This case study focuses on providing necessary information about strategic sourcing of powder coating for our client. Get more insights here: https://www.dragonsourcing.com/procurement-solutions/

1. Powder Coating
Strategic Sourcing - Case Study
Shanghai, Apr 22nd , 2016
Dragon Sourcing - 龙 源
Your Tailored Sourcing Approach to LCC Sourcing

2. Agenda
1. Objectives and Timeline
2. Approach
3. Results
© 2016 Dragon Sourcing. All rights reserved. 2

3. © 2016 Dragon Sourcing. All rights reserved.
Objectives and approach
Context
Objectives:
• Carry out sourcing service to identify competitive and
qualified suppliers, for the following categories:
– Coating
Geographical scope:
• 150KM range from client factory
Deliverables:
• Supplier database
• NDA signed copies
• RFI-RFQ template
• RFI-RFQ analysis report
• Supplier profiles and ranking
• Suppliers pre-audit reports (optional)
DS Approach consists in the following work steps:
1. Demand Analysis: define and understand products and
requirements (specs, volumes, materials, production technology
requirements)
2. Supply Market Analysis: Identify long list of potential suppliers in
China by leveraging B2B Websites, DS Database, Fair catalogues,
Chamber of Commerce, Magazines, Network, References.
3. Telephone Pre-screening: Selection of suppliers to be included in
the RFIRFQ process by telephone pre-screening based on agreed
simple criteria (e.g. capability to make the product, minimum
company size, quality certifications)
4. Develop the RFI-RFQ: Document prepared together with client to
pre-qualify the competitiveness and capabilities of the suppliers,
including: Background, Financials, Client references and Product
experience, Quality certification & processes, Social Responsibility,
Manufacturing technology capability, R&D capability
5. Administer the NDA: NDA template authorized by client that will be
distributed to the suppliers who is willing to attend the RFI-RFQ.
6. Administer the RFI-RFQ: Distributed to the suppliers who passed
the pre-screening section, with telephone follow-up to push for
maximum participation.
7. Develop a balance score with client, evaluating suppliers maturity
according to RFIRFQ
8. Analyze RFI-RFQ Responses: profiling & objectively ranking
suppliers by capability, and recommending those to be audited.
9. Pre-audits (optional): Carry pre-audits of recommended suppliers in
order to identify those to have you audit.
3

4. M1 M2 M3
Steps Owner
W W W W W W W W W W
1 2 3 4 5 6 7 8 9 10
0 Kick off meeting Client/DS
1 Data collection pack analysis Client/DS
2 Identify list of potential suppliers DS
3 Develop the RFI/RFQ, introduction letter to include all key qualification criteria. Client/DS
4 Conduct first phone screening of supplier database to send introduction letter. DS
5 NDA administration DS
6 Administer RFI/RFQ process to ensure as high a return rate as possible. DS
7 Develop balance score card to evaluate suppliers Client/DS
8 Recommend suppliers to audit according to RFI/RFQ analysis Client/DS
© 2016 Dragon Sourcing. All rights reserved. 4
DS has taken about 9 weeks to deploy Strategic sourcing following DS methodology on
coating project.
Not started Started Finished Holiday Milestone
Toda

5. Agenda
1. Objectives and Timeline
2. Approach
3. Results
© 2016 Dragon Sourcing. All rights reserved. 5

6. Demand analysis – Coating: 2 products with total spending around 8M RMB/year
© 2016 Dragon Sourcing. All rights reserved. 6
Products 1 2
Photo
Material Spring steel Q345B
Weight 0.8 Kg 6 Kg
Dimension 200*100*50mm 300×170×16mm
Painting Requirements Phosphate Ball Blasting + Pre-treatment
Painting Thickness >90μm 90μm～130μm
Salt Spray Test
（GB/T 10125 & GB 6461.4）
≥240H, class 7 (<0.5%) ≥240H, class 7 (<0.5%)
Adhesion Test Class 0 Class 0
Hardness Test - 〉2H

