Global Sourcing Case study in Appliances Market

Global Sourcing Case study in Appliances Market

May, 2013

Dragon Sourcing - 龙源Your Tailored Sourcing Approach to LCC Sourcing

Agenda

© 2013 Dragon Sourcing. All rights reserved. 2

1. Context

2. Sourcing Strategy

3. Conclusions and Results

Context

One of the European leading manufacturers and distributors of major domestic

appliances (washing machines, fridges, freezers, ovens etc.)

Selected Dragon Sourcing to launch an LCC programme for 5 spend categories in 9

countries

• 5 categories: fan motor, bearing, run capacitor, wot evaporator and yellow glass wool

• 9 countries: China, China Taiwan, Indonesia, Thailand, Malaysia, South Korea, Turkey, Russia and Ukraine

Through the programme, identify and qualify new competitive suppliers in the selected

sourcing countries.



• 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 Sourcing

Manager

Buyer

Buyer

Buyer

Buyer

Buying Analyst China

Buying Analyst India

Buying Analyst

Vietnam

The sourcing programme was managed by a multinational team of Dragon

Sourcing buyers

Buying Analyst

Turkey

Buying Analyst

Ukraine

Buyer

5 spend categories


Fan Motor Bearing

5 spend categories (continued)


Run Capacitor Wot Evaporator Yellow Glass Wool

Agenda


1. Context




• 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 a

cti

vit

ies

Dragon Sourcing went through the following 2 stage process




– Volumes

– Deadlines
















pre-qualification


Key a

cti

vit

ies


Product drawing

The first step was to develop a comprehensive understanding of the

requirements


Product picturesProduct Wot Evaporator

Yearly Qty XXXXXXpcs

Current

Price

(DDU)/pc

EUR XXX

Target

Price

(DDU)/pc

EUR XXX

Savings

target-13%

Packaging

-96 pcs per

packaging stacked in

a filmed pallet in a

maximum 4 ranks


then an extensive supplier data base is built leveraging multiple sources of

information

Company and contact information

No.Product

category

Supplier

nameProvince City Website Source

Contact

PersonEmail Telephone Mobile

1Wot

EvaporatorSupplier 1 Hubei Jingzhou

2Wot

EvaporatorSupplier 2 Anhui chuzhou

3Wot

EvaporatorSupplier 3 Guangdong Foshan

4Wot

EvaporatorSupplier 4 Shandong Jinan

5Wot

EvaporatorSupplier 5 Guangdong Zhongshan

6Wot

EvaporatorSupplier 6 Henan Xinxiang

7Wot

EvaporatorSupplier 7 Zhejiang Ningbo

Sources of Information - China

Website

name websites Remark

Alibaba www.alibaba.com

B2B for all over

the world

Global

Sources

www.globalsources.

com

B2B for all over

the world

Gongchang

www.gongchang.co

m

B2B for all over

the world

Tradekey www1.tradekey.com

B2B for all over

the world

ECVV www.ecvv.com

B2B for all over

the world

EC21 www.ec21.com

B2B for all over

the world

Hellotrade www.hellotrade.com

B2B for all over

the world

Trade Asia www.etradeasia.com B2B for Asia

Asian

Products

www.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.com

TOP 1 source

engine in China

http://www.alibaba.com/

http://www.globalsources.com/

http://www.globalsources.com/

http://www.gongchang.com/

http://www.gongchang.com/

http://www.ecvv.com/

http://www.ec21.com/

http://www.hellotrade.com/

http://www.etradeasia.com/

http://www.asianproducts.com/

http://www.asianproducts.com/

http://www.made-in-china.com/





http://www.china.cn/

http://www.cccme.org.cn/

http://www.baidu.com/

Then, a telephone pre-screening process is carried out to select the suppliers to

be included in the RFI/RFQ process


Product criteria No.1 criteria No.2 criteria No.3 criteria No.4 criteria No.5 criteria No.6

Fan Motors

min production

capability:

3 million pcs

ISO9001

Export

experience to

western world

if no experience,

interested in

developing

export

business?

R&D dept inside

the company?

experience

working for

MDA

Yellow Glass

Wool

min production

capability:

8 million s.m.

ISO9001

Export

experience to

western world

if no experience,

interested in

developing

export

business?

