Overview on Textile Sourcing in Vietnam, Thailand, China, Costa Rica, Guatemala and Honduras!

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Delivering sustainable sourcing value from emerging markets

Textiles Sourcing Case Study

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

2

Context Background: • Client is a professional eDistributor of sports products in the US. Project objectives: • To carry out sourcing services for textiles to achieve cost savings and identify new qualified suppliers.

Geographical scope: • Vietnam, Thailand, China, Costa Rica, Guatemala and Honduras Deliverables: • RFI / RFQ Template • RFI / RFQ report • Balanced Scorecard • Supplier profiles • Recommended audit supplier list

3

Sourcing products Vest

Band

Sleeve

Jersey

Sock

Shorts

Glove

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

5

1. Demand Analysis Approximate yearly volumes was collected from the client at the beginning of the project.

2015 Estimated 2016 2017 Sales Sales Target Price 2017 total No. Product Type Sales Qty. Qty. Qty. (US$/pc) spend (pcs) (pcs) (pcs) (US$) 1

2

3

4

5

6

7

Vest (including 55 SKUs) Band (including 22 SKUs) Sleeve (including 6 SKUs) Jersey (including 21 SKUs) Sock (Including 4 SKUs) Shorts (Including 5 SKUs) Glove (Including 4 SKUs)

% in total spend

251,678

259,762

230,151

19.19 ~ 57.15

193750

69%

97,882

92,123

86,960

0.28 ~ 0.66

33007

12%

46,942

53,243

44,435

0.57 ~ 1.17

27940

10%

13,025

10,791

4,050

4.39 ~ 5.27

19559

7%

3,281

2,890

1,392

2.31 ~ 3.14

3475

1.2%

Jersey; 6.94% Sock; 1.23% Shorts; 0.95% Glove; 0.52% Sleeve; 9.91%

Band ; 11.71%

Vest; 68.74% 3,858

3,181

1,002

2.68

2686

1.0%

3,406

1,966

1,947

0.70 ~ 0.84

1458

0.5%

281,874

100%

Total

Other Requirements: • 2 Client current suppliers should not be contacted :  XXX Co., LTD  XXX Co., LTD

6

2. Approach & Schedule RFI-RFQ process was completed in 11 weeks November September

W1 Nov.3rd

December W2 Nov.10th

W3 Nov.17th

W4 Nov.24th

W5 Dec.1st

W6 Dec.8th

W7 Dec.15th

January W8 Dec.22th

W9 Dec.29th

W 10 Jan.5th

W 11 Jan.12th

Auditing (within W12 -W13)

1. Demand Analysis 2. Supply Market Analysis 3. Telephone Pre-screening 4. Develop RFI/RFQ 5. Conduct RFI/RFQ Administration & Supplier Scorecard 6. Develop the Score card Analysis RFI /RFQ Responses

Shortlist for Audit Agreed

1

RFI/RFQ Approved

7. Suppliers Auditing (Optional)

Not started In process

2 Today

Done Delay

Note that the schedule maybe impacted by the time taken to collect category specifications, gain deliverable validation, short list suppliers, produce samples & test samples.

10

3. Weekly report Weekly progress reports are sent to client every week

Textiles sourcing weekly report -week 4 480 420 360 300

413

Honduras

46

Guatemala

97

Costa Rica

46

240 180

130

120

42 52

60 0

rs lie p p Su

47 286 46

China

130

Vietnam

Thailand 14 15 48 5 23 ng

11 52

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P

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FQ IF /R R

8

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ort p Re y l k

4.Suppliers Long list building in each target Country An extensive supplier data base is built leveraging multiple sources of information

9

5.Telephone Pre-screening Pre-screening process was administered to filter the potential suppliers for further next steps

No.

Textiles Criteria answer

Telephone Pre-screening Criteria

1

Are you manufacturer or trader?

Must “manufacturer�

2

Do you have an export license?

Must Yes

3

Does your facility have the ability to sublimate logos and/or imagery onto fabrics?

Must Yes

4

Is your facility a versatle sewing shop capable of producing a broad range of textle products?

5

Can your facility offer a range of packaging optons?

Must have

Must Yes

10

6.Textiles-Supply Market Analysis Supplier rejection analysis were shared to client for each step: pre-screening and RFIRFQ administration.

Example for Pre-screening rejection analysis

8 9

4

3 2 44

11

6

Example for RFI rejection analysis

10

7 8

Manufactuer but not producing as per the technical requirement Unable to contact them/ Company shutdown Traders/distributors or Importers only, Cannot export Not Interested Duplicate suppliers Stopped Producing

9

Cannot produce liquid flled transformers Not interested to contnue Do not wish to fll the RFI template Cannot produce within the given output voltage range.

