet Metal Parts

Top Beam Front Weld Assy

Galvanized

74.90

1100

Sheet Metal Parts

Top Beam Back Weld Assy

Galvanized

1100

Sheet Metal Parts

Roof Plate Left

Galvanized

1100

Sheet Metal Parts

Gen. Cooler Lid Left

Painted

1100

Sheet Metal Parts

Gen Cooler 1B, Housing

Painted

1100

Machined components

Manifold Tank Connection

0.93

1400

Machined components

3 Way 2" Valve Block For Thermo

1400

Machined components

Manifold For 2" Ball Valve

1400

Machined components

Hose Connector G1" - Ø25

1400

Machined components

Hose Connector G½" - Ø25

1400

Manifold block Manifold block Manifold block Hose connector Hose connector

Agenda

Sourcing Project Introduction

Sourcing Approach

Conclusions

- Following steps were covered under stage 1: Supplier Pre-Qualification No. 1.

Steps in stage 1 Demand Analysis Work with client to define and understand the Products and requirements (specs, volumes, material, Production technology requirements, others) Supply Market Analysis Identify long list of potential suppliers in the target region 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 RFI/RFP process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, Willing to sign NDA, min company size, certification, ..) NDA Send client’s NDA to suppliers and collect the signed copy. 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, etc.

Deliverables • Kick-Off Report

• Supplier Long List • Shortlist for RFI-RFQ process • Signed NDA’s soft copy. • RFI-RFQ Template • Balanced Scorecard

Administer RFI/RFQ: The RFI/RFQ is distributed to the suppliers, with telephone follow-up to push for maximum participation.

• Completed RFI-RFQ’s

Scoring the suppliers: Work with client to draft a balance score card to evaluate suppliers based on the RFI-RFQ.

• Score card document

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 and/or sampling.

Ongoing Completed

- Stage 1: Supplier Pre-Qualification timeframe. - Project was completed within 8 weeks as per schedule. STEPS

Week 1

Week 2

Week 3

Week 4

Delayed

Week 5

Week 6

Week 7

Week 8

1. Demand Analysis

2. Supply Market Analysis

3. Telephone Pre-screening

4. NDA Process

5. Develop RFI/RFQ

RFI/RFQ approved

6. Administer RFI/RFQ 7. Analyze RFI/RFQ responses & send RFQ report. â&#x20AC;˘

Supplier profiles with recommendations.

Weekly progress report was sent every Friday.

Finished

Milestones

- Long list of suppliers were identified from South Indian states leveraging multiple sources of information & from existing DS database.

Confidential

â&#x20AC;˘

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

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

Suppliers “Must have” criteria's to pass pre-screening.

•

Full sourcing process including pre-screening the suppliers was done online on the DS e-sourcing tool GSP

Supplier Profile example

• •

Post pre-screening the suppliers, RFI-RFQ process was administered only with the suppliers signed NDA.

RFI Score

RFI Ranking

Supplier Profile example

RFI process was administered to filter out most capable suppliers

Supplier Profile example

Category specific technical questions were added in the RFI to understand supplier capability and capacity.

- Supply market analysis was shared in the weekly progress and final report,

Process Supplier Identification

Pre-screening (Completed)

NDA Process (Completed)

RFI-RFQ Administration (Completed)

• •

Steps

Tamil Nadu

Bordering state

Total

• Suppliers identified

• Supplier passed in pre-screening

• Suppliers failed in Pre- screening

• NDA Sent

• NDA Received

• NDA rejected (not willing to sign)

• Number of RFI-RFQ sent

• Don't intend to respond

• Number of both RFI-RFQ received

Chennai is the capital of the South Indian state of Tamil Nadu. Bordering states include “Karnataka” with 15 suppliers identified and from “Kerala” 2 suppliers identified.

Supplier rejection analysis was shared with client for each step, Not reachable or Company Shutdown

Don’t produce required product 13

Don’t have welding process in-house Not interested, small Company with limited production process.

Not interested to sign NDA

3 7

Suppliers failed in Pre-screening process

Capacity Full

Only have 3 axis CNC machines in-house

Suppliers failed in NDA process

Not willing to sign NDA until they review drawings/pictures Can sign only on condition to change the governing law & dispute resolution to India

Don't have key production capability in-house like shearing, laser cutting, hot dip galvanizing etc. Not interested to continue

Only produce higher weight machined components Only have 2 axis CNC machines

Capacity full

Suppliers failed in RFI-RFQ process

RFQ Price Analysis, Suppliers for each category as per state wise was shared with the client. Total 17 suppliers: 7 from Chennai

