Creating Value with an Outsourced International Purchasing Office in China

Dragon Sourcing - éž™ ćş?

Your Tailored Sourcing Approach to China

Case Study Creating Value with an Outsourced International Purchasing Office in China

Agenda

Š 2007 Dragon Sourcing. All rights reserved.

1.

Context

2.

Sourcing Process

3.

Governance Model

4.

Results and conclusions

2

Context

AB Foods: • ABF is a global Manufacturer of food products, headquartered in London UK, with over 250 manufacturing locations around the world.

• ABF employs 85,000 people worldwide and has an annual turnover of £6.8 bn(13.6 bn USD) • Within it’s portfolio of products are well known brand such as Twinings teas, Ovaltine, Tone spices, Mazola oils, and Ryvita.

• AB Foods has recently launched a structured strategic sourcing programme to buy direct from suppliers in China with the assistance of Dragon Sourcing.

© 2007 Dragon Sourcing. All rights reserved.

3

Agenda

Š 2007 Dragon Sourcing. All rights reserved.

1.

Context

2.

Sourcing Process

3.

Governance Model

4.

Results and conclusions

4

Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting

Feasibility Analysis •

Key activities

•

Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines

•

Shortlist suppliers based on RFI/RFP process

•

Manage P/O and agree payment terms and details (L/Cs,..)

•

Audit shortlisted suppliers

•

Check in process production quality

•

Select 2-3 suppliers for sample development process

•

Conduct pre-shipment QC

•

Arrange logistics

•

Manage supplier performance

•

Monitor new sourcing opportunities

Analyse supply market and identify potential suppliers •

•

•

Pre-qualify potential suppliers through an RFI process

Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)

•

Develop Business case and implementation plan

© 2007 Dragon Sourcing. All rights reserved.

Manage sample development process

•

Conduct final negotiations and select suppliers

•

Finalise Contract

Manage RFP process with prequalified suppliers

•

Procurement Operations

5

Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting

Feasibility Analysis •

Key activities

•

Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines

•

Shortlist suppliers based on RFI/RFP process

•

Manage P/O and agree payment terms and details (L/Cs,..)

•

Audit shortlisted suppliers

•

Check in process production quality

•

Select 2-3 suppliers for sample development process

•

Conduct pre-shipment QC

•

Arrange logistics

•

Manage supplier performance

•

Monitor new sourcing opportunities

Analyse supply market and identify potential suppliers •

•

•

Pre-qualify potential suppliers through an RFI process

Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)

•

Develop Business case and implementation plan

© 2007 Dragon Sourcing. All rights reserved.

Manage sample development process

•

Conduct final negotiations and select suppliers

•

Finalise Contract

Manage RFP process with prequalified suppliers

•

Procurement Operations

6

The first step is to develop a comprehensive understanding of the need and of the functional requirements Product Name

Plastic Pallet

Quantity

1520 pcs

Current DDP price in EURO

€ 48.00

Current annual spend in EURO

€XXXXXX

Material

50 % Virgin HDPE - 50 % Recycled HDPE

Size

1000mm x 1200 mm x 150 mm

Fork access

Short: 510 mm - Long: 540 mm

Central Block

Short: 190mm - Long: 190 mm

Weight

19 kg (± 0.5 kg)

Product Picture

Dynamic Load capacity: 1000 kg (± 5%) Static Load capacity: 4000 kg (± 5%) Description Rack Load capacity: 1000 kg (± 5%) Rack Loading Deflection: 60 mm max Packaging

480 pcs/ 40’HC

HS Code

3923900000

Customs Duty

6.5% (China – UK)

© 2007 Dragon Sourcing. All rights reserved.

7

Then, an RFI/RFP process is administered to filter out most capable suppliers Request for information

Heavy duty HD PE plastic pallet quotation

DRAGON SOURCING 龙源有限公司上海代表处 To 收件人: Email 电子邮件: Tel number 电话: Fax number 传真:

Ms. Vivian Xu vivian.xu@dragonsourcing.com 021 - 6141 3958 021 - 6141 3966

INTEND TO RESPOND 答复意向 Company Name 公司名称 Contact Person 联系人 Title 职位 Email 电子邮件地址 Tel 电话 Fax 传真 Mobile phone 手机 What date was your company founded? 贵司是在哪一年成立的？ Ownership (State Owned/ Priviate/Foreign Investement) 企业性质 (国有/民营/外资) Registration capital (RMB) 注册资本 (人民币) What is the workfloor size (m²)? 贵司工厂面积有多少平方米？

