Client Case study
April 2010
Dragon Sourcing - 龙 源 Your Tailored Sourcing Approach to Asia
Agenda
A. Context and Products
B. Sourcing Strategy
C. Results & Conclusions
2© 2010 Dragon Sourcing. All rights reserved.
Context
• Major international fashion retailer– 1,900 stores in 35 countries (in Europe, Asia and United States)– 73,000 employees– USD 10 billion turnover in 2008
• Stores opening growing by 10-15 % per year
• Interested in identifying and qualifying new potential competitive suppliers in Vietnam, specialised in the manufacturing of shoes and garments (Blazers, suits, parkas, jackets, ladies fashion wear, jeans)
• Selected Dragon Sourcing as Procurement Service Provider responsible for managing the Vietnam supplier qualification process
3© 2010 Dragon Sourcing. All rights reserved.
Products included in the project scope were the following
GarmentsShoes
4© 2010 Dragon Sourcing. All rights reserved.
Agenda
A. Context and Products
B. Project Approach
C. Results & Conclusions
5© 2010 Dragon Sourcing. All rights reserved.
• 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 RFQ process with pre-qualified suppliers
• Analyse supplier responses and calculate fully delivered price (FOB price, logistics, import duties, ADT,..)
• Shortlist suppliers based on RFI/RFQ process
• Select 2-3 suppliers/product for sample development process
• Manage sample development process
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Finalise supplier selection
© 2010 Dragon Sourcing. All rights reserved.
Dragon Sourcing service offering covers the end-to-end sourcing process
Supplier Identification and pre-qualification Similar samples acquisition Supplier audits
Key
act
iviti
es
© 2010 Dragon Sourcing. All rights reserved.
Supplier Identification and pre-qualification Similar samples acquisition Supplier audits
Key
act
iviti
es
Dragon Sourcing service offering covers the end-to-end sourcing process
• 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 RFQ process with pre-qualified suppliers
• Analyse supplier responses and calculate fully delivered price (FOB price, logistics, import duties, ADT,..)
• Shortlist suppliers based on RFI/RFQ process
• Select 2-3 suppliers for sample development process
• Manage sample development process
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
The first step is to develop a comprehensive understanding of the product requirements
Product Name Ladies Coat Cutie
Picture
Annual Quantity (pcs) 40,000
Measurement Please refer to MEASUREMENT LIST V1357-1
Fabric technical data piggeline fabric, callipo fabric GPG08-2565, 55%wool+35%visc+10%poly Fully lined in T210 polyester DTM Polyester 100%
Color 09-090 black
Accessories
Hanger loop in self fabric, satin binding in contrast colour around halfmoon,
Plastic shiny buttons size 44lin soft shoulder pad hook and eye metall,
Halfmoon in self fabric
For more details Please see Development request
© 2010 Dragon Sourcing. All rights reserved.
Then a comprehensive database of potential suppliers is built
Activity Vietnam
Product category Blazers and suits Parkas and jackets
Ladies fashion wear
(light blouses & dresses)
Jeans"Vulcanized /
group" for ladies fashion shoes
"Injection group" for ladies fashion
shoes
Suppliers initially identified 220 171
RFI/RFQ sent-out 13 46 22 19 22 6
Suppliers intending to respond 8 19 8 10 11 6
RFI/RFQ declined/ discarded 5 27 14 9 11 0
RFI/RFQ received 8 19 8 10 11 6
Date issuing RFI/RFQ 4th Feb
Deadline for suppliers answers 19th March
© 2010 Dragon Sourcing. All rights reserved.