Total 17 suppliers: 7 from Chennai

Sheet Metal Parts

Machined Components

RFI Ranking

RFI %

Supplier Name

City

State

RFI Ranking

RFI %

Supplier Name

City

State

Supplier 2

Tamil Nadu

Supplier 5

Tamil Nadu

Supplier 27

Tamil Nadu

Supplier 25

Tamil Nadu

Supplier 6

Karnataka

Supplier 26

Tamil Nadu

Supplier 9

Tamil Nadu

Supplier 14

Tamil Nadu

Supplier 17

Tamil Nadu

Supplier 12

Tamil Nadu

Supplier 18

Kerala

Supplier 13

Karnataka

Supplier 1

Karnataka

Supplier 15

Tamil Nadu

Supplier 29

Tamil Nadu

Supplier 22

Tamil Nadu

Supplier 7

Tamil Nadu

Supplier 8

Tamil Nadu

Supplier 13

Karnataka

Supplier 20

Tamil Nadu

Supplier 11

Tamil Nadu

Supplier 28

Tamil Nadu

Supplier 4

Tamil Nadu

Supplier 23

Tamil Nadu

Supplier 19

Tamil Nadu

Supplier 16

Karnataka

Supplier 10

Tamil Nadu

Supplier 1

Karnataka

Supplier 24

Tamil Nadu

Supplier 3

Tamil Nadu

Supplier 30

Tamil Nadu

Supplier 4

Tamil Nadu

Supplier 21

Tamil Nadu

Supplier 10

Tamil Nadu

â&#x20AC;˘

4 suppliers (from Chennai and Bangalore location) have offered price for both the categories.

SHEET METAL PARTS

Minimum Below Average

- Price analysis was shared with the client, - DDP Spend Analysis in million INR for sheet metal parts. Supplier name All prices are delivered Chennai Warehouse Price excluding GST

City, State

Maximum

XX, TN XX, TN XX, KA XX, TN XX, TN XX, KL XX, KA XX, TN XX, TN XX, KA XX,TN XX, TN XX,TN XX, TN XX, TN XX, TN XX, TN

RFI Ranking #

Above Average

Item Annual Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Name/Descriptio Volumes Value Value Value Value Value Value Value Value Value Value Value Value Value Value Value Value Value n in Units

Top Beam Front Weld Assy

1100

Top Beam Back Weld Assy

1100

Roof Plate Left

1100

Gen. Cooler Lid Left

1100

Gen Cooler 1B, Housing

1100

₹ XX

In millions ₹44.10

Revised Revised Revised Revised Revised

•

State

Tamil Nadu

Karnataka

Kerala

Total

Average Spend is XX M INR from total 17 suppliers.

₹86.54 Revised

MACHINED COMPONENTS

Minimum Below Average

- Price analysis was shared with the client, - DDP Spend Analysis in million INR for machined components.

All prices are delivered Chennai Warehouse Price excluding GST

Supplier name

Above Average Maximum

City, Province XX, TN XX, TN XX, KA XX, TN XX, TN XX, KA XX, KA XX, TN XX, TN XX, KA XX,TN XX, TN XX,TN XX, TN XX, TN XX, TN XX, TN RFI Ranking

Annual Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Spend Volumes Value Value Value Value Value Value Value Value Value Value Value Value Value Value Value Value Value in Units

Item Name/Description

Manifold block Tank Connection

1400

3 Way 2" Valve Block For Thermo

1400

Manifold For 2" Ball Valve

1400

Hose Connector G1" - Ø25 mm

1400

Hose Connector G½" - Ø25 mm

1400

₹ 15.97

₹ XX

₹ 41.84

In millions

State

Tamil Nadu

Karnataka

Kerala

Total

•

Average Spend is XX M INR from 17 suppliers

Revised

Revised Revised Revised

MACHINED COMPONENTS

Minimum

Maximum

RFQ Price Analysis, - Tooling cost, Amortization of tooling cost, Production lead time and other information was collected during the RFQ process and shared in the report.. Supplier name

City, State

Chennai, TN

Coimbatore, TN

Hosur, TN

Chennai, TN

Price validity

Standard payment terms

Tooling cost

Amortize tooling cost Production after min. lead time PCS

Manifold block Tank Connection

0.93

₹ XX

30 days

₹ XX

35 days

N/A

42 days

N/A

42 days

3 Way 2" Valve Block For Thermo

7.96

₹ XX

35 days

₹ XX

49 days

₹ XX

42 days

₹ XX

42 days

Manifold For 2" Ball Valve

2.24

₹ XX

35 days

₹ XX

49 days

₹ XX

42 days

₹ XX

42 days

Hose Connector G1" - Ø25 mm

0.09

N/A

15 days

₹ XX

28 days

₹ XX

42 days

N/A

42 days

Hose Connector G½" - Ø25 mm

0.04

N/A

15 days

₹ XX

28 days

N/A

42 days

N/A

42 days

•

₹ XX

Suppliers without tooling cost do not wish to charge and will absorb the cost.

