case study: multi category sourcing in china, india, vietnam and turkey

Multi Category Sourcing in China, India, Vietnam and Turkey

Case Study Report

1© 2015 Dragon Sourcing. All rights reserved.

Dragon SourcingYour Tailored Sourcing Approach to Best Cost Countries

1. Objectives, Approach, and Timeline


2. Demand Analysis of 5 categories

3. RFI/RFQ approach

4. Results Summary

Agenda

Objectives


ObjectivesThe objective of this sourcing trial is to prove the approach and benefits of collaboration with Dragon Sourcing.

ScopeThis scope is to conduct sourcing across 5 different categories across a number global markets to secure competitive suppliers

Categories:1. Barrier Fencing

2. Caulking Guns

3. Bulk Bags

4. Scaffolding

5. 150lb Screw Fittings

Approach – Phase 1

Phase 1: Supplier Pre-Qualification


No. Step Deliverables1. Demand Analysis

Work with client to define and understand the products and requirements (specs, volumes, materials, production technology requirements)

Project Requirement Questionnaire

Kick-Off Report2. Supply Analysis

Identify long list of potential suppliers in the selected markets by leveraging B2B Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References.

Supplier Long List

3. Telephone Pre-screeningSelection 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, minimum company size, interest in participating)

Shortlist for RFI/RFQ

4. Develop RFI/RFQPrepare an RFI/RFQ document, with an aligned Balanced Scorecard that has the objective to pre- qualify the competitiveness and capabilities of the suppliers, including: Background, financial, Client and product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology capability, R&D capability

RFI/RFQ Template Balanced Scorecard Introduction Letter NDA

Milestone 1: RFI/RFQ & Scorecard Approved5. Conduct RFI/RFQ Administration

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

Control Sheet Completed RFI/RFQs

6. Analyze RFI/RFQ ResponsesAnalysis of RFI/RFQ responses, estimation of logistics costs, and preparation of a report which profiles& objectively ranks the suppliers by capability and competitiveness, including a recommendation for those to be audited.

RFI/RFQ Report Supplier Profiles Proposed Shortlist for

AuditMilestone 2: Shortlist for Audit Agreed

Approach – Phase 2

Phase 2: Selection & Contracting


No. Step Deliverables7. Prepare for Audits

Planning the audit schedule, budget, and drafting the Audit Questionnaire that will be used for the supplier self-assessment and on-site audits.

• Audit Plan• Audit Questionnaire

8. Conduct AuditsDistribution of the Audit Questionnaire to suppliers for their self-assessment (and to get them prepared), followed by onsite audits, with or without XXX buyers, of all the suppliers. Focus is management, logistics, production & quality.

Completed Audit Questionnaires

9. Analyse Audit ResultsAnalysis of the audit results, together with RFI/RFQ results, and preparation of a report that ranks the suppliers, including a recommendation for those for sample development.

Audit Report Supplier Audit Profiles Proposed Shortlist for

SamplingMilestone 3: Shortlist for Sampling Agreed10. Sample Development & Testing

Managing the sample development and testing iterations to determine which suppliers can meet the quality.

Samples Sample Analysis Reports

11. Negotiation & ContractingConducting final negotiations with the shortlisted suppliers, and facilitating contracting between selected suppliers and XXX.

Contract(s)

Milestone 4: Contracts Secured

ScheduleNot started In process

Done Delay

Steps 6 - Oct. 13 - Oct. 20 - Oct. 27 - Oct. 3 - Nov. 10 - Nov. 17 - Nov. 24 - Nov.

1. Demand Analysis

2. Supplier Identification

3. Telephone pre-screening

4. Develop RFI/RFQ

5. Administer RFI/RFQ

6. Analyze RFI/RFQ Responses

1 RFI/RFQ Approved

2


Shortlist for Audit/Samples Agreed




3. RFI/RFQ approach

4. Results Summary

Agenda

Demand Analysis - Barrier Fencing

Product Picture

Category: Barrier Fencing Annual Quantity: 3000 rolls


Product Specification

Product description Barrier Fencing, weather resistant Colour: OrangeSize: 1m x 50mMesh dimensions 100mm x 40mm Weight: 80GSM SQ/mtr

Material Durable plastic

Other requirement Coloured A4 paper label required.

