Case Study on Gloves Sourcing

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

Gloves Sourcing Case Study

Agenda

1.

Objectives

2.

Approach

3.

Results

2

Objectives DS Approach consists in the following work steps:

Context

1. Work with client to define and understand the products and requirements (specs, volumes, materials etc.).

2. Identify long list of potential suppliers in China by incorporating existing list of DS potential suppliers and by leveraging the web, external databases and various networks of experts.

3. Carry out a phone pre-screening of the suppliers based on maximum 4-5 screening criteria per category (e.g.: min size, having certain quality certification, experience in relevant industry,…) with these criteria to be provided by the client 4. Develop the RFI/RFQ – jointly with the client – to include all key supplier qualification criteria (e.g.: financial, technology, manufacturing etc.) and quotation requirements.

5. Administer the RFI/RFQ process to ensure as high return rate as possible including quotation.

6. Analyze responses and use balance score card developed together with client’s management team to rank and recommend suppliers that the client needs to take through a formal qualification process factory audit.

7. Carry out factory audits (either alone or jointly with client’s auditors or buyers) of the suppliers that appear attractive and competitive based on the RFI/RFQ analysis report. (Optional)

Objectives • To carry out sourcing service for the below category to achieve cost savings and identify new qualified suppliers:  Gloves

Geographical scope: • China • Thailand and Malaysia only for “nitrile gloves”

Deliverables: • • • • • •

Supplier long list RFI/RFQ template RFI/RFQ report Company profile Score card Recommend suppliers for audit

3

Agenda

1.

Objectives

2.

Approach

3.

Results

4

Total current yearly spend: AUD ~961 K; total target yearly spend: AUD ~859 K Category

Gloves

Type

No. of SKUs

Total current spend

Total Target spend

% in total target spend

Protective Glove

36 (including 19 different products)

$ 664,035

$ 614,468

71.5%

Anti Cut

13 (including 5 different products)

$ 196,212

$ 173,335

20.2%

Mechanical Protection

3 (including 1 product)

$ 54,330

$ 38,747

4.5%

Chemical resistant gloves

4 (including 3 different products)

$ 27,539

$ 19,278

2.2%

Chemical & Liquid Protection

2 (including 1 product)

$ 19,205

$ 13,444

1.6%

$ 961,321

$ 859,271

100%

% in total target spend 2.2%

1.6% 4.5%

20.2%

71.5%

Protective Glove

Anti Cut

Mechanical Protection

5

Chemical resistant gloves

Chemical & Liquid Protection

Below table indicate No. of sizes and spend for each item, item “gloves latex disp non-sterile� has the top 1 spend AUD ~357 K (41.5% of the total target spend) Category

Type

Protective Glove

Gloves

Gloves Latex Disp Non-sterile Gloves Knit Polycotton Gloves Hyflex Nitrile Palm Gloves Nitrile Ultratech Foam Gloves Uvex Helix C5 Gloves Cotton Interlock Gloves Nit T/Tuff Gloves Polycotton Knitted Gloves Polycotton Knitted Gloves Leather Prosafe Warrior Gloves Rubber Silverlined Gloves Hyflex Nit Gloves Food Safe Gloves Solvex Flockline Nitrile

No. of Sizes 2 1 2 3 2 1 3 4 1 2 2 2 2 2

No. of SKUs 2 1 2 3 2 1 3 4 1 2 2 2 2 2

Gloves Vantage Kevlar Stitch Leather

2

Gauntlets Solvex Nitrile Gloves Vinyl Food Safe Gloves Hyflex Ultra Gloves Ecogreen Nitrile Glove Kev Bdl Slve Lthr Pach

Item Description

$358,012 $78,107 $74,246 $23,262 $21,873 $20,668 $16,397 $11,965 $9,430 $8,914 $6,457 $5,968 $5,660 $5,514

$356,670 $77,513 $72,716 $16,283 $15,311 $14,467 $11,478 $8,375 $6,601 $6,239 $4,520 $4,178 $3,962 $3,859

% in total target spend 41.5% 9.0% 8.5% 1.9% 1.8% 1.7% 1.3% 1.0% 0.8% 0.7% 0.5% 0.5% 0.5% 0.4%

