Strategic Sourcing Case Study on Aluminum Industry by Dragon Sourcing

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Strategic Sourcing Case Study – Aluminum Industry

Agenda

1.

Objectives , work plan and time line

2.

Approach

3.

Results

2

Objectives and approach Dragon Sourcing approach

Context Objectives: • Identify new potential competitive suppliers in China

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

Categories involved 1.Spools 2.Steel pipe 3.Wear parts & liners 4.Electrical cables (HV/LV) and ladders 5.Collector and Copper Bars 6.HDPE pipe 7.Komatsu mobile equipment parts 8.Caterpillar mobile equipment parts 9.Tires 10.PLC

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

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 NDA: NDA provided by Client is distributed to the suppliers who passed pre-screen , with telephone follow-up to push for maximum signing.

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

Deliverables: • Supplier data base • NDA signed • RFI / RFQ report • Score Card • Company profiles • Recommended audit supplier list

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

The project was scheduled for 14 working weeks period with a weekly follow report sent every Friday.

Step

Who

0

Kick off

Client/DS

1

Demand Analysis

Client/DS

2

Supply Market Analysis

DS

3

Telephone prescreening

DS

4

NDA administration

DS

5

Develop the RFIRFQ

Client/DS

6

Conduct RFI/RFQ Administration

DS

7

Analyze RFI/RFQ Responses

DS

W0

W1

W2

W3

W4

W5

W6

W7

W8

Not-started

4

W9

Started

W 10

Delayed

W 11

Finished

W 12

W 13

Holiday

W 14

TODAY

Milestones

Agenda

1.

Objectives , work plan and time line

2.

Category Approach (HDPE pipe)

3.

Results

5

Demand analysis, total 24 items, RFQ spend USD 1.05 M. #

Description

HS code

Annual quantity (pc)

1

DN450 PN10 PE100 (12m Lengths)

39172200

150

2

DN355 PN25 CO-EX WHITE (12m Lengths)

39172200

34

3

DN200 PN10 PE100 CO-EX WHITE (12m Lengths)

39172200

70

4

100mm X 100m DRAIN COIL

39172200

177

5

DN355 PN16 SDR 11 CO-EX WHITE (12m Lengths)

39172200

49

6

DN250 PN16 PE100 CO-EX WHITE (12m Lengths)

39172200

21

7

DN200 PN16 S1 SDR11 CO-EX (12m Lengths)

39172200

16

8

DN400 PN12.5 PE100 (12m lengths)

39172200

48

9

DN315 PE100 PN12.5 (12m lengths)

39172200

72

10

DN160 PN12.5 PE100 (12m lengths)

39172200

144

11

DN200 PN12.5 PE100 (12m lengths)

39172200

279

12

DN400 PN12.5 PE100 (12m lengths)

39172200

48

13

DN315 PN16 PE100 CO-EX WHITE (12m lengths)

39172200

151

14

DN315 PN12.5 PE100 CO-EX WHITE (12m lengths)

39172200

54

15

DN280 PN16 PE100 CO-EX WHITE (12m lengths)

39172200

60

16

DN200 PN12.5 PE100 CO-EX WHITE (12m Lengths)

39172200

151

17

DN450 PN12.5 PE100 (12m Lengths)

39172200

30

18

DN355 PN10 PE100 (12m Lengths)

39172200

120

19

450mm Stub Flanges PN10 and ANSI backing ring to suit

39172200

120

20

450mm fully moulded long spigot equal TEE PE100 pn10

39172200

42

21

DN450 PN10 CO-EX WHITE (12m Lengths)

39172200

62

22

DN355 PN16 PE100 CO-EX WHITE (12m Lengths)

39172200

26

23

100mm X 100m DRAIN COIL with RTA Standard Sock

39172200

140

24

DN630 PN16 PE100 CO-EX WHITE (12m Lengths)

39172200

41

6

126 suppliers identified, all called, 48 passed pre-screen, total 48 RFI/RFQ sent, 2 RFQ and 22 RFI/RFQ received.

