Improve the effectiveness of procurement organization
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By taking necessary decisions the effectiveness of procurement organization can be improved. This case study will improve necessary information how to improve the effectiveness of procurement organization. Know more here: http://www.dragonsourcing.com/china-sourcing-company/
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Improve the effectiveness of procurement organization
- 1. Company Presentation Feb 2018 Dragon Sourcing - 龙 源 Delivering sustainable sourcing value from emerging markets
- 2. © 2018 Dragon Sourcing. All rights reserved. 1. Our offerings and approach 2. Our clients and category expertise 3. Client case study 4. Successful Sourcing in China
- 3. © 2018 Dragon Sourcing. All rights reserved. Procurement Intelligence to deliver you insight into markets to enable effective procurement decision. Global Sourcing to identify, qualify & secure capable and competitive suppliers in emerging markets. Procurement Outsourcing of IPO’s (international procurement offices) to increase productivity, reduce risks and fixed costs and rapidly scale up Procurement Capability Enhancement to Improve the productivity and effectiveness of your procurement function in emerging markets, especially in China
- 4. Procurement Intelligence to deliver you insight into markets to enable effective procurement decision. Global Sourcing to identify, qualify & secure capable and competitive suppliers in emerging markets. Procurement Outsourcing of IPO’s (international procurement offices) to increase productivity, reduce risks and fixed costs and rapidly scale up Procurement Capability Enhancement to Improve the productivity and effectiveness of your procurement function in emerging markets, especially in China © 2018 Dragon Sourcing. All rights reserved.
- 5. © 2018 Dragon Sourcing. All rights reserved. 5 CLIENT BENEFITS Clarifying Supply Chain Risks Discovering Market Opportunities Informed Buying Decisions PROCUREMENT INTELLIGENCE SUITE Supply Market Analysis Supplier Analysis Industry Best Practices Analysis Price Tracking & Forecasting Category Executive Dashboards Dynamic Should-Cost Models Value Chain Analysis Supplier Financial Assessment Supplier Ethics Assessment - Which countries have potential? - Should we buy-in or manufacture? - Who are the top suppliers? - What are the market dynamics? - Should we buy now or later? - Latest category news? - What will the impact of inflation be? - Is the market trending up? - What are the raw materials? - What are the key risks to supply? - Do these suppliers meet our CSR requirements? KEY CLIENT QUESTIONS
- 6. • 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 • Manage RFP process with pre- qualified suppliers • Analyse supplier responses and calculate fully delivered price (logistics, import duties, ADT,..) • Develop Business case and implementation plan • 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 © 2018 Dragon Sourcing. All rights reserved. Our suite of Sourcing Offerings covers the end-to-end sourcing process Value Discovery Supplier Selection and Contracting Procurement Operations • 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 Keyactivities
- 7. © 2018 Dragon Sourcing. All rights reserved. Capability Assessment: Improve the effectiveness of your procurement organization 7 1. Assessment 2. Implementation 3. Execution To assess the current situation of the procurement organisation and the demand, and identify the improvement opportunities. 1. Data collection through workshops and questionnaires to gain clarity on the current state and demand. 2. Interviews with staff to determine current roles, understanding of mission & capabilities. 3. Analysis & reporting of the current state, the demand, and the areas for improvement. 4. Draft a detailed plan for implementing and communicating the improvements. 5. Review and approval by stakeholders on the improvements and the implementation plan. To develop and implement the organisational improvements. 1. Develop the new org model, processes, tools, roles & policies. 2. Recruiting for capability gaps & training staff in new roles. 