case study-new plant building “capex sourcing in china”
TRANSCRIPT
New plant building Case studyCapex Sourcing in China
Shanghai, Jan 2014
Dragon Sourcing - 龙 源 Your Tailored Sourcing Approach to LCC Sourcing
Agenda
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1. Context
2. Sourcing Strategy
3. Conclusions and Results
© 2014 Dragon Sourcing. All rights reserved.
Context
Client profile:• One of the largest chocolate group in the world• More than 7.8 billion EUR revenue and 20,000+ employees in the world for 20 plants
Objectives:• To carry sourcing services for helping client to build a new plant in China, focused on below 8 categories
Pipelines Tanks and Silos Utilities Part of a Production Line Packaging MachineEngineering serviceConstruction serviceAutomation/Installation
Geographical scope:• China ( suppliers are capable of delivering the products and services near Hangzhou area)
Deliverables: • RFI / RFQ and Score Card• Supplier profiles• Audit reports
3
Gansu
JiangxiZhejiang
BEIJING
Jiangsu
Guangxi
Hunan
Hubei
Qinghai
Ningxia
Shaanxi
Anhui
Fujian
Neimongu
ShanxiShandong
Sichuan
Yunan
Guizhou
Henan
Jilin
LiaoningHebei
Guangdong
Gansu
SHANGHAI
TAIWAN
Heilongjiang
Location of identified suppliersLocation of client’s plant
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• Steering Committees weekly (conference call) to review overall progress on all categories
• Categories follow-up meetings on an ad-hoc basis to review category issues
• Meeting minutes record main decisions, planned actions and project status
Dragon SourcingClient
DS CEO
DS Account Manager
CPO
Strategic SourcingManager
Buyer
Buyer
Buyer
Buyer
Buying Engineer
Buying Engineer
Buying Analyst
The China sourcing programme is managed via a series of frequent conference call meetings
Buying Analyst
Buying AnalystBuyer
© 2014 Dragon Sourcing. All rights reserved. 5
Process for New Plant Building
Dragon Sourcing involved in 8 important categories for new plant building
DS Team Out of scope
New plant
Location selection
6.EngineeringService(design)
Trial production Formal productionCommission
Feasibility report
ConstructionManagement
Procurement
7.Construction service
3. Utilities
Process area
Production area
Packaging area
Electrical parts
8. Automation
Mechanical parts
5.Packaging machine
1. Pipelines
2. Tanks and Silos4. Part of production lineOthers
8 categories-5 categories for equipments -1. Pipelines, 2. Tanks&Silos
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1. Pipelines 2. Tanks and Silos
8 categories-5 categories for equipments -3. Utilities-electrical parts and mechanical parts
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Electrical parts-Switchgear &Switchboard Electrical parts-Transformer Electrical parts-UPS Electrical parts- Diesel Generator
Mechanical parts-AHU Mechanical parts-Chiller Mechanical parts-Cooling Tower Mechanical parts-Air compressor
8 categories-5 categories for equipments -4. Part of production line-equipments
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Equipments-Mixer Equipments-Refining System Equipments-Tempering Machine Equipments-Roaster
Equipments-Air Humidifier Equipments-Mills Equipments-Chocolate Pump Equipments-Pumps and Valves
8 categories-5 categories for equipments -4. Part of production line-lines
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Lines-Moulding line Lines-easy line
8 categories-5 categories for equipments -5. Packaging Machine
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Flow pack Wrappers Thermoforming Machine Tray Formers Cartoner/Case Packing Shrinker machine
Robot & Tool Checkweigher Ink Jet Laser Marker Hot Transfer
8 categories - 3 services categories -6. Engineering service, 7.Construction service and 8. Automation
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6. Engineering service 7. Construction service 8. Automation
-Working scope for engineering company Detailed engineering servicesDetailed designPermitting serviceEngineering timing & Permitting scheduleManhours and fee for engineering If good enough the engineering company can also be the management companyClose to client‘s factoryRecommend for piling supplierGood English skill
-Working scope for construction company Construction servicesPermitting serviceSupport for tender for construction company and supervision for realisation phaseConstructoin timing & Permitting scheduleManhours and fee for constructionList the work for sub-contractEnough licenseClose to client‘s factory and can do construction work in Xiaoshan, Hangzhou city (with license)Good English skill