Destination & Loading Information

Destination: UK

Number of pieces in a 20‘ GP container 2,000 rolls

Number of pieces in a 40‘ GP container 4,000 rolls

Number of pieces in a 40‘ HC container 4,300 rolls

Demand Analysis - Caulking Guns

Product Picture

Category: Caulking Guns

400ml extra strong trade skeleton caulking gun Annual Quantity: 15,000 pcs

400ml professional revolving caulking gun Annual Quantity: 10,000 pcs



Product description400ml extra strong trade skeleton caulking gun

400ml professional revolving caulking gun

Material

Other requirement


Destination: UK

400ml extra strong trade skeleton

400ml professional revolving

Number of pieces in a 20‘ GP container 28,000 16,000

Number of pieces in a 40‘ GP container 56,000 32,000

Number of pieces in a 40‘ HC container 69,000 38,000

Demand Analysis – Bulk Bags


Product Picture Product Specification

Category: Bulk BagsAnnual Quantity: 800,000 pcs

These bags are designed and certified to be used for one filling only. An FIBC of this category cannot be reused.

Printing: Buildbase branding in white font (identical to image)

Label: Label quoting test requirements and safe loading/lifting procedures

Product description FLEXIBLE INTERMEDIATE BULK CONTAINERS (FIBC)Safety Factor (SF): 5:1Safe Working Limit (SWL): 1000kgMaterial: External Dimension: 75 x 85 x 95cm Bottom closed

Material Woven Polypropylene, 140 gsm Colour: Uncoated redUV Treated

Other requirement Single trip FIBC’s for non hazardous goods Certified to ISO 21898

Lifting loop detail:Tunnel loops are 60 x 40cm. Corner Loops are 3.8 x 30cm


Destination: UK

Number of pieces in a 20‘ GP container 7,500 Pcs

Number of pieces in a 40‘ GP container 15,000 Pcs

Number of pieces in a 40‘ HC container 17,000 Pcs

Demand Analysis - Quick Stage QS System Scaffolding

Product Picture

Category: Quick Stage QS System Scaffolding



Product description

Quick Stage QS System Scaffolding, 19 Items

Annual spend: approx. £75KMaterial Q235

Other requirement Surface treatment: HDG / Paint / Power coating


Destination: UK

Number of pieces in a 20‘ GP container 25 Tons

Number of pieces in a 40‘ GP container Not applicable as scaffolding is heavy cargo

Number of pieces in a 40‘ HC container Not applicable as scaffolding is heavy cargo

Demand Analysis - 150lb Screw Fittings

Product Picture

Category: 150lb Screw Fittings(15 items, 71 SKUs)



Product description 150lb Screw Fittings

Annual spend £77K,Annual quantity 30,800 pcs for 71 SKUs

Material 316 Stainless Steel

Other requirement


Destination: UK

Number of pieces in a 20‘ GP container 25 Tons

Number of pieces in a 40‘ GP container Not Applicable as screw fittings are heavy cargo

Number of pieces in a 40‘ HC container Not Applicable as screw fittings are heavy cargo




3. RFI/RFQ approach

4. Results Summary

Agenda

120

43

175

46

9

4

3

22

8

2

13

12

0No. of suppliers

identified and have been called

No. of suppliers passed phone screening and

included in RFI/RFQ process

No. of suppliers responded to RFI/RFQ

No. of suppliers recommended

China India Turkey Vietnam

204 3

742

30

60

120

150

180

210

Malaysia

Progress Review – Barrier FencingIn total, 204 suppliers has been identified and called; 74 suppliers have passed the phone screening and have been included in RFI/RFQ process, 24 RFI/RFQ response have been received. 7 suppliers are recommended for factory audit and sampling.

Barrier Fencing – Progress Review

24

7


204 suppliers were identified initially.

130 suppliers were rejected during phone screening process the following main reasons:• Doesn’t produce the same barrier fencings (some are in other

material like PP, some are with different sizes, different color, different weight, some are knitting, some are metal, some are chain link…etc.)

