building material case study

Building material case Study

Decorative handles, resin basins & extruded aluminum profiles

Shanghai 2012

Dragon Sourcing - 龙源 Your Tailored Sourcing Approach to LCC Sourcing

2

Objectives

Context

To deliver sustainable procurement savings to our client through identifying and fully qualifying competitive suppliers in China for three different categories: decorative handles, resin basins and extruded aluminum profiles, capable of meeting the requirements by:

Expanding global sourcing and internationalize our client’s procurement

Identifying and qualifying new suppliers in China for decorative handles, aluminum extrusion and resin basins

Building up long term relationships with reliable and capable Chinese suppliers and expand our client’s supply base

Achieving sustainable and significant savings

© 2012 Dragon Sourcing. All rights reserved.

3

Steps November December January February

1

Collect detailed spend information about the category such as technical requirements, standards applied, material specification, drawings, pictures, consolidated volume by our client consuming factories, and current unit prices

2 Collect one representative sample of the products to be sourced in our Shanghai office

3 Identify list of potential suppliers China to include in the RFI / RFQ process

4Send RFI / RFQ to include all key supplier qualification criteria (e.g.: financial, technology, manufacturing capability, corporate responsibility, quality…) and quotation requirements

5 Administer the RFI / RFQ process

6Analyze responses and use balance score carding process together with our client’s management team to rank suppliers and recommend suppliers which our client needs to take through a formal qualification process

7 Jointly develop with our client the structure of the audit report

8Carry out audits (either alone or jointly with clients auditors or buyers) for the short listed suppliers that appear attractive and competitive based on RFI/RFQ process

9 Issue audit reports and rank suppliers based on audit and price competitiveness

10 Recommend which suppliers to move to sample development stage and manage sample development stage

11 Based on sample quality select suppliers with who to enter into final contract negotiations and support the contract negotiation process

MilestonesStarted FinishedNot-started Delayed

Work plan and timeline

© 2012 Dragon Sourcing. All rights reserved. Phase 1 Phase 2

As too bulky, samples of basins cannot be sent to

DS Shanghai office

Handles samples received to DS Shanghai office

today

Samples currently

not mandatory

Basins

Product name Product specifications Annual quantity Drawings

Resin basin n80- plan N 80 807x457x190 mm 10,000 pcs

Resin basin n120- plan N120 1205x457x190 mm 6,000 pcs

Resin basin k80- plan K60 602x410x148 mm 3,000 pcs

4© 2012 Dragon Sourcing. All rights reserved.

Product name Product specifications Annual quantity Pictures

ABS handle with matt aluminum finishing (reference FB 92)

Interaxial 96 mm 379,000 pcs

ABS handle with matt aluminum finishing (reference 521440100AA)