Plastic pallets 1000x1200x150 mm（annex1) 塑料托盘 1000x1200x150 mm (附件1) Plastic pallets 1165x1165x150mm (annex2) 塑料托盘 1165x1165x150 mm (附件2)

Product

Contact detail information

plastic pallet

Demand Quantity/4 Quantity 0'HC

1520pcs

Material Proportions (%) 回料比例

Quotations for plastic pallets without recyclable raw material (Virgin) 不加回料塑料托盘报价

Product and price information

FOB - CIF Sample transporta FOB price CIF Price Import tax charge FOB port tion (US$/pcs) (US$/pcs) duty (US$/pcs) charges estimates

CIF - DDP transporta DDP Price tion savings (US$/pcs) charges estimates

Logistics informatio n

Business information

How many employees do you have? 贵司员工总数有多少？ What kind of certification do you have (ISO, Environment friendly, etc) 有何质量管理证书？(例如 ISO,环境 Do you have good English speaker and writer in your factory? (Y/N) 贵司是否有可用英语进行书面及口语 交流的人员？(是/否) Are you capable to produce HD Polyethylene plastic pallets like showed in annex and that respect all

© 2007 Dragon Sourcing. All rights reserved.

Quotations for plastic pallets with recyclable raw material 加回料塑料托盘报价

Type of pallet

Logo on the pallet

8

During the tender process, the suppliers’ willingness to collaborate and to provide complete and accurate information is also assessed Company Information Supplier

Region

1 2 3 4 5 6

Shandong Zhejiang Guangdong Fujian Zhejiang Beijing

Supplier 2: Ningbo Changqi – –

–

Recycled HDPE at 50 % Fork Access • Short: 255 mm (required: 350 mm) • Long: 270 mm (required: 365 mm) Central Block • Short: 190 mm (required: 190 mm) • Long: 190 mm (required: 190 mm)

© 2007 Dragon Sourcing. All rights reserved.

RFI/RFQ follow up RFI/RFQ sent RFI/RFQ replied 13-Sep 12-Sep 13-Sep 12-Sep 10-Sep 14-Sep

27-Sep 27-Sep 27-Sep 27-Sep 27-Sep 27-Sep

FOB price

DDP price

Sample sent

€ 20.00 € 21.11 € 21.25 € 22.98 € 25.68 € 39.72

€ 32.27 € 33.38 € 33.52 € 35.25 € 37.95 € 51.99

— 19-Oct 19-Oct 19-Oct — —

Supplier 3: Foshan Bright-June – –

–

Virgin HDPE Fork Access • Short: 260 mm (required: 350 mm) • Long: 260 mm (required: 365 mm) Central Block • Short: 190 mm (required: 190 mm) • Long: 190 mm (required: 190 mm)

9

Suppliers 4: Aceally – –

–

Virgin HDPE Fork Access • Short: 260 mm (required: 350 mm) • Long: 260 mm (required: 365 mm) Central Block • Short: 190 mm (required: 190 mm) • Long: 190 mm (required: 190 mm)

Then all relevant information is collected to calculate DDP prices

Heilongjiang

FOB Price (supplier)

Freight forwarding, customs & duties DDP Price

Jilin Liaoning Logistics Cost Estimation

Hebei Neimongu

Gansu

Gansu

6

Shanxi

Ningxia

BEIJING

Anhui

5

€ 1.97

€ 32.27

€ 3,988.27

€ 31.45

€ 2.04

€ 33.38

€ 3,360.64

€ 3,988.27

€ 31.59

€ 2.05

€ 33.52

325

€ 3,360.64

€ 3,988.27

€ 33.32

€ 2.17

€ 35.25

€ 25.68

325

€ 3,360.64

€ 3,988.27

€ 36.02

€ 2.34

€ 37.95

€ 39.72

325

€ 3,360.64

€ 3,988.27

€ 50.06

€ 3.25

€ 51.99

Loading amount 40Ft in pcs

1

Shandong

€ 20.00

325

€ 3,360.64

€ 3,988.27

Shanghai

2

Zhejiang

€ 21.11

325

€ 3,360.64

SHANGHAI

3

Guangdong

€ 21.25

325

4

Fujian

€ 22.98

5

Zhejiang

6

Beijing

2

Zhejiang Jiangxi

Hunan

Fujian

Guizhou

4 Yunan

€ 30.34

FOB Price

Jiangsu

Hubei

Sichuan

DDP Price

Region

1 Shandong

Henan

Shaanxi

Import Duty Europe(6.5%)

FOB-CIF FOB-DDP CIF PRICE South Zaandma 40Ft Hampton 40Ft cost

Supplier

Guangxi

€ 48.00

Current

Guangdong 3

© 2007 Dragon Sourcing. All rights reserved.

