Strategic Sourcing Case Study – LED Luminaires

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Strategic Sourcing Case Study – LED Luminaires Aug 15th 2017

Agenda

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1.

Objectives and Timeline

2.

Approach

3.

Results

2

Objective and Approach DS Approach consists in the following work steps:

Context Objectives: • To carry sourcing services for LED Panel / Louver and Linear

1.Collect detailed spend information about the nature of the products required (supplier capabilities required, specifications, volumes, drawings, and samples when relevant for all references to be included in the RFI-RFQ process) with all spend data to be provided by client 2.Identify list of potential suppliers in Mainland China and India to include in the RFI process by incorporating existing list of DS potential suppliers, by leveraging the web, external databases and various networks of experts 3.Carry out a phone pre-screening of the suppliers based on maximum 4-5 screening criteria per category (e.g.: min size, having certain quality certification, experience in relevant industry,…) with these criteria to be provided by client 4.Develop the RFI-RFQ – jointly with client – to include all key supplier qualification criteria (e.g.: financial, technology,, corporate responsibility, quality certification, MOQ, client references…) and quotation requirements 5.Administer the RFI / RFQ process to ensure a high return rate 6.Analyze responses based on qualitative criteria and use a balance score card to rank suppliers and recommend suppliers which client needs to take through a formal qualification process

Geographical scope: • Mainland China • India

Deliverables: • Supplier data base • RFI / RFQ • Score Card • Company profiles • Recommended audit supplier list

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3

The project is scheduled for a 10 working weeks period before starting suppliers auditing as described below Steps

W1

W2

W3

W4

W5

W6

W7

W8

W9

W10

1. Demand Analysis

2. Supply Market Analysis

RFI/RFQ& Score card approved

3. Telephone Pre-screening Shortlist for recommended Audit

4. Develop RFI /RFQ

5. Conduct RFI / RFQ Administration

6. Develop the Score card and Analyze RFI /RFQ Responses

milestone Š 2015 Dragon Sourcing. All rights reserved.

4

Agenda

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1.

Objectives and Timeline

2.

Approach

3.

Results

5

Demand Analysis – China the strategic sourcing includes 4 groups of LED luminaires comprised of 12 items with different power and size Short Text

Reference Picture

Size (LxWxH)

Forecast(pcs)/year

27W Louver

597*597mm

36W Louver

597*597mm

36W Louver

297*1197mm

30W Panel

597*597mm

40W Panel

597*597mm

40W Panel

297*1197mm

43W Batten

1170mm

50K

22W Batten

585mm

5K

20W Batten

600mm

40W Batten

1200mm

50K

30K

30K 60W Batten

1500mm

80W Batten

1500mm

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6

Demand Analysis – India the strategic sourcing includes 3 groups of LED luminaires comprised of 10 items with different power and size Short Text

Reference Picture

30w DC Panel

Size (LxW)

Forecast(pcs)/year

595*595mm 10K

40w DC Panel

595*595mm

8.5w DL (Round)

D125mm x H 20mm

12w DL (Round)

D175mm x H 20mm

15w DL (Round)

D175mm x H 20mm

50K 18w DL (Round)

D175mm x H 20mm

25w DL (Round)

D225mm x H 20mm

30w DL (Round)

D225mm x H20mm

30w Panel

1200x75x60 ( H<70mm) 10K

60w Panel

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1200x75x60 ( H<70mm)

7

Executive Summary â&#x20AC;&#x201C; China & India Total 184 suppliers identified initially, 53 suppliers were shortlisted and 14 RFIRFQ received Step

China

India

Total

Total number of suppliers

112

72

184

Supplier called

112

72

184

Shortlisted supplier after call

39

19

58

Suppliers discarded by client

0

5

5

Final Shortlisted Suppliers

39

14

53

RFI/RFQ Sent

39

14

53

RFI/RFQ received from potential suppliers

8

6

14

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8

Telephone Pre-Screening Criteria: Below questions are discussed and aligned with client 1.

What concrete products you are making? (must produce one of our required product)

2.

How many production experience do you have to make LED lights ? (must>3 years)

3.

Do you have business license for both domestic & export business ? (must yes)

4.

Do you have ISO9001 certificate and ROHS compliance ? (must yes)

5.

How about your company annual turnover ? (must more than 5M USD)

6.

Are you 3C qualified factory ? (for China, must yes. India not required)

7.

SMT and Assembly line in house or not ? (optional)

8.

LED Driver design in house or not ? (optional)

9.