R&D dept inside

the company?

experience

working for

MDA

Run

Capacitors

min production

capability:

2 million pcs

ISO9001

Export

experience to

western world

if no experience,

interested in

developing

export

business?

R&D dept inside

the company?No need

Wot

Evaporator

min production

capability:

1 million pcs

ISO9001

Export

experience to

western world

if no experience,

interested in

developing

export

business?

R&D dept inside

the company?

experience

working for

MDA

Bearings

min production

capability:

3 million pcs

ISO9001

Export

experience to

western world

if no experience,

interested in

developing

export

business?

R&D dept inside

the company?No need

Next step is to administer the RFI-RFQ process


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

1-11 Mobile phone

手机

Contact detailinformation

I. Company Background

公司信息

2-1Is the company a manufacturer, distributor or broker ?

贵司是工厂，还是分销商，或代理？

2-2

If you are a manufacturer, please describe your commercial

approach for export market (direct or Indirect Sales, through

agents …)

如果贵公司是工厂，请描述您在出口业务的商业渠道（直接或间接销售，通过代理…）

2-3

Do you belong to any group? If yes, can you provide us the

name of parent holding company?

贵司是否属于任何一个集团公司？如果是，可否告知总公司的名字？

2-4What are your main type of products?

贵司的主要生产产品是？

Company Profile

III. Production Capacity

生产能力

3-1Total maximum production capacity for wot evaporator in 2013 (pcs / year)

预计2013年丝网蒸发器最大生产能力(套/年)

3-2Actual annual production for wot evaporator in 2012 (pcs / year)

2012年丝网蒸发器实际年产量(套/ 年)

3-3

What processing capabilities are included in your wot evaporator production? Are these

processes in-house or sub-contractors?

贵司生产丝网蒸发器包含哪些加工工艺？哪些是自行完成，哪些工艺是由承包商完成？

Process

生产工艺In house(Y/N)

自行生产(是/否)

Sub-

contractor(Y/N)

外包(是/否)

3-4Do you have R&D center, is it in your factory? 贵司是否有专门的研发中心？是在工厂里嘛？

Production Capacity

IIII. Quality, Environmental and Product Certification

质量,环境与产品认证

Yes / No

是/否

Date of

Certificate

发证日期

Expiration date

过期日期Certificate number

证书编号Certifying Org.

发证机构

3-6

What quality and environmental registrations

do you have?

贵司目前已通过何种质量/环境体系认证?

ISO 9001

ISO 140001 or EMAS

Name of Certificate

证书名称

Date of

Certificate

发证日期

Expiration date

过期日期Certificate number

证书编号Certifying Org.

发证机构

3-7

Other company/product certifications do you

have?