Step

HDPE Pipe

Total number of suppliers

126

Supplier called

126

Shortlisted supplier after call

48

RFI/RFQ sent

48

RFQ received

2

RFI/RFQ received

22

7

Balance Score card used to rank the suppliers Business information

Weight of criteria

Year Founded

15%

Turnover in 2017 in USD

15%

Number of employees

10%

English speaking R&D

5%

Export experience

10%

Profile of Top Customers

15%

Refinery industry experience Export experience to Australia Provide company presentation

10% 5% 5%

Cooperation during RFI/RFQ

5%

Completeness of RFI/RFQ

5%

Subtotal

100%

Production

Weight of criteria

Production of HDPE pipe, Co-extrusion HDPE pipe, PE coil

15%

Annual production in 2017- HDPE pipe ( Ton )

15%

Annual production in 2017- Co-extrusion HDPE pipe ( Ton )

10%

Annual production in 2017- HDPE coil ( Ton )

5%

Scoring 1=After 2010 2=Between 2000-2010 3=Before 2000 1=Less than 5M 2=5-10M 3=10-20M 4=above 20M 1= < 100 2=100-200 3=201-500 4=>500 0=No1=Yes 1=Less than 5 years 2=5-10 years 3=More than 10 years 1=Local customers 2=National customers 3=International customers as Client 0=No1=Yes 0=No1=Yes 0=No1=Yes 1= Poor 2= Satisfactory 3= Excellent 1= Poor (< 70%) 2= Satisfactory (70-85%) 3= Excellent(>85%)

Scoring 1= One kind 2=Two kinds 3=All 1 = < 500 2= 501-100 3 = 100001-2000 4 => 2000 1 = < 500 2= 501-100 3 = 100001-2000 4 => 2000 1 = < 500 2= 501-100 3 = 100001-2000 4 => 2000

Max Score per criteria

Weight of the section

5%

Extrusion produciton line

10%

Co-extrusion produciton line

10%

AS/NZS 4130 standard pipe

5%

0=No 1=Yes

1

Supply HDPE geomembrane with pipe

5%

0=No 1=Outsource 2=Produce in house

2

3

4

1= Part of Client requirement 2=Cover all Client requirement 1= 1 2=2-3 3=>3 1= 1 2=2-3 3=>3

Pipe/coil diameter range

4

2 3

3

ERP system

5%

0=No 1=Yes

1

1

Product/service traceability system

5%

0=No 1=Yes

1

3

Equipment maintenance program in place

5%

0=No 1=Yes

1

5%

0=No 1=Yes

1

30%

Formalďź?documented inventory management system Subtotal

3

Quality system

1 1 1

ISO 9001

3

100% Weight of criteria 20%

ISO 14001

6%

Company-wide quality manual

6%

Incoming material inspection and report

6%

On line quality inspection and report

6%

Final products inspection and report?

6%

Hydraulic strength test in house

10%

Yield strength test in house

7%

Weather resistance test in house

7%

Oxidation induction time test in house

7%

Longitudinal shrinkaget test in house

7%

Elongation at break test in house

6%

3 30% Weight of Max Score per the criteria section 3

4 35% 4

4

Radiation Absorption test in house

8

Subtotal

6% 100%

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

35% Weight of Max Score per the criteria section 1 1 1 1 1 1 1

35%

1 1 1 1 1 1 35%

20 suppliers have potential savings ranging from 0.3% to 12.8%.

Potential saving & RFI score & items quoted Potential Saving(USD)

RFI score

150000

Items quoted 100

80

100000 60

40 50000

20

0

0

9

6 green highlighted suppliers were recommended for auditing Supplier RFI score & potential saving & Items quoted RFI score

Items quoted

Potential Saving(USD)

100

150000 94

92

91

90

89

87

85

84

84 80

79

80

79

78 75

73

71

71 64

63

62

100000

62

60 52

40 50000

24 20

21

22

22

11

24

24

22

24

22

19 10

9

12

24

22

19

17 10

5

12 8

8

7 0

0

0

0

10

1st priority

2nd priority

Company profile xxxxxxx Company Name Address Town Province Company Website Contact Person Title Email Tel Fax Mobile phone

COMPANY INFORMATION xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx CONTACT PERSON INFORMATION xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx

What is the percentage of turnover distributed to:

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

Public listed

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

How many employees do you have?

