Dragon Sourcing case study Supporting New Factory launch

Dragon Sourcing case study Supporting New Factory launch

Shanghai, Aug 2015

Dragon Sourcing - 龙源 Your Tailored Sourcing Approach to LCC Sourcing

22

Introduction

client – one of the biggest chocolate producer in the world with +10 billion EUR in revenues

Project ObjectivesDragon Sourcing was selected to carry sourcing services to support the launch of a new factory in China by selecting world class competitive suppliers in China to cover all needs of the new factory

© 2015 Dragon Sourcing. All rights reserved.

33

The programme was managed in 3 stages

All other Purchasing requirements •Equipments/instruments•MRO •Service•Others

Capex Sourcing •Pipelines•Utilities•Automation•Tanks and silos•Part of production line•Packaging machine•IT

Pilot projects• Engineering service• Construction service

May 2014 – now

August 2013July 2013


Agenda

© 2015 Dragon Sourcing. All rights reserved. 4

1. Introduction

2. Projects – July 2013 to May 2014

3. Projects – May 2014 to Sept 2015


Context

Objectives:• Focused on below capex 9 categories to build a new plant in China,

Pipelines Tanks and Silos Utilities Part of a Production Line Packaging MachineEngineering serviceConstruction serviceAutomation/InstallationIT

Geographical scope:• China

Deliverables: • RFI / RFQ and Score Card• Supplier profiles• Audit reports

5

Gansu

JiangxiZhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Qinghai

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

ShanxiShandong

Sichuan

Yunan

Guizhou

Henan

Jilin

LiaoningHebei

Guangdong

Gansu

SHANGHAI

TAIWAN

Heilongjiang

Location of identified suppliersLocation of client’s plant


Process for New Plant Building

9 important categories in the process for the new plant building

DS Scouting Out of DS scope

New plant

Location selection

6.EngineeringService(design)

Trial production Formal productionCommission

Feasibility report

ConstructionManagement

Procurement

7.Construction service

3. Utilities

Process area

Production area

Packaging area

Electrical parts

8. Automation

Mechanical parts

5.Packaging machine

1. Pipelines

2. Tanks and Silos4. Part of production lineOthers

9. IT

• 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

Dragon Sourcing Approach

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

Key

act

iviti

es



• Steering Committees weekly (conference call) to review overall progress on all categories

• Categories follow-up meetings on an ad-hoc basis to review category issues

• Meeting minutes record main decisions, planned actions and project status

Dragon SourcingClient

DS CEO

DS Account Manager

CPO

Strategic SourcingManager

Buyer

Buyer

Buyer

Buyer

Buying Engineer

Buying Engineer

Buying Analyst

The 9 categories sourcing is managed via a series of frequent conference call meetings

Buying Analyst

Buying AnalystBuyer

9 categories-5 categories for equipments -1. Pipelines, 2. Tanks&Silos


1. Pipelines 2. Tanks and Silos

9 categories-5 categories for equipments -3. Utilities-electrical parts and mechanical parts


Electrical parts-Switchgear &Switchboard Electrical parts-Transformer Electrical parts-UPS Electrical parts- Diesel Generator

Mechanical parts-AHU Mechanical parts-Chiller Mechanical parts-Cooling Tower Mechanical parts-Air compressor

9 categories-5 categories for equipments -4. Part of production line-equipments


Equipments-Mixer Equipments-Refining System Equipments-Tempering Machine Equipments-Roaster

Equipments-Air Humidifier Equipments-Mills Equipments-Chocolate Pump Equipments-Pumps and Valves

9 categories-5 categories for equipments -4. Part of production line-lines


Lines-Moulding line Lines-easy line

9 categories-5 categories for equipments -5. Packaging Machine


Flow pack Wrappers Thermoforming Machine Tray Formers Cartoner/Case Packing Shrinker machine

Robot & Tool Checkweigher Ink Jet Laser Marker Hot Transfer

9 categories - 4 services categories -6. Engineering service, 7. Construction service, 8. Automation, 9. IT


6. Engineering service 7. Construction service 8. Automation 9. IT

-Working scope for engineering company Detailed engineering servicesDetailed designPermitting serviceEngineering timing & Permitting scheduleManhours and fee for engineering If good enough the engineering company can also be the management companyClose to client‘s factoryRecommend for piling supplierGood English skill

-Working scope for construction company Construction servicesPermitting serviceSupport for tender for construction company and supervision for realisation phaseConstructoin timing & Permitting scheduleManhours and fee for constructionList the work for sub-contractEnough licenseClose to client‘s factory and can do construction work in Xiaoshan, Hangzhou city (with license)Good English skill

-Working scope for construction company No matter integrator or producer, supplier must have the capability to program software and integrate hardware for different brands, and also cabling workAutomatioin including 4 areas: utilities automation, process automation, production automatoin and packaging automationSupplier has the design capablity fo the packaigng partsGood english skillHardware will be used as below:

• Automation control system (PLC)• Operator control and monitoring

System (HMI)• Identification system• Industrial communication• Industrial control• PC based automation• Sensor system• Vision system

-Working scope for construction company Ferrero would like to identify 2 types of suppliers for the IT category:

1.One is the equipment supplier who produce or distribute the equipments in the scope;