3. Defining a 12 month operating plan. 4. Communicating and formalising launch of the new organisation model. To reinforce the improvements and deliver the first cycle targets. 1. Tracking the adoption of the new tools, processes and policies. 2. Supporting behaviour change with side by side support. 3. Augmenting sourcing projects where there are temporary capability or capacity gaps. Deliverables • Analysis report of current situation and recommendations on the opportunities for improvements • Implementation plan • Communication plan Deliverables • Organisational model • Process documents • Tools, templates & policies • Role descriptions • Recruited staff • Trained staff • 12 month operating plan Outcomes • Reduced overheads • Higher productivity • Increased sourcing savings • Reduced contract leakage • Separation of duties • Increased visibility & control • Focus on value add activities
- 8. London Paris Graz Ljubljana Warsaw Budapest Istanbul Tel Aviv Mumbai Shanghai Hong Kong Ho Chi Min City Bangkok Jakarta Johannesburg Melbourne Sao Paulo Mexico City Houston Addis Ababa Prague Kiev Bucharest Riga Manila Lagos Rosario Nairobi Brussels We can cover global emerging markets through our owned offices and our network of procurement sub-contractors © 2018 Dragon Sourcing. All rights reserved. 8 Geographies covered by DS network of procurement subcontractors Santiago Sales offices Buying offices Novosibirsk Myanmar Cambodia Rome MadridMilan Porto Kuala Lumpur DammamCairo
- 9. Dragon Sourcing - Service Offerings Pricing DS Inhouse Outsourced Standard Comment Market Intelligence Procurement Intelligence x Fixed fees according to price list Should Cost Model x Supplier Financial Assessment x Supplier Supply Chain Assessment x Supplier Ethics Assessment x Category Executive Dashboard x Country and Manufacturing Site Evaluation Country Selection x Customized fixed fees based client's needs Country/Region/City Analysis x Factory ramp up support x Global Sourcing Portfolio Analysis & Category Prioritization x Fixed fees according to price list We can offer performance related deals (gain sharing, commissions, trading). Deals are structured on a case by case basis based on (1) spend value, (2) types of categories and (3) nature of the work required by the client; For Long-term Projects / High workload Projects, we move away from our standard pricing approach based on # of categories and # of countries to projects. Identification of potential suppliers (RFI process) x Measuring cost competitiveness of suppliers (RFQ process) x Auditing x x Sample development and testing x x Supplier development x x Contract negotiaton x Procurement Operations QC Management x x Fixed fee based on daily billing rateLogistics Management x Payment / Invoice management x Outsourcing Interim Management x (Buyers) x (SQE, SDE) Fixed fee based on monthly billing rate IPO Management x Fixed fees based on team size Performance related deals are possible to be crafted on a case by case basis © 2018 Dragon Sourcing. All rights reserved.
- 10. © 2018 Dragon Sourcing. All rights reserved.
- 11. © 2018 Dragon Sourcing. All rights reserved. Agenda 1. Our offerings and approach 2. Our clients and category expertise 3. Client case study 4. Successful Sourcing in China
- 12. © 2018 Dragon Sourcing. All rights reserved. Our clients are medium to large size corporations across a wide range of industries Food & Beverage Construction DIY Industrial Products
- 13. © 2018 Dragon Sourcing. All rights reserved. Our clients are medium to large size corporations across a wide range of industries Service Retail Heavy Machinery Automotive Packaging Pharma / Medical Energy/Chemicals Consumer Goods Government Mining
