PCBA Sourcing Case Study by Dragon Sourcing

Dragon Sourcing Your Tailored Sourcing Approach to Emerging Countries

PCBA Supplier Sourcing Case study

Agenda

1.

Objectives

2.

Approach

2

Objectives DS Supplier Market analysis Objectives

Context Client overall objectives •

To identify new potential competitive PCBA suppliers in China

•

Develop the RFI/RFQ document – jointly with Client – to include all key qualification criteria.

•

Identify list of potential suppliers to include in the RFI/RFQ process by leveraging the web, external databases, DS knowledge, database and various networks of experts

•

Conduct first phone screening of supplier database to identify potential suppliers

•

Administer RFI/RFQ process to ensure as high a return rate as possible

•

Analyze responses and use balance score card process to rank suppliers and recommend suppliers

•

Audit suppliers to check their capability to meet Client requirement

Segments involved: A. PCBA

3

The project is scheduled for 9 weeks period Steps

Who

0

Kick off meeting

1

Analyze the demand and define criteria allowing to qualify potential suppliers

DS

2

Develop the RFI/RFQ to include all key qualification criteria.

Client/ DS

3

Identify list of potential suppliers to include in the RFI/RFQ process.

Client / DS

4

Conduct first phone screening of supplier database to send RFI/RFQ

DS

5

Administer RFI/RFQ process to ensure as high a return rate as possible

DS

6

Develop balance score card to evaluate suppliers according to RFI/RFQ.

Client / DS

7

Analyze responses and recommend suppliers to take through the auditing process

Client / DS

8

Supplier auditing arrangement

Client / DS

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Week 9

Client / DS

TODAY 4

Not-started

Started

Delayed

Finished

Milestones

Agenda

1.

Objectives

2.

Approach

5

Total 276 suppliers identified, total 28 RFI received, 42 RFQ received

Action

Supplier quantity

Number of suppliers identified

276

Number of RFI/RFQ sent

231

Number of RFI received

28

Number of RFQ received

42

6

Sourcing Response Analysis of supplier RFI/RFQ Participation

Suppliers negative response 100

1: Cannot produce: Supplier don't do PCBA Can't purchase components Supplier is not able to meet quality requirements

84 80

2: No interest: Unwilling to do OEM manufacturing Supplier is not really a manufacturer Supplier don’t want to fill the RFI/RFQ

60 60 44 40

20

0 Can't produce

No interest:

Different products

7

3: Different products Supplier focuses on own products No experience in this kind PCBA

Supplier map, 29 in Guangdong, 7 in Zhejiang, the other 7 in another 4 provinces.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

Supplier name Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9 Supplier 10 Supplier 11 Supplier 12 Supplier 13 Supplier 14 Supplier 15 Supplier 16 Supplier 17 Supplier 18 Supplier 19 Supplier 20 Supplier 21 Supplier 22 Supplier 23 Supplier 24 Supplier 25 Supplier 26 Supplier 27 Supplier 28 Supplier 29 Supplier 30 Supplier 31 Supplier 32 Supplier 33 Supplier 34 Supplier 35 Supplier 36 Supplier 37 Supplier 38 Supplier 39 Supplier 40 Supplier 41 Supplier 42 Supplier 43

Province Zhejiang Zhejiang Zhejiang Zhejiang Zhejiang Zhejiang Zhejiang Shanghai Shanghai Shanghai Shanghai Jiangsu Hunan Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Guangdong Fujian

RFI Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Yes No Yes No No No No Yes Yes No No Yes Yes No Yes Yes Yes Yes Yes No No Yes No No Yes No Yes

RFQ Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes

BOM Price Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes No Xinjiang Yes Yes No Yes Yes Yes No Yes No Yes Xizang Yes Yes No Yes Yes No Yes Yes Yes Yes No Yes Yes Yes Yes No Yes Yes

Heilongjiang

Jilin Liaoning BEIJING

Neimongu

Gansu

Hebei Shanxi

Ningxia Qinghai

Gansu

Shandong

Hubei

Zhejiang Jiangxi

CHONGQING Hunan Guizhou Guangxi

Fujian

Guangdong

Hong Kong

8

SHANGHAI

Anhui

Sichuan Sichuan

Yunan

Jiangsu

Henan

Shaa nxi

Taiwan

Battery account for 30% value, top 8 components account for 83% value, the other 35 components account for 17% value.

BOM Average price (RMB) 12.00

10.05 10.00

8.00

6.00

5.75

5.53

4.00 3.10 2.62 1.95

2.00

1.71

1.69

1.68

U9

U5

U6

0.00 Battery

U1

U10

PCB

U3

9

The other 35

Components price including all , average price RMB 34.63 Components cost 70.00

60.00

50.00

40.00

30.00

20.00

10.00

0.00

10

Assembly cost, Average RMB 7.11 Assembly cost (RMB) 18.00 16.00 14.00 12.00 10.00

8.00 6.00 4.00

2.00 0.00

11

Score card template Company background

Weight

Turnover in 2012 ?

