Electronics Sourcing Case Study by Dragon Sourcing

Dragon Sourcing Your Tailored Approach to Emerging Markets

Electronics Sourcing Case Study China Turkey Vietnam

Agenda

1.

Objectives

2.

Approach

3.

Results

2

Objectives Context

Dragon Sourcing approach 1. Demand Analysis: Work with Client to define and understand the products and requirements (specs, volumes, materials, production technology requirements)

Client overall objectives : Identify new potential competitive suppliers in China, Vietnam and Turkey who can supply items at delivered prices below current levels (maintain/improve safety, quality and delivery)

2. Supply Market Analysis: Identify long list of potential suppliers in China , Vietnam and Turkey by leveraging B2B Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References.

Categories involved • Electronics

3. Telephone Pre-screening: Selection of suppliers to be included in the RFI/RFQ process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, minimum company size, interest in participating) 4. Administer the NDA: Administration and chasing for completion of the NDA with suppliers that have been preselected 5. Develop RFI/RFQ & Scorecard template: Prepare an RFI/RFQ document, with an aligned Balanced Scorecard that has the objective to pre-qualify the capabilities of the suppliers, including: Background, Financials, Client and product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology capability 6. Administer the RFI/RFQ: The RFI/RFQ is distributed to the relevant suppliers who have signed NDA, with telephone follow-up to push for maximum participation.

7. Analyze RFI /RFQ Responses: Analysis of RFI/RFQ responses to objectively rank the suppliers by capability and competitiveness, and to develop sense for price points 3

Agenda

1.

Objectives

2.

Approach

3.

Results

4

Total 16 RFQ Items used in China, Italy and Turkey, annual spend €4.75M

Destination

General description

Item no

Delivery term

Annual quantity(pcs)

Unit price

Annual spend

(Euro)

(Euro)

(CNY)

(CNY)

18204

€ 294,573.82

￥2,386,047.93

3PH BOARD ASSY WD COMPUT.

10752

€ 179,281.45

￥1,452,179.78

AS.SCH.CUOR SMDRF 3R 5804

30383

€ 142,708.03

￥1,155,935.05

70T72GD ( ODM )

30000

€ 333,333.33

￥2,700,000.00

7H51G ( ODM )

30000

€ 255,555.56

￥2,070,000.00

72H55F ( ODM )

50000

€ 333,333.33

￥2,700,000.00

3PH BOARD ASSY LB COMPUT.

15660

€ 267,169.09

￥2,164,069.64

3PH BOARD ASSY WD COMPUT.

45600

€ 801,109.09

￥6,488,983.64

AS.SCH.CUOR SMDRF 3R 5804

18404

€ 91,462.30

￥740,844.65

146640

€ 850,424.02

￥6,888,434.53

10078

€ 59,614.39

￥482,876.59

3DGT PCB THERMAL AMBRA

67152

€ 431,008.40

￥3,491,168.01

3DGT PCB HP RELE AMBRA

34037

€ 254,120.24

￥2,058,373.96

Timer green Ver PCB 7

50000

€ 281,060.61

￥2,276,590.91

Preco Green PCB 7

16000

€ 100,848.48

￥816,872.73

Preco White PCB 7

11000

€ 77,083.33

￥624,375.00

FUZZY PCB BWT +NEUTRAL SOFTWARE FUZZY PCB TWT/IT +NEUTRAL SOFTWARE Turkey

Annual spend

3PH BOARD ASSY LB COMPUT.

China

Italy

Unit price

€ 4,752,685.

Current Total Annual Spend

• Unit price doesn’t include VAT.

￥38,496,752

Euro:CNY=1:8.1 Euro:USD=1:1.32 Euro:TRY=1:2.81 5

Total suppliers 179 identified, 11 RFI/RFQ received ( China 7, Turkey 1, Vietnam 3)

Item

China

Turkey

Vietnam

Total

Suppliers identified

133

29

17

179

Suppliers called

133

29

17

179

Suppliers passed pre-screening

46

8

14

68

Suppliers NDA received

29

5

8

42

Suppliers RFI/RFQ sent

29

5

8

42

Suppliers RFI/RFQ received

7

1

3

11

6

7 RFI/RFQ received in China; 1 RFI/RFQ received in Turkey; 3 RFI/RFQ received in Vietnam Country

Supplier name

Province

China China China China China China China Turkey Vietnam Vietnam Vietnam

Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9 Supplier 10 Supplier 11

Guangdong Guangdong Guangdong Guangdong Jiangsu Zhejiang Zhejiang Ä°stanbul HaiDuong Binh Duong Binh Duong

China Y Y Y

Quote Client Italy Turkey Y Y Y Y Y Y

Y Y Y Y Y

Y Y Y

Y Y Y Y

Heilongjiang

Hai Duo ng

Jilin Liaoning

Xinjiang

Inner Mongolia Tianjin Hebei Shanxi Shandong Ningxia Qinghai Jiangsu Gansu Sha Henan AnhuiShanghai anxi Sichuan Hubei Sichuan Zhejiang Jiangxi Hunan Fujian Guizhou Gansu

Xizang

Yunan

Guangdong Guangxi Hong Kong

Taiwan

Binh Duong 7

Score card analysis for Client China: - 8 suppliers are ranked with an average score of 71.