10

Finally a Go/No Go decision to proceed is given based on the savings potential vs. the risk associated with changing suppliers Logistic Costs from FOB China to UK

Price Comparison

FOB Price

€60.00) €50.00) €40.00)

€ 51.99

Current DDP price € 48/pcs

€ 32.27

€ 33.38

€ 33.52

€ 35.25

supplier2

supplier3

supplier4

€ 37.95

€30.00) €20.00) €10.00) €0.00) supplier1

© 2007 Dragon Sourcing. All rights reserved.

11

supplier5

supplier6

Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting

Feasibility Analysis •

Key activities

•

Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines

•

Shortlist suppliers based on RFI/RFP process

•

Manage P/O and agree payment terms and details (L/Cs,..)

•

Audit short listed suppliers

•

Check in process production quality

•

Select 2-3 suppliers for sample development process

•

Conduct pre-shipment QC

•

Arrange logistics

•

Manage supplier performance

•

Monitor new sourcing opportunities

Analyse supply market and identify potential suppliers •

•

•

Pre-qualify potential suppliers through an RFI process

Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)

•

Develop Business case and implementation plan

© 2007 Dragon Sourcing. All rights reserved.

Manage sample development process

•

Conduct final negotiations and select suppliers

•

Finalise Contract

Manage RFP process with prequalified suppliers

•

Procurement Operations

12

Short-listed suppliers are audited to assess long-term partnership opportunities Objectives • Meet top management and sales management teams • Present order details • Refine supplier offer understanding • Understand organization • Validate manufacturing capabilities • Visit factory and check work conditions

Topics • General Management • Order management • Shipping / packaging • Planning process • Goods flow • Procurement • Purchasing • Production • Quality… © 2007 Dragon Sourcing. All rights reserved.

Audit questionnaire

Audit report

Audit summary

13

Collected information is shared with customer through detailed audit reports COMPLIANCE WITH LOCAL LAW

GENERAL INFORMATION SUPPLIER NAME

Ningbo Changqi Fluorine Plastic Products Co., Ltd

City

Ningbo

Province

Zhejiang

Zip code

315029

Contact person

Lola Guan

Job title

Purchasing Manager

Email

Lola-changqi@hotmail.com

Phone number

86-0574-56131221

Fax number

86-0574-87580015

Website

www.changqi.cn

1993

Ownership

foreign investment

Capital in million RMB

27.3

Work floor size (m²)

50,000

Number of employees

500

90%

Main export markets

US & Japan

Actual annual production of plastic pallets 45,000 pcs © 2007 Dragon Sourcing. All rights reserved.

Working hours

YES

Health & Safety

YES

Environmental issues

YES

ISO 9001:2000

YES

ISO 14000

YES

Others

JIS, UL, CSA

FACTORY PICTURE

Revenue/Turnover (in million RMB) 2007 100 % Sales exports to western markets

YES

QUALITY & ENVIRONMENT CERTIFICATION

BUSINESS INFORMATION Found Year

Children labor

14

Audit outcome is summarized in a rated profile of each supplier M 1 4.1 Q 4.2 2.1 2.2 2.3 L 2.4 2.5 2.6 2.7 T 3.1 3.2 C 5

Management Quality system and environment Quality assurance and improvement process Logistics: General Logistics: Order management Logistics: Expedition / Packaging Logistics: Planning Process Logistics: Goods flow Logistics: Procurement Purchasing Production and Work preparation Development - general F&A Average score

77% 80% 90% 68% 64% 80% 64% 75% 80% 77% 77% 75% 70% 75%

DS Scoring

Description

91 - 100 %

Excellent

81 - 90 %

Good

61 - 80 %

Satisfactory

51 - 60 %

Inadequate

- 50 %

Poor

Please check the relevant box

Ningbo Changqi Fluorine Plastic Products Co., ltd Audit 23rd of Novem ber 2007

(%) 100%

90%

90% 80%

77%

80%

80% 68%

70%

75%

80%

77%

77%

75%

70%

75%

64%

64%

60% 50% 40% 30% 20% 10% 0% 1

4.1

4.2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

3.1

3.2

5

Average score

Š 2007 Dragon Sourcing. All rights reserved.