An RFI/RFQ process is administered to filter out the most capable suppliers
Product Name Quantity Gross weight percarton(in kg)
Total No.ofset/20'container
Total No.ofset/40'container
Product Size Sample Charge inUS$
EXW US$ price per set FOB US$ price perset
FOB port Delivery Time Payment Term
产品名 需求量 /毛重 箱(公斤) 20尺柜的装箱量 40尺柜的装箱量 产品尺寸 ( )样品费 美元 ( )出厂美元单价 一套FOB 美元单价(一套)
FOB港口 交货时间 付款条件
Set 1:
Set 2:
Set 3:
Logistics Information 物流信息
Set of 3 PPtrolley suitcasesPP聚丙烯手推旅行箱3件套
9000套(3件套)
Product Name Quantity Material Size Color Accessory Packaging Carton Size (L×W×H)
产品名 需求量 材料 尺寸 颜色 附件 包装 纸板箱尺寸Set 1:
Set 2:
Set 3:
9000套(3件套)
General Information 概述
Ladies fashion wear (light blouses & dresses)女装
Request For Information 征询单Confidential 保密
To 收件人:Email 电子邮件:Tel number 电话:Mobile 手提电话Fax number 传真:
SUPPLIER NAME 公司名称
Adress 地址- 街道City 城市Province 省Zip code 邮政编码Contact person 联系人Job title 头衔email 电子邮件Phone number 电话Fax number 传真Website 网址
Which year was your company founded?贵司是在哪一年成立的?Ownership所有权Capital in million RMB固定资产(百万人民币)What is the workfloor size (m²)?贵司工厂面积有多少平方米?How many employees do you have?贵司员工总数有多少?Do you have a good English speaker and writer in your factory?(Y/N)贵司是否有可用英语进行书面及口语交流的人员?(是/否)How many years have you been in the PP trolley suitcasebusiness?
PP贵司从事 拉杆旅行箱生产有多少年?Do you have an export license ?是否持有进出口许可证 ?
Europe USA Others% of turnover exported to出口占销售百分比
CONTACT DETAILS INFORMATION 联系方式
GENERAL INFORMATION 概况
DRAGON SOURCING 龙源有限公司上海代表处Rachel Yao 姚瑛莹
[email protected] - 6141 3974
021 - 6141 3966159 00 89 89 18
BUSINESS INFORMATION 公司规模
Contact detailinformation
Businessinformation
Logisticsinformation
Product and priceinformation
Ladies fashion wear
(light blouses & dresses)女装
© 2010 Dragon Sourcing. All rights reserved.11
Then all relevant information is collected to prepare FOB prices calculation
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Supplier 5
Supplier 6
Supplier 7
Supplier 8
Supplier
Lady fashion Shoes Ref 1
FOB unit price in USD
Mould cost Totalin K USD
Supplier 1 3.10 6,200 167
Supplier 2 3.70 3,500 198
Supplier 3 5.21 400 236
Supplier 4 5.54 2,240 278
Supplier 5 6.21 290 320
Supplier 6 6.24 3,100 365
Supplier 7 n/a n/a n/a
Supplier 8 n/a n/a n/.a
Current FOB price 3.84 N/A 137
© 2010 Dragon Sourcing. All rights reserved.
Finally, suppliers’ quotation are compared to target prices to identify those worth keeping in the process
Supplier 1 Supplier 3 Supplier 4 Supplier 5 Supplier 6Supplier 2
Lady fashion Shoes ref 1USD FOB price comparison
3.103.70
5.21 5.546.21 6.24
© 2010 Dragon Sourcing. All rights reserved.
Feasibility Analysis Similar samples acquisition Procurement Operations
Key
act
iviti
es
Dragon Sourcing service offering covers the end-to-end sourcing process
• 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 RFQ process with pre-qualified suppliers
• Analyse supplier responses and calculate fully delivered price (FOB price, logistics, import duties, ADT,..)
• Shortlist suppliers based on RFI/RFQ process
• Select 2-3 suppliers for sample development process
• Manage sample development process
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
A closer look on collected samples shows slight feature differences among different suppliers
Supplier NameProduct detailed description : Lady coat
Measurement Fabric technical data Colors Accessories
Current productPlease refer to MEASUREMENT LIST V1357-1
Piggeline fabric, Callipo fabric GPG08-2565,55%wool+35%visc+10%poly Fully lined in T210 polyester DTM Polyester 100%
Black
Hanger loop in self fabric, Satin binding in contrast color around halfmoon, Plastic shiny buttons size 44lin Soft shoulder pad Hook and eye metall
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Supplier 5
Supplier 6
The RFI/RFQ and “identical sample” process result in a short-list ofpotential new qualified suppliers
Qualification of suppliers through RFI/RFQ Analysis of offers and samples
Potential Supplier
1
Potential
Supplier 2
Potential Supplier
3
Potential
supplier 4
Price
Prod. 1 26.4 23.8 24.9 24.6
Prod. 2 36.1 33.8 34.9 33.7
Prod. 3 13.4 15.1 12.2 12.8
Prod. 4 40.2 38.1 41.3 38.4
Region Vietnam Vietnam Vietnam Vietnam
Turnover (M€) 6 14 8 19
Staff 350 700 430 880
Capabilities 100/day 120/day 75/day 140/day
Cooperation Good Good Average Good
Samples
Pre-qualified suppliers Potential new
qualified suppliers
Potential suppliers
RFI/RFQprocess Sampling
process
15© 2010 Dragon Sourcing. All rights reserved.