What industry does your company mainly serve?

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

What Incoterms can your company quote and operate?

1

US

Rest of the World

2.0% Country China China China

1.7% % of sales 4% 3% 7%

ISO14001

Shortly describe your policy to cover health and safety.

OHSAS18001

Have any western companies conducted a social audit of your company during the last two years?

No PRODUCTION

Your company's business registration number What is your turnover in million USD ?

Ranking

Europe

Shortly describe your policy to cover environment and conservation.

2008

94

95% 1.3% Clients Industry Shenhua Coal Hechuang Chemical Alxa Mining CORPORATE RESPONSIBILITY

Who are your top 3 Clients?

1 2 3

BUSINESS INFORMATION What date was your company founded?

Domestic

RFI/RFQ score

xxxxx 2017

2016

2015

150

119

99

159750 1074 infrastructure, fuel gas, industrial and mining enterprises, electricity and heating power, residential buildings and other areas.

Yes

Does your company produce right listed product?(Y/N) Annual capacity in 2017(Ton) What's your company's current capacity utilization? (%) How many production lines does your company have?

Your company's pipe/coil diameter range (mm) Does your company supply right listed pipe/coil to any refinery company? (Y/N)

HDPE pipe

Co-extruded HDPE pipe

HDPE coil

Y

Y

Y

32000

28500

350

87%

87%

87%

17

14

3

20mm-2000mm

20mm-1600mm

20mm-63mm

Y

Y

Y

Does your company have How many machine below /production equipment in house? line does your (Yes/No) company have?

4

Details ( Brand, speed, years acquired，etc )

Extrusion

Y

17

Bottenfeld，2012

Co-extrusion

Y

14

Bottenfeld，2012

FOB, CIF

11

Company certificate and picture xxxxxxx Business registration

ISO 9001

ISO14001

Factory entrance

Workshop

Machinery

Machinery

Warehouse

Office

12

Agenda

1.

Objectives , work plan and time line

2.

Approach

3.

Results

13

In total, 1039 suppliers identified, 428 passed pre-screen, 92 NDA signed, 14 RFQ and 106 RFI/RFQ received.

#

Category

# of supplier identified

Tel Pre-screen called

# of supp pas Tel Pre-screen

NDA sent

NDA signed

RFI/RFQ sent

62

30

30

RFQ only

RFI/RFQ received

1

Pipe spools

127

127

62

2

Steel pipe

122

122

43

3

Wear parts & liners

114

114

52

52

29

29

13

4

Electrical cables (HV/LV) and ladders

180

180

37

37

23

23

18

5

Collector and Copper Bars

53

53

15

15

10

10

6

6

HDPE pipe

116

126

48

53

2

22

7

Komatsu mobile equip parts & components

114

114

44

44

2

4

8

Caterpillar mobile equip parts & components

56

56

46

46

1

8

9

Tyres

102

102

37

37

4

6

10

PLC

45

45

44

44

1039

1039

428

Total

14

43

166

92

359

9

5

13

7

14

Donâ&#x20AC;&#x2122;t need sign NDA

106

79 out of 88 suppliers have potential savings ranging from 1.8%-26.5%. For the other 4 categories, savings were not analyzed because client current prices were not available.

Potential saving summary

No of RFQ items

Number of Number of Number of supplies suppliers Suppliers with responding to responding to potential RFQ only RFI/RFQ savings

Number of items with savings

1 Pipe spools

16

9

9

15

2.0%

29.0%

14.0%

2 Steel pipe

7

13

17

4

0.4%

5.3%

3.7%

3 Wear parts & liners

6

13

13

6

10.0%

43.5%

26.5%

15

18

18

9

0.6%

9.5%

3.8%

5 Collector and Copper Bars

10

6

2

6

0.5%

3.0%

1.8%

6 HDPE pipe

24

2

22

20

16

0.1%

12.8%

4.5%

78

7

81

79

56

#

4

Category

Electrical cables (HV/LV) and ladders

Total

5

15

Min potential Max potential saving saving

Average potential saving