- 14. –Whisks –Cooking items –Bowl –Cast Iron French Oven –Soft Grid Handle –Cast Iron Roster –Oval Plate in Teflon –Water filter –Opal Glassware –Tong –TPE Lasagna Lid –Cast Iron Saucepan –Fondue Set –Elegant plastic plate –Cast Iron Braiser –Vacuum Thermos Bottles • Kitchenware –Melamine dishes –Nylon Spatula –Cast Iron Skillet –Oval Baker –BBQ –Lock Lids –ABS handle/silicon handle Finished goods for retail –Self inflating air mattress –Sleeping bag –Towel / Beach towels –Underwear –White Tshirts –Work wear –Blouse –Padded Jacket –Comber cotton waste –Casual shoes,boots,sandals –Napkin/ Table Cloth –Pillow –PP non woven uniform –PU Boots –Canvas Shoes –Quilt –Coat –Silk Dress –Ladies’ Blazers –Made ups (Linen) –Plaids –Semi finished artificial grass carpet • Textile –Baby wear –Blanket –Carpets –Duvet cover –Socks (Lady, Men) –Jeans –Thermal suit –Egyptian cotton CVC white bleached fabric –Burmuda short – stock lot buy –Shopping Bag –Shopping Basket –Shopping Trolley –Sound Ball –Stones and Marble –Wicker Basket –Stand –Microsign –Baking tray –Plastic trays –Christmas decoration –Deko Spring –Door Sign –Double loop hook –Loop Hook –Magnet –Metal floorstand –Dump bin –Wooden crate –Podium – Fruit liner –Cosmetic display • Goods not for resale －Acrylic Menu Holder －Black hook －Cardboard display －Ceramic products (cup Teapot, Plates) －Counter unit －PVC pocket －Poster stand －Roller scroll －Wire Shelving －Ice cream scoop –Sonic Toothbrush –Tooth Brush –Tooth Floss –Toothpick –Elastic enhanced wrist support –Elastic knee support (4 ways) –Powder free examination glove –Adjustable Medical Chair –Fish Oil –Hand Soap –Hot Water Jar –Moisturizer –Crutch –Ankle support –Neoprene knee support –Electric toothbrush –Deluxe functional lumbar support –Manual toothbrush with blister • Healthcare –Bath Gel –Body care wet wipes –Conditioner –Soft pad elbow brace –Elastic wrist brace –Elastic elbow support –Neoprene waist belt –Elastic ankle support –Knee support –Neoprene ankle brace –Shampoo –Household wet wipes –Humidifier –Luminaries –Misting Lamp –Plastic scoop –Dishwashing brush –Energy saving lamp • Household –Air freshener –Aroma diffuser –Battery Alkaline –Tray –Cloth pegs –Clothes line –Thermos pot –Vase –Wicker basket –Fridge magnet –Tong –Sardines in tomato sauce –Swordfish steak –Tuna steak –Vannamei –Whole Clean Octopus –Red Chilli –Tomatoes –Canned Pineapple –Nut (Peanuts and Cashew) –Pangasius –Whole Clean Squid –Broth Cubes –Wet Noodle/Sauce in Pouch –Noodle/Pasta Cup • Food –Baby Corn –Baby Cucumber –Block of White Sesame Candy –Canned Papaya –Pickled Cherry –High Chair –Toys –Cloud travel cot –Color Book –Diapers –wipes • Baby products –Bottle Sterilizer –Model car –Folding booster •Furniture −Steel Patio Furniture −Rattan Patio Furniture −Outdoor furniture –Vanity –Chair –Wooden furniture －Wicker furniture －Compactus －Office chair • Shoes –Vulcanized shoes –Children EVA sandals –Casual shoes –Rain boots –Surf – lady –UGG boots –GUM boot –Hiking boot –Sauna slipper –Doble pulgger –Surf – man －Outdoor hikers －Children boots －Snow boots －Children beach sandals –Sandwich bag –Soft Tissue Paper –Cardboard Binder –Seafood tray –Trash bag –Touch screen –Tent –iPad stand –Twisted pearl necklace –Bag –Crab pot –PE tarpaulin –Silver drop necklace –Car mat –LED candle –Paper Cup –Plastic Bags –PS Cup –Cup holder –Snap frame –White board markers and clips –Opera house –Black hand bag –Perfume pump –Brass bell with ropes –Shopping basket –Printing postcard, booklets.. –Shoe bag –Kids Bike in aluminium • Consumables –Container bin bag –Deep freezer bag –Book divider –Light box –Light box difital hand tally counter –Yogo mat –Battery –Winter scarf –Sear cover –Satin Wrap –Fixture –Plastic box –Cord bag –Flat bag
- 15. Laboratory items Packaging • Consumables –Beakers –Brown glass bottles –Caps bouffant –Conical flask –Corundum crucibles –Coverall –Count Tact Box –Disposable centrifuge tubes –Disposable latex gloves –Disposable nitrile gloves –Disposable plastic dropper –Disposable sterile masks –Disposable syringes –Drip tube –Graduated cylinders –Halfline measuring cups –Hollow glass stopper –Jerricans –Mechanical stopwatches –Mercury thermometer –Micro plates –Paper wiper –Petri dishes –Pipette tips –Plugs –PTFE magnetic stirring bar kit –Shoe Cover –Stainless steel medicine spoons –Testtube brush –Two neck flasks –VIDAS plastic Barrett –VIDAS plastic container –Wash bottles –Wide mouth plastic bottles –Wrist cuff –Tongue depressor –Swab –Irradiation label –Extensive pH indicator paper –Funnels –Gloves –Tongue depressor –Tubes –Ear washing bulb • Equipement –Walk in Fume hood –Wide Fume hood –Racks –Autoclave –Sealing machine –Precise peristaltic pump –Haier freezer for pharmaceutical industry –Water heater –Laminar flow cabinet –Freeze dryer –Stainless steel chair –Marble table for lab –Steel shelf –Cabinet –Vortex mixer • Plastic –Bread bag –CD Box –Film –Freshness box –Innerfoil –Intermediate Bulk Containers –Multilayered and Coextruded Films –Multilayered and Coextruded Plastic Films –Plastic Pallets –Plastic box –Hangsell –Thermal sealable cellophane –Wine Bottle Capsule –LDPE foam –Plastic bags –Plastic bubble wrap –U shape edge protector –Plastic rigid bottles, caps –Plastic rigid tubes –Carton box handle –Woven Plastic Sacks –Shopping bag –Garment bag –Cardboard bin with plastic tray –Strawberry container –Adidas tray –Brochure holder –Menu holder –Printing Film on Reel for Food Industry –Plastic rigid jars • Paper –Carton for Food Industry –Chocolate Boxes –Corrugated Packaging –Cardboard box 7 layers –Labels for electronic devices – Lables and print –Hamburger box –Hot Chip Box/Hot beverage cup –Multilayered Paper Sacks –Filter paper • Wood –Wine Bottle Cork Stopper –Wine Boxes –Wooden biscuits box –Lumber –Fasteners –Stainless steel box • Metal –Beer kegs －Tin Boxes Construction Materials MRO Raw Materials Production Equipment - Cupper - Can bodymaker - Washer - Decorator - Pin Oven - Sprayer - Necker - Empty can palletizer - Hydraulic Press machine - Shell press - Conversion system - Liner - Conveyer - Dryer - Shell balancer - Auto bagger - Vessels - Screen printing equipment - Inverter - Agitator - Pipe line - Rotary dryer -Round seamless steel bar -Cathode Bar -Activated Carbon -Silicon metal -Silicon metal HP -Steel wire cordage -Steel wire -Potassuim Amyl Xanthate -Sodium sulfide -Sodium chlorate -Potassium permanganate -Aluminum fluoride -Benzoin Gum -Ammonium sulfate –Haz Mat Shoe Boot –PVC industrial gloves –Nitrile industrial gloves –Safety glasses –Coverall –Protective glove –Welding Helmet –Headband –Tear away mesh –Beach hats –Cooling bandanas –Boot steals –Sunscreen Lotion –Earplug –Anti fatigue Mat –Work wear –Cool Cap –Baseball Bump Cap –Protective Clothing –Duct tape –Helmet Lens –Respirator –Protective Eyewear –Cut resistant glove -Wire Mesh - Aluminum laminate - Fiberglass tissue - Tack strip - Concrete Accessory -Agriculture Product -Metal Lath -Wood flooring -Organic fiber -Zamak handle -Wire rods -Steel Wire -Cable Ladder - Plywood - MDF (medium density fiberboard) - PTB (Particle board) - Nail - Moulding -Laminate flooring -Drawer side -ABS handle with aluminum finishing -Plywood -Steel -Cable Channel -Resin Basin -Deformed steel rebar in coil & Straight length -Southern yellow pine -DWI Aluminum Can Raw Materials: inks, Ultra premium® exterior paint, Basecoat, Premium spray paint, Sealant compound -T6 6060 Aluminum extruded profiles -Steel Angle -Cable Tray • Glass –Alcohol bottles –Beverage bottles –Food Jars –Pharmaceutical bottles & vials –Cosmetic bottles –Wine bottle and outer carton
- 16. Industrial items –PVOH (Polyvinyle Alcohol)Fully hydrolysed –DINP di-isononyl phthalate • Industrial Plastic –PVB film for automotive glass –PVB film for Construction, building glassPVB resin for PVB film manufacturing • Tools –Hand saw –Scrapers –Steel Wire brush –Tool Case –Utility knife –Wall brush –Tapes –Staples • Supporting range –DIN Rail –Perforated strips –S Hooks –Steel chains –Suspension Hooks –Threaded rod • Grounding range –Brass connector –Cloverleaf rod closed clamp –Cloverleaf rod flat clamp –Connecting bolt –Cross shape rod with bolt –Derivation connector –Earthing clamp –Isolation bar –Round rod closed clamp –Round rod flat clamp –Striking head –Threaded copper round rod –Cable terminal –Cable tie –Cable attachment • Connecting range –Christa’l terminal –Heat Sink –Low current connectors –Peltier element –Power cord –Terminal for lamps –Terminal strip black Do it Yourself items • Electrical –AWG wire –Cable sleeve –PCBA –EMT straps / Couplings –Electric racking –Electric switches –Electric protection –Electric cable –Electric lighting –Electric ground rod –Electric general －Plastic Injection: Wheel joint for Baby trolley, ABS and PP , Luggage wheels, Coffee Machine parts, winddeflector, front beam, Black hook, Curved shelf, Plastic number, Rota vials, HIV vials, FOB vials, Fasteners & Springs • Processed Technologies –Castings: exhaust, In queue product parts, Axle Housing Assembly, Coffee Machine