steel structural parts case study

STEEL STRUCTURAL PARTSCASE STUDYJanuary 2012

Your Tailored Sourcing Approach to emerging markets

© 2011 Dragon Sourcing. All rights reserved.

2© 2011 Dragon Sourcing. All rights reserved.

AGENDA

1/ Project context and objectives

2/ Case Study: Steel mechanical structural parts

3/ Recommendations and Potential

4/ Supplier profiles


Context and objectives

Our client: Global nuclear industry leader.The company is also one of the world leaders in renewable energies: Wind, solar, bioenergies, hydrogen and storage Commercial presence in more than 100 countries with a total of around 50,000 employees worldwide.

Objectives:The company aimed to explore the potential of Latin American countries in terms of technical capabilities for the production of steel parts used for construction.So far, due to specific standards, those steel parts have been purchased mainly in Europe and in the USA.

The company decided to assign Dragon Sourcing to work on a feasibility analysis in order to identify potential suppliers offering:

Very specific production capabilities and equipments High production capacities for bulky mechanical structural steel parts Conformity to US standards

© 2011 Dragon Sourcing. All rights reserved.. 4

Sourcing Geographic ScopeExplored countries: Mexico, Venezuela, Colombia, Ecuador, Peru, Argentina, Chile and Brazil


AGENDA


2/ Feasibility analysis


4/ Supplier profile


• Manage P/O and agree payment terms and details (L/Cs,..)

• Check in process production quality

• Conduct pre-shipment QC

• Arrange logistics

• Manage supplier performance

• Monitor new sourcing opportunities

• Shortlist suppliers based on RFI/RFP process

• Audit shortlisted suppliers

• Select 2-3 suppliers for sample development process

• Manage sample development process

• Conduct final negotiations and select suppliers

• Finalise Contract

• Analyse spend category in detail– Specifications and quality requirements– Volumes– Deadlines

• Analyse supply market and identify potential suppliers

• Pre-qualify potential suppliers through an RFI process

• Identify suppliers production technology and capabilities

• Come up with conclusions and recommendations

Feasibility Analysis Supplier Selection and Contracting Procurement Operations

Key

act

iviti

es

Dragon Sourcing service offering covers the end-to-end sourcing process

SCOPE OF PROJECT

Remarks: This feasibility analysis was done through an RFI exercise and aimed to:- Analyze production capabilities /equipments of potential suppliers- Check compliance with US standards This did not include any pricing exercise as a typical analysis conducted by DS would

include


Full products specificationsThe first step is to develop a comprehensive understanding of required products

Product Name STEEL MECHANICAL STRUCTURAL PARTS Product Picture

Yearly Quantity 33,000 pces

　

Quotation FOB Price

Dimensions 15 X 4 X 1/4", 520" +/-.5“

Length / unit (m) 12,95

Weight / Unit (kg) 497

Total length (m) 13650

Packaging Bulk

Material ASTM A 500 GR B


Then, an RFI process is administered to identify most capable suppliers

CONTACT DETAILS

INFORMATION

BUSINESSINFORMATION

PRODUCTIONINFORMATION

DESIGNINFORMATION


During RFI process, all responses are analyzedSuppliers’ willingness to collaborate and to provide complete and accurate information is also assessed


During RFI process, 6 countries are explored within Latin America, 96 potential suppliers identified, 65 RFI sent out and 7 RFI returned


During RFI process, DS analyzed the technical capabilities / equipments of each supplier which responded

1= Yes

0 = No


Through the RFI process, conformity to US standard being compulsory for this project, DS identifies suppliers able to provide ASTM A500 standard products in BRAZIL


Through the RFI process, conformity to US standard being compulsory for this project, DS identifies suppliers able to provide ASTM A500 standard products in REST OF LATAM


DS collected feedback from international groups and study their production strategy locally

BELOW HSS INTERNATIONAL GROUPS HAVE BEEN CONTACTED:- THEY SEEM NOT BEING PRODUCING LOCALLY IN LATAM COUNTRIES (except Supplier 4 producing in Mexico - Supplier profile provided)- MOST OF THEM HAVE REQUIRED TO CONTACT THEIR OFFICE IN US


AGENDA


2/ Case Study: Steel Mechanical Structural Parts


4/ Supplier profile


POTENTIAL AND RECOMMENDED FUTURE ACTIONS

To move forward with this project, DS is recommending:

To prioritize parts requiring suppliers which have a “Specialist” profile versus a “Polyvalent” one

To explore potential collaboration with:

1/ Strong actors producing equipment parts for the automotive and aeronautics industries.