• Traders, not a manufacturer.• Doesn’t export, or can’t export by themselves.

74 suppliers were included in the RFI/RFQ process,

50 suppliers didn’t respond to RFI/RFQ for several main reasons:• After checking the RFQ specifications, some supplier realized they

can not produce the exactly same product.• Some suppliers are not able to respond to RFI to provide their

produce barrier fencing in their own factory.• Some promised to respond on time but after a lot of pushing they

still didn’t respond.• Some are not interested and doesn’t want to participate in our

selection process.

24 RFI/RFQ supplier responses were secured and after analysis of competitiveness and capability we recommend 7 suppliers for next steps: factory audit and sampling.

50 26 6 12 2 4

Barrier Fencing – Supplier Phone screening & RFI/RFQ process rejection reason analysis

Phone screening - Failed reason analysis RFI/RFQ process - Rejection reason analysis

130 77 37 1 1 14


China India Vietnam Malaysia Turkey

8 5 11 1 2

8

6 1 1

2 1 2

1

1

RFI/RFQ Process ‐ Rejection reason No. of %

suppliersDeclare unable to produce the same productafter checking the spec. and pictures in RFQ(Some supplier only produce weaving 27 55%fencing…etc.)Not interested in participating the selectionprocess after reviewing the RFI/RFQ template 8 16%

Too busy to reply or can't respond on time 8 16%

Not manufacturing barrier fencing by theirown factory 5 10%Not intend to produce Orange barrier fencingin next year 1 2%Only produce heavy barrier fencing with 550GSM 1 2%

Phone Screening ‐ Failed reason No. of

%suppliers

China India Vietnam Malaysia Turkey

Don't produce required plastic barrier fencing, some are metal, chain link fence, some are other type of fencing…etc.

4837%

12 23 1 1 11

Don’t have export license, but they can export through a Trading company.

1814%

18

Traders only, not a manufacturer. 1612%

4 10 2

Don’t produce barrier fencing in orange color, some only produce green color.

1512%

15

Can’t meet GSM requirement, some producing much heavier fencing over 120GSM.

1411%

14

Can’t meet mesh requirement 100xx x 40mm. 6

5%

6

Not reachable 6

5%

5 1

Not interested to participate in the project or selection process. 4

3%

3 1

Doesn’t export, only supply to domestic market. 3

2%

2 1

Barrier Fencing - DDP Price Calculation

FOB Price (supplier) Freight forwarding, customs & duties

DDP Price

+ + +

+ Cargo Marine Insurance +

FOB PriceSea Freight

Import Duty

UK Local charges Inland Truck Transportation

cost+ DDP Price=

1) Sea Freight: from different ports to Southampton (New freight rate received from forwarder on Nov. 6th, 2014)

2) UK local charges with Inland truck transportation cost: (New rate received from forwarder on Nov. 6th, 2014.) Destination address: xxxx UK

3) Import duty rate: was searched in European commission Taric website China: 6.5%, Vietnam: 0%, India: 0%, Turkey: 0%


Barrier Fencing - RFQ Summary


NOTE: Suppliers marked in blue color are the recommended suppliers to proceed with next steps (audits/sampling).

Category Pictures Annual Qty. No. RFIScore

Supplier name Country of Origin

FOB Port FOB price In US$

CIF price In US$ DDP Price In US$ Annual Spend

20' GP 40' GP 40' HC 20' GP 40' GP 40' HC

Barrier Fencing

3,000 rolls 1 84 Supplier 1 China Ningbo $8.066 $8.657 $8.657 $8.641 $9.919 $9.569 $9.528 $28,708

2 86 Supplier 2 China Ningbo $8.200 $8.791 $8.791 $8.775 $10.063 $9.713 $9.671 $29,139

3 80 Supplier 3 China Ningbo $8.310 $8.902 $8.902 $8.886 $10.180 $9.830 $9.789 $29,491

4 79 Supplier 4 China Tianjin $9.100 $9.694 $9.694 $9.678 $11.025 $10.675 $10.633 $32,024