parts; Hollow Steel Structure; Steel structure for solar panel; Counter weight filler bit, Meat mincer, Heating block, Die casting assy axle, insert, Cast PU components, Cast AI components –Extrusion: Aluminum extrusion parts, Baby trolley parts, Alu-alloy part , Data strip, Railshaped ruler –Metal Cutting and Melding: Hollow steel structure, Steel structures for solar panel –Stampings: Bread Pans for Automated Ovens, Steel Containers, Steel Containers Coffee Jug, In queue product parts, Industrial Boiler Components, Lamp armature, Stainless steel display tower, glass reinforcement, spring wind deflector, Safety bar -Forging Lower tube sheet, Gears, Shaft Axle, Custom hot rolled steel profiles –Hot Rolled Wire –Mud Stay –Plastic Bread Trays –Stainless Steel products –Tractor –U bolts –UTube –Water tank –Ductile Iron Pipe and fittings –Car window channel –Wire fence –Carcass Light Box –Electric and gasoline generator –Solor motor –Invertor –Brass roller buckle –Steel basic frame –Solenoid –Speaker –Transformer –Filter –Electro-magnets –Pump –Ni Magnet –Ball Valve –Surge Protector • Finished products –Bread tins –Bus bumpers –Car batteries –Coffee Machine –Cutting knives –Electric aerosol dispenser –Fasteners –Fifth Wheel –Flame detector –Tungsten wire –Grinding media –Magnet –Double loop hook –Wind Turbine Permanent Magnet Generator/Alternator –Brass lock –Twist lock with fixed hinge –Engraved padlock –Full zipper puller –Brass rivet –Zinc alloy hook –Plumbing –Membrane keyboard –Gauge –Neck Printing Machine –Metal Bracket –Handbag/Luggage lock&puller –Composite tube –Motor assembly –Universal AC motor for Food Processing Machine –Sheet metal – ATB reader –Machining – ATB reader –Turned parts – ATB reader –Conduits –Battery charger –Battery –Brass padlock with two keys –Twistlock –Padlock –Buzzer –Electric motor –Electric motor for water filtration system and GE appliance –Flanges & Fittings –HVAC –Printed circuit board –Aluminum sheets –Fin Stock real • Road Transportation • Travel agencies • Airlines • Warehousing • Creative agencies • Legal Service Services
- 17. Chemicals and Food Ingredients –Acetonitrile 99.9+% 0.782g/mL (Methyl cyanide) for HPLC gradient analysis CertiFied HPLC –Acetone (Propanone) –Metanol grad. Hplc –Methylene Chloride Optima –Dichloromethane 99+% (GLC) stabilised with 0.005% amylene SpeciFied –Heptan-n 99,5% pa –Ethyl acetate cert acs/hplc –Acetonitril –"Blood Agar" –Tetrahydrofuran 99.5+% (GLC) stabilised with 0.025% 2,6-di-tert- butyl-p-cresol –iso-Hexane contains < 5% n- hexane for HPLC CertiFied –Hexane optima grade –Hexane cert acs/hplc –Xylene –Tryptic Soy Broth • Pharmaceutical –Water 0.1% tfa –Dodecyl Sulfate Sodium –Ethanol 99.8+% (GLC) 0.7897g/mL absolute (Ethyl alcohol) for analysis CertiFied AR –Dimetylsulfoxid –Human Serum –Horse Serum –Sulfuric acid –Brucite –Turpentine- Myrcene –Turpentine- Citronellene –Turpentine-Alpha-Pinene –Turpentine- Beta-Pinene • Industry –Calcined bauxite –Vitamin A 1000 IU Retinol –Vitamin B1 –Vitamin B12 –Vitamin B2 –Vitamin B3 –Vitamin B5 –Vitamin B6 –Vitamin B9 –Vitamin C Acid Ascorbic Dried –Vitamin C Stabilised 35% –Sorbitol esters –Soya Protein –Tartaric acid –Taurine –Tetra Potassium Pyrophosphate (TKPP) –Tetra Sodium Pyrophosphate (TSPP) –Titanium dioxide (TiO2) –Tri calcium Phosphate –Trilon A92 (Chelating agent) –Trilon B (Chelating agent) –Vitamin A - All-trans-retinyl acetate –Glycine –L-cysteine –Lecithin –Liquid Caustic Soda –Milk –Mono calcium Phosphate –Phosphoric Acid (75%) FCC –Phosphoric Acid: 80%, –Potassium Sorbate –Propionic acid –Sodium Stearoyl lactylate –Sodium Tripolyphosphate (STPP) –Sorbic acid –Vitamin E (VE) • Food and Animal Nutrition –80% Sulphur DF and 20% Mancozeb WP –Benzoic acid –C8 10L Fatty Acid –Calcium Propionate –Caustic Potash –Caustic Potash (Liquid) –Caustic Soda Pearl –Citric acid –Di calcium Phosphate –Dicalcium Phosphate (DCP) –Glycerine (Palm/Coconut derived) –Xylose –Sodium Phosphatemonobasic –Sodium Thiocyanate –Sucrose –Tartrazine Acidyellow 23 –Thimerosal –TMB . 2HCl . 