2/ Suppliers working in the nuclear and solar energy industries

To study the possibility to combine multiple suppliers expertise within a same geographic zone

To study and negotiate potential collaboration with suppliers producing international standards products such as ASTM A500

Highest potential suppliers we have identified, mainly based upon ASTM A500 availability, factory quality standards as well as manufacturing capacities and capabilities:

In Colombia : Supplier 3

In Mexico : Suppliers 6, 9 and 13

In Brazil : Suppliers 18 and 2

To source and follow-up manufacturers technical capabilities which will supply parts for World Cup 2014 and Summer Olympics 2016 constructions in Brazil


AGENDA


2/ Case Study: Steel Mechanical Structural Parts


4/ Supplier profile

© 2011 Dragon Sourcing. All rights reserved. 18

All suppliers who responded to RFI are presented to client using following company profiles.This document shows full details in terms of supplier´s business, production, social responsibility and quality management

TOP 5 CUSTOMERS

Customers Industry Country Percentage of sales

CLIENT 1 Aeronautic BRAZIL 20%

CLIENT 2 Automotive BRAZIL 15%

CLIENT 3 Road infrastructure BRAZIL 10%

CLIENT 4 Automotive BRAZIL 25%

COMPLIANCE WITH LOCAL LAW ( Y / N )

Children labor YES

Health & SafetyYES

Environmental issuesYES

Confidentiality AgreementYES

PRODUCTION CAPACITY

Total maximum production capacity (units or m²or tons / year) in 2009. 35,000 hours

Actual annual production (units or m²or tons / year) in 2009 25,000 hours

What is your current level capacity (%) for the 6 next months? 18,000 hours

Are you available to accept new client orders? (Y/N) Yes

GENERAL INFORMATION

Supplier name SUPPLIER 1City São Paulo

Province São Paulo

Zip code 13486-325

Contact person M. CARDEROSO

Job title Director

Email [email protected]

Phone number 19 3451 0000

Fax number 19 3451 0000

Website www.xxxxyyyyy.com

BUSINESS INFORMATIONFound Year 1975

What is the nationality/region of your company? Brazilian

How much capital do you have (in US$)? 22,000,000

Are you a manufacturer or distributor? Manufacturer

Do you have export experience? NO

Number of employees 400

Turnover(in USD)

2007 2008 2009 2010

n/a n/a n/a n/a

% Sales exports to the main markets

North America (%)

South America

(%)EU (%)

Asia / Pacific(%)

0 Brazil 0 0

mailto:[email protected]



QUALITY CONTROL

How do you manage the TRACEABILITY in the production process ? Parts are identified with specific codes which can be tracked up to the delivery

Do you have a QUALITY CONTROL PROCESS? (Y/N) If yes, please describe briefly your QC process. Meeting to decide detailed quality inspection plan and production plan based upon analysis of designs, production methods…Control during final inspection

Do you have IN-LINE QUALITY INSPECTIONS (Y/N)?How often do you have these inspections? On which production stages do you conduct theses inspections?

Yes. First piece is inspected and for every ten pieces produced we inspect another one. This can be adapted if any specific requirements from client.

What type of inspection do you perform:Inspection on 100% of production OR inspection on samples?

100% inspection on critical aspects – for less critical, first and we inspect one piece every ten pieces produced.

If sampling inspection, what is your sampling rate? 10%

What performance do you achieve (on average) in out-going quality measures? (What is your REJECTION RATE %)? 1 a 2%

How long do you keep your QC records? 12 months

Yes / No Date of Certificate Expiration date Certificate number Certifying

Org.

What QUALITY and ENVIRONMENTAL registrations do you have? ISO 9000 No

ISO 9001 Yes 12/06/03 21/09/12 XXXX0003 Bureau Veritas

ISO 14000 No

Name of Certificate Date of Certificate Expiration date Certificate number Certifying

Org.

Other COMPANY CERTIFICATIONS do you have? No

Name of Certificate Date of Certificate

Expiration date Certificate number Certifying

Org.

What International/Domestic PRODUCT CERTIFICATION do you have? No

steel structural parts case study

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