6 Supplier 6 China Tianjin $10.500 $11.099 $11.099 $11.083 $12.520 $12.170 $12.129 $36,511

7 83 Supplier 7 China Qingdao $10.600 $11.199 $11.199 $11.183 $12.627 $12.277 $12.236 $36,832


9 49 Supplier 9 Turkey Istanbul $12.000 $12.611 $12.363 $12.341 $13.311 $12.713 $12.666 $38,139

10 84 Supplier 10 Turkey Izmir $12.500 $13.113 $12.865 $12.842 $13.813 $13.215 $13.168 $39,644


12 57 Supplier 12 China Guangzhou $12.400 $13.005 $13.005 $12.989 $14.551 $14.201 $14.159 $42,602

13 Supplier 13 India N/A $13.990 $14.591 $14.389 $14.364 $15.291 $14.739 $14.690 $44,216


15 67 Supplier 15 India Mumbai $14.500 $15.103 $14.901 $14.876 $15.803 $15.251 $15.201 $45,752

16 Supplier 16 China Shanghai $13.400 $14.009 $14.009 $13.993 $15.619 $15.269 $15.228 $45,807




20 55 Supplier 20 Turkey Istanbul $16.000 $16.625 $16.376 $16.354 $17.325 $16.726 $16.679 $50,179


22 Supplier 22 China Ningbo $16.000 $16.617 $16.617 $16.601 $18.397 $18.047 $18.006 $54,142

23 48 Supplier 23 India Mumbai $18.800 $19.417 $19.215 $19.190 $20.117 $19.565 $19.516 $58,694

24 33 Supplier 24 Turkey Izmir $21.500 $22.143 $21.895 $21.872 $22.843 $22.245 $22.198 $66,734

Barrier Fencing - Price Comparison Chart

Barrier Fencing - Unit price comparison

P.S. Supplier 9 was recommended but with low score is because they are considered strong however they’re not willing to disclose some of their company information at early stage. Once they are shortlisted, they’re willing to provide more of their company information.

$8.07 $8.20 $8.31

$9.79$9.10 $9.44

$11.00 $10.50 $10.60 $10.70$11.85

$12.40$13.00 $13.40 $13.50 $13.50 $13.90

$15.00$16.00

$13.99$14.69 $14.50

$19.52$18.80

$12.00$12.67 $12.50

$16.68$16.00

$22.20$21.50 33

$9.53 $9.67$10.63

$12.13 $12.24 $12.34

$13.57$14.16

$14.80 $15.23 $15.33 $15.33 $15.76$16.94

$18.01

$15.20

$13.17

84 86 80 79 81

0

83 70 8757

0 0 0

51

0 0 0 0

6748 49

8455

‐500

‐400

‐300

‐200

‐100

0

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

Supp

lier 1

Supp

lier 2

Supp

lier 3

Supp

lier 4

Supp

lier 5

Supp

lier 6

Supp

lier 7

Supp

lier 8

Supp

lier 1

1

Supp

lier 1

2

Supp

lier 1

4

Supp

lier 1

6

Supp

lier 1

7

Supp

lier 1

8

Supp

lier 1

9

Supp

lier 2

1

Supp

lier 2

2

Supp

lier 1

3

Supp

lier 1

5

Supp

lier 2

3

Supp

lier 9

Supp

lier 1

0

Supp

lier 2

0

Supp

lier 2

4

China

FOB Price DDP Price RFI Score

India Turkey

Sum of Price ‐ FOB Sum of Price D‐ DP Average of RFI Score FOB‐

RFI Score 100


Unit price / Roll

Recommended suppliers

36 32 32 3929 28 29 34

25 24 2013

3022 19 15

3029 25

23

24 25 24 14

13 11 21

13

30

159

8

1216 17 14

18 17 1614

1311

17

12

17

1113

5

9 10 10 8 10 10 108

65

10

10

7

78

5

0

10

20

30

40

50

60

70

80

100

90

Supplier 11 Supplier 2

RFI Score 87

86

Supplier 1

84

Supplier 7

83

Supplier 5

81

Supplier 3

80

Supplier 4

79

Supplier 8 Supplier 12 Supplier 18 Supplier 15 Supplier 13 Supplier 10 Supplier 20 Supplier 9 Supplier 24

70 57 51 67 48 84 55 49 33

India

Turkey

China

Company Background Production Capability Quality Control Management & Certifications Cooperation Willingness

Barrier Fencing - Supplier RFI scorecard summary24 RFQ responses were secured, however only 16 suppliers completed the RFI section.