Thermal, Optical, mechanical design in house or not ? (optional)

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9

Telephone Pre-Screening Criteria: 39 LED Luminaries suppliers in China passed in the pre-screening

Heilongjiang

Short List Suppliers Location

Nb Jilin Liaoning

Guangdong

19

Zhejiang

7

Jiangsu

5

Shanghai

5

Xinjiang

Beijing

1

Hunan

1

Shanxi

1

Total

39

Gansu

Tianjin

Shanxi

Ningxia Qinghai

Beijing

Inner Mongolia

Gansu

Shaanxi

Jiangsu

Henan Anhui

Xizang Sichuan Sichuan

Hubei

Shanghai Zhejiang

Jiangxi Hunan Guizhou Yunan

Guangxi

Guangdong

Taiwan

Hong Kong

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10

Location of the suppliers passed

Telephone Pre-Screening Criteria: 14 LED Luminaries suppliers in India passed in the pre-screening

Short List Suppliers Location

Nb

Maharashtra

6

Andra Pradesh

2

West Bengal

1

Tamil Nadu

1

Rajasthan

1

Karnataka

1

Haryana

1

Gujarat

1

Total

14

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Pradesh

11

Location of the suppliers passed

In order to measure suppliers’ maturity, a balanced score card template is discussed and aligned with client.

Score card weight of each section of the RFI measuring the maturity

Scoring Area

Weight

• Business Information

15%

• Design Capability

25%

• Technology & Process

20%

• Material Supply Management

15%

• Quality System and Testing

25%

Total

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100%

12

Agenda

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1.

Objectives and Timeline

2.

Approach

3.

Results

13

China: RFQ is provided basing on MOQ of each supplier. To be further negotiated in the face to face meeting Short Text

Size (LxW)

27W Louver

597*597mm

36W Louver

597*597mm

36W Louver

297*1197mm

30W Panel

597*597mm

40W Panel

597*597mm

40W Panel

297*1197mm

43W Batten

1170mm

Forecast(pcs)/year

Saving %

50K

No saving but close to target price. Can be negotiated

No saving 30K

3% No saving but very close to target price. Can be negotiated

50K No saving

22W Batten

585mm

20W Batten

600mm

40W Batten

1200mm

60W Batten

1500mm

80W Batten

1500mm

5K

30K

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No saving

14

China: DS recommend to audit 5 potential suppliers at first stage which is strong at one of six areas client seems to focus on.

Recommended Suppliers

Spec Fitness

Price

Maturity

√

Suppler 2

√

Suppler 3

Suppler 5

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Cooperation

√

Suppler 1

Suppler 4

3C

√ √

15

ODM Capability

RFI Score

Yes

95

Yes

94

Yes

93

Yes

93

Yes

87

China: DS did not recommend to audit remaining 3 suppliers at first stage which is weak at one of six areas client seems to focus on.

Not Recommended Suppliers

Spec Fitness

Cooperation

ODM Capability

RFI Score

Suppler 6

ᵡ

Yes

91

Suppler 7

ᵡ

Yes

83

Yes

73

Suppler 8

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Price

Maturity

ᵡ

16

3C

India: RFQ is provided basing on MOQ of each supplier. To be further negotiated in the face to face meeting Short Text

Size (LxW)

30w DC Panel

595*595mm

40w DC Panel

595*595mm

8.5w DL (Round)

D125mm x H 20mm

12w DL (Round)

D175mm x H 20mm

15w DL (Round)

D175mm x H 20mm

Forecast(pcs)/year

Saving %

10K

No saving

50K 18w DL (Round)

D175mm x H 20mm

25w DL (Round)

D225mm x H 20mm

30w DL (Round)

D225mm x H20mm

30w Panel

1200x75x60 ( H<70mm) 10K

60w Panel

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1200x75x60 ( H<70mm) 17

No saving

No saving

India: DS recommend to audit 4 potential suppliers at first stage which is strong at one of five areas client seems to focus on.

Recommended Suppliers

Spec Fitness

Price

Maturity

√

Arihant

√

Intelux

√

Ready

Lajj

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Cooperation

√

18

ODM Capability

RFI Score

Yes

86

Yes

84

Yes

82

Yes

75

India: DS did not recommend to audit remaining 2 suppliers at first stage which is weak at one of five areas client seems to focus on.

Not Recommended Suppliers

Spec Fitness

Price

Effe Led

ᵡ

ᵡ

Leo Led

ᵡ

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Maturity

ᵡ

19

Cooperation

ODM Capability

RFI Score

Yes

77

Yes

65

Sigma ([(Max-Min)/Average] for best 3 prices) overview for both China and India: Dragon sourcing consider prices as coherent when Sigma ([(Max-Min)/Average] for best 3 prices) is below 35% Country

Product Name

Sigma

27W Louver

51%

36W Louver (Square)

46%

36W Louver (Rectangular)

54%

30W Panel

71%

40W Panel (Square)

35%

40W Panel (Rectangular)

28%

43W Batten 1

45%

43W Batten 2

45%

22W Batten 1

51%

22W Batten 2

51%

20W Batten

115%

40W Batten

64%

60W Batten

5%

80W Batten

4%

30w DC Panel

25%

40w DC Panel

29%

8.5w DL (4 Inch)

15%

12w DL (6 Inch)

38%

15w DL (6 Inch)

23%

18w DL (6 Inch)

8%

25w DL (8 Inch)

16%

30w DL (8 Inch)

7%

30w Panel

21%

60w Panel

27%

China

India

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