Case Study for Glassware & Metal Barware Project

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

Case study Glassware and Metal barware Sourcing in China Shanghai, Jan 2022

Agenda

1. Context 2. Sourcing Strategy 3. Conclusion and Next step

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Context Objectives: • To carry sourcing services for glass ware and metal barware.

• To find an alternative supplier to improve current products quality and long term relationship.

Geographical scope • China

Deliverables: Step 1 • RFI/RFQ Analysis Report • Recommended supplier list for audit • Recommended supplier list for sampling Step 2 (not started) • Supplier audit (if deemed necessary) • Sampling • Contracting

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Agenda

1. Context 2. Sourcing Strategy 3. Conclusion and Next step

© 2022 Dragon Sourcing. All rights reserved.

Following STEPS were covered for end to end sourcing Supplier Pre-Qualification •

Demand analysis to define and understand the product and key requirements

•

Prepare for audits (audit schedule, budget, and finalise audit questionnaire)

•

Supply analysis to identify list of potential suppliers

•

Conduct audits.

•

Recommend suppliers for sampling

Telephone pre-screening based on agreed simple criteria

•

Sample development & testing

•

Develop RFI/RFQ template

•

•

Conduct RFI/RFQ administration

•

Analyze RFI/RFQ responses and issue RFI-RFQ report

•

Recommend suppliers for next phase

Key activities

•

STEP 1 © 2022 Dragon Sourcing. All rights reserved.

Procurement Operations

Selection & Contracting

Negotiation, contracting and final selection

STEP 2

•

Manage P/O and agree payment terms and details.

•

Check in process production quality

•

Conduct pre-shipment QC

•

Arrange logistics

•

Manage payments

•

Manage supplier performance

•

Monitor new sourcing opportunities

STEP 3

Not started

Finished

In process

Delay

Milestone

The project to be carried out in 8 weeks for step 1.

Week 1

Week 2

Week3

Week 4

Week 5

Week 6

Week 7

Nov.29 Dec.3

Dec.6 - Dec.13 - Dec.10 - Dec.27 Dec.10 Dec.17 Dec.24 Dec.31

Jan.3 Jan.7

Jan.10 - Jan.17 - Jan.24 - Jan.31 Jan.14 Jan.21 Jan.28 Feb.4

Step

Step 1

Week 8

Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Feb.7 Feb.11

Feb.14 - Feb.21 - Feb.28 - Feb.28 Feb.18 Feb.25 Mar.4 Mar.4

Step 2 (most of the factories will be closed 1 to 2 weeks before and after Chinese New Year)

1. Demand Analysis Supplier long list

2. Supply Market Analysis 3. Telephone pre-screening 4. Develop RFI/RFQ 5. Conduct RFI/RFQ administration 6. Analyse RFI/RFQ Responses

Supplier profiles with recommendations

CNY holiday

7. Prepare for Audits (if deemed necessary) 8. Conduct Audits jointly with CLINQ (if deemed necessary) Supplier for sampling

9. Analyse Audit Results (if deemed necessary) 10. Sample Development & Testing 11. Negotiation & Contracting

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Mar.7 Mar.11

Today

Step 1 ： Supplier Pre-Qualification Supplier Pre-Qualification •

Demand analysis to define and understand the product and key requirements

•

Supply analysis to identify list of potential suppliers

Key activities

•

Telephone pre-screening based on agreed simple criteria

•

Develop RFI/RFQ template

•

Conduct RFI/RFQ administration

•

Analyze RFI/RFQ responses and issue RFI-RFQ report

•

Recommend suppliers for next phase

STEP 1 © 2022 Dragon Sourcing. All rights reserved.

Procurement Operations

Selection & Contracting •

Prepare for audits (audit schedule, budget, and finalise audit questionnaire)

•

Conduct audits.

•

Recommend suppliers for sampling

• •

•

Manage P/O and agree payment terms and details.