2

$4,926

$3,448

0.4%

2 1 1 1 1

2 1 1 1 1

$4,578 $3,520 $2,756 $1,784 $87,652

$3,205 $2,464 $1,929 $1,249 $85,950

0.4% 0.3% 0.2% 0.1% 10.0%

Total current spend Total target spend

Glove Atg Maxiflex Ultimate

3

3

$48,037

$38,946

4.5%

Anti Cut

Gloves Ansell Dyneema

2

2

$29,907

$27,007

3.1%

Mechanical Protection

Gloves Uvex Helix Gloves Maxicut 5 Ultimate Gloves Hylite Nitrile

3 4 3

3 4 3

$17,848 $12,768 $54,330

$12,494 $8,937 $38,747

1.5% 1.0% 4.5%

Gloves Disp Nitrile Tgc Orange

2

2

$19,729

$13,810

1.6%

Chemical resistant gloves

Gloves Solvex Flockline Nitrile Gloves Ecogreen Nitrile

1 1

1 1

$5,062 $2,748

$3,544 $1,924

0.4% 0.2%

Chemical & Liquid Protection

Gloves Ansell Microflex

2

2

$19,205

$13,444

1.6%

Total

58

$961,321

859,271

100%

6

19 RFI/RFQ and 11 only RFQ received, except 1 supplier is in Pennang of Malaysia, the other 29 suppliers are all located in China: 10 in Jiangsu, 8 in Shandong, 2 in Shanghai, 3 in Guangdong,3 in Zhejiang, 1 in Fujian, 1 in Beijing Gloves Saving compare to target price (AUD) RFQ Items quoted Province RFI (Y/N) RFI score (Y/N) (total 58 SKUs)

#

Country

1

China

Jiangsu

Y

Y

51

2

China

Shandong

Y

Y

27

3

China

Fujian

Y

Y

54

20’ with pallet

20' without pallet

78

88,253

109,036

64,518

78

151,564

156,525

146,490

78

286,534

327,558

233,612

119,544

112,034

LCL (1 pallet)

4

China

Jiangsu

Y

Y

8

75

115,877

5 6

China China

Shandong Jiangsu

Y Y

Y Y

53 51

73 69

374,742 170,847

415,175 188,994

315,688 163,942

7 8 9

China China China

Shandong Beijing Jiangsu

Y Y Y

Y Y Y

24 10 6

67 63 62

0 99,408 41,361

0 119,440 42,668

0 60,630 39,984

10

China

Jiangsu

Y

Y

24

59

132,909

140,888

131,807

11

China

Shandong

Y

Y

10

58

6,837

20,348

1,134

12

China

Shandong

Y

Y

6

56

39,793

42,760

39,392

13

China

Shanghai

Y

Y

6

56

8,183

8,965

7,161

14

China

Guangdong

Y

Y

23

56

127,501

131,902

122,902

15

China

Guangdong

Y

Y

5

55

111,854

131,344

73,966

16

China

Jiangsu

Y

Y

6

55

11,823

12,477

11,136

17

China

Jiangsu

Y

Y

21

50

121,857

125,523

118,008

18

Malaysia

Penang

Y

Y

9

44

7,183

8,290

7,099

19

China

Shanghai

Y

Y

22

33

20,077

21,285

19,532

20

China

Henan

N

Y

23

no RFI

160,321

120,761

155,500

21

China

Jiangsu

N

Y

15

no RFI

146,204

150,740

141,448

22

China

Shandong

N

Y

37

no RFI

142,990

160,809

127,896

23

China

Guangdong

N

Y

4

no RFI

124,317

143,496

86,612

24 25 26 27 28

China China China China China

Zhejiang Zhejiang Zhejiang Jiangsu Shandong

N N N N N

Y Y Y Y Y

8 9 3 3 7

no RFI no RFI no RFI no RFI no RFI

99,255 72,314 19,943 0 0

119,032 95,864 20,184 0 0

60,801 71,885 19,914 0 0

29

China

Shandong

N

Y

3

no RFI

0

0

0

no RFI

0

0

0

30

China

Jiangsu

N

Y

3

7

Score card analysis - 19 suppliers RFI are scored and ranked, 18 suppliers are from China, 1 supplier is from Malaysia China Section