其他公司质量管理证书后者产品认证证书？

Quality and certificate

Company and contact information RFI/RFQ Process follow up

Product

category

Supplier

nameProvince City

RFI/RFQ sent Intend to respond Last call follow up RFI received RFQ received

Y/N Date Y/NIf no,

reasonDate Comment Y/N Date

If no,

reasonY/N Date

If no,

reason

Wot

EvaporatorSupplier 1 Hubei Jingzhou Yes

20-Feb-

13Yes 28-Feb-13

completed RFI-

RFQYes

28-Feb-

13Yes

28-Feb-

13

Wot

EvaporatorSupplier 2 Anhui chuzhou Yes

20-Feb-

13Yes 28-Feb-13

replied RFI but

not complete,

ask supplier to

update it

Yes5-Mar-

13Yes

5-Mar-

13

Wot

EvaporatorSupplier 3 Guangdong Foshan Yes

26-Feb-

13Yes 6-Mar-13

not complete

RFI-RFQYes

6-Mar-

13Yes

6-Mar-

13

Wot

EvaporatorSupplier 4 Shandong Jinan Yes

25-Feb-

13Yes 6-Mar-13

completed RFI-

RFQYes

27-Feb-

13Yes

27-Feb-

13

Wot

EvaporatorSupplier 5 Guangdong Zhongshan Yes

20-Feb-

13Yes 5-Mar-13

completed RFI-

RFQYes

5-Mar-

13Yes

5-Mar-

13

Wot

EvaporatorSupplier 6 Henan Xinxiang Yes

20-Feb-

13Yes 6-Mar-13

not complete

RFI-RFQYes

27-Feb-

13Yes

27-Feb-

13

Wot

EvaporatorSupplier 7 Zhejiang Ningbo Yes

20-Feb-

13Yes 5-Mar-13

not complete

RFI-RFQYes

5-Mar-

13Yes

5-Mar-

13

During the RFI-RFQ process, an RFI-RFQ control sheet is used to follow up the

whole process


0

100

200

300

400

500

600

No. of suppliers identified No. of suppliers RFI-RFQ sent

No. of suppliers replied RFI-RFQ

No. of suppliers to be audited

Turkey

Ukraine

Russia

Thailand

Malaysia

Indonesia

South Korea

China Taiwan

China

Out of 570 suppliers initially identified, 56 suppliers replied to the RFI-RFQ, the

vast majority of them being in China


570

132

56

16

Main reason for not sent RFI-RFQ:-Eliminated by telephone pre-screening

-Not produce we required

-Trading company

-Not valid contact details

Main reason for not reply RFI-RFQ:-Can’t meet the requirement/drawing

-Think RFI-RFQ is too complicated

-Prefer directly do business with final client

Among received 56 suppliers: 48 from China, 1 from China Taiwan, 2 from

South Korea, 2 from Russia, 3 from Turkey

© 2012 Dragon Sourcing. All rights reserved.

Contact information

Company

nameSupplier 6

Town Xinxiang

Province Henan

Website

Contact

person

Tel

E-mail

Company background

Year

Founded2003

Ownership private

Capital US$ 3 M

Work floor

size (m²) 16,000 m2

Have export

license (Y/N)Yes

How many

years of

export

experience

6 years

Business Overview

Turnover (in USD)

2013 20 M

2012 14 M

2011 11 M

% Sales Export to Main

Markets

US (%) 0%

EU (%) 30%

Japan (%) 0%

Rest of the world

(%)40%

Total 70%

Top 3 Customers

Custom

er nameIndustry Country

Sales

%

Vestel Fridge Turkey 30%

Videoco

nFridge India 25%

Godrej fridge India 15%

Based on the RFI-RFQs, company profiles are developed

Production

Total maximum production

capacity in 20131 M pcs

Total maximum production

capacity in 2013300 K pcs

ProcessIn-House

(Y/N)

Sub-

contractor(Y/N)

pipe cut Yes No

pipe bender Yes No

welding Yes No

electrophoresis Yes No

dusting or

ElectroplatingNo Yes

Production Capacity

Quality & Environmental Registration

Certificate Y/NDate of

certificateExpiration date

Certifying

organization

ISO 9001 Y June-29-2012 June-28-2014 Kainxin certification (Beijing)ltd

ISO 14000 N

Quality Control

Top 3 Customers in MDA

Customer

nameCountry Sales %

Vestel Turkey 30%

Videocon india 25%

Godrej india 15%

Human Resources- # of

employees and

if can speak English (Y/N)

Factory

Workers300 N

Office staff 42 Y

R&D

(engineers)10 Y

Total 352

Corporate Responsibility

Adhere to all rules and regulations

in respect to (Y/N)