7. © 2016 Dragon Sourcing. All rights reserved. 7
Total 103 suppliers identified, 5 potential suppliers RFIRFQ & 1 client current
suppliers RFIRFQ received.
Total number of suppliers 103
Supplier called 103
Shortlisted supplier after call 6
NDA Sent 6
NDA Received 6
RFIRFQ Sent 6
RFIRFQ received 5
RFIRFQ received of current supplier 1

8. Score card
© 2016 Dragon Sourcing. All rights reserved. 8
Business information
Weight of
criteria
Scoring
Max Score
per criteria
Weight of
the section
Registered capital? 15%
0= Less than 5 Million
1= 5-10 million
2= 10-20 Million
3= More than 20 million
3
35%
Turnover in 2015? 12%
0= Less than 20 million
1= 20-50 Million
2= 50-100 million
3=100-200 million
4=More than 200 Million
4
Nature of the company 6%
1= Private,
2= State owned
3= Joint venture
3
How many years since the founding
of the company?
10%
1= Less than 5 years
2= 5 to 10 years
3= More than 10 years
3
How many square meters(m²) does
your factory occupy ?
12%
1= Less than 4000sqm
2= 4000-5000sqm
3= 5000-8000sqm
4= More than 8000sqm
4
How many square meters(m²) does
your warehouse occupy ?
12%
1= Less than 1000sqm
2= 1000-2000sqm
3=> 2000-3000sqm
4= More than 3000sqm
4
How's your enviromental approval
upon on the sqm that allowed?
23%
1= Less than 0.2m sqm
2=> 0.2m-1m sqm
3> 1m sqm
3
Profile of Top Customers 10%
0=Not provided
1=Small local customers
2=National customers
3=International ustomers
3
Subtotal 100% 35%
Production capability
Weight of
criteria
Scoring
Max Score
per criteria
Weight of
the section
Does your company have automatic
coating line which includes pre-
treatment?
15%
0=No
1=Yes
1
45%
How many coating lines does your
company have?
15%
1=1 coating line
2=2 coating lines
3=More than 2 coating lines
3
How many pieces can your company
coat annualy?
15%
1=Less than 0.1M
2=0.1M - 0.5M
3=0.5M - 1M
4=More than 1M
4
45%
How much capacity do you have to
accept new orders?
15%
1=Less than 20%
2=20%-50%
3=50%-80%
4=More than 80%
4
How many sand blasting machines
does your company have?
20%
0= No blasting machines
1= 1 blasting machine
2= 2 blasting machines
3= More than 2 blasting
machines
3
Can your company do simple
packing for client?
20%
0= No
1= Yes
1
Subtotal 100% 45%
Quality system
Weight of
criteria
Scoring
Max Score
per criteria
Weight of
the section
Does your company have
experience of GB/T 10125 and GB
6461.4?
30%
0= No
1= Yes
1
15%
Does the supplier have ISO 9001? 15%
0= No
1= Yes
1
Does the supplier have ISO 14001? 15%
0= No
1= Yes
1
Does your company have final
inspection and report?
25%
0= No
1= Yes
1
How long do you keep QC record
form?
15%
0= less than 1 year
1= 1 year
2= 2 years
3= More than 2 years
3
Subtotal 100% 15%
Cooperation
Weight of
criteria
Scoring
Max Score
per criteria
Weight of
the section
Cooperation during RFI/RFQ 50%
1= Poor
2= Satisfactory
3= Excellent
3
5%
Completeness of RFI/RFQ 50%
1= Poor
2= Satisfactory
3= Excellent
3
Subtotal 100% 5%