Weight

Malaysia

Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Business information 20%

91

92

91

79

88

91

76

55

58

64

82

68

73

77

55

52

32

20

64

Production

30%

65

51

57

71

51

53

38

25

49

43

29

31

41

34

37

49

31

15

16

Quality system

30%

81

100

81

81

81

63

81

100

69

69

63

69

69

44

69

44

63

81

63

Social Responsibility

20%

80

70

90

70

80

70

60

70

60

60

60

60

40

80

60

70

80

0

40

Total

100%

78

78

78

75

73

67

63

62

59

58

56

56

56

55

55

52

50

33

44

(Score max 100 points) 100

RFI score card and filling rate

(Filling rate total 100%) 100%

75

75%

50

50%

25

25%

0

0% Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 China

Malaysia

8

China

75 75% 75 75%

50 50% 50 50%

25 25% 25 25%

0 0% 0 0%

Malaysia

9 Supplier 9 China

Social Responsiblity

Supplier 19

Supplier 18

Supplier 17

Supplier 16

Supplier 15

Supplier 14

Supplier 13

Supplier 12

Supplier 11

Supplier 10

Supplier 9

Production

Supplier 19

China

Supplier 18

Supplier 17

Supplier 16

Supplier 15

Supplier 14

Supplier 13

Supplier 12

Supplier 11

Malaysia

Supplier 10

Supplier 8

Supplier 7

Supplier 6

Supplier 5

Supplier 4

Supplier 3

(Score max 100 points) 100

Supplier 8

(Score max 100 points) 100

Supplier 7

Supplier 6

Supplier 5

Supplier 4

Supplier 3

(Filling rate total 100%) 100%

Supplier 2

Supplier 1

(Filling rate total 100%) 100%

Supplier 2

Quality system

Supplier 1

China

Supplier 19

Supplier 18

Supplier 17

Supplier 16

Supplier 15

Supplier 14

Supplier 13

Supplier 12

Supplier 11

Supplier 10

Supplier 9

Supplier 8

Business information

Supplier 19

Supplier 18

Supplier 17

Supplier 16

Supplier 15

Supplier 14

Supplier 13

Supplier 12

Supplier 11

Supplier 10

Supplier 9

(Score max 100 points) 100

Supplier 8

Supplier 7

Supplier 6

Supplier 5

Supplier 4

Supplier 3

Supplier 2

Supplier 1

(Score max 100 points) 100

Supplier 7

Supplier 6

Supplier 5

Supplier 4

Supplier 3

Supplier 2

Supplier 1

Score card analysis - RFI score and filling rate for each section Low score at production section due to only produce 1 category PPE product and not cooperated with global PPE clients, low score at social responsibility due to no ISO14000/OHSAS 18001 certificate and not a Sedex member (Filling rate total 100%) 100%

75 75% 75 75%

50 50% 50 50%

25 25% 25 25%

0 0% 0 0%

Malaysia (Filling rate total 100%) 100%

Malaysia

Agenda

1.

Objectives

2.

Approach

3.

Results

10

Client total target spend for total 5 types of gloves - 58 RFQ items is AUD 859K, 30 quoted suppliers’ spend are from AUD 11K to AUD 2.6M for 3 to 54 items; all 58 items from 25 suppliers have potential savings, the total savings range from 16% to 73%.

