Case Study-New Plant Building “Capex Sourcing in China”

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New plant building Case study Capex Sourcing in China Shanghai, Jan 2014 Dragon Sourcing - 龙 龙 Your Tailored Sourcing Approach to LCC Sourcing

Transcript of Case Study-New Plant Building “Capex Sourcing in China”

Page 1: Case Study-New Plant Building “Capex Sourcing in China”

New plant building Case studyCapex Sourcing in China

Shanghai, Jan 2014

Dragon Sourcing - 龙 源 Your Tailored Sourcing Approach to LCC Sourcing

Page 2: Case Study-New Plant Building “Capex Sourcing in China”

Agenda

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1. Context

2. Sourcing Strategy

3. Conclusions and Results

Page 3: Case Study-New Plant Building “Capex Sourcing in China”

© 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

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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

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8 categories-5 categories for equipments -1. Pipelines, 2. Tanks&Silos

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1. Pipelines 2. Tanks and Silos

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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

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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

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8 categories-5 categories for equipments -4. Part of production line-lines

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Lines-Moulding line Lines-easy line

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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

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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

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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

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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 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

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Product drawing

The first step was to develop a comprehensive understanding of the requirements

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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

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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

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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

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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

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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

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© 2014 Dragon Sourcing. All rights reserved.

Contact information

Company name Supplier 4

City Shanghai

Province N/A

Website

Contact person

Tel

E-mail

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

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© 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

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  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

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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

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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

Page 25: Case Study-New Plant Building “Capex Sourcing in China”

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

Page 26: Case Study-New Plant Building “Capex Sourcing in China”

5 tank suppliers were finally selected for audit

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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 

Page 27: Case Study-New Plant Building “Capex Sourcing in China”

© 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

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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…

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Audit outcome is summarized in a rated profile of each supplier

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Audit summary

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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

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Agenda

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1. Context

2. Sourcing Strategy

3. Conclusions and Results

Page 32: Case Study-New Plant Building “Capex Sourcing in China”

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

Page 33: Case Study-New Plant Building “Capex Sourcing in China”

© 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

Page 34: Case Study-New Plant Building “Capex Sourcing in China”

• 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