Child labour Yes

Environmental

issuesYes

Health and safety

issuesYes

List of equipments

Name Quantity Age Brand

pipe cutter 5 5 n/a

pipe bender 5 5 n/a

auto-welding

machine4 1 n/a

leakage test 5 5 n/a

electrophoresis 5 5 n/a

powder coating 5 5 n/a

packing 1 5 n/a

List of QC Equipment

No. Name

1 moisture tester

2 sensitive balance

Are you aware of the RoHS Directive 2011/65/EC in force in the

European Community?(Y/N)Yes

Are you aware of the Regulation 1907/2006 REACH in force in the

European Community? (Y/N)Yes


Factory Entrance Workshop 1 Workshop 2

Workshop 3 Machinery 1 Machinery 2

Factory Pictures

…and factory pictures collected


Scorecard-Wot Evaporator

Supplier 1Supplier 1

Company BackgroundWeight of

criteriaScoring

Max Score

per criteria

Weight of the

sectionScore per criteria Supplier's answer

Year Founded 10%

1= After 2010

2= Between 2000 to 2010

3= Between 1990 to 2000

4= Before 1990

4

25%

Capital in USD 10%

1= Less than 10M

2= Between 10 to 20M


4= More than 30M

4

Workfloor size (m2) 10%

1= Less than 10,000m2

2= Between 10,000 to 15,000m2

3= Between 15,000 to 20,000m2

4= More than 20,000m2

4

Number of Employees 10%

1= Less than 99

2= Between 100 & 199

3= More than 200

3

How many workers? 5%

1= Less than 30

2= Between 30 and 50


4= More than 100

4

How many office staff? 5%

1= Less than 10


3= More than 20

3

How many R&D (engineers)? 5%

1= Less than 10


3= More than 20

3

English Speakers 5%0=No

1=Yes1

Do you have export experience to western world (EU, US)？ 10%0=No

1=Yes1

Do you have experience working for MDA (major domestic appliance)? 10%0=No

1=Yes1

Turnover in 2012 in USD 5%

1= Less than 10M



4= More than 30M

4

Turnover in 2011 in USD 5%

1= Less than 10M



4= More than 30M

4

% of the turnover dedicated to Export 5%

1= Less than 10%

2= Between 10 to 30%

3= Between 30 to 50%

4= More than 50%

4

Years of Export Experience 5%

1= Less than 2 yrs

2= Between 2 & 5 yrs

3= More than 5 yrs

3

Subtotal 100% 3 25% 0

Corporate responsibilityWeight of

criteriaScoring

Max Score

per question

Weight of the

sectionScore per criteria Supplier's answer

Does the supplier adhere to all rules and regulations in respect to child

labor?33%

0=No

1=Yes1

5%Does the supplier adhere to all rules and regulations in respect to

environmental issues?33%

0=No

1=Yes1

Does the supplier adhere to all rules and regulations in respect to health

and safety issues?33%

0=No

1=Yes1

Subtotal 100% 1 5% 0

Production Capacity

Weight

of

criteria

Scoring

Max Score

per

question

Weight of

the section

Score per

criteria

Supplier's

answer

Maximum production capacity for wot evaporator in 2013

(pcs/year) 25%

1= Between 1M to 5M

2= Between 5M to 10M

3= Over 10M

3

20%

Actual annual production for wot evaporator in 2012

(pcs/year) 25%

1= less than 1 M

2= Between 1M to 5M

3= Between 5M to 10M

4= Over 10M

4

Are all manufacture processes in-house or sub-contractors

except zinc finishing?20%

0=No

1=Yes1

Are zinc finishing processes in-house or sub-contractors? 5%0=No

1=Yes1

Do you have R&D center, is it in your factory? 25%0=No

1=Yes1

Subtotal 100% 2 20% 0

Quality, Environmental and Product Certification

Weight

of

criteria

Scoring

Max Score

per

question

Weight of

the section

Score per

criteria

Supplier's

answer

Company Certifications

ISO 9001 20%0=No

1=Yes1

20%

ISO 140001 or EMAS 20%0=No

1=Yes1

Product Certifications (CE or UL or others) 20%

0=No

1=1 certificate

2=2 certificates

3=over 2 certificates

3

Are you aware of the RoHS Directive 2011/65/EC in force in

the European Community?(Y/N)20%

0=No

1=Yes1

Are you aware of the Regulation 1907/2006 REACH in force

in the European Community?(Y/N)20%

0=No

1=Yes1

Subtotal 100% 1 20% 0

Cooperation

Weight

of

criteria

Scoring

Max Score

per

question

Weight of

the section

Score per

criteria

Supplier's

answer

Completeness of RFI 35%

0= Poor

1= Satisfying

2= Excellent

2

10%

Completeness of RFQ 35%

0= Poor

1= Satisfying

2= Excellent

2

Company pictures available 15%0=No

1=Yes1

Timeliness of response 15%

0= poor

1=Satisfying

2=Excellent

2

Subtotal 100% 2 10% 0

Price Competitiveness

Weight

of

criteria

Scoring

Max Score

per

question

Weight of

the section

Score per

criteria

Supplier's

answer

DDU price (compare to current price EUR 6.78) 100%

0= no savings

1= savings between 1%~13%

2= savings over 13%~20%

3= savings over 20%

3 20%

Subtotal 100% 3 20% #VALUE!

