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Coffee Machine Case Study

Chief Procurement Officer at Dragon Sourcing
Jan. 6, 2017
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Coffee Machine Case Study

  1. 1 Case Study Worldwide “Automatic Coffee Machines” Dragon Sourcing Your Tailored Sourcing Approach to Emerging Markets © 2013 Dragon Sourcing. All rights reserved. www.dragonsourcing.com
  2. 2 Worldwide Suppliers Market Screening for “Automatic Coffee Machines” Context Our Client was an American consumer-goods company with commercial activities in more than 100 countries. The Client , currently buying in Europe, wanted to identify a new strategic region to source their Automatic Coffee Machines in order to implement the best cost-efficient strategy possible. Segment involved: -Automatic Coffee Machines DS Supply Market analysis Objectives • Collect detailed spend information about the categories such as technical requirements, standards applying, material specifications, volume and current unit prices by Client’s consuming factories. • Identify a list of potential suppliers worldwide to include in the RFI/RFP process by leveraging the web, external databases, and various networks of experts. • Develop the RFI / RFP – jointly with client – to include all key suppliers qualifications criteria (e.g.: financial, technology, manufacturing capability, corporate responsibility, quality…). • Administer RFI / RFP process to ensure as high a return rate as possible. • Analyze responses, prices and use balance score carding process to rank suppliers and recommend suppliers per category which client needs to take through their auditing process in order to potentially qualify them. • Provide Client with a profile for all of the suppliers recommended to be audited. © 2013 Dragon Sourcing. All rights reserved.
  3. © 2013 Dragon Sourcing. All rights reserved. 3 Suppliers Screening 220 suppliers were initially identified in 27 countries, 151 passed first screening. We received 28 complete RFI and another incomplete 6. No. Country Total Identified Passed Phone Screening RFI Sent Intended To Respond RFI Received 1 Greater China 68 67 37 11 9 2 India 18 18 15 5 5 3 Brazil 6 6 3 3 3 4 Netherlands 6 1 2 2 2 5 USA 8 4 4 3 2 6 Canada 3 2 2 2 2 7 France 2 2 2 1 1 8 Switzerland 9 2 2 1 1 9 Spain 7 3 3 1 1 10 Germany 5 4 3 1 1 11 Turkey 1 1 1 0 1 12 Korea 6 6 5 3 0 13 UK 12 5 5 0 - 14 Singapore 10 9 3 0 - 15 Argentina 3 3 1 0 - 16 Italy 32 1 1 0 - 17 Ireland 1 1 1 0 - 18 Denmark 1 1 1 0 - 19 Romania 1 1 1 0 - 20 Indonesia 9 9 0 - - 21 Thailand 4 4 0 - - 22 Bulgaria 2 1 0 - - 23 Belgium 2 0 - - - 24 Monaco 1 0 - - - 25 Sweden 1 0 - - - 26 Portugal 1 0 - - - 27 Austria 1 0 - - - Total 220 151 92 34 28
  4. © 2013 Dragon Sourcing. All rights reserved. 4 Our approach enabled us to pre-select 28 suppliers out of 151 potential companies identified. Selection of potential suppliers Pre-selection of suppliers Sending & Follow- up of the RFI/RFQ Analysis of the suppliers’ RFI/RFQ Suppliers RFI process 28 92 151 0 20 40 60 80 100 120 140 160 Passed First Screening RFI sent RFI received Canada USA Argentina Brazil Thailand Indonesia Korea Singapore India Romania Bulgaria Turkey Netherland Austria Belgium Denmark Germany Spain Portugal Sweden Monaco Switzerland Italy France Ireland UK Greater China
  5. © 2013 Dragon Sourcing. All rights reserved. 5 Reasons Analysis for not sending RFI to 59 suppliers & Reasons Analysis for the 58 suppliers which did not respond Reasons not to send RFI 23 16 20 0 5 10 15 20 25 Cannot produce Trading companies Could not be reached Reason no intend to respond 27 10 11 10 0 10 20 30 Trading companies Not interested Domestic only Suppliers to whom RFI were not sent 59 Cannot produce 23 Could not be reached 16 Trading companies 20 Did not intend to respond 58 Cannot produce 27 Trading companies 10 Not interested in the project 11 Domestic market only 10 Cannot produce
