Battery Sourcing Case Study by Dragon Sourcing

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Battery Global Sourcing Case Study 2019

Agenda

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1.

Objectives , work plan and time line

2.

Demand Analysis

3.

Progress

2

Client is leading global digital security company, the battery sourced is used in display card.

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3

Objectives and approach DS Approach consists in the following work steps:

Context

1. Demand Analysis: define and understand products and requirements (specs, volumes, materials, production technology requirements) 2. Supply Market Analysis: Identify long list of potential suppliers worldwide 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, quality certifications) 4. Develop the RFI-RFQ: Document prepared together with client to pre-qualify the competitiveness and capabilities of the suppliers, including: Background, Financials, Client references and Product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology capability, R&D capability 5. Administer the RFI-RFQ: Distributed to the suppliers who passed pre-screen, with telephone follow-up to push for maximum participation.

6. Develop a balance score with client, evaluating suppliers maturity according to RFI/RFQ 7. Analyze RFI-RFQ Responses: profiling & objectively ranking suppliers by capability, and recommending those to be audited.

8. Pre-audits (optional): Carry pre-audits of recommended suppliers in order to identify those to have you audit.

Objectives: • Identify new potential competitive suppliers worldwide to decrease price, secure manufacturing capacities, lead-time.

Geographical scope: • Worldwide Categories: • Battery

© 2019 Dragon Sourcing. All rights reserved.

4

The project is scheduled to finish in 9 weeks. #

Step

Who

0

Kick off

Client/DS

1

Demand Analysis

Client/DS

Week0 Week 1 Week2 Week 3 Week4 Week 5 Week6 Week 7 Week8 Week 9

2

Supply Market Analysis

DS

3

Telephone pre-screening

DS

4

Develop the RFI-RFQ

5

Administer the RFI/RFQ

6

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

Client/DS

7

Analyze responses and select suppliers for audit phase

Client/DS

Client/DS

DS

Not-started

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5

Started

Delayed

Finished

Milestones

Agenda

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1.

Objectives , work plan and time line

2.

Demand Analysis

3.

Progress

6

Demand analysis – Battery , total annual spend USD 6M

Description

Spec

Photo

12mAh

14mAh

4,000,000

1..Thickness : 0.45mm MAX ； 2.Capacity > 12 mAh ; 3. Smart card application; 4.flexible

4,000,000

15mAh

© 2019 Dragon Sourcing. All rights reserved.

Annual quantity (pcs)

4,000,000

7

Agenda

Š 2019 Dragon Sourcing. All rights reserved.

1.

Objectives , work plan and time line

2.

Demand Analysis

3.

Progress

8

Total 49 suppliers identified from 8 countries / regions, 13 suppliers passed prescreen, 7 RFI/RFQ received .

Supplier headquarter location China mainland

Taiwan

Japan

South Korea

India

US

Germany

Austria

Total

Suppliers identified

28

2

3

2

1

11

1

1

49

Suppliers passed prescreen

11

1

0

0

0

2

0

0

14

RFI/RFQ Sent

11

1

Need client info and product detail

1

2

14 1

Can’t quote until NDA signed

1

RFI/RFQ Received

1

7

7

Battery supplier RFI/RFQ Progress

30

Suppliers identified RFI/RFQ Received

28

25

Suppliers passed pre-screen

Need client info and product detail

Can’t quote until NDA signed

20 15 10 5 0

11

11 7 1 1

China mainland

2 1 Taiwan

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3 2 Japan

2

1

South Korea

1 India

9

US

1 Germany

Austria

7 RFI/RFQ received, the 7 suppliers located in 2 provinces, 6 in Guangdong, 1 in Hubei.

No

Supplier name

Province

RFI RFQ

Supplier Presentation

Spec

Product Status

1

Supplier 1

Guangdong

Y

Y

Y

Mass production

2

Supplier 2

Guangdong

Y

Y

Y

Mass production

3

Supplier 3

Guangdong

Y

Y

Y

Trial production

4

Supplier 4

Guangdong

Y

Y

Y

Mass production

5

Supplier 5

Y

Y

Y

Mass production Liaoning

6

Supplier 6

Guangdong

Y

7

Supplier 7

Guangdong

Y

Hubei Xinjiang

Gansu

Y

Y Inner Mongolia

Y

Y

Shanxi

Ningxia Qinghai

Gansu

Shaanxi

Sichuan Sichuan

Jilin

Mass production Tianjin Hebei willing to develop Shandong Jiangsu

Henan Anhui

Xizang

Heilongjiang

Shanghai

Hubei Jiangxi Zhejiang Hunan Guizhou

Yunan

Guangxi

Guangdong Hong Kong

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10

Fujian Taiwan

Battery RFI Scorecard Business information Year Founded

Weight of criteria 10%

Net sales (USD)

Profit (USD) last 3 years

20%

15%

Business trend over the last three years

15%

Employee numbers

10%

Profile of Top Customers

15%

Provide company presentation

5%

Cooperation during the RFI/RFQ process

10%

Subtotal Production & Quality

Scoring 1=After 2010 2=Between 2000 to 2010 3=Before 2000 0=Not provided 1=Less than 10M 2=10-20M 3=20-50M 4=above 50M 0 = not provided 1 = negative 2 = positive 0=not provided 1= negative 3 = stable or growing 1=Less than 100 2=100-200 3=200-500 4=above 500 0=Not provided 1=Local customers 2=National customers 3=International customers 0=No 1=Yes 1= Poor 2= Satisfactory 3= Excellent

100% Weight of criteria

Max Score per criteria

Experience of smart card / display card

10%

Any part of the process subcontracting ?