Need drawings/technical specs to review frst

11

7.Send RFI/RFQ through GSP to client for Review 1/2 RFI process was administered to filter out most capable suppliers

12

7.Administer RFI/RFQ Through GSP 2/2 After Client approved the RFI/RFQ, it was sent to suppliers through GSP

13

8.RFI process was administered to filter out most capable suppliers 1/2

Su

14

ple m a x ile e f o r rP pplie

8.RFI process was administered to filter out most capable suppliers 2/2

Supplier Profile example

Sup

r plie

15

has

cer t i ubm to s

ct & u d o , pr s e t a t i fi c

f

s ure t c i ry p o t c a

9.Draft score and send it to client for review 1/3 The RFI-RFQ responses are analyzed using a score card validated by the client

C lie

16

n

st u j d na t ca

c ti o e s h eac

n

ing ght i e w

9.Score card 2/3 The RFI-RFQ responses are analyzed using a score card validated by the client Business information

Weight of criteria 5% 5% 5% 5% 5% 5% 5% 5%

Sales distribution

5%

Industry mainly serve Customer reference Export license Do you have experience in producing soccer items(Jerseys,shorts.socks,captain arm bands, comp sleeve, scrimmage vest? If yes, how many years ?

10% 15% 15%

Scoring Max Score per criteria 1=After 2011,2=Between 2000 to 2010,3=Before 2000 3 1 = below 20,2 = 21 - 50,3 = 50 - 100,4 = 100+ 4 1 = below 3 years,2 = 3 - 10 years,3 = 10+ years 3 0=Trader/Distributor/Others ,1= Manufacture 1 1= only FOB,2=Can offer FOB & CIF,3= Can offer all: FOB, CIF, DAP & DDP 3 1=Less than 1 M US$,2= 1 - 3M US$ ,3= 3 - 5 M US$ ,4=above 5 M US$ 4 1 = below 20,00 (m²),2 = 20,01- 5,000 (m²)3 = 50,00-10000 (m²),4=10000(m²)+ 4 0 = Others,1 = State owned,2 = Foreign investments/ Joint Venture/Public limited,3 = Private 3 1= 70% or more to domestic market,2= 50% or more sales to export market 3 3= 70% or more export to EU+ North America 0= No info or others,1=Same as client 1 0=Not provided ,1=Local /domestic customers,2= International customers3= clients from client industry 3 0=No,1=Yes 1

15%

0=No,1=Yes

Year Founded Number of Employees Years of export experience Company type what incoterms can your company quoted and operate?

Sales revenue in 2016 in US$ Square meters(m²) of the work floor Ownership

Production

Does your company have have production operating instruction on site?

Does your company have have production/service traceability system?

Does your company have have a formal/documented inventory management system ?

Does your company use ERP system?

How many pieces of textiles does your company produce per year?

Is your facility a versatile sewing shop capable of producing broad range of textile products?

Does your facility have the ability to sublimated logos and /or imagery onto fabrics?

Percentage of your turn from soccer textiles ?% Can your facility offer a range of packaging options ?

Quality management

20%

1

Weight of criteria 5% 0= No,1= Yes

Does your company have equipment maintenance program in place?

Does your company have production and safety training for each worker?

Weight of the section

Scoring

Max Score per criteria 1

5%

0= No,1= Yes

1

5% 5%

0= No,1= Yes 0= No,1= Yes

1 1

5%

0= No,1= Yes

5% 10%

0= No,1= Yes 1=<=300000,2=<=500000,3=>=500000

15%

0=No,1=Yes

15% 15% 15%

0=No,1=Yes 1=<= 10%,1= <=20%,3>=20% 0=No,1=Yes

Weight of criteria

re c Sco Scoring

ar

Weight of the section

1

le mp a x de

1 3

30%

1 1 3 1

Max Score per criteria

what performance does your company achieve on average in out going quality measure(%rejected ?

15%

0=5%-10%,1=3%-3%,2=1%-2%,3<=1%

3

Does your company have incoming material inspection and report?

15%

0= No,1= Yes

1

Does your company have a documented company-wide quality manual?

15%

0= No,1= Yes

1

Does your company have clear and systematic procedure to collect,register,handle and solve customer complaints?

15%

0= No,1= Yes

1

Does your company have daily on line quality inspection and report?

20%

0= No,1= Yes

1

Does your company have final products inspection and report?

20%

0= No,1= Yes

1

Weight of the section

30%

17

9.Score card 3/3 The RFI-RFQ responses are analyzed using a score card validated by the client

Social Responsibility Do you adhere to all rules and regulations in respect to child labor?

