Steel Shelving Rack Case Study by Dragon Sourcing

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Steel Shelving Rack

Case Study

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

2

- Client Introduction & Project Objectives,  Dragon Sourcing approach in 2 stages  Client Introduction: USA based client in the business of business of manufacturing, assembling, designing and marketing cabinets, shelving, files, lockers, toolboxes and plastic storage.

Stage 1: Supplier Pre-Qualification 1. Demand Analysis 2. Supply Market Analysis 3. Develop RFI/RFQ 4. Administer RFI/RFQ 5. Analyse RFI/RFQ Responses

 Project Objectives: To identify and qualify potential suppliers by potential suppliers by running Request for Information/Request for Quote (RFI-RFQ) process through procurement and sourcing direct from manufacturers in 10 countries.

 Deliverables: Stage 1 - Supplier database - RFI-RFQ template & analysis report - Supplier profiles including factory and product pictures, suppliers location, price analysis, supplier recommendation.

 Category • Steel Shelving Rack (Complete unit) • Component – Beams and Post for steel shelving racks  Geographical scope: Covering10 Countries.

• Eastern Europe: Hungary, Poland, Slovakia, Czech Rep, Bulgaria, Slovenia, Romania, Serbia and Croatia.

• Asia: India.  Supplier key requirement: Supplier should have all the production the production process in house mainly the powder coating facility.

Quality management certification will be considered as advantage.

 Stage 2: Audits, Selection & Contracting to be finalised post stage 1 completion.

- Audit Report - Samples - Contract(s)

3

- 2 styles from complete unit and 8 components were selected for RFQ, - And suppliers were asked to offer their existing boltless designs. #

Complete unit

Number of SKU’s in category

Description

1

Complete unit- Product 1

• • •

Heavy Duty 5-Shelf steel unit Wooden shelves 72' Height, 36' width, 18' depth

2

Complete unit – Product 2

• • •

Heavy Duty 5-Shelf steel unit Wooden shelves 78' Height, 48' width, 24' depth

Number of SKU’s in category

Description

1

Part # 1

• 18 inch brace

2

Part # 2

• 24 inch brace

Part # 3

• 36 inch beam

4

Part # 4

• 48 inch beam

5

Part # 5

• 60 inch beam

6

Part # 6

• 30inch post

Part # 7

• 36 inch post

Part # 8

• 39 inch post

#

3

7

Components

• Z BEAM

• POST

8 4

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

5

- Following steps were covered under stage 1: Supplier Pre-Qualification No.

Step

Deliverables

1.

Demand Analysis Work with client to define and understand the Products and requirements (specs, volumes, current unit prices, delivery destinations of delivery/consumption). Collect samples of the products in order to ensure potential suppliers fully understand them

• Kick-Off Report

2.

Supply Market Analysis Identify long list of potential manufacturers in countries in scope by leveraging B2B websites, DS database, fair catalogues, Chamber of Commerce, magazines, network, references.

• Supplier Long List

3.

Telephone Pre-screening Selection of manufacturers to be included in the RFI/RFP process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, can export, quality certifications, interest in participating, etc.

• Shortlist for RFI-RFQ process

4.

Develop RFI/RFQ document Prepare an RFI/RFQ document, with an aligned balanced scorecard that has the objective to pre-qualify the competitiveness and capabilities of the manufacturers, including: background, financial, client and product experience, quality certification & processes, social responsibility, manufacturing/technology capability, R&D capability.

• RFI-RFQ Template • Balanced Scorecard

5.

Administer RFI/RFQ: The RFI/RFQ is translated to the local languages as relevant, and distributed to the relevant manufacturers, with telephone follow-up to push for maximum participation.

• Completed RFI-RFQ’s

6.

Analyze RFI/RFQ Responses: Analysis of RFI/RFQ responses, estimation of logistics costs, and preparation of a report, which profiles & objectively ranks the manufacturers by capability and competitiveness, including a recommendation for those to be audited.

• RFI-RFQ Report • Supplier Profiles • Proposed Shortlist for sampling and/or audit.

6

Complete Unit – Steel Shelving Rack, Yearly volumes and estimated yearly spend value was over US$ 30 million collected at the project kick off stage.

#

Category

Number of SKU’s in category

Description

Estimated Yearly Volumes

Estimated yearly spend in US$

FOB Target Price in US$

1

Product 1

• •

5 Shelf steel unit, wire shelves 78' Height, 48' width, 24' depth

units

XX

XX

XX

2

Product 2

• •

5 Shelf steel unit, wire shelves 78' Height, 60' width, 24' depth

units

XX

XX

XX

Product 3

• • •

Heavy Duty 5-Shelf steel unit Wooden shelves 72' Height, 36' width, 18' depth

units

500,000

XX

XX

4

Product 4

• • •

Heavy Duty 5-Shelf steel unit Wooden shelves 78' Height, 48' width, 24' depth

units

250,000

XX

XX

5

Product 5

• • •

Bulk Steel 4 Storage Rack, Adjustable wooden shelves 60' Height, 36' width, 18' depth

units

XX

XX

XX

3

Steel Shelving Rack

RFQ selected styles 7

Yearly volume are 30 million units of components, Estimated yearly spend value was over US$ 15 million collected at the project kick off stage.