  6. © 2013 Dragon Sourcing. All rights reserved. 6 Heilongjiang Gansu Jiangxi Zhejiang BEIJING Jiangsu Guangxi Hunan Hubei Ningxia Shaanxi Anhui Fujian Neimonggu Shanxi Shandong Sichuan Yunan Guizhou Henan Jilin Liaoning Hebei Guangdong Gansu Taiwan SHANGHAI Chinese Suppliers Locations 5 suppliers are located in Zhejiang province ; 2 suppliers are located in Guangdong province Hubei and Shanghai provinces both have 1 supplier each N° Company Name Province 1 Chinese Supplier 1 Guangdong 2 Chinese Supplier 2 Guangdong 3 Chinese Supplier 3 Shanghai 4 Chinese Supplier 4 Zhejiang 5 Chinese Supplier 5 Zhejiang 6 Chinese Supplier 6 Zhejiang 7 Chinese Supplier 7 Zhejiang 8 Chinese Supplier 8 Hubei 9 Chinese Supplier 9 Zhejiang
  7. Results of the Suppliers Ranking & Scoring © 2013 Dragon Sourcing. All rights reserved. 7 7.50 7.35 7.45 7.32 7.50 7.50 7.50 7.36 7.28 7.25 6.78 5.69 5.65 5.66 5.29 5.07 4.84 4.21 2.78 2.57 5.00 3.97 3.19 2.81 2.25 5.27 4.12 3.83 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 USSupplier1 USSupplier2 CanadaSupplier2 CanadaSupplier1 NetherlandsSupplier1 NetherlandsSupplier2 GermanySupplier SwitzerlandSupplier FranceSupplier SpainSupplier TurkeySupplier ChinaSupplier2 ChinaSupplier6 ChinaSupplier3 ChinaSupplier1 ChinaSupplier5 ChinaSupplier9 ChinaSupplier4 ChinaSupplier7 ChinaSupplier8 IndiaSupplier1 IndiaSupplier5 IndiaSupplier4 IndiaSupplier2 IndiaSupplier3 BrazilSupplier2 BrazilSupplier1 BrazilSupplier3 Company background Quality Control Production capability Cooperation Total North America Europe China India Brazil
  8. Current status • Based on the RFI process DS identified new promising regions for sourcing their Automatic Coffee Machines. Top-ranked suppliers from each region were recommended to the Client. • Based on DS recommendations, the Client audited factories in China, Turkey, and Brazil. © 2010 Dragon Sourcing. All rights reserved. 8
  9. © 2013 Dragon Sourcing. All rights reserved. 9 Supplier Name: xxx - China Business information Top 5 Customers Customers Industry Country/Area of physical delivery Percentage of sales Customer 1 Small appliances Italy 35% Customer 2 Electrical appliances US 10% Customer 3 Electrical appliances US 8% Customer 4 Electrical appliances US 10% Customer 5 Electrical appliances Europe 5% COMPLIANCE WITH LOCAL LAW ( Y / N ) Children labor Y Health & Safety Y Environmental issues Y confidentiality agreement Y GENERAL INFORMATION Supplier name xxx City Foshan Province Guangdong Contact person xxx Job title Marketing Manager Email xxxxx Phone number +86-000-00000000 Fax number +86-000-00000000 Website www.xxx.com BUSINESS INFORMATION Found Year 1988 What is the nationality/region of your company? China How much capital do you have (in US$)? 58,000,000 What is your core business? R&D, Production and Marketing for Small Domestic Appliances What is the strategic focus of your company? To be the global competitive electrical appliances manufacturer Number of employees 16300 Turnover (in USD) 2007 2008 2009 2010 450 M 500 M 620 M 300 M % Sales exports to the main markets North America (%) South America (%) EU (%) Asia / Pacific(%) 30% 6% 55% 4%
  10. 10 Supplier Name: xxx - China Production capacity Production capacity What are your core technologies in your current products? What is the in-house part production capability? what is the main material? (plastics, metal etc..) Metal Yes Plastic Yes Others, please specify here What's your maximum amount of machine you can assemble in a year with you current facilities? 200K/month For all types of coffee machines that you make; please provide the following information: Coffee machine type Volumes produced in 2009 (in units) Maximum production capacity in units (2010) Please list key customers Fully Automatic 50k 110K Customer 6 Coffee Pod Machine 110k 500k Customer 7 Capsule Machine 230k 600k Customer 8 15 Bar Machine 250k 550k Customer 9 3.5 Bar Machine 120k 600k Customer 10 Name Certificate No. Date of expiry Certifying Org. Please list what third party Quality registration certificates you have obtained Korea certificate EK XXXXXXX 2011 Korea Cert. Europe certificate CE XXXXXXX Unlimited Eurocorp. © 2013 Dragon Sourcing. All rights reserved.