-Working scope for construction company No matter integrator or producer, supplier must have the capability to program software and integrate hardware for different brands, and also cabling workAutomatioin including 4 areas: utilities automation, process automation, production automatoin and packaging automationSupplier has the design capablity fo the packaigng partsGood english skillHardware will be used as below:
• Automation control system (PLC)• Operator control and monitoring System (HMI)• Identification system• Industrial communication• Industrial control• PC based automation• Sensor system• Vision system
Agenda
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1. Context
2. Sourcing Strategy
3. Conclusions and Results
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• Analyse spend category in detail– Specifications and quality requirements– Volumes– Deadlines
• Analyse supply market and identify potential suppliers
• Pre-screening potential suppliers through telephone based on client’s criteria and manage NDA process
• Pre-qualify potential suppliers through an RFI-RFQ process
• Analyse supplier RFI-RFQ responses and develop score card
• Shortlist suppliers recommended for audit based on RFI/RFQ process and score card
• Finalize suppliers for audit
• Make audit schedule and budget
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Select 2-3 suppliers for sample development process
• Manage sample development process
• Conduct final negotiations and select suppliers
• Finalise Contract
Step 1Supplier identification and
pre-qualification
Step 2Supplier selection and contracting
Key
act
iviti
es
Dragon Sourcing went through the following 2 stage process
© 2014 Dragon Sourcing. All rights reserved. 14
• Analyse spend category in detail– Specifications and quality requirements– Volumes– Deadlines
• Analyse supply market and identify potential suppliers
• Pre-screening potential suppliers through telephone based on client’s criteria and manage NDA process
• Pre-qualify potential suppliers through an RFI-RFQ process
• Analyse supplier RFI-RFQ responses and calculate fully delivered price (FOB price, logistics, import duties, ADT,..), develop score card
• Shortlist suppliers recommended for audit based on RFI/RFQ process and score card
• Finalize suppliers for audit
• Make audit schedule and budget
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Select 2-3 suppliers for sample development process
• Manage sample development process
• Conduct final negotiations and select suppliers
• Finalise Contract
Step 1Supplier identification and
pre-qualification
Step 2Supplier Selection and contracting
Key
act
iviti
es
Dragon Sourcing went through the following 2 stage process
Product drawing
The first step was to develop a comprehensive understanding of the requirements
© 2014 Dragon Sourcing. All rights reserved. 15
Product picturesProduct Tank
Purchase Qty XXX pcs
Current Price (DDU)/pc
EUR XXX RMB XXX
Target Price (DDU)/pc
EUR XXX RMB XXX
Savings target xxx
Packaging Depends on supplier
© 2014 Dragon Sourcing. All rights reserved. 16
then an extensive supplier data base is built leveraging multiple sources of information
Company and contact information
No. Product category
Supplier name Province City Website Source Contact
Person Email Telephone Mobile
1 Tank Supplier 1 Shanghai
2 Tank Supplier 2 Jiangsu
3 Tank Supplier 3 Shanghai
4 Tank Supplier 4 Shanghai
5 Tank Supplier 5 Shanghai
Sources of Information - China
Website name websites Remark
Alibaba www.alibaba.comB2B for all over the world
Global Sources
www.globalsources.com
B2B for all over the world
Gongchangwww.gongchang.com
B2B for all over the world
Tradekey www1.tradekey.comB2B for all over the world
ECVV www.ecvv.comB2B for all over the world
EC21 www.ec21.comB2B for all over the world
Hellotrade www.hellotrade.comB2B for all over the world
Trade Asia www.etradeasia.com B2B for AsiaAsian
Productswww.asianproducts.com B2B for Asia
made in china
www.made-in-china.com BSB for China
Alibaba China china.alibaba.com BSB for China
CHINA.CN www.china.cn BSB for China
CCCME www.cccme.org.cn
China Chamber of Commerce for electrical & mechanical products
Baidu www.baidu.comTOP 1 source engine in China
Then, a telephone pre-screening process is carried out to select the suppliers to be included in the RFI/RFQ process
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CategoryMust-be criteria
criteria No.1 criteria No.2 criteria No.3
Tank ISO9001 Willing to sign NDA
Inside R&D department
Category
Can-be criteria (According to the response of all the suppliers, decide which criteria
will change to must-be criteria)criteria No.1 criteria No.2 criteria No.3 criteria No.4
Tank ISO14001
Experience tosupply products
for the western client located
in China?
