Glass Bottles and Glass Jars Sourcing Project Case Study

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Glass Bottles and Glass Jars Sourcing Project Case Study

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

2

Objectives and Approach Context  Client Introduction: Leading food company with operations and headquarters in Europe.

 Dragon Sourcing approach in 2 stages 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 running Request for Information/Request for Quote (RFI-RFQ) process through procurement and sourcing for category Glass Bottles and Jars.  Geographical scope: • China: • India/UAE • Poland/Czech Republic

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

 Supplier key requirement:  Should be a manufacturer.  Must have export license and good export experience.  Must be certified with Global Food Safety Initiative (GFSI) schemes or any of its food safety standards.  Quality management and social compliance certification will be considered as advantage.

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

- Audit Report - Samples - Contract(s)

3

-

Total 12 styles were selected for RFQ with estimated yearly spend about € 4 million, - In the RFQ process, items highlighted in green are considered important.

Class

Item Description

ACT VOLUME C18 FY

DDP PRICE €/each

Total Spends in Euro

GLBTXXX

Fles 180ml

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

GLJAXXX

Terrine 145ml

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Million

44.05

€ XX

4

Example drawings for bottles,

Example drawings for Jars,

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 drawings and other relevant documents 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 from 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, food and safety, quality & CSR 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

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

- Project was completed within 8 weeks as per schedule.

Not started

Done

In process

Delay

• •

Project timeline was same in all the target Countries.

Weekly progress report was sent every Friday.

Steps

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

7. Pre-audits (optional)

-

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

1

2

Finished

7

Milestones

- 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 8

- 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 9

Supplier Profile example

• •

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

10

Supplier Profile example

RFI process was administered to filter out most capable suppliers

11

Supplier Profile example

-

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

12

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

Process

Supplier Identification

Steps

China

India

Poland

Czech Republic

U.A.E

Total

Suppliers identified

55

24

5

2

2

88

Supplier passed prescreening

XX

XX

XX

XX

XX

41

Suppliers failed Prescreening

XX

XX

XX

XX

XX

47

RFI-RFQ sent

XX

XX

XX

XX

XX

41

Number of RFI-RFQ received

XX

XX

XX

XX

XX

11

Don’t intend to respond

XX

XX

XX

XX

XX

30

Pre-screening Process

RFI-RFQ Administration Process

13

Supplier rejection analysis was shared with client for each step,

Not certified with Global Food Safety Initiative (GFSI) schemes or any of its food safety standards

3 2

3

Don't produce Glass bottles and Jars for Food Industry

18

4

Cannot Export Stopped production for glass bottles and jars

6

Traders or distributors only

11

Duplicate supplier

Cannot meet the technical requirement / quality standard

3

1

Cannot meet the technical requirement / quality standard Don't produce machine-made glass bottle

8

Disclosed now, Traders or Importers only

18 Small production capacity

14

Part of the RFQ sheet,

•

Cost sheet with drawings was sent to all the pre-screening passed suppliers

Weight Brimful Closure Diameter Height (gram)

# of output Estimated FOB Price Mold Cost PCS from Volumes in in Euro each in PCS Euro/PC mould

#

Class

Item Description

1

GLBTXXX

Fles 180ml

188

29/21

56,8

139,5

173

Brown:

XXX

2

GLBTXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

3

GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

White Flint

XXX

4

GLJAXXX

Terrine 145ml

145

58

63

77,1

137

XXX

XXX

5

GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

6

GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

7

GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

8

GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

9

GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

10 GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

11 GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

12 GLJAXXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Color

Items highlighted in green are with high potential volumes and more importance for the order.

15

MOQ

Productio # of PCS n lead in 20'ft time container

Supplier Remarks,

- Price analysis was shared with the client, - Part of the DDP Spend Analysis.