1H2O –Trans-Cinnamaldehyde –Trishydroxymethylamino methane –Triton X-100 –Urea HydrogenPeroxide –Variquat 56 –Zwittergent 3-14 –Mops(morphol.Prop.Sulf onic Acid) –White/vory Beeswax –Antimony Oxide –RBD LLP –Poly ethylene Glycol (Macrogol 8000) –Polysorbate 20 –Potassium dihydrogenphosphate –SERMUL EN 9 –Sodium Hydroxide –Sodium Carbonate –Sodium ChlorideType A –Sodium citratedihydrate –Sodium Hydrogen Carbonate –Sodium Iodacetate –Sodium phophatemonobasic monohydrate –Sodium phosphate dibasic dihydrate –Goat anti rabbit antibody & goat anti mouse antibody –Coconut Oil –Emdex –Eryoglaucine –Erythrosin B –Ethanol 96% denatured (5%Methanol) –Ethanol Type A (96% v/v) –Gentamicin sulfate salt –Glycine –GuanidineThiocyanate –HEPES free acidULTROL Grade –Horse Radiche Peroxidase Grade II –Hydrochloricacid 37% –Iron(III) chloride Hexahydrate –Kathon CG Biocide –Linalool –Bile salts –Albumin prepared from Human plasma • Biological –2-Chloroacetamide –2-Chloro-N- (hydroxymethyl)acetamide –alpha,alpha-TrehaloseDihydrate –Amaranth –BromocresolPurple –Calcium Chloride dihydrate –Citric acid Monohydrate –CTAB –Dextran Blue –Dextran T40 –Disodium EDTA dihydrate reagent (ACS) –DL-Dithiothreitol –NASBA Lysis buffer 500 ML –Mannitol reagent (ACS) –Sheep blood –Organic Stearic Acid Promotional items • Gifts –Electronic gadget: Photo frame, USB Key, Flashlight…. –Premium:Lighter, key ring, money clip… –Umbrella and parasols –Wine related gifts: cooler wine bottle ring, bottle opener, parkling cork, wine standee, wine bucket, Vacuum stopper… –Writing instruments: Notebook, ball pens… –Plastic diffuser and LED • Display –Cardboard display –Light box –Metal display –Plastic display • Glasses –Bar accessories: Decanter, Jug, Water carafe, Ice bucket… –Glasses: Cognac glasses, Wine glasses, Whisky glasses, Cocktail glasses, Champaign glasses… • Luggage and Textile –Backpack –Bags –Luggage –Textile: Uniform, Apron, Towel set, Jacket • Printing & Boxes –Brochures –Christmas cards –Gift boxes –Shopping bag –High temperature resistant spray paint
- 18. © 2018 Dragon Sourcing. All rights reserved. Agenda 1. Our offerings and approach 2. Our clients and category expertise 3. Client case study 4. Successful Sourcing in China
- 19. P1 P2 P2 P3 P4 100 km P4 Liuzhou = Client Plant = Outsourcing warehouse = Seaport = River-port = Railway station P1 P2 P2 P3 P4 100 km P4 Liuzhou = Client Plant = Outsourcing warehouse = Seaport = River-port = Railway station 19 Client Profile • The client had 3 JV Companies owning 4 plants in Southern China all located within 250 km of each other. • The logistics spend of the JV Companies represented 70M RMB per annum © 2018 Dragon Sourcing. All rights reserved.
- 20. © 2018 Dragon Sourcing. All rights reserved. 20 the project scope included 28.2 M RMB, 90% of which on road cargo transportation Factory Warehouse Port Load/unloading (0.2 M RMB) Price based on Labor cost plus a management fee – service is provided by warehouse, transportation company or by a 3rd party providing contract labor Warehousing (2.7 M RMB) Scope included 275 K Ton of warehousing capacity clustered around 4 geographic locations. Transportation (25.3 M RMB) Scope included 45 routes, with most of the routes delivering to to one destination and less than 40km
- 21. © 2018 Dragon Sourcing. All rights reserved. 21 Context and objectives Dragon Sourcing’s objective • Introduce world class supply chain management and professional purchasing processes into a formally state- run company. • Initiate purchasing synergies and supplier base rationalization across 4 plants, improve supplier service levels and achieve meaningful savings. • Support client new central Purchasing team by having them work jointly with DS. Situation within Client • Client has recently created a Central purchasing office • Little to no synergies in terms of sourcing across 4 plants. • No clear consolidated understanding of the spend. • Weak supplier qualification and procurement management capabilities. Project Context • The Client was facing a large increases transportation cost (Min 6.8%) cost because of 3 factors 1) Increased Oil Prices – The Cost of Diesel fuel increased by 17% since previous contract 2) New labor regulations have increased labor cost 3) Inflation in China – Government Inflation target is 4.8% for 2008