RFI Score summary – Barrier Fencing

Recommended suppliersP.S. Supplier 9 was recommended but with low score is because they’re not willing to disclose some of their company information at early stage, once they are shortlisted, they’re willing to provide more of their company information.


Barrier Fencing - Supplier Recommendation


No. Country Supplier name RFIScore

Sample available

Sample cost

Sample Lead time

Recommend for factory

Audit

Reason for recommending

1 China Supplier 2 86 Y Free 10 days Y • Competitive price.• Rich experience in the industry, have produced the same barrier fencing before.• 30% export to Europe with 11 years of export experience, especial good experience export to UK.• Good production capacity 3,650 Tons per year.

2 China Supplier 1 84 Y Free 15 days Y • Competitive price.• Rich experience in the industry, have produced the same barrier fencing before.• 70% export to Europe with 7 years of export experience.• Production capacity 2,000 Tons per year.

3 China Supplier 5 81 N US$ 250 15 days Y • Competitive price.• Good experience, have produced the same barrier fencing before, but didn’t keep samples, so they

will charge for sample cost.• 10% export to Europe with 14 years of export experience.• Production capacity 2,000 Tons per year.

4 China Supplier 3 80 Y Free 15 days Y • Competitive price.• Rich experience in the industry, have produced the same barrier fencing before.• 45% export to Europe with 4 years of export experience.• Production capacity 2,000 Tons per year.

5 China Supplier 4 79 Y Free 15 days Y • Competitive price.• 25% export to Europe with 4 years of export experience.• Good experience in the industry, have produced the same barrier fencing before.• Production capacity 2,000 Tons per year.

6 Turkey Supplier 10 84 Y Free Immediately Y • Very promising company with wide product range.• 44% export to Europe with 7 years of export experience.• They produce barrier fencing and also bulk bags, paper bag, plastic cutlery.

7 Turkey Supplier 9 49 Y Free Immediately Y • Supplier 9 is the only big manufacturer who only does this business in Turkey.• 10% export to Europe with 10 years of export experience.• Very professional firm, easy to communicate in English.

Country: ChinaCompany name: supplier 2Company Background

RFI/RFQ rank 2

Score: 86


COMPANY BACKGROUND

Year Founded 2003

Ownership(State Owned/ Private/ Foreign Investment)

Private

Business Type: Manufacturer, or trader ? Manufacturer

Registered Capital (in US$) 1M

Export License ? (Y/N) Yes

Be able to export to UK / Europe? (Y/N) 11

Export Experience (Years) Yes

Work Floor Size ( Square meters) 3,000

Total Employee Number 50

No. of English speaker and writer 5

TOP 3 CUSTOMER

Customer Name Industry Country % of Sales Type of Product

Top 3 Customers

Midwest Air N/A US 30% N/A

Signet N/A Australia 10% N/A

TIENHUI N/A South Africa 10% N/A

CORPORATE SOCIAL RESPONSIBILITY

Declare to adhere to all rules and regulations in respect to child labor? (Y/N) Yes

Working hours specified in the employment contract? (Y/N) Yes

Declare to adhere to all rules and regulations in respect to environmental issues? (Y/N) Yes

Declare to adhere to all rules and regulations in respect to health and safety issues? (Y/N)

Yes

Commercial terms

Payment terms 30% deposit in advance and the balance to be paid against the fax copy of the shipping documents.