Has experience to western world
(EU, US)Min production
capability
III. Quality, Environmental and Product Certification质量环保认证
3-16What quality and environmental registrations do you have? 右侧相关认证贵司达到吗 ?
Yes / No Date of Certificate Certifying Org.
ISO 9001 ISO 14001 Other ( 已或得的其它认证请列举 )
II. Production Capability生产能力 3-1
Can you do these tanks products 100% matching the drawing requirements?贵司是否能完全按照图纸要求生产这批罐体产品 ?
3-2
What processing capabilities are included in your tanks production? Are these processes in-house or sub-contracted? However we would require all these process done in house.贵司生产此罐体包含哪些加工工艺?哪些是自行完成,哪些工艺需要外协完成 ? 我们要求所有相关工艺需要在本厂自行完成。
Process生产工艺In house(Y/N)自行生产
( 是 / 否 )
Sub-contractor(Y/N)外包 ( 是 / 否 )
3-3What is the range of unit size your production facilities currentlly handles? 贵司能生产的罐体产品的单件尺寸范围是多少 ?
Min in m3
最小立方 Max in m3
最大立方
3-4What is the range of dimensions that your production can handle? 贵司能生产的罐体产品的单件最大尺寸是多少 ?
Length 最长 (mm)
Width 最宽 (mm) Height 最高 (mm)
I. Company Background 公司信息
2-1What date was your company founded?贵司是在哪一年成立的 ?
2-2Ownership (State Owned/ Priviate/Foreign Investement)企业性质 ( 国有 / 民营 / 外资 )
2-3What are your main type of products?贵司的主要产品是 ?
2-4Where is the factory located? 生产工厂 / 车间位于哪里 ?
2-5What is the workfloor size (m²)?贵司工厂面积有多少平方米 ?
Next step is to administer the RFI/RFQ process
© 2014 Dragon Sourcing. All rights reserved. 18
RFI- Contact Information信息征询 - 公司联系方式
Please fill the orange cells 请填写橙色表格Dragon Sourcing contact龙源联系人 Email电子邮件 Tel电话 Fax传真 Mobile phone手机
COMPANY INFORMATION公司信息
1-1Company Name公司名称
1-2Address地址
1-3Town城市
1-4Province省份
1-5Company website公司网址
CONTACT INFORMATION 联系信息
1-6Contact Person联系人
1-7Title职位
1-8Email电子邮件
1-9Tel电话
1-10Fax传真
1-11Mobile phone手机
Contact detailinformation
Company Profile
Production Capacity
Quality and certificate
Company and contact information RFI/RFQ Process follow up
Product category
Supplier name Province City
RFI/RFQ sent Intend to respond Last call follow up RFI received RFQ received
Y/N Date Y/N If no, reason Date Comment Y/N Date If no,
reason Y/N Date If no, reason
Tank Supplier 1 Shanghai Shanghai Yes Oct.-2013 Yes Oct.-2013 completed RFI-RFQ Yes Oct.-
2013 Yes Jan.-2014
Tank Supplier 2 Jiangsu Nantong Yes Oct.-2013 Yes Oct.-2013
replied RFI but not complete, ask supplier to
update it
Yes Oct.-2013 Yes Jan.-
2014
Tank Supplier 3 Shanghai Shanghai Yes Oct.-2013 Yes Oct.-2013 not complete RFI-RFQ Yes Oct.-
2013 Yes Jan.-2014
Tank Supplier 4 Shanghai Shanghai Yes Oct.-2013 Yes Oct.-2013 completed RFI-RFQ Yes Oct.-
2013 Yes Jan.-2014
Tank Supplier 5 Shanghai Shanghai Yes Oct.-2013 Yes Oct.-2013 completed RFI-RFQ Yes Oct.-
2013 Yes Jan.-2014
During the RFI/RFQ process, an RFI/RFQ control sheet is used to follow up the whole process
© 2014 Dragon Sourcing. All rights reserved. 19
© 2014 Dragon Sourcing. All rights reserved.