- 22. © 2018 Dragon Sourcing. All rights reserved. 22 The spend was split across very many suppliers Plant 1 & Plant 2 Plant 4Plant 3 # of suppliers 2007/08 10 4 4 6 1 1 3 1 1 0 2 4 6 8 10 12 14 16 18 20 JV #1 (Plant 1&2) JV #2 (Plant 3) JV #3 (Plant 4) Plant Numberofsuppliers Warehouse Transportation Load & Unload 19 6 6
- 23. © 2018 Dragon Sourcing. All rights reserved. 23 The transportation spend was split across 8 suppliers with no common suppliers between factories JV #1 (Plant 1 & 2) JV #3 (Plant 4)JV #2 (Plant 3) 2006/07 plant spend vs. supplier 8.8 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 JV #1 Plant 1 & 2 JV #2 Plant 3 10.9 5.7 11000 JV #3 Plant 4 MRMB Supplier 8Supplier 6 Supplier 9Supplier 7 Supplier 1 Supplier 3Supplier 2 Supplier 4 Supplier 5
- 24. © 2018 Dragon Sourcing. All rights reserved. 24 The No1 destination accounted for 61% of the total spend in value Total QTY: 546 k tons Total spend: 28.2 M RMB Destination 1 (12M RMB, 61%) 15% 6% 5% Destination 1 (12M RMB, 61%) 15% 6% 5% Destination 1 (224 Ton, 41%) 13% 13% 6% 6% 7% Destination 1 (224 Ton, 41%) 13% 13% 6% 6% 7% (17.2 M RMB, 61%)
- 25. © 2018 Dragon Sourcing. All rights reserved. 25 On transportation, we found significant price variability for destinations within the same distance range suggesting strong potential for price reduction through fact based negotiations techniques Price variation analysis 3.0 3.0 8.4 2.2 1.1 0.9 2.5 0.8 0.8 0.7 0.9 0.5 0.5 0.5 0.5 0.4 0.5 0.5 0.3 0.5 0.5 0.5 0.5 0.9 0.9 0.5 0.5 0.5 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.3 0.2 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Price/Ton/Km 0km-10km 10km-20km 20km-30km 40km-50km 50km-90km 90km-120km 500km- 530km
- 26. © 2018 Dragon Sourcing. All rights reserved. 26 On warehouses, with the exception of short term storage and non-enclosed storage, the current prices paid by client were aligned around RMB 0.2 / day / ton. Warehousing & load/unload & transportation 0.00 0.05 0.10 0.15 0.20 0.25 0.30 JV #1 (Plant 1 & 2) (10 suppliers) JV #2 (Plant 3) (4 suppliers) JV #3 (Plant 4) (4 suppliers) Type of supplier Warehousing Warehousing & load/unload Warehouse Price RMB/day/Ton 0.13 0.15 0.20 0.20 0.20 0.20 0.2 0.23 0.23 0.23 0.28 0.2 0.2 0.23 0.24 0.28 0.2 0.2 0.2 0.23 Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 Supplier 9 Supplier 10 Supplier 11 Supplier 1 Supplier 2 Supplier 3 Supplier 4i Supplier 5 Supplier 1 Supplier 2 Supplier 3 Supplier 4
- 27. © 2018 Dragon Sourcing. All rights reserved. 27 Hence, the highest leverage we had was to rationalise the supply base in order to extract better pricing conditions • Client had 10 warehouse suppliers with a total stock capacity of 670 K Ton • Client was actually using 25 warehouses with no long term contracts, clustered around 4 geographic locations. • However, the client’s needs were for 275 K Ton of warehousing capacity • Hence, we focused our strategy on reducing the supplier base in order to achieve better price points and ensure higher quality and consistency of service
- 28. © 2018 Dragon Sourcing. All rights reserved. 28 On transportation, DS invited a total of 46 suppliers; negotiated with 6 and finally awarded the business to 3 46 suppliers RFI/RFQ responded Long list of suppliers Research to identify potential suppliers RFI/RFQ process Bidding process 40 6 40 6 12 5 RFI/RFQ sent 5 1 2 Attended the bidding Selected 1 Many potential suppliers were eliminated because of strong internal resistance to working with new suppliers
- 29. © 2018 Dragon Sourcing. All rights reserved. 29 For warehousing services, we negotiated with all current suppliers and finally rationalised the supplier base to 3 Research to identify potential suppliers RFI/RFQ process Bidding process RFI/RFQ responded Long list of suppliers RFI/RFQ sent Attended the bidding Selected 10 suppliers 9 1 3 9 1 9 1 9 1
- 30. © 2018 Dragon Sourcing. All rights reserved. 30 At the end of the negotiation, we evaluated 3 different scenarios Scenarios Pros Cons Benefits $ Choose 3 Suppliers Consolidated supply base & large savings Small risk because of new supplier 2.18 M RMB Savings Choose 5 Current Suppliers Low Risk No Savings & still working with some weak suppliers 540 K RMB Spend Increase Stay with Current Situation No risk No Savings 760 K RMB Spend Increase Scenarios Pros Cons Benefits $ Choose 3 Suppliers Simplified logistics and inventory management Small risk to find storage capacity if production is much higher than forecast 140 K RMB Savings Choose 5 Current Suppliers Low Risk No savings & reduced location choices 53 K RMB Spend Increase Stay with Current Situation No Risk No Savings & Complex Supplier Management 270 K RMB Spend Increase Transportation Warehousing