9. Company profile
Supplier 1(1/3)
BUSINESS INFORMATION
What date was your company founded? 1998
How much is your registration capital (RMB)? 2 Million
What's the nature of your company? (Private,
state owned, joint venture, etc）
Private
What is your turnover in million RMB ?
2015 2014 2013 2012
21 19 23 21
How many square meters(m²) does your factory
occupy ?
6000
How many square meters(m²) does your
warehouse occupy ?
250
How many employees do you have? 78
How many employees can communicate in
English?
1
Do you have European / international customers?
If yes, which ones?
xxx
Which industry sector do you serve for? Metal surface process
Do you have experience in serving railway
industry clients?
Yes
Who are your top 5 road delivery Clients?
Customer
name
Industry country % of sales
1 Xxx Elevator Swiss 40
2 Xxx Train Germany 25
3 xxx Train China 25
CORPORATE RESPONSIBILITY
Do you sign contract with all employees? Yes
Does your company pay social insurance for all employees? Yes
How many hours per week, including overtime are your employees working on
a regularly scheduled basis?
50h
Does your company have social audit by your client? If yes, What's their name? Yes
COMPANY INFORMATION
Company Name Supplier 1
Address xxx
Town Suzhou
Province Jiangsu
Company Website xxx
CONTACT PERSON INFORMATION
Contact Person xxx
Title Quality Manager
Email xxx
Tel Xxx
Mobile phone xxx
9© 2016 Dragon Sourcing. All rights reserved.
QUALITY CONTROL
What quality and environmental registrations
do you have?
Yes / No
Date of
Certificate
Certifying Org.
Date of
Expiry
ISO 9001 Yes 1999/3/11 Zhongwulian 2016/3/18
ISO 14001 Yes 2014/4/22 TUV Nort 2017/4/21
Do you have the instrument in
house?(Yes or No)
Instrument description and
brand
Coating thickness test instrument Yes Beijing Shidai
Salt spray test instrument Yes Shanghai Jinghua
Impact resistance test Yes Beijing Shidai
Adhesive attraction test Yes Beijing Shidai
Does your company have experience of
GB/T 10125 and GB 6461.4?
Yes
Does your company have dependant quality
department? How many employees of the
quality department?
Yes, 8 persons
Does your company have incoming raw
material inspection and report?
Yes
Does your company haveIn-process quality
control and inspection and report?
Yes
Does your company have final inspection
and report?
Yes
How long do you keep QC record form? 10 years

10. Company profile
Supplier 1
10© 2016 Dragon Sourcing. All rights reserved.
Production
Does your company have automatic coating line which includes pre-treatment? Yes
How many coating lines does your company have? 2
How many pieces can your company coat annually? 20 Million
How much capacity do you have to accept new orders? 30%
How many sand blasting machines does your company have? 5
Can your company do simple packing for client? Yes
Do you have equipment list? (Yes/No) Yes
Worker Engineer R&D Quality Control Management Sales
How many people do you have in these positions? 50 3 0 8 12 2
How long does your employee work in your company in average? 6 years
How many shift does your company work? How many hours one shift? 1 shift, 8 hrs

11. Factory Overview and Qualification Pictures
Business registration Tax registration Organization Code certificate Factory entrance
Sand blasting machine Pre-treatment Phosphorylation Coating workshop
Finished goods warehouse Laboratory Office Office
Company profile
Supplier 1
11© 2016 Dragon Sourcing. All rights reserved.

12. Agenda
1. Objectives and Timeline
2. Approach
3. Results
© 2016 Dragon Sourcing. All rights reserved. 12

13. Product price comparison, two suppliers are more competitive, 11-29%
potential saving.
© 2016 Dragon Sourcing. All rights reserved. 13
0.82
1.00
1.12
1.52
1.81
2.13
0.00
0.50
1.00
1.50
2.00
2.50
Supplier 1 Supplier 2 Current Supplier 3 Supplier 4 Supplier 5
Product unit price without VAT
More competitive than current

14. Cost breakdown analysis to evaluate supplier’s quotation.
© 2016 Dragon Sourcing. All rights reserved. 14
0.00
0.50
1.00
1.50
2.00
2.50
Supplier 1 Supplier 2 Current Supplier 3 Supplier 4 Supplier 5
RMB/PC
Cost breakdown
Sand blasting Powder Labour Coating Gas/Coal/Electricity Management Gross profit

15. Supplier RFI score and unit price combination to recommend suppliers.
© 2016 Dragon Sourcing. All rights reserved. 15
85
79
70
65
60 60
0.00
2.00
4.00
6.00
8.00
10.00
12.00
0
10
20
30
40
50
60
70
80
90
Supplier 1 Supplier 2 Current Supplier 3 Supllier 4 Suplpier 5
RMB/PC
RFIscore
Suppliers RFI score & product unit price comparison
RFI Score Product 1 Product 2
Recommend to audit