Total spend, supplier potential savings for LCL and RFI score 3,000

100

78

78

2,000

0

65

0 0

164

33 316

234 0

0 0

20

61

74

61 0

Total Spend Supplier 1

58

55

1,000

87 146

75

75

63

52

1,500

500

78

73

67

1

0

50

72 128 20 155 123 132 141 112 118 39 0

0

0

Savings on SKUs with lower quotes

0

62

56

56

55

50

44 25 0

0

40

0 0

7

11

7 0

0

RFI score

Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Total 2,607,671 2,402,205 795,322 709,548 669,049 617,739 601,964 522,757 335,707 313,773 289,341 277,403 211,847 202,168 174,591 164,632 159,680 109,947 92,288 Spend # of SKU 3 51 51 6 24 54 22 53 10 8 5 4 27 10 9 34 3 23 23 quoted # of SKU lower 0 7 40 0 0 47 7 51 9 8 3 4 24 2 7 30 2 23 23 than target Savings on SKUs with 0 64,519 163,942 0 0 233,612 19,532 315,688 60,630 60,800 73,966 86,612 146,491 1,135 71,884 127,896 19,915 155,499 122,902 lower quotes Savings % on SKUs 0% 57% 62% 0% 0% 32% 52% 38% 16% 16% 21% 24% 65% 27% 47% 64% 74% 59% 57% with lower quotes

11

59

56

RFI score

Thousands AUD

2,500

Supplier 20

85,312

Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier 21 22 23 24 25 26 27 28 29 30

78,844 66,337 60,364 38,302

33,915

30,715 15,046 11,663 11,253 10,743

24

26

21

21

6

3

3

6

9

6

6

24

26

21

21

6

0

0

6

7

6

6

0

0

39,984

7,099

11,137

7,161

0%

0%

73%

52%

50%

40%

131,807

61%

141,448 112,035 118,008 39,392

64%

63%

66%

51%

5 suppliers are recommended for 2nd round RFQ Gloves

#

1

2

3

4

5

No. of Excluded from bids Items RFI RFQ RFI Province quoted Sedex Chemical Chemical (Y/N) (Y/N) score Anti Cut Mechanical (total 58 Protective & Liquid Resistant （13 SKUs） (3SKU) SKUs) (36 SKUs) （2 SKU） (4 SKUs)

Shandong

Jiangsu

Fujian

Shandong

Jiangsu

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

78

78

78

73

69

27

51

54

53

51

20/36

2/36

2/36

5/36

2/36

2/2

0

0

0

2/2

8/13

3/13

0

0

3/13

1/4

2/4

2/4

0

0

0

N

0

N

0

Y

0

0

12

Saving compare to target price % (AUD) ANZ safety coverag standards e of 20' 20’ LCL compliance bids by without (1 pallet) spend with pallet pallet ANSI, CE (EN 388:2003) ANSI, CE (AS/NZS 2161:2005/EN 3741:2003/EN 388:2003) CE (EN 388:2003/EN4 20/EN374/ EN407)

38%

95%

98%

151,564

88,253

286,534

Recommend reasons

156,525

No.1 RFI score with good savings, has cooperated with global PPE clients, 146,490 very good attitude and it's first vendor who quoted with entire packging information.

109,036

64,518

No.1 RFI score, found in 1983, big factory. High Quality they quoted so savings aren't very good, but can requote after receive samples. Almost all gloves they can produce.

327,558

No.1 RFI score, have good savings, almost all gloves they can produce.

233,612 Only one vendor who are a member of Sedex.

N

ANSI,CE,ISO

97%

374,742

415,175

N

ANSI, CE (AS/NZS 2161:2005/EN 388:2003)

95%

170,847

188,994

Have good savings, almost all gloves they can produce, very good attitude, can quote all other products which 315,688 client needs, they have lots of experience in auditing but seems they also use other factory to produce gloves have good savings, almost all gloves they can produce. Their prices are 163,942 nearly close to the prices with client, should know those kinds of gloves very well.

For 5 recommended suppliers , they are located in 3 province: 3 in Jiangsu, 1 in Fujian, 1 in Shandong

Protective Gloves

#

Province

RFI (Y/N)

No. of Items RFQ RFI score quoted (Y/N) (total 58 SKUs)

Saving compare to target price (AUD) 20’ with pallet

20' without pallet

LCL (1 pallet)

1

Shandong

Y

Y

78

27

151,564

156,525

146,490

2

Jiangsu

Y

Y

78

51

88,253

109,036

64,518

3

Fujian

Y

Y

78

54

286,534

327,558

233,612

4

Jiangsu

Y

Y

73

53

374,742

415,175

315,688

5

Jiangsu

Y

Y

69

51

170,847

188,994

163,942

13