Steel structural parts case study

STEEL STRUCTURAL PARTS
CASE STUDY
January 2012
Your Tailored Sourcing Approach to emerging markets
© 2011 Dragon Sourcing. All rights reserved.

2© 2011 Dragon Sourcing. All rights reserved.
AGENDA
1/ Project context and objectives
2/ Case Study: Steel mechanical structural parts
3/ Recommendations and Potential
4/ Supplier profiles

Context and objectives
Our client:
Global nuclear industry leader.
The company is also one of the world leaders in renewable energies: Wind, solar, bioenergies, hydrogen and storage
Commercial presence in more than 100 countries with a total of around 50,000 employees worldwide.
Objectives:
The company aimed to explore the potential of Latin American countries in terms of technical capabilities for the production
of steel parts used for construction.
So far, due to specific standards, those steel parts have been purchased mainly in Europe and in the USA.
The company decided to assign Dragon Sourcing to work on a feasibility analysis in order to identify potential suppliers
offering:
 Very specific production capabilities and equipments
 High production capacities for bulky mechanical structural steel parts
 Conformity to US standards

© 2011 Dragon Sourcing. All rights reserved.. 4
Sourcing Geographic Scope
Explored countries: Mexico, Venezuela, Colombia, Ecuador, Peru, Argentina, Chile and Brazil

AGENDA
2/ Feasibility analysis
4/ Supplier profile

• Manage P/O and agree payment
terms and details (L/Cs,..)
• Check in process production quality
• Conduct pre-shipment QC
• Arrange logistics
• Manage supplier performance
• Monitor new sourcing opportunities
• Shortlist suppliers based on
RFI/RFP process
• Audit shortlisted suppliers
• Select 2-3 suppliers for sample
development process
• Manage sample development
process
• Conduct final negotiations and
select suppliers
• Finalise Contract
• Analyse spend category in detail
– Specifications and quality requirements
– Volumes
– Deadlines
• Analyse supply market and identify potential
suppliers
• Pre-qualify potential suppliers through an RFI
process
• Identify suppliers production technology and
capabilities
• Come up with conclusions and
recommendations
Feasibility Analysis Supplier Selection and Contracting Procurement Operations
Keyactivities
Dragon Sourcing service offering covers the end-to-end sourcing process
SCOPE OF PROJECT
Remarks: This feasibility analysis was done through an RFI exercise and aimed to:
- Analyze production capabilities /equipments of potential suppliers
- Check compliance with US standards
This did not include any pricing exercise as a typical analysis conducted by DS would
include

Full products specifications
The first step is to develop a comprehensive understanding of required products
Product Name STEEL MECHANICAL STRUCTURAL PARTS Product Picture
Yearly Quantity 33,000 pces
　
Quotation FOB Price
Dimensions 15 X 4 X 1/4", 520" +/-.5“
Length / unit (m)
12,95
Weight / Unit (kg) 497
Total length (m) 13650
Packaging Bulk
Material ASTM A 500 GR B

Then, an RFI process is administered to identify most capable suppliers
CONTACT
DETAILS
INFORMATION
BUSINESS
INFORMATION
PRODUCTION
INFORMATION
DESIGN
INFORMATION

During RFI process, all responses are analyzed
Suppliers’ willingness to collaborate and to provide complete and accurate information is also assessed

During RFI process, 6 countries are explored within Latin America, 96 potential suppliers
identified, 65 RFI sent out and 7 RFI returned

During RFI process, DS analyzed the technical capabilities / equipments of each supplier which
responded
1= Yes
0 = No

Through the RFI process, conformity to US standard being compulsory for this project, DS
identifies suppliers able to provide ASTM A500 standard products in BRAZIL

Through the RFI process, conformity to US standard being compulsory for this project, DS identifies
suppliers able to provide ASTM A500 standard products in REST OF LATAM

DS collected feedback from international groups and study their production strategy locally
BELOW HSS INTERNATIONAL GROUPS HAVE BEEN CONTACTED:
- THEY SEEM NOT BEING PRODUCING LOCALLY IN LATAM COUNTRIES (except Supplier 4 producing in Mexico - Supplier profile provided)
- MOST OF THEM HAVE REQUIRED TO CONTACT THEIR OFFICE IN US