- 4 suppliers are above average score.

- DS recommend Client to audit top 4 suppliers

Supplier name

Supplier location

Business information

Production

Quality system

Price Competitiveness

Total

Rank by score 10%

20%

30%

40%

100%

Supplier 1

China

8

20

27

36

91

1

Supplier 2

China

8

19

14

42

82

2

Supplier 3

Vietnam

8

20

21

28

76

3

Supplier 4

China

10

20

26

16

71

4

Supplier 5

China

8

19

20

22

68

5

Supplier 6

Turkey

10

16

21

16

63

6

Supplier 7

Vietnam

7

16

24

16

63

7

Supplier 8

China

6

20

14

13

53

8

8

Score card analysis: - 6 suppliers are ranked with an average score of 71.

- 3 suppliers are above average score.

- DS recommend Client to audit top 3 suppliers

Supplier name

Supplier location

Business information

Price Quality system Competitivenes s

Production

Total Rank by score

10%

20%

30%

40%

100%

Supplier 1

China

8

20

27

36

91

1

Supplier 2

Vietnam

8

20

21

40

88

2

Supplier 3

China

10

20

26

16

71

3

Supplier 4

Vietnam

7

16

24

16

63

4

Supplier 5

Turkey

10

16

21

13

61

5

Supplier 6

China

6

20

14

13

53

6

9

Company profile Supplier 1 - Vietnam Does your company have an export license ?(yes or no) How many years of export experience do you have?

COMPANY INFORMATION Company Name

XXXX Vietnam

Address

XXXXXXXXXXXX HaiDuong

Company Website CONTACT PERSON INFORMATION Contact Person

Mr. XXXXX

Title

G.Director

Tel

Panasonic No Domestic

Europe

US

Rest of the World

0%

0%

0%

100%

Clients

Industry

Country

% of sales

1

Panasonic LVBD

Assembly

Japan

50%

2

Panasonic

PCB

Japan

40%

3

Sharp

PCB

Japan

10%

Joint venture Who are your top 3 Clients?

2014 ( to date)

2013

0.37

0.59

2012

2011

16000m2

How many employees do you have?

40 employees

How many employees can communicate in English?

5 Worker Engineer

How many shift does your company work?

How many hours one shift?

What is the percentage of turnover distributed to:

06/2012 2M

How many square meters(m²) does your factory occupy ?

How many people do you have in these positions?

How long does your employee work in your company in average?

0.5%

Do you have European / international customers? If yes, which ones?

Mobile phone

What is your turnover in million USD?

3

12 years

Who is your main customer in white goods industry?

Fax

How much is your registration capital (USD)?

What's the nature of your company? (Private, state owned, joint venture, etc)

Rank

Yes

Percentage of you turn over coming from white goods Industry? （%）

Email

BUSINESS INFORMATION What date was your company founded?

76

Assembly and manufacturing of printed circuit board, What industry does your company mainly electronics devices, household electrical appliances and other serve? works related to above.

Do you have subsidiaries outside Yes, Japan, China Vitenam? If yes, where?

Do you supply products to white goods Yes, industry? If yes, how many years?

Town Province

RFI/RFQ score

8

2

QualityC Manage ontrol ment

R&D 1

1

5

Sales 1

CORPORATE RESPONSIBILITY Shortly describe your policy to cover We want to contribute to the protection of the global environment environment and conservation. and environmental protection of the local community Shortly describe your policy to cover We always create a lean working environment and always try to health and safety. not happen labor accident.

2 years

Shortly describe your policy to cover human rights.

Observance of the cover human rights (employee)

1

Shortly describe your policy to cover business ethics and anti-Bribery.

Productivity&Quality-Foundation for Sustainable Development

10

Company profile Supplier 1 - Vietnam PRODUCTION Assembly and manufacturing of printed circuit board, What's your main products? electronics devices, household electrical appliances and other works related to above.

How many years of EMS experience do you have?

12 Years over experience OEM ODM Do you provide the right listed PCBA service? yes yes (Yes/No) Do you provide the right listed PCBA service for yes yes home appliance industry?

Do you provide right listed PCBA servie for control yes yes board of white goods?

In White goods industry, which client do you Panasonic provide right listed PCBA service?

Does your company produce PCB in house? yes (Yes/No) Does your company do PCBA in house? (Yes/No) yes Can you source and purchase components for yes client? （Yes/No) Can you support client in product design? Yes/No) yes 50%

What's your capacity utilization？(%)

Please respond to questions for the following technologies：

In house or Subcontracted

SMT Reflow soldering

yes

Wire bonding

yes Worker

How many people do you have in these positions?

How many of those speak and write english?

Can your company design according to client's requirement?

How long does your employee work in your company in average?

How many shift does your company work? How many hours one shift?

8

Do you have below certificates ?

Manufacturing QMS

yes

ISO 14001

yes

TS16949

no

OHSAS18001

no

What international/domestic product certification CE do you have?