10%

Employee No.

5%

EMS industry experience?

Experience of assembling for European customer?

Can you do OEM? Profile of Top Customers

25%

1= Less than 2 million 2= 2-10 Million 3= More than 10 million 1= Less than 100 staff 2= 100 to 200 staff 3= More than 200 staff 1= Less than 5 years 2= 5 to 10 years 3= More than 10 years

Max Score

Max Point

3

0.3

3

0.15

3

0.75

Weight

10%

Quality and Test Control

Weight

Does the supplier have ISO 9001?

30%

Does the supplier have ISO 14000?

5%

Does the supplier have RoHS test?

5%

Does the supplier have ICT test?

10%

25%

0= No, 1= Yes

1

0.25

Does the supplier have AOI test?

10%

25%

0= No, 1= Yes 1=Unknown/Not provided 2=Local brands 3=International Brands

1

0.25

Does the supplier have aging test?

10%

3

0.3

14

2 Max Point

10%

Is the supplier able to support client in setting up new testing process?

Subtotal

100%

Weight

Price Competitiveness

Weight

Is quotation competitive compared to other suppliers?

50%

Provided break down details?

25%

Does the supplier provid all components price?

25%

10%

Subtotal

100%

Production Capabilities

Weight

Is the supplier able to produce PCB in house?

Assemble 0201 Assemble 0402 Assemble QFN packages Assemble BGA-packages Is the supplier able to support client in product design?

Comply with IPC-A-600.

Comply with IPC-6012.

Comply with IPC-A-610.

SMT in house Reflow soldering in house Wave soldering in house Wire bonding in house Manual solder, insert & assembly in house Plastic injectin in house What's the monthly assemble capacity of FR-4, double layer PCB? Subtotal

Scoring

Scoring

Max Score

5%

0= No, 1= Yes

1

0.05

2% 5% 2% 2%

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

1 1 1 1

0.02 0.05 0.02 0.02

15%

0= No, 1= Yes

1

0.15

5% 5% 5% 5% 2% 2% 10%

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

1 1 1 1 1 1 1

0.05 0.05 0.05 0.05 0.02 0.02 0.1

10%

0= No, 1= Yes

1

0.1

10%

0= No, 1= Yes 1= Less than 50,000 2= Between50,000-200,000 3= More than 200,000

3

0.3

3

0.45

20

1.50

15% 100%

20%

30%

Subtotal

100%

Compliance & Cooperation

Weight

Is the supplier willing to sign a confidentiality agreement?

20%

Cooperation during RFI/RFQ

50%

Can you source and purchase components for client

30%

Subtotal 20%

12

50% Total scoring

Scoring 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes Scoring 1= Lowest 1/3 competitive 2= Middle 1/3 competitive 3= Top 1/3 competitive 0= No 1= Yes 0= No 1= Partially 2= All Scoring 0= No 1= Yes 1= Poor 2= Satisfactory 3= Excellent 1= Poor 2= Satisfactory 3= Excellent

Max Score

Max Point

1

0.3

1

0.05

1

0.05

1

0.1

1

0.1

1

0.1

1

0.3

7

1.00 Max Point

Max Score 3

1.5

1

0.25

2

0.5

6

2.25 Max Point

Max Score 1

0.2

3

1.5

3

0.9

4 51

1.70 8.45

Weight

30%

30% Weight

25%

25% Weight

15%

15% 100.00%

Company Profile xxx How many employees can communicate in English?

Do you have own finished product? If yes, what's it?

How many years of EMS experience do you have?

COMPANY INFORMATION xxx xxx Hangzhou Zhejiang xxx

Company Name Address Town Province Company Website

CONTACT PERSON INFORMATION xxx Oversea Sales Manager xxx xxx xxx xxx

Contact Person Title Email Tel Fax Mobile phone

Can you do OEM? Can you do ODM? How do you manage customer IP proctection? Please give examples.

What's your company's position considering price competition? ( High, Middle, Low)

BUSINESS INFORMATION What date was your company founded?

1997 How much is your registration capital 3.49 million (USD)?)

Is company manufacturer or trading Manufacturer company?

What's the nature of your company?

(Private, state owned, joint venture, etc Joint venture ） 2015 ( to 2014 2013 date ) What is your turnover in million USD ?

82 80 81 What is the percentage of turnover Western Domestic North America distributed to: Europe % 62 5 12 Who are your top 3 Clients?

Total Employee 907

2002 79 Rest of the World 18

Industry

xxx xxx xxx

Japan Italy Taiwan

Controller Controller Controller

% of sales 9 8 9

20,000 PE/IE

R&D

633

35

80

Quality Control 54

16 Yes/No Yes Yes

If yes, please fill out client name.

Manage customer IP procection Middle Price as High level Quality

What's your company's position considering quality competition? ( High, Middle, Low)

High

Which industry is your product used in?

controllers for air conditioners, refrigerators, microwave ovens, water heaters, kitchen range hoods and electric cookers， Automotive

If yes, please provide 3 customer reference we can contact:

Country

Production

No

Do you assemble for European customer?