Total scoring 12 100% #VALUE!

The RFI-RFQ responses are analyzed using a score card validated by the client.

Company Profile

Production Capacity

Quality and certificate

RFQ

Cooperation

0

10

20

30

40

50

60

70

80

90

100

Price Competitiveness

Cooperation

quality control and certificate

Production Capacity

Corporate responsibility

Company Background


Example of a score card – wot evaporators category

CountrySupplier

Name

Company

Background

Corporate

responsibility

Production

Capacity

Quality

control and

certificate

Cooperation Price

CompetitivenessTotal Rank by

score

card

Rank by

price

25% 5% 20% 20% 10% 20%max score

100

China Supplier 1 18.75 5.00 8.44 11.43 8.11 13.33 65.06 1 1

China Supplier 2 17.50 5.00 6.22 11.43 8.11 6.67 54.93 2 2

China Supplier 4 23.33 5.00 8.89 8.57 8.11 0.00 53.90 3 4

China Supplier 6 19.58 5.00 8.44 8.57 8.11 0.00 49.71 4 6

China Supplier 7 17.50 5.00 8.44 8.57 7.30 0.00 46.81 5 7

China Supplier 5 19.17 5.00 8.44 8.57 5.41 0.00 46.59 6 5

China Supplier 3 14.58 5.00 8.44 2.86 7.30 6.67 44.85 7 3

Average 51.63

65.06

54.93 53.9049.71

46.81 46.59 44.85

Supplier 1 Supplier 2 Supplier 3 Supplier 6 Supplier 7Supplier 4 Supplier 5

DDU prices are then calculated


FOB Price (supplier)

Freight forwarding, customs

DDU Price

Shanghai

SHANGHAI

Gansu

JiangxiZhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

Shanxi Shandong

Sichuan

Yunan

Guizhou

Henan

Jilin

Liaoning

Hebei

Guangdong

Gansu

Heilongjiang

12

3

4

5

SupplierFOB price

(USD/pcs)

Quantity

(pcs/containter)

DDU Price

(USD/pcs)

DDU Price

(EUR/pcs)

20' 40' 40' HQ 20' 40' 40' HQ 20' 40' 40' HQ

Supplier 1 610 960 2112 2112 786 761 761 604 584 584

Supplier 2 650 960 2112 2112 826 801 801 634 615 615

Supplier 3 660 960 2112 2112 836 811 811 642 623 623

Supplier 4 753 960 2112 2112 929 904 904 714 694 694

Supplier 5 777 960 2112 2112 953 928 928 732 713 713

Supplier 6 780 960 2112 2112 956 931 931 734 715 715

Supplier 7 960 960 2112 2112 1137 1111 1111 873 853 853

6

7

100

200

300

400

500

600

700

800

900

Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7

Price Index DDU price analysis for 20 feet container

FOB price transport cost 20'c Client's current DDU price Client's target DDU price Supplier's DDU price


Example of DDU price calculations – wot evaporator

These 3 suppliers’ quotation are 6%~13% lower than

client’s current price but higher than the target price


Category Country Supplier name City ProvinceScore card

rankingprice

rankingStrength weakness

wot evaporator

China Supplier 1 Jingzhou Hubei 1 1good score card ranking and price is just achieve target price

wot evaporator

China Supplier 2 Chuzhou Anhui 2 2 good score card ranking price is higher than target price but lower than current price

back up for wot

evaporatorChina Supplier 4 Hefei Anhui 3 4

strong company backgroud, about 2010 employees

price is higher than current price

back up for wot

evaporatorChina Supplier 3 Foshan Guangdong 7 3

pirce is ranked No.3 but higher than target price lower than current price

-from the factory's pictures, the factory is old and not clean -Total 145 employees

back up for wot

evaporatorChina Supplier 7 Ningbo Zhejiang 5 7

The factory's pictures seems O.K. and they have similar packaing experience according to their pictures

-the price is the highest among the 7 RFQ-the factory is old but acceptable about 550 employees

Finally the quotations and the scorecard are used to select suppliers to be audited