Interaxial 160 mm 481,000 pcs

Zamak handle (reference 52143710000) Interaxial 160 mm 70,000 pcs

5

Decorative handles


Aluminium Profiles

Product number Product specifications Annual quantity in kg Drawings

00059951Kg/Ml: 0.32

Length (mm): 5,500Part weight (kg): 1.76

34,000

00059963Kg/Ml: 0.82


31,000

00059952Kg/Ml: 0.41


30,000

00051966Kg/Ml: 1.82


26,000

00059979Kg/Ml: 0.69


24,000

00059947Kg/Ml: 0.23


24,000


Basins supplier base

7

Xinjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Qinghai

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

ShanxiShandon

g

Xizang

Sichuan

Yunan

Guizhou

Henan

Jilin

LiaoningHebe

i

Guangdong

GansuSHANGHAI

Hong Kong

Taiwan

Heilongjiang

Sichuan

Neimongu

Heilongjiang

Province # of suppliers

Anhui 1

Fujian 1

Guangdong 16

Hong Kong 2

Jiangsu 1

Shanghai 3

Zhejiang 38

Total 62


8

Basins quotations


35

65

30

Client’s current FOB price paid

Supply base for decorative handles

9


Guangdong 44

Hebei 1

Jiangsu 4

Shanghai 1

Zhejiang 51

Total 101

Xinjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Qinghai

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

ShanxiShandon

g

Xizang

Sichuan

Yunan

Guizhou

Henan

Jilin

LiaoningHebe

i

Guangdong

GansuSHANGHAI

Hong Kong

Taiwan

Heilongjiang

Sichuan

Neimongu

Heilongjiang


10

Decorative handles quotations

© 2012 Dragon Sourcing. All rights reserved. Client’s current FOB price paid

0.85

0.19

0.16

Aluminium extrusion supply base

11

Xinjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Qinghai

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

ShanxiShandon

g

Xizang

Sichuan

Yunan

Guizhou

Henan

Jilin

LiaoningHebe

i

Guangdong

GansuSHANGHAI

Hong Kong

Taiwan

Heilongjiang

Sichuan

Neimongu

Heilongjiang


Anhui 2

Beijing 1

Chongqing 2

Fujian 8

Guangdong 58

Guangxi 1

Hebei 3

Heilongjiang 1

Hubei 2

Hunan 1

Jiangsu 30

Liaoning 3

Shandong 9

Shanghai 9

Sichuan 1

Tianjin 1

Zhejiang 13

Total 145


Supplier YBusiness overview

Company Name Supplier Y

Town Shenzhen

Province Guangdong

Company Website N/A

Contact Person N/A

Title N/A

Email N/A

Tel N/A

Mobile phone N/A

Business Information

Manufacturer or trader Manufacturer

Ownership (State Owned/ Private/Foreign Investment) Enterprise With Sole Investment

Year Founded 1993

Registration capital (RMB) 5M HK$

Have export license (Yes/No) Yes

How many years of export experience 18years

work floor size (m²) 16,000 sqm

Main type of products ?

Cabinet Handle and Knob, Furniture Handle and Knob,

Bathroom Accessories and related Hardware.

Decorative handles category- company profile

Turnover (in RMB)

2009 115M

2010 120M

Forecast 2011 110M

Sales breakdown per region (2010)

USA (%) 10%

Western Europe (%) 35%

Japan (%) 10%

Others (%) 55%

Top 3 Customers

Customer name Country Sales %

B&Q China UK 15%

Haier China 15%

Homeart China 15%

Human Resources

How many employees in total? +360

Employees in sales & management 12

Employees in R&D 22

Employees in QC 30

Number of workers 320

Corporate Responsibility

Adhere to all rules and regulations in respect to (Yes/No)

Child labour Yes

Environmental issues Yes

Health and safety issues Yes


Supplier YProduction Capacity & Quality management

Production Capacity & Machinery

Major categories of products manufacturing

Yearly production capacity (in

PCS)

2010 produced volume (in PCS)

% Exported in 2010

Zinc Alloy Pull Handles 12M 9M 70%Aluminium Alloy Pull Handles 8M 5M 70%

Plastic Pull Handles 6M 3.5M 80%Ceramic Pull Handles 10M 5M 90%Door Locks and Knobs 6M 2M 60%

MaintenancePreventative maintenance programme (Y/N) Yes

Production equipment

Equipment Producer Date acquired Quantity

Die casting machine L.K 2005 5 sets

Grinding machine LI-0618 2004 2 sets

Drilling machine Z 516 2005 10 sets

Milling machine LT-3S 2004 4 sets

EDM HD-430 2004 1 set

Current level capacity for the next 6 months? 65%

Inventory ManagementUse of ERP (Y/N) Yes

Follow FIFO and product traceability Yes

Can you produce ABS handles with matt aluminum finishing?(Y/N) Yes

Can you produce Zamak handles (with aluminum finishing)? (Y/N) Yes

Quality certifications

Certificate Y/N Date of certification

Expiration date

Certificate number

Certifying orga

ISO 9000 No N/A N/A N/A N/A

ISO 9001 Yes 2.9.08 1.9.11 110807046 Moody Intl

ISO 14000 No N/A N/A N/A N/A

Products compliant with CE? (Y/N) Yes

Production Capacity Quality Management

Quality control and testing

Managing traceability in production process Tracking number with ERP

Experience with AQF? Yes

Formal QC criteria in house for QC (Y/N). Description

quality control in each of production process from incoming materials, engineering, fabrication,

processing, production up to shipment.

Daily on line inspection(Y/N). How often?

Around 100% inspection, and AQL before shipment



Supplier YFactory pictures