Annual Spends from the actual report

#

1

2

3

4

5

6

7

8

9

10

11

Supplier name

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

No. SKU's offered

11 SKU's

12 SKU's

12 SKU's

12 SKU's

8 SKU's

12 SKU's

12 SKU's

12 SKU's

10 SKU's

10 SKU's

Country

India

China

China

China

China

5 SKU's Czech/ Austria

China

China

China

China

India

Estimated Clients AVG Volumes in Annual DDP PCS Spends

DDP DDP DDP DDP DDP DDP DDP DDP DDP DDP DDP Spends in Spends in Spends in Spends in Spends in Spends in Spends in Spends in Spends in Spends in Spends in Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro

#

Class

Item Description

1

GLBTXXX

Fles 180ml

XX

€ XXX

-

€ XX

€ XX

€ XX

-

€ XX

€ XX

€ XX

€ XX

2

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

3

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

€ XX

4

GLJAXXX

Terrine 145ml

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

5

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

6

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

7

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

-

8

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

-

€ XX

-

€ XX

-

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

9

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

€ XX

€ XX

-

-

10

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

€ XX

€ XX

€ XX

€ XX

11

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

-

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

12

XX

XX

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

-

€ XX

€ XX

€ XX

€ XX

€ XX

Total volumes:

XX

€ XXX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

44.05

Difference in Euro

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

Volumes in Million:

Price Competitive Suppliers High DDP Spend Lower DDP Spend

Savings%

12%

9.5%

4.5%

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

Total Mould Cost in Euro

€ 38,500

€ 48,000

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

Annual Spends+Mold Cost in Euro

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

€ XX

16

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,

Supplier 1

Supplier 2

Supplier 3

Supplier 4

Supplier 5

17

Supplier 6

Supplier 7

Supplier 8

Supplier 9

Supplier 10

Supplier 11

-

#

Supplier

1

Supplier 1

Executive summary with key information was shared with the client,

RFI Export Country Scor licens e% e

China

84

Main Producing items

Daily production Can offer Certification - food safety Certification - CSR and RFQ: total 12 SKU's wax capacity (Tons standards Quality management emulsion Have per day) concentra CNC tes for machines high for mould willing to Certified Certified Number Quality performa designs amortize the with GFSI or with any Social Glass Glass of SKU's Management nce mold cost any of its other food compliance bottles Jars offered in Certification, coatings for X number food safety safety certification RFQ Others, of PCS standards standards

Industry mainly serve

Customer Reference

Yes

• Glass bottle & • Glass Bottle Jars

• Heinz • Carlsberg • Budweiser • Tsingtao

1400

1200

Yes

No

8

Yes

FSSC 22000

HACCP

ISO 14001

ISO 9001

•Pharmaceutic • tablet bottle • al glass food bottles • packaging syrup bottles • • cosmetic • cosmetic bottles food bottles

• NBTY • Mccormick • Blackmore • Silver Spur Cooperation

1000

600

No

n/a

10

Yes

FSC 22000

• ISO 22000 • ISO 15378

• ISO 14001 • OHSAS 18001

ISO 9001

• Pernod Ricard • Diageo Ltd • Amul Ltd.

480

120

No

No

11

Yes

None

ISO 22000

ISO 14001

ISO 9001

2

Supplier 2

China

78

Yes

3

Supplier 3

India

69

Yes • Liquor Bottles • Liquor

4

Supplier 4

Czech Republic

67

Yes

XXX

XXX

XXX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

5

Supplier 5

China

XXX

Yes

XXX

XXX

XXX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

6 7 8

Supplier 6 Supplier 7 Supplier 8

China China China

XXX XXX XXX

Yes Yes Yes

XXX XXX XXX

XXX XXX XXX

XXX XXX XXX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

XX XX XX

9

Supplier 9

China

XXX

Yes

XXX

XXX

XXX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

10

Supplier 10

India

XXX

Yes

XXX

XXX

XXX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

11

Supplier 11

China

XXX

Yes

XXX

XXX

XXX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

18

RFI Score

84%

RFI Ranking

1

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

19

-

Suppliers location was shown on the map Example for China and India supplier location

20

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

21

Remarks

Agenda

1.

Sourcing Project Introduction

2.

Sourcing Approach

3.

Conclusions

22

Conclusions  Whole project was carried out in 8 weeks with 88 suppliers identified & 11 complete RFI-RFQ received.  All the recommended suppliers are certified with food and safety standards and quality management certification.  All the recommended suppliers had key production process in-house.  Suppliers were willing to amortize the mould cost for X number of PCS  Eastern European supplier will offer production from two different facilities within Europe.

 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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