Are the working hours specified in the employment contract? Do you comply with the regulations in regard to working hours?

Do you adhere to all rules and regulations in respect to environmental issues?

Do you adhere to all rules and regulations in respect to health and safety issues?

Subtotal

Certificate, documents and pictures Please upload your company's business registration certificate Please upload your company's SA 8000 certificate Please upload your company's SIO 14001 certificate

Weight of criteria 25% 25% 25% 25% 100% Weight of criteria 5% 10% 10%

Please upload your company's SA 8000 certificate

10%

Please upload your company's Sates 16949 certificate

10%

Please upload your company's presentation

15%

Please upload your company's pictures of entrance,workshop,machine,test lab, warehouse and office

20%

Please upload your company's ISO 9001 certificate

20%

Scoring

Max Score per criteria

0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes

Weight of the section

1 1 10% 1 1 ă&#x20AC;&#x20AC;

ă&#x20AC;&#x20AC;

10%

Scoring

Max Score per criteria

Weight of the section

0=not provided ,1=uploaded and clear to read 0=not provided ,1=uploaded and clear to read 0=not provided, 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read 0=not provided 1=uploaded and clear to read

18

1 1 1 1

r e ca r o Sc

de

pl xam

e

1 1 1 1

10%

10.Textiles-RFI score and ranking 27 suppliers responded to the RFI-RFQ

Textiles-Supplier Score and ranking 100

Certfcate,documents and pictuers

Social Responsibility

30.00% Quality system

Producton

Business informaton

%Cost saving

80

20.00%

60 10.00% 40 0.00%

20

0

r X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X er X ie l li li li li li li li li li li li li li li li li li li li li li li li pp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp upp u S S S S S S S S S S S S S S S S S S S S S S S S

19

-10.00%

11.RFQ analysis 1/4 Supplier Geographic Distribution: 27 RFQ received in 5 countries Supplier map

China:18 RFI/RFQ received Guatemala :4 RFI/RFQ received

Vietnam:1 RFI/RFQ received

Honduras :No RFI/RFQ received

Thailand:2 RFI/RFQ received

Costa Rica :2 RFI/RFQ received

12.RFQ analysis 2/4 27 RFQ received in total, 3 suppliers quoted all items No. of SKU quotes per supplier Product

No. of SKU

Vietna m

China

Thailand

Guatemala

Costa Rica

Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl Suppl ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X ier X Player Gloves

4

4

Referee Shorts

5

5

Referee sock 3 stripes Referee sock 2 stripes

2

2

2

2

Referee Jersey

21

21

21

21

21

21

21

21

DLX Scrimmage Vests 39

39

39

39

39

39

39

39

8

8

8

8

8

8

8

8

8

8

8

8

8

8

DLX Numbered Vests Numbered Vests

4 5

5

4

5

5

2

5

4

4

5

5

5

5

5

5

5

4 5

5

5

5

5

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

2

21

21

21

21

21

21

21

39

39

39

39

39

39

8

8

8

8

8

8

8

8

8

8

1

1

1

1

1

1

1

3

3

39

21

21

21

21

39

39

39

39

8

8

8

8

8

8

8

8

8

8

39

Black Arm Band

1

1

1

1

Internatonal Captain Arm Band

3

3

3

3

3

3

3

3

3

3

Reflectve Captain Arm

2

2

2

2

2

2

2

2

2

2

2

2

2

Captain C Band

4

4

4

4

4

4

4

4

4

4

4

4

4

Captain Arm Band

12

12

12

12

12

12

12

12

12

12

12

12

12

Compression sleeve

6

6

6

6

6

6

Total SKU

117

117

81

83

81

22

4

76

5

85

81

61

25

113

30

113

6 111

85

117

22

97

44

60

Supplier Quoted all item

21

Supplier Quotations lower than client target price

117

81

107

21 39

43

39

85

12.RFQ analysis-3/4 Based on cost savings and RFI score, 5 suppliers were shortlisted for auditing and sampling, (4 in China,1 in Vietnam)

#

Client total spend USD 281,874 Supplier

1

Supplier x

2

Supplier x

3

Supplier x

4

Supplier x

5

Supplier x

6

Supplier x

7

Supplier x

Cost Sub-category cost Saving/U saving SD REFEREE SHORTS REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF JERSEY DLX SCRIM VEST REF SOCK 3 STRIPE REF SOCK 2 STRIPE DLX SCRIM VEST DLX Num Vest Num Vest REF SOCK 3 STRIPE