HUMAN RESOURCES

Factory Workers Quality Control staff

Technical Staff / R&D Engineer

Sales & Management

Others

Employee No. 18 6 5 15 3

ANNUAL TURNOVER

2014 Forecast 2013 2012

Total sales turnover (in M USD) 4.5M 3.5M 2.5M

MAIN MARKET

Europe (%) US (%) Asia (%) Domestic (%) Rest of the world (%)

% of Sales 30% 30% 20% 0% 0%

COMPANY INFORMATION

Company Name

Factory Address

City

Province

Country

Company Website

CONTACT PERSON INFORMATION

Contact Person

Title

Email Address

Telephone Number

Mobile Number

Country: ChinaCompany name: Supplier 2Production Capability & Quality Control Management

RFI/RFQ rank 2

Score: 86


PRODUCTION CAPABILITY

Main Products plastic grids and geosynthetics

Main materials Plastics

Number of production lines 6

Maximum Production Capacity (Tons/ year) 2,000

Actual Production Capacity of 2013 (Tons / year) 1,800

No. of Shifts Per Day 2

Working Hours Per Shift 8 hours

International Standards Applied Ali certification

Standard lead time after first order 20days

Lead time for repeat orders 15days

PRODUCTION EQUIPMENT

Equipment name Quantity Brand / Type Usage of the Equipment

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

N/A N/A N/A N/A

INVENTORY MANAGEMENT

Formal Documented Inventory Management System in place? (Y/N)

Yes

Use ERP (Enterprise resource planning)? (Y/N) No

Follow the FIFO management with the stock? (Y/N) Yes

CERTIFICATIONSCertificate Y/N Date of

CertificateDate of Expire

Certificate number.

Certifying Organization

ISO 9001:2008Quality management systems

Yes Yes N/A N/A N/A N/A

ISO 14001Environmental management

systems

No N/A N/A N/A N/A N/A

Other current certificates:

(Please specify)

Ali certification Yes Yes N/A N/A N/A Alibaba

N/A N/A N/A N/A N/A N/A N/A

QUALITY CONTROL MANAGEMENT

General Production Defective Rate (% rejected)? 0.01%

Time to keep QC records? (in Month) 3

Accept 3rd party QC? (Y/N) Yes

Customer Satisfaction Survey in place? (Y/N) Yes

Rules for maximum reaction time to deal with quality claim from client? (Hours)

24

Inspection?˄Y/N˅

Inspection report

available? (Y/N)

Frequency or

testing %

QC Criteria Testing Method Testing Equipment

Incoming Raw material quality control


In-process / On-line quality control


Finished product quality control


Country: ChinaCompany name: Supplier 2Factory Photos

RFI/RFQ rank 2

Score: 86


FACTORY PHOTOS

Factory Overview Office R&D room

Workshop Workshop Warehouse

Machinery Machinery Lab / test center


2. Demand Analysis of 5 Categories

3. RFI/RFQ approach


4. Results Summary

Agenda

Across all 5 categories,DS have identified 639 China suppliers, 278 India suppliers， 149 Turkey suppliers and 53 Vietnam and Malaysia suppliers; resulting in 128 RFI/RFQ received, 29 suppliers recommended for audit and sampling.


China sourcing India sourcing Vietnam & Malaysia sourcing

Turkey sourcing 5 Countries In Total

# Category Supplier Identified

Tel Pre‐screen called

# of supplier passed phone screening

RFI / RFQ received

Supplier recommended

Supplier Identified



RFI / RFQ received


Supplier Identified



RFI / RFQ received


Supplier Identified



RFI / RFQ received


Supplier Identified



RFI / RFQ received


1 Barrier Fencing 120 120 43 17 5 46 46 9 3 0 16 16 14 0 0 22 22 8 4 2 204 204 74 24 7

2 Caulking Guns 107 107 22 21 4 47 47 6 1 0 0 0 0 0 0 14 14 5 2 0 168 168 33 24 4

3 Bulk Bags 111 111 64 17 0 56 56 34 12 6 16 16 5 5 0 42 42 26 4 0 225 225 129 38 6

4 Scaffolding 128 128 34 14 5 61 61 33 5 1 9 9 0 0 0 26 26 16 2 0 224 224 83 21 6

5 Screw Fittings 173 173 45 13 5 68 68 31 6 0 12 12 1 0 0 45 45 7 2 1 298 298 84 21 6

5 Categories In Total 639 639 208 82 19 278 278 113 27 7 53 53 20 5 0 149 149 62 14 3 1119 1119 403 128 29

case study: multi category sourcing in china, india, vietnam and turkey

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