2.The other is the GC supplier who don’t produce equipments but can provide: installation of component

(customized or not)cables and racks installationWiFi installation (antenna, ..)Services (like setup of active

component)Datacenter Setup

1742 suppliers initially identified leading to 5 Chinese suppliers being selected in addition to global European suppliers


CategoryNo. of

suppliers identified

No. of suppliers go to pre-screening

No. of suppliers RFI

sentNo. of suppliers

RFI receivedNo. of

suppliers audited

No of suppliers selected for RFP No of suppliers final selected

Pipelines 284 90 36 21 9 9 0 (client decided to use 1 engineering company

to do the project management and source products from suppliers selected by DS)

Tanks and Silos 83 51 39 22 5 5

Utilities-electrical 223 87 65 47 10 4 0 (As client decided to use global European supplier for all electrical utilities)

Utilities-mechanical 431 104 104 47 12 6 1 for HVAC

1 for Chiller

Part of a Production Line 394 208 158 77 27 11 0 (Chinese suppliers not capable of matching

European requirements)Packaging Machine 69 69 50 34 12 4 0 (Chinese suppliers not capable of matching

European requirements)Engineering service 25 25 15 14 6 6 1

Construction service 34 34 9 9 8 8 1

Automation 72 40 18 11 11 4 0 (Chinese suppliers not capable of matching European requirements)

IT 127 54 54 37 6 4 1

Total 1742 762 548 319 106 61 5

Agenda


1. Introduction

2. Projects – July 2013 to May 2014

3. Projects – May 2014 to Sept 2015

Total projects Completedprojects

On goingprojects

On holdprojects

0

10

20

30

40

50

60

70

80

90

100

110

74

39

27

8

14

8

4

2

8

5

2

1

4

3

1

0

100

55

34

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Project Overview

Others

Instrument

Service

MRO

1717

From May 2014 to sept 2015, more than a 100 sourcing projects were carried out


CategoryTotal projects Completed

projectsOn going projects

On hold projects

No. % No. % No. % No. %

MRO 74 74% 39 71% 27 79% 8 73%

Service 14 14% 8 15% 4 12% 2 18%

Instrument 8 8% 5 9% 2 6% 1 9%

Others 4 4% 3 5% 1 3% 0 0%

Total 100 100% 55 100% 34 100% 11 100%

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The work covered all of the services and MRO requirements for the plant

MROUniform sourcing CompletedBox sourcing CompletedDrum sourcing CompletedAir shower/air curtain CompletedStationary-staples CompletedSmall tool supplier sourcing CompletedWashing machine CompletedPlastic and wooden pallet CompletedLED lighting CompletedDistributor mechanical material CompletedWorkshop list CompletedMetal label CompletedDust collector CompletedDry Ice Blasting CompletedFilters bags inlet/outlet sourcing CompletedLocker CompletedPb ball CompletedDiesel oil CompletedBoiler CompletedDesk for QA CompletedLabel printer CompletedGasket & Oring CompletedProtection products CompletedNameplate CompletedCleaner CompletedOil supplier sourcing CompletedAlcohol supplier sourcing CompletedVacuum cleaner CompletedChairs Completedo3 generator CompletedTrash bag CompletedAluminum wire mesh Completed

LegendCompletedOn goingOn hold

MROWelding kit Completed

Safety video Completed

Meters Completed

Canteen POS system Completed

Hazelnuts container Completed

Sparking water Completed

Dozier equipment Completed

Metal label Completed

Stainless table On going

Stairs On going

Container On going

Fridge On going

Aluminum platform On going

Max printer label/ribbon On going

lock system On going

Toilet paper On going

Acoustic panels On going

Doors On going

Deodorizing tower cover On going

Medicine On going

Signage On goingHydrogen concentratoin detector and alarm system On going

Speed sensor and camera On going

Sensory cup & spoon On goingMicro media On goingSieve On goingGlasses box On goingPatrolling rod On goingCondenser shelf On goingAdhesive tape On going

© 2015 Dragon Sourcing. All rights reserved

MRODecoration On goingClock On goingVideo system for meeting room On goingWater shelf On goingPlatform for checkingproducts inside the trucks On hold

Carton press machine On holdLean lift sourcing On holdPallet turner On holdDeep cleaning system On holdVacuum machine for hazelnuts ton bag

On hold

Rubbish bin On holdCover for machinery: :Lexan On hold

ServiceCleaning and pest controlservice Completed

Security service CompletedIndustrial kitchen products CompletedHotel CompletedScouting for wastesupplier CompletedInternet & telephone CompletedEHS consultant company sourcing

Completed

Household waste CompletedPrinter service On goingOccupational HazardAssessment On going

Greenery On goingWaste Oil On goingDoctor service for Ferreroplant On hold

Civil maintenance service On hold

Instrument/EquipmentChocolate melting tank Completed

Vacuum machine forsampling Completed

Movable and fixedwrapping machine sourcing Completed

Roche cartoner Completed

Chocolate mould Completed

Lab instrument sourcing On going

tackle/crane for plastic film On goingVacuum machine forRoche On hold

OthersCongress or ExpoInvestigation Completed

Computer Completed

Sky tunnel/ skylightssystem Completed

Aluminum sheet On going

Dragon Sourcing case study Supporting New Factory launch

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