1,183 1,832 807 6,599 35972 333 358 24,498 2,492 2,670 1,136

%Cost Saving 44% 74% 81% 34% 21% 13% 36% 14% 23% 28% 46%

REF JERSEY

11,864

61%

REF SOCK 3 STRIPE REF SOCK 2 STRIPE International arm band Reflective Arm Band Captain C Band Captain arm REFEREE SHORTS REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF JERSEY International arm band Reflective Arm Band Captain C Band REF JERSEY Black arm band International arm band Reflective Arm Band Captain C Band

569 165 1,315 459 3,062 3,891 181 665 457 2,549 1,400 317 3,669 8,543 115 978 297 3,821

23% 17% 47% 75% 37% 21% 7% 27% 46% 13% 50% 42% 44% 44% 5% 35% 38% 46%

Total cost %Total saving cost saving USD

RFI score

Score ranking

Short listed

Short listed reason

Remark

46,393

16.45%

67

21

Yes

Have the biggest cost saving,5 items have cost saving

Vietnam

30,351

10.77%

84

5

Yes

5 items have cost saving, Vest have bigger cost saving

China

13,000

4.61%

92

1

Yes

The biggest cost saving, The highest RFI score,REF JERSEY have the biggest cost saving

China

9,461

3.35%

73

13

Yes

China

11787

3.27%

8543

3.03%

72

16

5211

1.85%

79

10

22

27

24

Short list supplier

China

Yes Yes

China

4 items have cost saving, arm band have bigger cost saving

China

12. RFQ analysis-4/4 Based on cost savings and RFI score, 5 suppliers were shortlisted for auditing and sampling, (4 in China,1 in Vietnam)

#

8

Client total spend USD 281,874

Supplier

Supplier x

9

Supplier x

10

Supplier x

11

Supplier x

12

Supplier x

13

Supplier x

14

Supplier x

15

Supplier x

16

Supplier x

Total cost %Total Cost Sub-category cost %Cost saving Saving/U cost saving Saving SD saving USD REFEREE SHORTS REF SOCK 2 STRIPE REF JERSEY International arm band Captain C Band REFEREE SHORTS REF SOCK 3 STRIPE REF SOCK 2 STRIPE International arm band Reflective Arm Band Captain C Band REF SOCK 2 STRIPE International arm band Reflective Arm Band Captain C Band Compression Sleeve REF JERSEY REF SOCK 3 STRIPE REF SOCK 2 STRIPE Player Gloves REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF SOCK 3 STRIPE REF SOCK 2 STRIPE REF SOCK 2 STRIPE

81 221 1,334 1,104 2,304 321 129 178 851 93 2,001 197 683 52 787 1,279 2,144 333 294 601 226 326 119 294 40

3% 22% 7% 40% 28% 12% 5% 18% 30% 10% 24% 20% 24% 5% 9% 5% 11% 13% 29% 41% 9% 33% 5% 29% 4%

6378

1.78%

3,573

1.27%

2,998

1.11%

2,144

0.76%

627

0.22%

601

0.21%

552

0.20%

413

0.15%

40

0.01%

23

RFI score

Score ranking

Short listed

Short listed reason

Remark

76

12

Yes

China

68

84

63 No RFI

84 80

78

71

19

3

22

4 8

11

17

China

Short list supplier

Yes

Yes

Yes

Good RFI score,Quoted all Item,5 items have cost saving,Compression Sleeve have the biggest cost saving

China

China China China Guatemala China China

Agenda

1.

Introducton

2.

Sourcing Approach

3.

Conclusions

24

Conclusions

 Whole project was carried out 11 weeks in Vietnam,Thailand,Costa Rica,Guatemala,Honduras and China 1) In total 413 suppliers were identified,141 suppliers passed phone screening, 27 RFI/RFQ received (Vietnam 1, Thailand 2 ,China 18, Guatemala 4, Costa Rica 2) 2) Textiles have 14 sub-categories :Player Gloves, Referee Short, Referee Sock 3 Stripes, Referee Sock 2 Stripes, Referee Jersey, Dlx Scrim Vest, Dlx Num Vest, Num Vest, Arm Band Blk, Intl Captain Band, Reflective Arm Band, Captain C Band, Captain Arm Band, Comp Sleeve,In total 117 SKUs 3) Only 3 suppliers quoted all SKUs, most of the suppliers tend to specialize in specific sub-categories  Savings reached 17% and 5 suppliers were shortlisted for sampling and auditing (4 in China, 1 in Vietnam)  The next steps Include: a. On-site audit to verify their production capability, quality and management b. Sample making to ensure supplier meet client requirements c. Place trial production orders to verify suppliers’ capabilities regarding production quantities

25