•

Check in process production quality

•

Conduct pre-shipment QC

•

Arrange logistics

•

Manage payments

•

Manage supplier performance

•

Monitor new sourcing opportunities

Sample development & testing Negotiation, contracting and final selection

STEP 2

STEP 3

Demand Analysis Category

Item name

Picture

2020 Volume

2021 Volume (units)

Price (including box and agent commission)

Currency Country

0 - New product in 3,000 pcs 2021 - only (1,500 sets) just landed

AUD

Coupe Glass Glassware boxed pair

0 - New product in 2,000 pcs 2021 - only (1,000 sets) just landed

AUD

China

Shot glass boxed set of 4

0 - New product in 6,000 pcs 2021 - only (1,500 sets) just landed

AUD

China

Copper plated hammered tumber boxed pair

Only started importing 6,000 pcs from China (3,000 sets) mid -2020

AUD

China

Copper plated Metal champagne barware flute - boxed pair

Only started importing 10,000 pcs from China (5,000 sets) mid -2020

AUD

China

Copper plated mug - boxed pair

Only started importing 6,000 pcs from China (3,000 sets) mid -2020

AUD

China

Martini Glass boxed pair

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Current supplier notes

China

Does not appear to be good quality glassware factory chips and bubbles on glassware, poor quality plating, significantly varying product sizes

Large manufacturer.

Not great on quality or interested in building good relationship need close management and careful QC.

Dragon Sourcing has developed an online sourcing tool (GSP) to manage sourcing projects end to end.

The GSP provides: •

A central database of hundreds of thousands of suppliers •

•

Management of sourcing projects from start to finish.

Tools to facilitate supplier research, pre-screening, RFI-RFQ administration & qualifying supplier through ranking process and generating supplier profiles.  Complete unique online platform suitable for Global Strategic Sourcing process.  http://gsp.dragonsourcing.com

© 2022 Dragon Sourcing. All rights reserved.

As a first step, extensive supplier data base was built leveraging multiple sources of information & from existing DS database.

ing d l i Bu

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rd e i l p su p

se a b ata

SP G in

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

s“ r e i pl Sup

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ri a ri te c ve” a h st

to

s pas

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. ing n e c re s e r

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

dard n a t s RFI-

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tion a m infor s s ne busi

i on t c u od & pr

l ntro o C ality u Q &

Suppliers Identification results Total 95 suppliers identified, 62 suppliers passed telephone, 34 supplier replied RFI-RFQ 100

95

95

43

43

80

62

62

30

30

60

No of suppliers

40

34 52

52

16

20 32

32 18

0

0

li pp u S

er

ed tifi n e Id

Te

ne ho p le

epr

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ng ni

m Co

pl

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ed et

Pa

ss

ed

Te

le

e on ph

s epr

e cr

g in en S

tR en

FI

Q RF ly On

R

FQ

re

0 d vi e ce

R

-R FI

FQ

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Rejection reason for phone screening and RFI-RFQ administration Metalware #

Rejection Reasons - Metalware

Don't produce required products, 1 although there are metal barware on the website 2 Stopped producing 3 cannot produce all 3 types 4 Outsourced Not interested, think their price is not 5 competitive 6 cannot do double side plating 7 Trader Total #

Rejection Reasons - Metalware

Can't meet the technical requirement / quality standard Say will reply but no reply finally, 2 every week call them 2-3 times Consider themselves not competent 3 for this project after checking the spec. don't answer phone or email after 4 phone pre-screening Total 1

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Glassware

No. of suppliers failed phone prescreening

%

5

38%

2 2 1

15% 15% 8%

1

8%

1 1 13

8% 8% 100%

No. of suppliers failed RF-RFQ

%

6

75%

5

33%

2

13%

2

13%

15

100%

#

Rejection Reasons – Glassware

Don't produce required products, 1 although there are glassware on the website 2 Traders/distributors or Importers only Not interested, think their price is not 3 competitive 4 Stopped producing Duplicate suppliers (different 5 company name but same boss) 6 Cannot export Total