10%

ISO 9001 & ISO14001

5%

Certificate for battery

5%

Component / product warranty term

10%

4

Intellectual property

10%

3

Intention to compete in the same market (display card)

15%

4

2

3

Subtotal 1

Time to develop solution as per client requirement

15%

Capacity

3

1= In test 2= Yes 0 = more than 6 months

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50%

2

3 1 2

3

2

Max Score per criteria

Scoring

20M

3 3= >20M

Max Score per criteria CAPEX investment capacity

20%

Standard Lead-time

30%

2

Subtotal 3

2= 1-3 months

1

2= 5M-

1= 3 - 6 months 10%

100% Weight of criteria

2

1= <5M Annual capacity of thin battery

Scoring

10%

3

0= In development Product already in production

Internal laboratory for the product

0= No (only in line control) 1 = Basic equipment 2= Full range (e.g Reliability / aging testing, chemical, XRayâ&#x20AC;Ś) 0=No 1=Yes 0 = more than 1 process 1 = 1 process maximum 2 = no subcontracting 0= none 1=ISO14001 2= ISO9001 3=Both 0=No 1=Yes 0= no warranty 1= 1 year 2= over 2 years 0= no IP 1= no IP - licence to use 2= IP locally applicable 3= own IP - no risk 0 = intent to go on the segment market 2 = OEM - component focused

11

100%

0= no 1= yes 0 = higher than current one 1= similar 2= better To compare with current BOM

1 2

Unit price comparison, three suppliers have saving 3%-12%.

Unit Pirce Comparison (USD) 1.5

1.23

1.04 1

0.93 0.88 0.79

0.82

0.97

0.99

0.85

0.5

0

Current price

Supplier 3

Supplier 5

Supplier 2

Supplier 7

Supplier 2

Supplier 1

Quotations lower than current price Š 2019 Dragon Sourcing. All rights reserved.

12

Supplier 4

Supplier 6

Current price

Battery RFI Score and potential saving, 7 suppliers scored and ranked , 6 suppliers score are above 70, 3 have potential saving.

RFI Score Criteria

Weight

Supplier 1

Supplier 2

Supplier 3

Supplier 4

Supplier 5

Supplier 6

Supplier 7

Business information

25%

23

23

24

19

21

19

7

Production

35%

29

32

28

28

27

27

29

Capacity

40%

40

33

33

33

27

27

33

Total

100%

91

88

86

81

75

73

69

RFI Score and Battery Unit Price comparison RFI Score Potential saving 100 90

91

88

80

14% 86 12%

81

75

70

73

12% 69

60 50

8%

7%

6%

40 30

4%

3%

20

2%

10 0

0% Supplier 2

Supplier 3

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10%

Supplier 4

0% Supplier 5 13

Supplier 6

0% Supplier 7

0% Supplier 7

0%

Company profile Supplier 1 COMPANY INFORMATION XXX

Company Name Address

ULTRA THIN BATTERY PRODUCTION below 0.45mm

XXX

Town

Dongguan

Province

Guangdong

Country

China

Company Website

Monthly production capacity( pcs )

300K

XXX CONTACT PERSON INFORMATION Raymond Lau Sales Manager XXX XXX XXX XXX

Contact Person Title Email Tel Fax Mobile phone

BUSINESS INFORMATION What date was your company founded?

What is your turnover in million USD?

2000

2018

2017

2016

2015

60

55

40

37

How many employees do you have?

What is the percentage of turnover distributed to:

600 China

Europe

US

Rest of the World

N/A

N/A

N/A

N/A

Clients

Industry

Country

% of sales

1

XXX

Digital products

China

N/A

2

XXX

IT

Japan

N/A

3

XXX

Computer

American

N/A

Who are your top 3 Clients?

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15 mAh 12 mAh ultra thin 14 mAh ultra thin ultra thin battery battery battery 200K

200k

Experience of smart card / display card

Yes

Factory location

XXX

Can your company develop according to client's requirement?

Yes

Others 300K

How long will it take to develop new design?

Not fixed, usually 30-45 days, depend on the battery configuration

How much will it cost to develop new design? (USD)

Not fixed, just depend on the customer's requests(cells, sample quantity etc) Quality

What quality and environmental registrations do you have?

Yes / No

Date of Certificate

Certifying Org

ISO 9001

Yes

2/17/2015 QA International

ISO 14001

Yes

3/1/2015

QA International

Others (please list)

OHSAS18001

2/1/2015

QA International

Please list the certificate your company has for battery. (product and transportation)

SGS, UL, CE, PSE,FCC etc

Product failure rate (ppm) What's the warranty term of your product?

What is your internal rule regarding maximum reaction time of quality claim?

14

170 1 year 48 hours response

Date of Expiry