UL Can your company provide ROHS self declaration and 3rd party test report?

Can your company provide REACH self declaration and 3rd party test report?

What type of inspection to be conducted(100% or sample inspection)?

If sampling inspection, what is your sampling rate?

Koki Japan/Ws302LF

Engineer 2

R&D 1

Quality Control 1

Do you have final products inspection and report?

11-096 Manageme Sale nt s 5 1 3

1

What performance do you achieve on average in out going quality measures (% rejected)?

What is your internal rule regarding maximum reaction time of quality claim?

Do you accept 3rd party QC?

yes How long do you keep the QC records?

2

Which test does yor company corporate with an external supplier?

1 shift

11

Date of Certifying Yes / No Certificat Org. e

ISO 9001

Do you have incoming material inspection and report?

If in house, If in house, please please provide prvide Brand/Type number of Machines

yes yes

Wave Soldering

Quality, Environmental and Product Certification

no yes yes no

yes

sample inspection.

AQL(Acceptable Quality Level)

Yes, we have 0.5%

Daily Report yes 10 years NA

Company profile Supplier 1 - Vietnam

Quality, Environmental and Product Certification

Please list quality control equipment that you have in-house

Test

In house test Equipment (Yes/No)

Test

In house test eEquipment (Yes/No)

Test

In house test Equipment (Yes/No)

Test

In house test Equipment (Yes/No)

Optical visual inspection system

yes

Crimp Insertion tester

no

Thermal shock test

no

Micrometers of suitable size and design

yes

Xrf Rohs analyser

no

2d Microscopes

yes

High voltage test

yes

digital calipers of suitable design and size.

yes

Temperature gauges

yes

Cross cut and polishing machines

no

Weld monitoring equipment

yes

Scanning electron microscope

no

Circuit Test

yes

Optical measuring systems

no

Humidity recording system

no

Bevel protractors

no

On board circuit test

yes

Earth leakage test

ye

Insulation resistance test

no

Shadowgraph

no

Cold temperature cabinet

no

Performance tester

yes

Insulation tester

no

Xray testing

no

Profile gauges and templates

yes

Glow wire test

no

Thickness testers

yes

Surface tables

yes

Crimp height analysers

no

Resistance meters

yes

Emc Test

no

3 Axis CMM

no

Tracking test

no

High temperature oven

no

Ozone test chamber

no

3d Micorsopes

yes

12

Company certificate and picture Supplier 1 - Vietnam Business registration

Tax registration

Organization Code certificate

Factory entrance

Workshop

Machinery

Machinery

Warehouse

R&D

13

Agenda

1.

Objectives

2.

Approach

3.

Results

14

Unit DDP price analysis for Client China, total 6 items: 8 suppliers quote Client China items (5 from China, 1 from Turkey,2 from Vietnam).

1

Item no

2

3

4

5

China

Client current CNY

6

7

Turkey

8 Vietnam

Supplier 1

Supplier 2

Supplier 3

Supplier 4

Supplier 5

Supplier 6

Supplier 7

Supplier 8

41037686

131.07

-

76.57

-

215.00

229.60

166.17

122.86

235.46

41037687

135.06

-

78.66

-

219.00

-

173.06

126.67

244.52

41034618

38.05

-

41.36

-

68.60

121.90

87.63

80.49

85.00

43613888

90.00

93.00

79.67

86.50

86.46

-

-

229.22

-

43612636

69.00

76.00

69.23

62.50

75.00

91.86

-

99.04

-

43613473

54.00

60.00

-

48.80

57.00

-

-

87.53

-

• Turkey and Vietnam supplier quote FOB price, DDP price is calculated by DS. Quotations lower than Client current price 15

Potential savings of 15% have been identified from Vietnamese supplier.

M CNY

16

Unit DDP price analysis for Client Italy, total 3 items: 6 suppliers quote Client Italy items (3 from China, 1 from Turkey, 2 from Vietnam).

1

Item no

Client current EUR

2

3

China

4

5

Turkey

6

Vietnam

Supplier 1

Supplier 2

Supplier 3

Supplier 4

Supplier 5

Supplier 6

41037686

17.06

10.94

27.93

28.60

20.66

15.34

29.24

41037687

17.57

11.20

28.45

-

21.51

15.81

30.35

41034618

4.97

5.04

7.36

15.22

10.92

10.06

10.62

• Turkey and Vietnam supplier quote FOB price, DDP price is calculated by DS. Quotations lower than Client current price 17

Potential savings of 33% identified from Vietnamese supplier on Italian parts

M EUR

18

Total potential savings of â‚Ź630k was identified

Total Potential Saving summary of Client China, Turkey and Italy

Total

% potential saving

# items quoted ( 16 RFQ items)

# items with saving

386,240

632,165

13.31%

15

11

107,361

161,619

3.40%

16

4

-

69,136

1.46%

3

3

-

13,094

0.28%

16

1

Supplier

Supplier location

China

Turkey

Italy

Supplier 1

China

235,623

10,302

Supplier 2

Vietnam

29,590

24,668

Supplier 3

China

69,136

-

Supplier 4

China

13,094

-

19