15

A closer look on collected samples shows slight feature differences among different suppliers Dyn. Load (kg)

Price € FOB

Supplier Name

Province

Recycled

Stat. Load (kg)

1

Shandong

YES – 30%

1000

4000

Short: 220 mm Front: 270 mm

Short: 180 mm Front: 180 mm

20.00

2

Zhejiang

YES – 50%

1000

4000

Short: 255 mm Front: 270 mm

Short: 190 mm Front: 190 mm

21.11

3

Guangdong

NO

1000

4000

Short: 260 mm Front: 260 mm

Short: 190 mm Front: 190 mm

21.25

4

Fujian

NO

1000

4000

Short: 260 mm Front: 260 mm

Short: 190 mm Front: 190 mm

22.98

5

Zhejiang

YES – 10%

1000

4000

n/a

n/a

25.68

6

Beijing

NO

1000

4000

Short: 268 mm Front: 268 mm

© 2007 Dragon Sourcing. All rights reserved.

16

Fork Access

Central Block

Short: 141 mm Front: 181 mm

39.72

Picture

n/a

The final supplier selection relies on the short-listed suppliers’ offers, audits and sample quality Region

FOB Price

1

Shandong

€ 20.00

325

€ 3,360.64

€ 3,988.27

€ 30.34

€ 1.97

€ 32.27

2

Zhejiang

€ 21.11

325

€ 3,360.64

€ 3,988.27

€ 31.45

€ 2.04

€ 33.38

3

Guangdong

€ 21.25

325

€ 3,360.64

€ 3,988.27

€ 31.59

€ 2.05

€ 33.52

4

Fujian

€ 22.98

325

€ 3,360.64

€ 3,988.27

€ 33.32

€ 2.17

€ 35.25

5

Zhejiang

€ 25.68

325

€ 3,360.64

€ 3,988.27

€ 36.02

€ 2.34

€ 37.95

6

Hebei

€ 39.72

325

€ 3,360.64

€ 3,988.27

€ 50.06

€ 3.25

€ 51.99

Supplier 2: Ningbo Changqi – –

–

Recycled HDPE at 50 % Fork Access • Short: 255 mm (required: 350 mm) • Long: 270 mm (required: 365 mm) Central Block • Short: 190 mm (required: 190 mm) • Long: 190 mm (required: 190 mm)

Logistics Cost Estimation Loading FOB-DDP CIF PRICE Import Duty DDP Price FOB-CIF South Europe(6.5%) amount 40Ft Zaandma 40Ft Hampton 40Ft cost in pcs cost

Supplier

€ 48.00

Current

Suppliers’ quotation

Supplier Name

Supplier 3: Foshan Bright-June – –

–

Virgin HDPE Fork Access • Short: 260 mm (required: 350 mm) • Long: 260 mm (required: 365 mm) Central Block • Short: 190 mm (required: 190 mm) • Long: 190 mm (required: 190 mm)

Supplier 1 Supplier 2 Supplier 3 Supplier 4

Audit summary

Suppliers 4: Aceally – –

Virgin HDPE Fork Access • Short: 260 mm (required: 350 mm) • Long: 260 mm (required: 365 mm) – Central Block • Short: 190 mm (required: 190 mm) • Long: 190 mm (required: 190 mm) © 2007 Dragon Sourcing. All rights reserved.

Samples

17

Supplier 5

Dragon Sourcing service offering covers the end-to-end sourcing process Supplier Selection and Contracting

Feasibility Analysis •

Key activities

•

Analyse spend category in detail – Specifications and quality requirements – Volumes – Deadlines

•

Shortlist suppliers based on RFI/RFP process

•

Manage P/O and agree payment terms and details (L/Cs,..)

•

Audit shortlisted suppliers

•

Check in process production quality

•

Select 2-3 suppliers for sample development process

•

Conduct pre-shipment QC

•

Arrange logistics

•

Manage supplier performance

•

Monitor new sourcing opportunities

Analyse supply market and identify potential suppliers •

•

•

Pre-qualify potential suppliers through an RFI process

Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..)

•

Develop Business case and implementation plan

© 2007 Dragon Sourcing. All rights reserved.