Tooling cost

Amortize tooling cost Production after min. lead time PCS

Item Name/Description

₹ 35,250

Tooling cost

Amortize tooling cost Production after min. lead time PCS

₹ XX

Tooling cost

Amortize tooling cost Production after min. lead time PCS

Weight in Kg

₹ XX

Suppliers Assessment, - Suppliers were assessed and ranked based on their Company profile, - Scoring and ranking of the suppliers were done on the e-sourcing tool GSP,

Shortlisted Could be considered Not shortlisted

Average scoring: 53

100 90 80 80

Supplier RFI Score

70 60

24 24

63 4

61 3

18 21

40 32 30 20 10

1 18

23 2 18

22 1 17

4 18

34 2 7

25 3 3 9

Supplier 22

Supplier 23

Supplier 24

Supplier 25

Supplier 26

Supplier 27

Supplier 28

Supplier 29

Supplier 30

Supplier 21

Supplier 20

Supplier 19

Supplier 18

Supplier 17

Supplier 16

Supplier 15

Supplier 14

Supplier 13

Supplier 12

Supplier 11

Supplier 10

Supplier 9

Supplier 8

Supplier 7

Supplier 6

Supplier 5

Supplier 4

Supplier 3

Supplier 2

Supplier 1

2 14

18 17

24 3

Business information

Social Responsibility

Production

Quality management

Certificate, documents and pictures

Total Score

India

Suppliers location was shown on the map. Ranking

Supplier Name

City

State

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9 Supplier 10 Supplier 11 Supplier 12 Supplier 13 Supplier 14 Supplier 15 Supplier 16 Supplier 17 Supplier 18 Supplier 19 Supplier 20 Supplier 21 Supplier 22 Supplier 23 Supplier 24 Supplier 25 Supplier 26 Supplier 27 Supplier 28 Supplier 29 Supplier 30

Banglore Puducherry Chennai Chennai Chennai XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Karnataka Tamil Nadu Tamil Nadu Tamil Nadu Tamil Nadu XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX

• •

Chennai is the capital of the South Indian state of Tamil Nadu. 12 suppliers responded from Chennai.

RFI Ranking Shortlisted Could be considered Not shortlisted

RFI Ranking

RFI RFI Score Ranking %

Shortlisted Could be considered Not shortlisted

Executive summary with key information was shared with the client,

Supplier

State

Sheet Metal Parts Number 2019 Product of turnove Laser Powder PaintingCategory employe r (in M Welding incutting Inhouse Coating spray cabin es US$) house

Machined Components

Certification

Total Spend Value in million

CNC 3, 4 & 5 axis machine

Total Spend Value in million

Social Compliance Certification

Quality management & others

Karnataka

Both

210

Yes

₹ XX

Yes

₹ XX

ISO 14001

ISO 9001

Tamil Nadu

Sheet Metal Parts

215

Yes

₹ XX

Not applicable

ISO 14001, OHSAS 18001

ISO 9001

Tamil Nadu

Machined Components

257

Yes

Not applicable

Yes

₹ XX

ISO 14001

ISO 9001

Tamil Nadu

Both

Tamil Nadu

Machined Components

Sheet Metal Parts

Machined Components

Sheet Metal Parts

Both

Sheet Metal Parts and Machined Components: Spend value in INR M Minimum

Below Average

Above Average

Maximum

Next Steps was suggested to the client Below are the proposed next steps with responsibilities. Actions

Responsible

Deadline

Collect similar samples from recommended suppliers

DS/Client

Process to start immediately.

Send original samples to recommended suppliers

Client

Process to start immediately.

DS and/or Client

To be confirmed

3. On site audit (Technical/ Social/ or Hybrid model)

Remarks

Production follow up

Quality inspections

6. Container loading supervision

Agenda

Sourcing Project Introduction

Sourcing Approach

Conclusions

Conclusions ✓ Whole project was carried out in 8 weeks with 83 suppliers identified from South Indian state & 30 complete RFI-RFQ received. ✓ All the recommended suppliers are certified with ISO 9001 certification with key production process in-house. ✓ Some of the suppliers could offer both the categories (Sheet metal and machined components) inhouse which was considered as high advantage in supplier selection. ✓ Suppliers were willing to amortize the mould cost for X number of PCS ✓ Sampling process was initiated with the recommended suppliers. ✓ A plan was framed to audit the recommended suppliers as a next step post sampling. ✓ Overall based on our report, It helped client to identify potential & price competitive suppliers in the desired location close to city Chennai or in and around Tamil Nadu sate. ** Dragon Sourcing has experienced team for performing Technical and Social Corporate Responsibility (CSR) audit or hybrid model combing both. © 2020 Dragon Sourcing. All rights reserved.