Contact information
Company name Supplier 4
City Shanghai
Province N/A
Website
Contact person
Tel
Company background
Year Founded 1990
Ownership Foreign Investment
Main Products Tank Products
Work floor size (m²) 800,000 ㎡
Have export license (Y/N) Yes
How many years of export
experience
15 years more
Business Overview
Turnover (in USD)
2013 20 M
2012 14 M
% Sales to the Main Markets
Domestic (%) 60%
Italy (%) 2%
Rest of EU (%) 8%
Other Main markets (%) 30%
Total 100%
Top 3 Customers
Customer name Industry Country
GE Medical US
BP Petrochemical US
P&G Petrochemical US
Based on the RFI/RFQ, company profiles are developed
Production Capacity
Quality Control
Top 3 Customers in food industry
Customer name Country
Coca-cola US
Suntary Japan
Nestle US
Corporate Responsibility
Adhere to all rules and regulations in respect to (Y/N)
Child labour Yes
Environmental issues Yes
Health and safety issues Yes
List of equipments
Name Quantity Age Brand
Endoscope n/a n/a n/a Texture
analyzers n/a n/a n/a
Thickness gauges, n/a n/a n/a
Golden image AnalyzerElectron
microscopes
List of QC EquipmentNo. Name
1 moisture tester2 sensitive balance
Human Resources
Factory Worker 2945 QC 105
Engineer 750 Office Staff 200
Total 4000 English Speaker
800 more
ProductionTotal maximum production capacity in 2013 1100 Units
Actual annual production capacity in 2012 900 Units
Percentage of your tank products among all the categories?
80 %
Percentage of your stainless products among all the metals?
56%
What is the range of unit size your production facilities currentlly handles?
0.01-5000 m3
What is the range of dimensions that your production can handle?
10000X10000X70mm
Quality & Environmental Registration
Certificate Yes / No Date of certificate
Expiration date Certifying organization
ISO 9001 Y 1999 N/A N/A
ISO 140001 Y 2010 N/A N/A
Others OHSAS 18001:2007 N/A
Others N/A N/A
20
© 2014 Dragon Sourcing. All rights reserved. 21
Factory Entrance Workshop 1 Workshop 2
Machinery 1 Machinery 2 R&D
Factory Pictures
…and factory pictures collected
Supplier 1Location
in RFI/RFQ
Quality Control Weight of criteria Scoring Max Score
per criteriaWeight of
the section Answers Score
3-16 Do you have ISO 9001? 35% 0= No1= Yes 1
20%
3-16 Do you have ISO 14000? 25% 0= No1= Yes 1
3-16 Do you have any other key certificate like ROHS, REACH? 10% 0= No
1= Yes 1
3-11Do you have daily on line quality inspection and supporting documents(Y/N)?
10% 0= No1= Yes 1
3-12 Do you accept 3rd party QC? 5% 0= No1= Yes 1
3-14 & 15 Do you conduct tests for the tanks before the delivery? ? 5% 0= No
1= Yes 1
3-13 & 15 Do you have in house testing equipments/lab? 10%
0= No1= Basic QC Mechanical inspect tools(Caliper, Micrometer, etc)2= Optical inspect tools (CMM, 3D, etc)
2
Subtotal 100% 1.1 20% Point per section based on 100 0.00
Location in
RFI/RFQExport Experience Weight of
criteria Scoring Max Score per criteria
Weight of the section Answers Score
2-9 Export license 5% 0= No1= Yes 1
20%
2-17 % of the turnover dedicated to Export 15%1= <25%2= 26% ~ 50%3= >51%
3
2-17 Main Export Market 40%1= Other2= USA/Japan3= Western Europe
3
2-18 & 19 Who are the main customers 40%1= Local brands2= International brands3= Famous international brands
3
Subtotal 100% 2.9 20% Point per section based on 100 0.00
Location in
RFI/RFQCooperation Weight of
criteria Scoring Max Score per criteria
Weight of the section Answers Score
Cooperation / Attitude during RFI/RFQ 100%1= Acceptable2= Satisfactory3= Excellent with great interest
3 10%
Subtotal 100% 3 10% Point per section based on 100 0.00
Total scoring 12 100.00% Total Points based on 100 0.00
Supplier 1
Location in
RFI/RFQCompany background Weight of
criteria ScoringMax
Score per
criteria
Weight of the
sectionAnswers Score
2-1 How long is your industry experience? 20%1= Less than 5 years2= 5 to 10 years3= More than 10 years
3
25%
2-16 What's your turnover in 2012? 20%1= Lowest 1/3 of responses2= Middle 1/3 of responses3= Top 1/3 of responses
3
2-7 & 8Do you have good English capability with engineering/technical staffs as well as sales/account personnels?