No. of suppliers failed phone prescreening

%

9

45%

5

25%

2

10%

2

10%

1

5%

1 20

5% 100%

#

Rejection Reasons - Glassware

No. of suppliers failed RF-RFQ

%

1

Can't meet the technical requirement / quality standard

11

79%

2

Not interested to continue as capacity is full/Qty is too small/not competitive

3

21%

Total

14

100%

RFI Score Card for metal barware 16 Suppliers replied RFI-RFQ – the highest score is 97 points, and the lowest score is 59 points, the average score is 77 points (RFI score) 100

97 20

95 18

93 89

88

17 17

80

83 20

81

14 18

78

76

12 20

73 17

20

60

40

71

77

77

76

72

68

69

63

67 10

67 10

60 12

14

48

46

Supplier 14

Supplier 15

56

51

57

57

20

Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9

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59 8

66 56

0

60

Supplier 10

Supplier 11

Supplier 12

Supplier 13

51

Supplier 16

Metal barware RFQ analysis 16 suppliers replied RFQ, 7 suppliers’ prices are 6%~35% lower than client’s current price

(FOB price)

1 USD= 1.38 AUD

RFQ analysis - metalware

(Tooling cost)

US$50

US$1,500

US$40

US$1,200

US$30

US$900

US$20

US$600

US$10

US$300

US$0

Supplier 9 Supplier 8 Supplier 13 Supplier 9 Supplier 8 Supplier 13

Supplier Supplier 4 Supplier 3 Supplier Supplier 1 Supplier 2 Supplier 12 11 15 Supplier Supplier 4 Supplier 3 Supplier Supplier 1 Supplier 2 Supplier 12 11 15 Total price for 3 items with 10% DS margin Total tooling cost for cup

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Supplier 16 Supplier 16

Client's current price Total sampling cost

Supplier 14 Supplier 14

Supplier Supplier 5 Supplier 6 Supplier 7 10 Supplier Supplier 5 Supplier 6 Supplier 7 10

RFI score

US$0

RFI Score Card for glassware 18 Suppliers replied RFI-RFQ – the highest score is 99 points and the lowest score is 41 points, the average score is 71 points

100

99 94 88

20 20 80

14

81

80

18

14

79 75 15

73

70

70

70

12 15

60

14

20

17

68 12

66 10

63 10

62 12 48

40

79

12 74

74 63

20

0

66

64

63

47 41 14 14

58

56

50

53

56

56

53

50 36

33

27

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

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Glassware RFQ analysis - 18 suppliers replied RFQ, suppliers’ prices are 11%~129% higher than client’s current price

1 USD= 1.38 AUD US$80

US$1,300

US$60 US$800

US$40

US$300

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Supplier 6

Jiuyi Dahua RFI score

Supplier 16

Supplier 2

Supplier 18

Supplier 3

Supplier 4

Supplier 8

Supplier 10

Supplier 5

Supplier 10

Supplier 1

Supplier 15

Supplier 17

Supplier 9

Supplier 7

Shanxi Wonderf Crystal Meilian Yihua Anhua Jingshen Linkand Jinghuan Yingmao Beststee Ruixin Fly ul g with 10% DS margin g de Client's l current price Total price for 3 items Total Tooling cost for cup Total Sampling cost

Supplier 11

Yafu

Supplier 14

US$0

Supplier 13

US$20

Xinhua

Aliistar

Ron

US$200

Recommended for sampling

Recommended suppliers for sampling – metal barware No.