- 31. © 2018 Dragon Sourcing. All rights reserved. 31 Intial Total Spend vs Achieved Total Spend 2.70 2.56 1.63 1.55 25.33 23.15 5.68 4.98 0.03 0.030.20 0.22 0.12 0.13 0.060.05 0.360.380.650.69 10.02 8.77 8.15 10.88 0 5 10 15 20 25 30 Initial Total Spend Achieved Total Spend JV #1(Plant 1&2) Initial Total Spend JV #1 (Plant 1&2) Achieved Total Spend JV #2 (Plant 3) Initial Total Spend JV #2 (Plant #3) Achieved Total Spend JV #3 (Plant 4) Initial Total Spend JV #3 (Plant 4) Achieved Total Spend Spend(MRMB) Load/Unload Warehouse Transportation Savings of each JV Company JV #1 (Plant 1 &2) Savings: 930 K RMB / 7.3 % JV #2 (Plant 3) Savings: 560 K RMB / 6.8 % JV #3 (Plant 4) Savings: 720 M RMB / 11.8 % Finally, the client opted for the scenario with highest savings (2.3 M RMB or 8.1%) 28.23 25.23 12.63 11.70 9.51 8.86 6.09 5.37 Transportation Saving 2.18 M RMB / 8.6% Warehouse Saving 0.14 M RMB / 5.1% Clients Total Savings Savings: 2.3 M RMB / 8.1 %
- 32. © 2018 Dragon Sourcing. All rights reserved. Successful Sourcing in China • Adopt strategic approach vs. tactical approach – No leverage back mentality – Follow through with real orders vs. benchmarking only • Sell your « buy » to the Chinese suppliers – High quality suppliers are in high demand – Build credibility in your sourcing program with the suppliers • Enterprise wide approach with top management support vs. Procurement only – Internal change management is often the toughest challenge – Involve Marketing, Quality, Engineering, Manufacturing from the beginning (mix function of categories) • Dedicated professionals vs. User/buyer model – Don’t try using local buyers to manage « export » business • Start with high potential/low risk categories on a pilot basis to generate rapid success – Rigorous analysis of spend portfolio to identify best candidates • In Sourcing cycle per se, use same professional process rigor as in the West – Don’t believe that it’s only a « relationship » game
- 33. © 2018 Dragon Sourcing. All rights reserved. The following cost framework helps explain, differences in procurement philosophies between Japan and the West Cost Driver Framework Structural Inherent Realized • Cost driven by the selection of the supply base e.g.: – Factor cost – Scale effect • Costs driven by design decisions and by the selection of the manufacturing process • Costs driven by the on- going operational performance of the supplier Castings Example Average cost/kilo by country Mould yield ratio Operational metrics 42,5 44,5 46,5 48,5 50,5 52,5 54,5 56,5 58,5 60,5 C zech R epublic Poland H ungary C anada France U nited Kingdom Sw eden Finland U nited States N etherlands Italy Belgium D enm arkAustralia JapanSw itzerlandG erm any Averagecostperkg(measure/kg) The Client average cost 17% 15% 14% 6% 6% 2% 2% 1% 1% 1% 0% 0% 1% 2% 2% 8% 10% 55 Change of: • Labor cost • Energy cost • Transportation cost • Interest rates 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 0 1000 2000 3000 4000 5000 6000 7000 The weight of the article (grams) Themouldyieldratio Supp. C, Engine Bracket Supp. C, Engine Bracket Supp. A, Camshaft housing Supp. B, Oilsump Averagecostperkg(measure/kg) The Client average cost 42,5 44,5 46,5 48,5 50,5 52,5 54,5 56,5 Improved casting labor productivity Full utilization Reduced burnoff Reduced scrap rate Reduced mould yield ratio 8,9% 9,3% 10,1% 10,6% 12,8% 55 Averagecostperkg(measure/kg) The Client average cost 42,5 44,5 46,5 48,5 50,5 52,5 54,5 56,5 Improved casting labor productivity Full utilization Reduced burnoff Reduced scrap rate Reduced mould yield ratio 8,9% 9,3% 10,1% 10,6% 12,8% 55
- 34. © 2018 Dragon Sourcing. All rights reserved. Potential China Model Western Japan Competitive pricing Relationshipmanagement Japanese Model (Keiretsu) Western Model Sourcing Model Matrix China’s ambition in procurement can be and must be to leapfrog the West and Japan