Customer name

1 2 3 How many square meters(m²) does your factory occupy ?

278

Manage ment 57

Sales 48

1 2 3 Does your company have export license ?(yes or no) How many years of export experience do you have?

Does your company have experience to provide stock for your client?

If yes, usually you will keep stock for your clients: Do you have an organization chart?

(Yes/No

13

Yes Customer name Xxx Xxx xxx

Type(Asse mble /end Contact user) Italy Assemble German Assemble France Assemble Country

Tel

Email

Yes 10 Yes 2 weeks

1 month

2 months

>3 months

45%

25%

20%

15%

Yes

If yes, please provide organization chart

Company Profile xxx PRODUCTION Does your company produce PCB in house? (Yes/No) If yes, can you produce FR-4, 2 layers PCB?(Yes/No) Maximum Layers your company can produce：

Yes

Yes

How many years ROHS product experience do you have？

14 years

4

How do you control PCB quality?

Does your company do PCBA in house?

(Yes/No) If yes, can you assemble FR-4, 2 layers PCB? (Yes/No) Minimum line width(mil) Minimum hole size on a 1.6mm board(mm) Maximum PCB Layers your company can assemble： Can your company assemble below components?

0201

Does your company comply with IPC-A610 ?

Yes

TS16949 Please respond to questions for the following technologies：

Yes

In house or Subcontracted

If in house, please prvide Brand/Type

If in house, please provide number of Machines

Yamaha,Samsu ng

14

Yes

Yes / No

Size ( inch )

n/a

SMT

n/a

Reflow soldering

n/a

Wave Soldering

In house

Wire bonding

In house

Type of equipment

Equipment quantity

Plastic injection

Yes

QFN-packages

Yes

-

BGA-packages Does your company have MRP？ (Yes/No) Can you source and purchase components for client? （Yes/No) Can you support client in product design? （Yes/No) Can you support client in production set up? (Yes/No) Can you support client in set up new testing process ? (Yes/No) Does your company comply with IPC-A600 acceptability standard for printed circuits?

Does your company comply with IPC6012?

Yes

-

In house

Manual solder, insert & assembly

No

0402

In house

Yes Yes

What's your capacity utilization？(%)

7

Ridong

11

In house

28

Subcontracted <25 cm2

What's your monthly assemble capacity of right listed FR-4, double layer PCB? (pcs)

Nuosida

25-50 cm2

50-100 cm2

200k

90% Two shifts,

Yes

How many shift does your company work per day?

Yes

How many hours per shift?

Yes

How many days per week does your company work?

5-6 days

Yes

What's your standard inventory level?

n/a

Yes

What tools do you use to manage inventory? FIFO, LIFO, other?

14

8

FIFO

>100 cm2

Company Profile xxx QUALITY CONTROL What quality and environmental registrations do you have?

CORPORATE RESPONSIBILITY

Yes / No

Date of Certificate

ISO 9001

Yes

13/04/2011

13/04/2018

ISO 14001

Yes

27/10/2011

27/10/2018

TS16949

02902/0

Others (please list)

Certifying Org.

Date of Expiry Do you adhere to all rules and regulations in respect to child labour?(Yes/No)

27/10/2021

yes, respect to child labour

Do you have the equipment in If yes, please provide equipment house?(Yes or No) description and brand ICT

Yes

AOI

Yes

ROHS

Yes

Delvtai Fuxing

How many hours per week, including overtime are your employees working on a regularly scheduled basis?

Others equipment (please list) Does your company have in house reliability/aging assessment?

Yes

If yes, please describe the protocol you use.

TS16949

What's your production defective rate? (%)

2500ppm

What's the defective rate claimed by your customer? (%)

500 ppm,some less than 100 ppm

How do you control the incoming material quality?

IQC Checking

How do you control incoming material warehouse condition, like tempreture, humidity?

How do you control finished product warehouse condition,like tempreture, humidity?

How long do you keep QC records for?

48 hours-56hours

Do you have any Ethical and Environmental Policies with independent verification of these policies? (Yes/No)

tempreture-5-35C , humidity:25-85%

Yes, Ethical and Environmental Policies with independent verification

Does your company have social audit by your client? If yes, What's their name?

Yes, we have social audit by client Electrolux,Sakura

Are you willing to sign a confidentiality agreement?(Yes/No)

Yes

tempreture-5-35C , humidity:25-85%

2-5 year

15

Factory Pictures xxx Factory entrance

Workshop

Finished goods warehouse

R&D

SMT

Reflow soldering

Wave Soldering

Manual solder, insert & assembly

Plastic injection

16

Supplier profile score out of 100 Supplier profile score out of 100 100 90 80

94

90

90

89

88

86

85

84

83

83

82

79

78

77

70 60 50 40 30 20 10 0

17

76

75

73

73

73

70

69

66

65

64

60

60

58