Supplier

Total price for 3 RFI items with 10% DS Savings Tooling score cost margin

Sample cost for Cup

Sample cost for Sampling lead Packaging time

Back up suppliers

Advantage

Disadvantage

1

Supplier 9

76

35%

Very good price/has exported to German retailer like cup:30 days Need tooling cost for cup+ gift box: Aldi 、 Lidl/100% export: 40% to Europe,50% to north champagne flute and America/good factory: 9500m2 with 136 staffs/own ISO cannot be refunded 30 days 9001/BSCI/sample cost can be refund

2

Supplier 8

78

22%

cup: 14days Very good price/has exported to retailer like Factory is small about cup+ gift box: Casa/Lidl/Amazon/98% export: 40% to export and 40% 1200m2/sample cost is 45 days to north America/own BSCI 50% refunded

3

Supplier 13

67

21%

cup:10days cup+ gift box: 15 days

4

Supplier 12

61

13%

cup: 10 days good price/has exported to retailer like zwilling/wmf/ cup+ gift box: Kobach/Lidl/60% export: 20% to export and 20% to 15 - 20 days north America/8000m2 factory size with 120 staffs

12%

Good price./DS’s current supplier/has exported to cup: 7-12days METRO, HABITAT, BBB, VISKI&TRUE, TARGET, cup+ gift box: COSTCO/95% export: 40% to export and 45% to north 12-18 days America/180 staffs/own BSCI/Sedex/no tooling cost and sample cost can be refunded

7%

Price is O.K./DS’s current supplier/has exported to cup: 15 days IKEA ,WESCO,COSTE ,TARGET,LIDL, ALDIAND/99% cup+ gift box: export: 54% to export and 40% to north America/total 25 days 550 staffs for 3 factories/own ISO 9001/BSCI/no tooling cost and sample cost can be refunded

6%

Price is O.K./has exported to cup: 7-10days GEFU/ALDI/MATO/LIDL/90% export: 50% to export and Packaging sample cost cup+ gift box: 10% to north America/big factory with 380 staffs, cannot be refunded 14 days 66Km2/own ISO 9001/ISO 14001/BSCI/no tooling cost/sample cost is low

5

7

8

Supplier 4

Supplier 3

Supplier 11

89

93

71

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Very good price, no tooling cost,99% export:60% Europe, 30%north America, has exported to Paragon sample cost is high and Customer Communications limited/gng /selbrae house cannot be refunded ltd The tooling cost and packaging sample cost are 50% refunded

Recommended for sampling

Recommended suppliers for sampling – glassware No.

Supplier

Total price for 3 RFI items with 10% score DS margin

Savings

1 Supplier 13

66

-11%

2 Supplier 14

63

-12%

3

75

-15%

4

Supplier 7

Supplier 9

5 Supplier 15

6

Supplier 1

70

62

99

Tooling cost

Sample cost Sample cost Sampling lead for for time Cup Packaging 20 days

Back up suppliers

Advantage

Disadvantage

Almost 20 years export experience/has exported to Small factory with 1000m2 UK retailer: The Printed Image/100% export: 20% and 42 staffs/price is higher to Europe, 50% to north America,20% to Australia/tooling and sample cost can be refunded than client’s current price

Has exported to with retailer such as Price is higher than client’s 10-15 days CHS(AHR ) ,TWO‘S,ESSENTIAL/big factory with 240 current price staffs, 60k m2/70% export: 30% to Europe/own BSCI/sampling cost can be refunded Has exported to retailer Price is higher than client’s BODUM,MASTRAD,TARGET/More than 10 years current price/sampling cost 15 working export experience/80% export: 25% to Europe,40% for packaging cannot be days to north America/tooling and sample cost for cup refunded/small company can be refunded with 50 staffs, 2000m2

-15%

Has exported to retailer Mikasa, Creat & Barrel,/17 Price is higher than client’s current price/Packaging 15-20 days years export experience/own ISO 9001/80% sample cost can not be export: 10% to Europe,35% to north America/ refunded

-22%

Has exported to UK retailer Matanlan/80% export: 30% to Europe,35% to north America/tooling and Price is higher than client’s sample cost can be refunded/middle size factory current with 3000m2, 200 staffs

-24%

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15 days

Has exported to Aldi, Target, TESCO, Walmart, GDC, ZARA HOME, Anthropolgie, Crate and Barrel/80%sales to Europe and America/own Price is higher than client’s 25-30 days ISO9001/BSCI/SEDEX /factory is big with 300 current staffs/tooling and sample cost are cheaper and can be refunded