Substation Project Case Study by Dragon Sourcing

Dragon Sourcing - 龙 源 Delivering sustainable sourcing value from emerging markets

Strategic Sourcing Case Study – AIS, GIS, Transformer in substation Jan 30th 2019

Agenda

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1.

Objectives, Approach, and Schedule

2.

Demand Analysis

3.

Results

2

Objectives and Approach Context

Dragon Sourcing approach in 2 stages Stage 1: Supplier Pre-Qualification

• Objectives: Identify and recommend new potential competitive suppliers.

1.

2.

3.

4.

5.

6.

• Geographical scope: China.

• Category: Sub Station Equipment • Deliverables: Stage 1 − Supplier database − RFI-RFQ template − RFI-RFQ analysis report − Supplier profiles and ranking Stage 2: − Audit Report − Contract(s)

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Demand Analysis Supply Market Analysis Telephone Pre-screening Develop RFI/RFQ Administer RFI/RFQ Analyse RFI/RFQ Responses

Stage 2: Audits, Selection & Contracting 7. Prepare for audits 8. Conduct audits jointly with Sterlite Power 9. Analyse audit results 10.Negotiation & Contracting

3

Stage 1: Supplier Pre-Qualification No.

Steps

1.

Demand Analysis Work with Sterlite to define and understand the products and requirements (specs, volumes, current unit prices, delivery destinations of delivery/consumption).

• Kick-Off Report

2.

Supply Market Analysis Identify long list of potential manufacturers in China 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, quality certifications, interest in participating, etc.)

• Shortlist for RFI-RFQ process

4.

Develop RFI/RFQ document Prepare a 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 Audit

© 2019 Dragon Sourcing. All rights reserved.

Deliverables

4

Stage 2: Audits, Selection & Contracting No. Steps

Deliverables

7.

Prepare for Audits Planning the audit schedule, budget, and drafting the Audit Questionnaire that will be used for the supplier self-assessment and on-site audits.

• Audit Plan • Audit Questionnaire

8.

Conduct Audits Distribution of the audit questionnaire to manufacturers for their self-assessment followed by onsite audits of all the manufacturers. Focus is management, logistics, production, quality and includes photos & videos where allowed.

• Completed Audit Questionnaires

9.

Analyze Audit Results Analysis of the audit results together with RFI/RFQ results and preparation of a report that ranks the manufacturers, including a recommendation for those for sample development.

• Audit Report • Supplier Audit Profiles • Proposed Shortlist for Sampling

10.

Negotiation & Contracting Conducting final negotiations with the shortlisted manufacturers.

• Contract(s)

Milestone: Contracts Secured •

The time required to perform the audits will depend on how many suppliers need to be audited and their location.

© 2019 Dragon Sourcing. All rights reserved.

5

Dragon Sourcing received 8 categories in parallel (1 GIS, 1 Transformer, 6 AIS)

Step

Who

1. Demand Analysis

Sterlite/ DS

2. Supply Market Analysis

Sterlite/ DS

3. Telephone Pre-screening

DS

4. Develop RFI/RFQ

DS

5. Administer RFI/RFQ

DS

6. Analyze RFI/RFQ Responses

W1

W2

11/2

11/9

W3

W4

W5

11/16 11/23 11/30

W6

12/7

W7

W8

W9

W10

W11

W12

Sterlite/ DS

6

W14

12/14 12/21 12/28 01/04 01/11 01/18 01/25 02/01

Milestones

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W13

Agenda

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1.

Objectives, Approach, and Schedule

2.

Demand Analysis

3.

Results

7

Number of categories Phase 1

#

Category

# of configuration

Volume (Nos/Set/Bay)

1

CB

12

426

2

Isolator

26

681

3

Arrester

6

249

4

Insulator

13

762

5

CRP

53

1283

6

CT/VT/CVT

22

815

7

Transformer/Reactor

14

60

8

GIS

2

15

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8

Product pictures

Transformer

GIS

CB

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CT

CRP

Isolator

Arrester

9

Insulator

Agenda

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1.

Objectives, Approach, and Schedule

2.

Demand Analysis

3.

Results

10

Total 101 suppliers identified, 46 passed pre-screening, 20 submitted RFI. 2 offered AIS, 3 offered GIS, 2 offered transformer, 1 offered both transformer and GIS.

Step

Total

# of suppliers identified

101

# of suppliers passed pre-screening

46

# of suppliers failed pre-screening

55

# of RFIRFQ sent

46

# of suppliers reject to respond on RFI and RFQ

26

# of suppliers submit RFI but reject on RFQ

12

# of suppliers submit both RFI and RFQ

8

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11

12 potential suppliers located in 9 provinces (GIS and Transformer)

#

Supplier name Head office

GIS

Transformer

Score

Offer received or not?