20%0 = Not satisfactory1 = Average2 = Good
2
2-11 Do you have experience of providing tank for the food industry ? 20% 0 = No
1 = Yes 1
2-12Do you have experience of supplying products for the western client located in China?
20% 0 = No1 = Yes 1
Subtotal 100% 2 25% Point per section based on 100 0.00
Location in
RFI/RFQProduction Capabilities Weight of
criteria ScoringMax
Score per
criteria
Weight of the
sectionAnswers Score
2-15 How many employees do you have? 15%1= <1002= 100-2003= > 200
3
25%
3-1Whether can do these tanks products 100% matching the drawing requirements?
15% 1= No, partly2= Yes 2
3-2Do you have all your processes in house with strong design & fabrication capability?
15% 1= No, partly2= Yes 2
3-6 What's your annual production capacity in units? 15%
1= Lowest 1/3 of responses2= Middle 1/3 of responses3= Top 1/3 of responses
3
3-8 What's the percentage of your tank products among all the categories? 20%
1= Lowest 1/3 of responses2= Middle 1/3 of responses3= Top 1/3 of responses
3
3-9What's the percentage of your stainless products among all the metals?
20%1= Lowest 1/3 of responses2= Middle 1/3 of responses3= Top 1/3 of responses
3
Subtotal 100% 2.7 25% Point per section based on 100 0.00
© 2014 Dragon Sourcing. All rights reserved. 22
The RFI responses are analyzed using a score card validated by the client
Company Profile
Production Capacity
Quality and certificate
Export
Cooperation
© 2014 Dragon Sourcing. All rights reserved. 23
Example of a score card – tank category
Rank by score card Supplier name
Sections Total100%25% 25% 20% 20% 10%
Company backgroundProduction Capabilities Quality Control Export Experience Cooperation base 100
1 Supplier 4 25.00 18.06 20.00 16.21 10.00 89.26
2 Supplier 5 22.50 17.59 20.00 17.24 10.00 87.33
3 Supplier 3 22.50 21.30 18.18 16.21 6.67 84.85
4 Supplier 2 25.00 19.91 20.00 12.41 6.67 83.99
5 Supplier 1 22.50 23.15 9.09 13.45 10.00 78.19
Average 84.72
Supplier 4 Supplier 5 Supplier 3 Supplier 2 Supplier 10
10
20
30
40
50
60
70
80
90
100
89.26 87.33 84.85 83.99 78.19
CooperationExport ExperienceQuality ControlProduction CapabilitiesCompany background
© 2014 Dragon Sourcing. All rights reserved. 24
Suppliers recommended to be audited according to the score card
Country Supplier name City Province Score card
ranking Strength weakness
China Supplier4 Shanghai Shanghai 1- Excellent company background- Has a lot of experience in the food industry- Has a lot of experience in supplying for western clients located in China- They are foreign invested company with Japan background
- The percentage of stainless products among all the metals is 56%.
China Supplier 5 Shanghai Shanghai 2- Very good company background- Has a lot of experience in the food industry- Has some experience in supplying for western clients located in China- They are foreign invested company.