FOB Target Price in US$ per unit

Number of SKU’s in category

Description

1

Part # 1

• 18 inch brace

units

XX

XX

XX

2

Part # 2

• 24 inch brace

units

XX

XX

XX

Part # 3

• 36 inch beam

units

XX

XX

XX

4

Part # 4

• 48 inch beam

units

XX

XX

XX

5

Part # 5

• 60 inch beam

units

XX

XX

XX

6

Part # 6

• 30inch post

units

XX

XX

XX

Part # 7

• 36 inch post

units

XX

XX

XX

Part # 8

• 39 inch post

units

XX

XX

XX

#

3

7

8

Components

Z BEAM

POST

8

Estimated Yearly Estimated yearly Volumes in million spend in US$ M

Project Schedule, - Stage 1: Supplier Pre-Qualification timeframe.

- Project was completed within 8 weeks as per schedule.

Done

In process

Delay

• •

Steps

Project timeline was same in all the 10 target Countries.

Weekly progress report was sent every Friday.

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Week 9

10 - 14 Sep

17 - 21 Sep

24 - 28 Sep

1- 5 Oct

8 - 12 Oct

15 - 19 Oct

22 - 26 Oct

29 Oct 2 Nov

5- 9 Nov

Duration/week commencing

1. Demand Analysis

1

2. Supply Market Analysis (Long list supplier database)

2

3. Pre-screening the identified suppliers

2

4. Develop RFI/RFQ template and validate from customer.

1

5. Administer RFI/RFQ process

3

6. Analyze responses & submit RFQ report

2

Timeline reduced to 8 weeks

Not started

1

2

9

- An extensive supplier data base as per target country wise was built by leveraging multiple sources of information & from existing DS database.

Confidential

•

Full sourcing process including building long list of supplier databasewas done online on the DS e-sourcing tool GSP 10

- Pre-screening process was initiated after receiving client validation, - This process was to filter the long list of suppliers prior moving them to the RFI-RFQ step

•

Full sourcing process including pre-screening the suppliers was done online on the DS e-sourcing tool GSP 11

Supplier rejection analysis was shared with client for each step,

1 12

1

1

Key production process not in-house

3 2

Cannot Export

11

60

Traders or Importers only, Unable to contact/Stopped Producing/ Company shutdown

26

Do not have In house powder coating facility Not interested 26

Cannot meet the technical requirement / quality standard 31

Told to contact their USA branch Don't speak English Duplicate supplier Very small capacity for domestic sales only 12

Supplier Profile example

• •

Post pre-screening the suppliers, RFI-RFQ process was administered to filter out most capable suppliers,

13

Supplier Profile example

RFI process was administered to filter out most capable suppliers

14

Supplier Profile example

-

Category specific technical questions were added in the RFI to understand supplier capability and capacity.

15

Part of the RFQ sheet,

•

#

Item#

1

Product 1

2

Product 2

Cost sheet was sent to the suppliers,

Product & box picture

Description

Dimensions (HxWxD)

Reference Finished material

Produc ExUnits in FOB tion Annual work 20'ft Shelf Price in lead Packag Qty in Price in MOQ container Capacity USD/U time in ing units USD/U (loading nit (Weeks nit capacity) )

BLK Black Steel Each Heavy Duty 5-Shelf shelf must 72' height, Shelving Unit, hold 36' width, 4000lbs Capacity 363KG or 500,000 18' depth with Wooden/particle 800 board shelves pounds •10 each 36 inch beams •10 each 18 inch braces •8 each 36 inch posts • XX • XX • XX Each WGB steel shelving shelf must in silver vein, 72' height, hold 4000lbs Capacity 48' width, 363KG or 250,000 with Wooden/particle 24' depth 800 board shelves pounds

16

Part of the RFQ sheet,

•

Cost sheet was sent to the suppliers,

Componen # Part number ts - Angles

1

2

Component s "Z BEAM" styles

POSTS Slotted Angles

Drawing name

Annual Part Steel Deman Description weight Thickness d in in KGS PCS

Part # 1

XX

18" BEAM

XX

XX

XX

Part # 2

XX

24" BEAM

XX

XX

XX

Part # 3

XX

36" BEAM

XX

XX

XX

Part # 4

XX

48" BEAM

XX

XX

XX

Part # 5

XX

60" BEAM

XX

XX

XX

Part # 6

XX

30" POSTS

XX

XX

XX

Part # 7

XX

36" POSTS

XX

XX

XX

Part # 8

XX

39" POSTS

XX

XX

XX

17

Ex-work Price in USD/PC

Producti FOB Price on lead in USD/PC time in (Weeks)

MOQ

Can you offer required steel thickness

PCS in 20'ft container (loading capacity)

- Supply market analysis country wise was shared in the weekly progress and final RFI/RFQ report,

Process

Supplier Identification

Prescreening Completed

RFI-RFQ Administration Completed

Hungary

Poland

Slovakia

Czech Rep

Bulgaria

Slovenia

Romania

Serbia

Croatia.