– Volumes

– Deadlines
















pre-qualification


Key a

cti

vit

ies

16 Chinese suppliers were finally selected for a first round of audits


Visited by

No. Province City Supplier name Product Client DS score card ranking

1 Jiangsu Changzhou Supplier 1 Fan Motor x 1

2 Zhejiang Ningbo Supplier 2 Fan Motor x 2

3 Zhejiang Ningbo Supplier 3 Fan Motor x 3

4 Zhejiang Ningbo Supplier 4 Fan Motor x x 5

5 Zhejiang Ningbo Supplier 5 Bearings x 1

6 Zhejiang Taizhou Supplier 6 Bearings x 10

7 Zhejiang Ningbo Supplier 7 Run Capacitor x 6

8 Zhejiang Wenzhou Supplier 8 Run Capacitor x 1

9 Anhui Xuancheng Supplier 9 Run Capacitor x 3

10 Anhui Guangde Supplier 10 Run Capacitor x 5

11 Shanghai Shanghai Supplier 11 Run Capacitor x x 2

12 Jiangsu Yangzhou Supplier 12 Yellow Glass Wool x 3

13 Liaoning Dalian Supplier 13 Yellow Glass Wool x 1

14 Hubei Jingzhou Supplier 14 Wot Evaporator x 1

15 Guangdong Shenzhen Supplier 15 Fan Motor x 4

16 Guangdong Foshan Supplier 16 Fan Motor x 6


An audit schedule and budget is developed

Agenda Timing TransportationCost

(RMB)Cost (EURO)

From hotel to

supplier No.18:00 - 8:30 By rented car

Visit supplier No.1 8:30-11:30 -

Lunch 11:30-12:00 - 180/p 22.5/p

From supplier 1 to

supplier 212:00 - 15:00 By rented car

Visit supplier No.2 15:00-18:00

Go to Ningbo airport 18:00-19:00

Dinner 19:00-19:50 180/p 22.5/p

From Ningbo to

Guangzhou20:50-22:55 plane 1668/p 208.5/p

Stay in Guangzhou lodging 700/room 87.5/room

From Shanghai to

Guanghzou

For the 2nd

DS personplane 1776/p 222/p

Stay in GuangzhouFor the 2nd

DS personlodging 700/room 87.5/room

Total 5204 650.5

No. Category Supplier name City ProvinceScore card

rankingprice ranking

1 Run capacitor Supplier 11 Shanghai Shanghai 2 3

2 back up for fan motor Supplier 4 Ningbo-Yinzhou Zhejiang 5 3

1RMB=0.125EUR


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…


Audit outcome is summarized in a rated profile of each supplier

Audit summary


The final supplier selection relies on the short-listed suppliers’ offers, audits and

sample quality

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

Agenda


1. Context



Chinese suppliers remain most competitive country for this case despite cost

increase in China


We totally sent 132 RFI-RFQ and received 56 responses, 48 suppliers are from China

The main reasons for suppliers declining to participate the project is they can’t meet client

requirements

Below table indicate the score card ranking for each category, you can find Chinese suppliers are

on the top ranking.

Category

No. of RFI-

RFQ total

received

Scord card ranking

China China Taiwan South Korea Indonesia Malaysia Thailand Russia Ukraine Turkey

Fan motor 12 No.1~No.12 Not required Not required 0 0Not

required

Not

required

Not

required0

Yellow glass

wool3 No.1~No.3 0 Not required Not required 0

Not

required

Not

required

Not

required0

Run capacitor 15 No.1~No.12 No.13 No.14 & No.15 Not requiredNot

required

Not

required

Not

required

Not

required

Not

required

Wot

evaporator7 No.1~No.7 0 Not required 0

Not

required

Not

required

Not

required

Not

required

Not

required

Bearing 19

No.1~No.10

No.12~No.14

No.16

Not required Not required Not required 0 0No.17 &

No.180

No.11,

No.15 &

No.19

No. of RFI-

RFQ total

received

56 48 1 2 0 0 0 2 0 3

Access to a very competitive local raw materials supply base

Huge domestic market which creates economies of scale in the supply base

Presence of all the large international players to both source from China and manufacture in

China which raises the performance level of all the suppliers

Local suppliers highly interested in international business to increase the company’s reputation in

oversea’s market


Interestingly, Chinese suppliers remain the most attractive cost and currency

inflation, key reasons are