- The percentage of tank products among all the categories is 40%
China Supplier 3 Shanghai Shanghai 3-Very good company background- Has a lot of experience in the food industry- Has a lot of experience in supplying for western clients located in China- With 21 years industry experience
- Mainly market is in local China.
China Supplier 2 Shanghai Shanghai 4- Excellent company background- Has a lot of experience in the food industry- Has a lot of experience in supplying for western clients located in China
- Has no ISO14001
China Supplier 1 Shanghai Shanghai 5- Very good company background- Has a lot of experience in the food industry- Has a lot of experience in supplying for western clients located in China
-Has no ISO14001- The Max tank they can do is 100m3
Strongly recommended to be audited Can be audited
Dragon Sourcing went through the following 2 stage process
© 2014 Dragon Sourcing. All rights reserved. 25
• Analyse spend category in detail– Specifications and quality requirements– Volumes– Deadlines
• Analyse supply market and identify potential suppliers
• Pre-screening potential suppliers through telephone based on client’s criteria
• Pre-qualify potential suppliers through an RFI-RFQ process
• Analyse supplier RFI-RFQ responses and calculate fully delivered price (FOB price, logistics, import duties, ADT,..), develop score card
• Shortlist suppliers recommended for audit based on RFI/RFQ process and score card
• Finalize suppliers for audit
• Make audit schedule and budget
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Select 2-3 suppliers for sample development process
• Manage sample development process
• Conduct final negotiations and select suppliers
• Finalise Contract
Step 1Supplier identification and
pre-qualification
Step 2Supplier Selection and contracting
Key
act
iviti
es
5 tank suppliers were finally selected for audit
© 2014 Dragon Sourcing. All rights reserved. 26
Visited by
Rank by score card Province City Supplier name Product Client DS
1 Shanghai Shanghai Supplier 4 Tank x x
2 Shanghai Shanghai Supplier 5 Tank x x
3 Shanghai Shanghai Supplier 3 Tank x x
4 Jiangsu Nantong Supplier 2 Tank x x
5 Shanghai Shanghai Supplier 1 Tank x x
© 2014 Dragon Sourcing. All rights reserved. 27
An audit schedule and budget is developed
No. Category Supplier name City Province Location Score card ranking
1 Tank Supplier 4 Nantong factory Nantong Jiangsu Pin A 1
2 Tank Supplier 4 Shanghai factory Shanghai Shanghai Pin B 1
Timing AgendaEstimated
Cost (RMB)Attendee
08:30am Finish breakfast and Supplier 4 come to pick up at hotel
Mr.xxx(Client)Mr.xxx (Client)Mr.xxx (DS)
09:00am ~ 12:00pm
Supplier 4 Nantong Factory audit and technical discussion on the
drawings and quotation
12:00pm ~ 13:00pm
Lunch or supplier may invite for lunch together
EUR 22 / lunch / person
13:00pm ~ 15:00pm
Supplier 4 car take us back to Shanghai Supplier 4 factory
15:00pm ~ 17:00pm
Supplier 4 Shanghai Factory audit and technical discussion on the
drawings and quotation
17:00pm ~ Take taxi to get back hotelThen DS goes back home
EUR 25/carEUR 15/car
Total EUR 106/3 persons 1 EUR=8.1856 RMB
© 2014 Dragon Sourcing. All rights reserved. 28
Short-listed suppliers are audited to assess long-term partnership opportunities
Audit questionnaire
Audit report
Audit summary
Objectives• Meet top management and sales management teams• Present order details• Refine supplier offer understanding• Understand organisation• Validate manufacturing capabilities• Visit factory and check work conditions
Topics• General Management• Order management• Shipping / packaging• Planning process• Goods flow• Procurement• Purchasing• Production• Quality…
© 2014 Dragon Sourcing. All rights reserved. 29
Audit outcome is summarized in a rated profile of each supplier
Audit summary
© 2014 Dragon Sourcing. All rights reserved. 30
The final supplier selection relies on the short-listed suppliers’ offers, audits and samples
Supplier Name
Final Ranking
Supplier 1 1
Supplier 2 4
Supplier 3 2
Supplier 4 5
Supplier 5 3