Manage sample development process

•

Conduct final negotiations and select suppliers

•

Finalise Contract

Manage RFP process with prequalified suppliers

•

Procurement Operations

18

Quality is regularly monitored during production and at pre-shipment • Dragon Sourcing teams are trained to follow a 7-step process to execute Quality inspections

• Sampling and criteria requirements are detailed in a specific document for customer approval

Overall methodology & 7-step process

• On-site data are recorded in a specifically designed Excel table

• Inspections are documented in a report submitted to customer

Checkitem # Box # \

Marking

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK

OK OK OK OK OK OK OK NO OK OK OK OK OK OK OK OK NO OK

Mug upper diameter

Mug lower diameter

Wall thickness

Mug weigth

Material type

Quality

64.9 64.5 64.6 64.8 57 61 64.5 62 64.1 63.4 64.8 64.2 63 65 65.6 65.5 64.1 60

3.6 4.2 3.9 3.8 3.6 3.8 3.9 3.9 3.1 3.7 3.9 3.2 4 4 4.1 3.9 3.8 3.8

326 346 344 317 308 317 328 345 322 325 317 316 316 322 357 311 300 342

OK OK OK OK OK OK OK OK OK OK OK OK MO OK OK NO OK OK

OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK OK

Sampling & Criterias

Inner carton Mug Quantity 48 48 48 48 48 48 48 48 48 48 48 48 48 45 48 48 48 48

Mug heigth 104.3 103.4 104 104.6 104.3 104.8 103.7 103.8 103.3 103.2 104.4 102.3 105.4 105.6 106.3 103.4 104.7 104

Excel recording tool

• Action plans are defined in order to improve product quality © 2007 Dragon Sourcing. All rights reserved.

19

QC Reports provide detailed information concerning production quality

Š 2007 Dragon Sourcing. All rights reserved.

20

Following the failed QC Audit Solutions were proposed and issue was resolved working closely with the client

• Shipment was stopped pending input of the client

• Key Reasons for QC failure were evaluated – Antiskid inserts were missing on some pallets – Antiskid inserts were not correctly inserted on some pallets

• A Solution was proposed – Because this is a minor problems DS suggested that the Supplier provide extra Antiskid inserts at no cost so they could be easily fixed if they fall out or are found missing a later time • Client Agreed with the Solution and the containers were released for Shipment

© 2007 Dragon Sourcing. All rights reserved.

21

Supplier performance is closely monitored and new potential suppliers regularly audited in order to manage the supplier for continuous improvement

Supplier performance management

Alternative sourcing opportunities monitoring

Price

Potential Supplier 1

Potential Supplier 2

Potential Supplier 3

Current Supplier

Prod. 1

26.4

23.8

24.9

24.6

Prod. 2

36.1

33.8

34.9

33.7

Prod. 3

13.4

15.1

12.2

12.8

Prod. 4

40.2

38.1

41.3

38.4

Jiangsu

Zhejiang

Shanghai

Shanghai

6

14

8

19

350

700

430

880

100/day

120/day

75/day

140/day

N/A

Good

N/A

Good

Good

Good

Average

Good

Competitivity

Capabilities

Motivation

Region Turnover (Mâ‚Ź) Staff Capabilities Sample quality Cooperation Overall performance

Q1

Q2

Š 2007 Dragon Sourcing. All rights reserved.

Q3

Potential supplier assessment

Q4

Potential Supplier 1

22

Potential Supplier 2

Potential Supplier 3

Current Supplier

Agenda

Š 2007 Dragon Sourcing. All rights reserved.

1.

Context

2.

Sourcing Process

3.

Governance Model

4.

Results and conclusions

23

The China sourcing programme is managed via a series of frequent conference call meetings

Business Model • Dragon Sourcing is a service provider assisting customer in sourcing and procurement activities • Customer places Purchase Orders directly with selected suppliers and suppliers invoice directly Customer • Customer pays DS a fixed monthly mgmt fee + evaluates every quarter Dragon Sourcing performance

Client procurement unit

Dragon Sourcing

President

DS CEO

Sourcing Director

DS Account Manager

Logistics

Communication • Steering Committees weekly (conference call) to review overall progress on all categories • Categories follow-up meetings on an adhoc basis to review category issues • Meeting minutes record main decisions, planned actions and project status © 2007 Dragon Sourcing. All rights reserved.

Buying Analyst

Buyer Buyer Buyer Buyer Buyer Buyer

Buying Analyst Buying Analyst China

Buying Analyst Buying Analyst Vietnam

24

During these meetings, projects’ status and issues are discussed Project No.