India

Total

• Suppliers identified

12

33

9

19

11

11

32

23

19

65

234

• Supplier passed prescreening

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

60

• Suppliers failed Prescreening

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

174

• RFI-RFQ sent

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

60

• RFI-RFQ received

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

20

• Don't intend to respond

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

40

Steps

18

Suppliers Assessment, - Suppliers were assessed and ranked based on their Company profile, - Scoring and ranking of the suppliers were done on the e-sourcing tool GSP, RFI Scoring Chart 75%

72%

71%

70%

69%

68%

67%

66%

65%

64%

63%

63%

62%

61%

60%

Average RFI scoring: 62%

59%

57%

55%

51%

RFQ - Product Capability Score Business information Score

Production Score Certificate, documents and pictures Score 19

Quality management Score Corporate Social Responsibility Score

Supplier 20-PL

Supplier 19-PL

Supplier 18-PL

Supplier 17-IN

Supplier 16-PL

Supplier 15-IN

Supplier 14-IN

Supplier 13-IN

Supplier 12-IN

Supplier 11-IN

Supplier 10-IN

Supplier 9-IN

Supplier 8-PL

Supplier 7-IN

Supplier 6-IN

Supplier 5-IN

Supplier 4-IN

Supplier 3-PL

Supplier 2-IN

Supplier 1-IN

29%

-

Executive summary with key information was shared with the client,

Export license RFI Countr Score y % Yes/No

#

Supplier

1

Supplier 1

India

75

Yes

2

Supplier 2

India

72

Yes

3

Supplier 3

Poland

71

Yes

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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

India India India India Poland India India India India India India India Poland India Poland Poland Poland

70 69 68 67 66 65 64 63 63 62 61 60 59 57 55 51 29

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Process: In-house Main Producing items

Sheet metal components and assemblies Steel doors, steel windows, racks. metal shelving's, aluminum ladders, safes, metal boxes, metal furniture Storage system All types of racks Steel shelving racks XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Items offered from RFQ, Can offer Can offer boltless component Supplier shelving as s (Beam similar Complete Component per RFQ and Post boltless units s designs Angles) range available

Certification,

Rivetin g

Powder coating

Yes

Yes

Yes

Yes

Yes

Yes

No

ISO 9001 certified only

Yes

Yes

Yes

Yes

Yes

Yes

No

ISO 9001, ISO 14001 & OHSAS 18001

Yes

Yes

Yes

Yes

Yes

Yes

Yes

ISO 9001 certified only

Yes Yes Yes XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Yes Yes Yes XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Yes Yes Yes XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Yes Yes Yes XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Yes Yes Yes XX XX XX XX XX XX XX XX XX XX XX XX XX XX

Yes Yes Yes XX XX XX XX XX XX XX XX XX XX XX XX XX XX

No No No XX XX XX XX XX XX XX XX XX XX XX XX XX XX

ISO 9001 certified only ISO 9001 certified only ISO 9001 certified only XX XX XX XX XX XX XX XX XX XX XX XX XX XX

20

RFI Score

75%

RFI Ranking

1

- Suppliers company profiles as per ranking wise were shared in the final report.

21

-

Recommended suppliers location was shared on the map

22

Next Steps was suggested to the client Below are the proposed next steps with responsibilities.

Actions

Responsible

Deadline

1.

Collect similar samples from recommended suppliers

DS/Client

-

Process to start immediately.

2.

Send original samples to recommended suppliers

Client

-

Process to start immediately.

3. On site audit (Technical/ Social/ or Hybrid model)

DS and/or Client

-

To be confirmed

4.

XX

DS and/or Client

-

XX

5.

XX

DS and/or Client

-

XX

6. XX

DS and/or Client

-

XX

23

Remarks

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

24

Conclusions  Whole project was carried out in 8 weeks with 234 suppliers identified & 20 complete RFI-RFQ received.  All the recommended suppliers are certified with quality management certification.  All the recommended suppliers had key production process in-house including powder coating facility.  Indian suppliers were currently not doing boltless designs however they are willing to develop/customize as per client requirement.  Sampling process was initiated with the recommended suppliers.  A plan was framed to audit the recommended suppliers as a next step post sampling.  Overall based on our report, It helped client to identify potential suppliers with some substantial savings

** Dragon Sourcing has experienced team for performing Technical and Social Corporate Responsibility (CSR) audit or hybrid model combing both.

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