Suppliers’ quotation
Samples
Supplier summary
Supplier capabilities
Supplier assessment
Supplier Quotation for Client Standard
Quotation for Supplier Standard
Supplier 1 € 34,810 € 22,590
Supplier 2 € 44,454 € 40,432
Supplier 3 € 45,420 € 40,050
Supplier 4 € 78,500 € 74,700
Supplier 5 € 93,533 € 82,910
Agenda
© 2014 Dragon Sourcing. All rights reserved. 31
1. Context
2. Sourcing Strategy
3. Conclusions and Results
1615 suppliers initially identified for 8 categories, 494 suppliers went to the RFI process, 282 suppliers replied to the RFI, 100 suppliers were finally audited, client intends to cooperate with Chinese suppliers for all categories
© 2014 Dragon Sourcing. All rights reserved. 32
Category No. of suppliers identified
No. of suppliers go to pre-screening No. of suppliers RFI sent No. of suppliers RFI
received No. of suppliers audited
Pipelines 284 90 36 21 9Tanks and Silos 83 51 39 22 5Utilities-electrical 223 87 65 47 10Utilities-mechanical 431 104 104 47 12Part of a Production Line 394 208 158 77 27Packaging Machine 69 69 50 34 12Engineering service 25 25 15 14 6Construction service 34 34 9 9 8Automation 72 40 18 11 11 Total 1615 708 494 282 100
0
50
100
150
200
250
300
350
400
450
No. of supplier identified
No.of supplier go to pre-screening
No. of supplier RFI sent
No. of supplier RFI re-ceived
No. of supplier audited
© 2014 Dragon Sourcing. All rights reserved.
Approach
Categoies
Engineering servcie
Construction service
Utilities-electrical
Utilities-machanical Automation Pipelines Tanks Part of
production linePackaging machine
Time spend (weeks) 8 weeks 10 weeks 16 weeks 13 weeks 12 weeks 15 weeks 11 weeks 12 weeks 8 weeks
1 Collect detailed technical information 1 week 2 weeks 4 weeks 3 weeks 4 weeks 3 weeks 2 weeks
4 weeks(short time but need to source several items)
2 weeks(short time but need to source several items
and some items only need
supplier list)
2 Identify list of potential suppliers in China to pre-screening process
3Carry out a phone pre-screening of the suppliers based on (1) maximum 4-5 screening criteria per category with these criteria to be provided by client 2 weeks 2 weeks 3 weeks 3 weeks 2 weeks 4 weeks 3 weeks
4 Develop the RFI-RFQ – jointly with client– to include all key supplier qualification criteria
6 weeks 3 weeks5 Administer the RFI process to ensure as high a return rate as possible
2 week 2 weeks 4 weeks 3 weeks 3 weeks 4 weeks 3 weeks
6 Analyze RFI responses by score card and recommend suppliers which client needs to the RFQ process
7Administrate NDA process(For some categories, this process done after the audit process)
1 weeks 1 week
4 weeks 3 weeks
1 week(Done after
audit) 3 weeks(RFQ
required after audit)
2 weeks(RFQ
required after audit)
Not required for the NDA
Not required for the NDA
8
Administrate RFQ process and analyze RFQ responses by score card and recommend suppliers with client for audit(Not all categories need RFQ process and some RFQ process done after audit by client themselves)
RFQ process controlled by client themselves after
audit
RFQ process controlled by
client themselves after audit
RFQ process controlled by
client themselves
Not required for RFQ
Not required for RFQ
9Carry out audits with pre-selected suppliers: Dragon Sourcing carries out qualification audits with client together
2 weeks(Done before RFQ
process)
3 weeks(Done before RFQ
process)1 week 1 week 2 weeks 1 week 1 week 2 weeks 2 weeks
33 Process done by DS Process done by client
The selection process varied in time depending on the category
• Understand the process for building a plant in China very well
• Successful sourcing experience on extensive set of categories
• Knowledge about who best qualified suppliers are for all Capex and services categories needed to build new facility in China
• Strong project management experience allowing to proceed at speed
© 2014 Dragon Sourcing. All rights reserved. 34
Based on this experience, DS can provide end-to-end procurement support to clients building a new plant in China