95

Yes (GIS)

xxx

Zhejiang (Hangzhou)

2

xxx

Henan (Pingdingsha n)

88

No

3

xxx

Liaoning (Shenyang)

88

Yes (GIS)

xxx

Shanghai (Shanghai)

1

4

Heilongjiang

Jilin

Liaoning 87

/

xxx xxx

Shandong (Taian)

7

xxx

Henan (Xuchang)

71

Yes (GIS)

8

xxx

Hunan (Changsha)

70

No

Beijing (Beijing)

67

6

9

xxx

75

Shanxi

Ningxia 72

Beijing Hebei Tianjin

Yes (both) No

Qinghai

Shandong

Gansu

Jiangsu

Henan

Shaanxi

Anhui

Xizang Sichuan Sichuan

Hubei

Shanghai Zhejiang

Jiangxi Hunan

No Guizhou

10

xxx

Jiangsu (Liyang)

64

No

11

xxx

Guangxi (Liuzhou)

59

Yes (Transformer)

12

xxx

Jiangsu (Suzhou)

56

Yes (Transformer)

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Inner Mongolia

Gansu

Shandong (Taian)

5

Xinjiang

Yunan

Guangxi

Fujian Guangdong

Taiwan

Hong Kong Province

12

GIS

RFI Analysis – 9 suppliers can offer GIS, with average score of ’79’

Overall Score 100

95 88

88

87 75

score

75

72

71

70

Supplier 7

Supplier 8

67

50

25

0 Supplier 1

Supplier 2

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Supplier 3

Supplier 4

Supplier 5

13

Supplier 6

Supplier 9

GIS

RFI Analysis - assess 9 suppliers from 3 sections Overall Business 100

96

81

85

Supplier 2

Supplier 3

89 77

76

78

Supplier 4

Supplier 5

Supplier 6

80

81

Supplier 7

Supplier 8

Supplier 9

45

40

40

Supplier 7

Supplier 8

Supplier 9

score

75 50 25 0 Supplier 1

Project related capability 100

90

85

90

75

score

100

85 55

50 25 0 Supplier 1

100

Supplier 2

100

score

100

Supplier 3

88

Supplier 4

Supplier 5

Supplier 6

Quality/Certificates 100 100

88

100

88

75 50

29

25 0 Supplier 1 Š 2019 Dragon Sourcing. All rights reserved.

Supplier 2

Supplier 3

Supplier 4

Supplier 5 14

Supplier 6

Supplier 7

Supplier 8

Supplier 9

AIS + Transformer

RFI Analysis- 8 suppliers can offer either AIS or Transformer, with average score of ’66’

Overall Score 100

score

75

74 69

68

68

65

63

60

58

50

25

0 supplier 1

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supplier 2

supplier 3

supplier 4

15

supplier 5

supplier 6

supplier 7

supplier 8

AIS + Transformer

RFI Analysis - assess 8 suppliers from 3 sections Overall Business 100 74

score

73

72

75

62 51

48

supplier 1

supplier 2

50

56

65

25 0 supplier 3

supplier 4

supplier 5

supplier 6

supplier 7

supplier 8

30

30

supplier 6

supplier 7

supplier 8

88

88

88

supplier 6

supplier 7

supplier 8

Project related capability 100 80 70

score

75

50 50

40

50 40

25 0 supplier 1

supplier 2

supplier 3 100

supplier 4

supplier 5

Quality/Certificates 100

score

100

88

88

supplier 1

supplier 2

88

75

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supplier 3

supplier 4

16

supplier 5

Supplier 3 2.4

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2.0 1.8 1.0

1.9 1.3 1.4

17 0.8 0.9 0.7

1.1 1.1 0.9

80 MVA, 3 Phase 132/33 KV

50 MVA, 3 Phase 132/33 KV

0.8

100 MVA, 3 Phase 132/33 KV

9

105 MVA, 1 Phase 400/220/33 KV

3 8

105 MVA, 1 Phase 400/132/33 KV

2.3

7

160 MVA, 3 Phase 220/132/33 KV

Supplier 2 6

160 MVA, 3 Phase 220/132/11 KV

2 5

160 MVA, 3 Phase 400/220/33 KV

Supplier 1 4

200 MVA, 3 Phase 220/132/33 KV

1 3

315 MVA, 3 Phase 400/220/33 KV

Supplier name 2

315 MVA, 3 Phase 400/132/33 KV

# 1

500 MVA, 3 Phase 400/220/33 KV

Final Offer Summary – Transformer - 3 suppliers provide quotation with datasheet.

FOB price ( M USD) 10 11 12

0.5 0.4 0.3

0.5 0.5 0.4

0.7 0.6 0.4

Final Offer Summary – GIS - 4 suppliers submitted offer with proposed drawings

#

Supplier name

FOB price - 220 KV GIS (M USD)

1

Supplier 1

1.5

2

Supplier 2

1.6

3

Supplier 3

1.8

4

Supplier 4

1.8

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18

Conclusions

✓ All the recommended suppliers are very well qualified (completed certificates, strong financial background and global experience) ✓ All recommended suppliers are vertical integrated mails having all the production process in house ✓ 2 suppliers have been visited by Sterlite with very good impression. More meetings/visits will be arranged in terms of RFI score. ✓ DS recommended suppliers are likely to become strategic partner of Sterlite.

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15