Project request date

Customer project leader

1

Bouillon Cubes

JH

2

Plastic Pallets

Job title

4 5 6

7

Bread Baskets

Vitamin C

Bread Bags

Animal Feed sacks

Nitrates and Phosphates Polypropylene

Product category

status

Target completion request date

Completion date definition

Project Overview & Follow up 4/6/2007

CL

Project Project Customer Number request date Project Leader

3

Organization

Current supplier contract ending date

Current estimated annual spend

CL

Job title

Organisation

Product category

Current estimated annual spend

Current Supply Contract ending date

Status

Target completion request date

Completion date definition

Priority

1

10-Jul-06

AB

Buying Manager

Not For Resale Paper cup

Sampling

18-Sep-06

1st Shipment

High

2

11-Jul-06

AB

Sourcing Manager

Not For Resale Shelving systems

RFP

To be defined

1st Shipment

High

3

21-Jul-06

AB

Buying Manager

US

Paper cup, Garbage bag, cup

Supply Market 6-Sep-06 Survey

e-auction for supplier selection

High

4

10-Jul-06

CD

European Sourcing Manager

Private Label

Corrugated packaging for detergents & household cleaning

RFP

Business Case

To be defined

5

12-Jul-06

CD

Sourcing Manager

Not For Resale Roll container

Supply market To be defined survey

To be defined

To be defined

8

24-Jul-06

AB

European Sourcing Manager

Not For Resale Tissue Paper

Supply market To be defined survey

To be defined

To be defined

10

25-Mar-06

AB

Buying Manager

Not For Resale Plastic produce bag

RFP

1st Shipment

To be defined

11

25-Aug-06

CD

Buying Manager

To be defined

KM CL SG

1-Feb-07

Pet Food

15-Dec-06

Supply market survey To be defined

MQ

Š 2007 Dragon Sourcing. All rights reserved.

To be defined

To be defined

To be defined

TBD

25

Priority

Collaborative workflows facilitate clear communication and quick decision making

Feasibility analysis Dragon Customer Sourcing

Supplier

Supplier selection and contracting Dragon Customer Sourcing

Project information

Supplier

Procurement Operations Dragon Customer Sourcing

Production

Suppliers audits

(specs., samples, quantity, price)

Quality Control

Sample development

Supplier database

Supplier

Delivery

RFP design RFP launch RFP answers

Final sample Payment management Recommendation Supplier performance

RFP analysis Analysis report Decision to

Final selection Market monitoring Negotiation Reporting Contracting

realize project

Š 2007 Dragon Sourcing. All rights reserved.

26

Agenda

Š 2007 Dragon Sourcing. All rights reserved.

1.

Context

2.

Sourcing Process

3.

Governance Model

4.

Results and conclusions

27

The sourcing programme has covered a high variety of items Spend Categories Bouillon Cubes Plastic Pallets Bread Baskets Vitamin C Bread Bags Animal Feed sacks Nitrates and Phosphates Polypropylene Sugar Sacks Carton packaging  Bread Tins Twinings Projects Transportation and Warehousing 1 Ton Woven PP and 25 Kg Paper Sugar Sacks Beet Slicing Knives & Fraisers IT System Telecom Services Multilayered Paper Sacks Non-Dairy Creamer Soy Proteins Buckets Etc…. 

© 2007 Dragon Sourcing. All rights reserved.

28

Savings range from 5 to 30% depending on the product and the “as-is” sourcing situation

(%) 30%

Generated savings per product(%) 28%

25% 20% 15% 10%

6%

12%

9% 5%

5%

5%

0% Plastic

Animal Feed

Animal Feed Polypropylene

Pallets

sacks

sacks

(AB Agri UK)

(AB Agri

sugar Sacks

China)

© 2007 Dragon Sourcing. All rights reserved.

29

Carton packaging

Bread Tins

In addition to savings, the Client benefits from a range of other benefits from our “Sourcing on Demand” service • Reduced sourcing risks in terms of: – CSR – Capacity/availability/delivery reliability – Quality • Total Supply Chain transparency – Sourcing process (RFI, RFP, Audits, QCs,…)

– Knowledge about the suppliers (regular visits by client) – Assurance that product is really made to the spec • Pro-active market intelligence about category opportunities and innovative products in China • Flexibility to increase/reduce sourcing capacity on Demand • Window to other Asian countries (e.g.: Vietnam, Malaysia,…) © 2007 Dragon Sourcing. All rights reserved.

30