AGENDA
2/ Case Study: Steel Mechanical Structural Parts
4/ Supplier profile

POTENTIAL AND RECOMMENDED FUTURE ACTIONS
To move forward with this project, DS is recommending:
 To prioritize parts requiring suppliers which have a “Specialist” profile versus a “Polyvalent” one
 To explore potential collaboration with:
1/ Strong actors producing equipment parts for the automotive and aeronautics industries.
2/ Suppliers working in the nuclear and solar energy industries
 To study the possibility to combine multiple suppliers expertise within a same geographic zone
 To study and negotiate potential collaboration with suppliers producing international standards products such as ASTM A500
 Highest potential suppliers we have identified, mainly based upon ASTM A500 availability, factory quality standards as well as manufacturing
capacities and capabilities:
In Colombia : Supplier 3
In Mexico : Suppliers 6, 9 and 13
In Brazil : Suppliers 18 and 2
 To source and follow-up manufacturers technical capabilities which will supply parts for World Cup 2014 and Summer Olympics 2016
constructions in Brazil

AGENDA
2/ Case Study: Steel Mechanical Structural Parts
4/ Supplier profile

© 2011 Dragon Sourcing. All rights reserved. 18
All suppliers who responded to RFI are presented to client using following company profiles.
This document shows full details in terms of supplier´s business, production, social responsibility
and quality management
TOP 5 CUSTOMERS
Customers Industry Country Percentage of sales
CLIENT 1 Aeronautic BRAZIL 20%
CLIENT 2 Automotive BRAZIL 15%
CLIENT 3 Road infrastructure BRAZIL 10%
CLIENT 4 Automotive BRAZIL 25%
COMPLIANCE WITH LOCAL LAW ( Y / N )
Children labor YES
Health & Safety
YES
Environmental issues
YES
Confidentiality Agreement
YES
PRODUCTION CAPACITY
Total maximum production capacity (units or m²or tons / year) in 2009. 35,000 hours
Actual annual production (units or m²or tons / year) in 2009 25,000 hours
What is your current level capacity (%) for the 6 next months? 18,000 hours
Are you available to accept new client orders? (Y/N) Yes
GENERAL INFORMATION
Supplier name SUPPLIER 1
City São Paulo
Province São Paulo
Zip code 13486-325
Contact person M. CARDEROSO
Job title Director
Email xxxxxx@yyyyy.com
Phone number 19 3451 0000
Fax number 19 3451 0000
Website www.xxxxyyyyy.com
BUSINESS INFORMATION
Found Year 1975
What is the nationality/region of your
company? Brazilian
How much capital do you have (in US$)? 22,000,000
Are you a manufacturer or distributor? Manufacturer
Do you have export experience? NO
Number of employees 400
Turnover
(in USD)
2007 2008 2009 2010
n/a n/a n/a n/a
% Sales exports
to the main
markets
North
America
(%)
South
America
(%)
EU (%)
Asia /
Pacific(%)
0 Brazil 0 0

© 2011 Dragon Sourcing. All rights reserved. 19
This document shows full details in terms of supplier´s business, production, social responsibility and
quality management
QUALITY CONTROL
How do you manage the TRACEABILITY in the production process ? Parts are identified with specific codes which can be tracked up to the delivery
Do you have a QUALITY CONTROL PROCESS? (Y/N) If yes, please describe briefly your QC process. Meeting to decide detailed quality inspection plan and production plan based
upon analysis of designs, production methods…Control during final inspection
Do you have IN-LINE QUALITY INSPECTIONS (Y/N)?
How often do you have these inspections? On which production stages do you conduct theses inspections?
Yes. First piece is inspected and for every ten pieces produced we inspect
another one. This can be adapted if any specific requirements from client.
What type of inspection do you perform:
Inspection on 100% of production OR inspection on samples?
100% inspection on critical aspects – for less critical, first and we inspect one
piece every ten pieces produced.
If sampling inspection, what is your sampling rate? 10%
What performance do you achieve (on average) in out-going quality measures? (What is your REJECTION RATE %)? 1 a 2%
How long do you keep your QC records? 12 months
Yes / No Date of Certificate
Expiration
date
Certificate number
Certifying
Org.
What QUALITY and ENVIRONMENTAL registrations do you have?
ISO 9000 No
ISO 9001 Yes 12/06/03 21/09/12 XXXX0003 Bureau Veritas
ISO 14000 No
Name of Certificate Date of Certificate
Expiration
date
Certificate number
Certifying
Org.
Other COMPANY CERTIFICATIONS do you have?
No
Name of Certificate Date of Certificate
Expiration
date
Certificate number Certifying
Org.
What International/Domestic PRODUCT CERTIFICATION do you have? No

20
This document shows full details in terms of supplier´s business, production, social responsibility
and quality management

Steel structural parts case study

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