© 2010 Dragon Sourcing. All rights reserved.
Feasibility Analysis Supplier Selection and Contracting Supplier audits
Key
act
iviti
es
Dragon Sourcing service offering covers the end-to-end sourcing process
• 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 RFQ process with pre-qualified suppliers
• Analyse supplier responses and calculate fully delivered price (FOB price, logistics, import duties, ADT,..)
• Shortlist suppliers based on RFI/RFQ process
• Select 2-3 suppliers for sample development process
• Manage sample development process
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Develop Business case and implementation plan
© 2010 Dragon Sourcing. All rights reserved.
Short-listed suppliers are audited to finalise the qualification process
Audit questionnaire
Audit report
Audit summary
Objectives• Meet top management and sales management teams• Present order details• Refine supplier offer understanding• Understand organisation• Validate manufacturing capabilities• Visit factory and check work conditions
Topics• General Management• Order management• Shipping / packaging• Planning process• Goods flow• Procurement• Purchasing• Production• Quality…
© 2010 Dragon Sourcing. All rights reserved.
Collected information is shared with customer through detailed audit reportsGENERAL INFORMATION
Supplier Name Supplier 1
City
Province Vinh Long
Contact person
Job title Senior Manager
Email [email protected]
Phone number +886-4-xxxxxxxx #120
Fax number +886-4-xxxxxxxx
Mobile +886-921-xxxxxx
Website N/A
BUSINESS INFORMATION
Found Year 1986
Ownership Joint Venture
Manufacturer, distributor, or agent Manufacturer
Capital in million US$ N/A
Work floor size (m²) 330,000
Number of employees 10,000
License for self import/export (Yes/No) Yes
Years of export experience 24
MAIN PRODUCTS
Products Yes/No % of production
"Vulcanized / Injection group" for ladies fashion shoes Yes 100%
Others (please mention)
TURNOVER IN US$
2009 (Estimated) 2008 2007
N/A N/A N/A
% SALES EXPORT TO MAIN MARKETS IN 2009
US (%) EU (%) Asia (%) Total (%)
40% 30% 5% 75%
CUSTOMER BASE
Customers Country Percentage of sales
1. Converse Worldwide 60%
2. Adidas Worldwide 17%
3. Cat Worldwide 10%
4. Columbia Worldwide 8%
5. Paul Smith Worldwide 5%
QUALITY & ENVIRONMENTAL REGISTRATION
Certificate Yes/No
ISO 9001 Yes
ISO 14001 Yes
ISO 18001 Yes
COMPLIANCE WITH LOCAL LAW
Are you aware of Better Work Vietnam program? (Y/N) Y
Are you willing to participate in the Better Work Vietnam program in the future? (Y/N) Y
Do you adhere to all rules and regulations in respect to child labor laws? (Y/N) Y
Do you adhere to all rules and regulations in respect to environmental issues? (Y/N) Y
Do you adhere to all rules and regulations in respect to health and safety issues? (Y/N) Y
Are you willing to sign a confidentiality agreement? (Y/N) Y
© 2010 Dragon Sourcing. All rights reserved.1919
Collected information is shared with customer through detailed audit reports
FACTORY PICTURES
© 2009 Dragon Sourcing. All rights reserved.
The final supplier selection relies on the short-listed suppliers’ offers, audits and sample quality
Suppliers’ quotation
Samples
Audit summary
Supplier summary
Supplier capabilities
Supplier assesment
Supplier Name
Final Ranking
Supplier 1 1
Supplier 2 4
Supplier 3 2
Supplier 4 5
Supplier 5 3
Agenda
A. Context and Products
B. Sourcing Strategy
C. Results & Conclusions
21© 2010 Dragon Sourcing. All rights reserved.
Qualification process resulted in the client selecting 7 new suppliers from Vietnam
Activity Vietnam
Product category Blazers and suits Parkas and jackets
Ladies fashion wear
(light blouses & dresses)
Jeans"Vulcanized /
group" for ladies fashion shoes
"Injection group" for ladies fashion
shoes
Suppliers initially identified 220 171
RFI/RFQ received 8 19 8 10 11 6
Suppliers provided competitive quotes 3 11 4 6 6 2
Competitive suppliers successfully passed DS and client audit
3 8 3 4 5 2
Selected Vietnamese suppliers to start production order
1 2 1 2 1 1
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