  11. 11 Supplier Name: xxx - China Quality control, R&D QC Equipment Yes/No What quality control equipment do you have in-house? Life Test Laboratory Yes Safety Test Laboratory Yes XRF Yes ICP-AES Yes GC-MS Yes What test equipment do you have in-house? Earth resistance tester Test board of four-item electrical Specification Withstand voltage measuring device Leakage current tester Power meter What procedures are available for outgoing check? Material inspection Safety inspection System inspection Finished products inspection PQC What performance do you achieve on average in out going quality measures(% rejected)? 0-4% Mechanical Electronics How many engineers? 25 15 How many engineers for development? 35 What is your most innovative product? (why) Full automatic coffee machine Do you hold any patents on certain technologies? Yes Spend in R&D (% of revenue) 2% Location of R&D offices In House 5 last products developed in house? Card management type vending machine, Multifunction mixed coffee machine experience level of technologies: Yes/No - table top machines Yes - instant coffee Yes - liquid coffee extract No - pour over / filter coffee No - hot water systems Yes - cooling technologies No - payment systems No - automatic cleaning of machine (CIP) Yes - electronics (development hard-software) Yes © 2013 Dragon Sourcing. All rights reserved.
  12. 12 Supplier Name: xxx - China Products information Current product Coffee machine type Product description Coffee Machine Picture Automatic Espresso Coffee Machine CM4809A/CM4809 *15 bar electromagnetic pressure pump *Thermoblock heating system to ensure the precise temperature and instant steam **1.2L large detachable transparent water tank *250g coffee bean box capacity *Short brewing time for full-bodied espresso with perfect cream *With high pressure frothing function for making cappuccino *LCD digital programmable menu settings with blue light for your easy operation *Fully intelligent system to remind user the facing problem and how to settle promptly *Adjustable strength and particle size for different tastes Automatic Espresso Coffee Machine CM4802 *15bar electromagnetic pressure pump *Thermoblock heating system to ensure the precise temperature and instant steam *1.8L large removable transparent water tank *200g coffee bean box capacity *Short brewing time for full-bodied espresso with perfect cream *Professional milk frothing device: sucks milk and delivers creamy milk froth directly into cup, excellent for cappuccino making *LCD digital programmable menu settings with green light for your easy operation Automatic Espresso Coffee Machine CM4801 *15bar electromagnetic pressure pump *Die-casting aluminum heating boiler *1.8L large removable transparent water tank *200g coffee bean box capacity *Short brewing time for full-bodied espresso with perfect cream *Professional milk frothing device: sucks milk and delivers creamy milk froth directly into cup, excellent for cappuccino making *Hot water spout to produce ho water over 90℃: ideal for tea or other hot beverage © 2013 Dragon Sourcing. All rights reserved.
  13. 13 13 Supplier Name: xxx - Netherlands Business information Top 5 Customers Customers Industry Country/Area of physical delivery Percentage of sales Confidential Confidential Confidential Confidential Confidential COMPLIANCE WITH LOCAL LAW ( Y / N ) Children labor Y Health & Safety Y Environmental issues Y confidentiality agreement Y GENERAL INFORMATION Supplier name xxxx City Son Province Son Zip code xxx Contact person Mr. xxx Job title Global Business Director / CEO Email xxx Phone number '+31-00-0000000 Fax number +31-00-0000000 Website www.xxx.com BUSINESS INFORMATION Found Year 1890 What is the nationality/region of your company? Dutch How much capital do you have (in US$)? n/a What is your core business? Development, Manufacturing, sales, service and operating of vending, horeca machines and dispensers What is the strategic focus of your company? n/a Number of employees 21,1250 (Direct 1150) Turnover (in USD) 2007 2008 2009 2010 Confidential xx xx xx % Sales exports to the main markets North America (%) South America (%) EU (%) Asia / Pacific(%) 0% 10% 80% 10% © 2013 Dragon Sourcing. All rights reserved.
  14. 14 14 Supplier Name: xxx - Netherlands Production capacity © 2013 Dragon Sourcing. All rights reserved. Production capacity What are your core technologies in your current products? Heating & Control systems What is the in-house part production capability? what is the main material? (plastics, metal etc..) Metal Yes Plastic No Others, please specify here What's your maximum amount of machine you can assemble in a year with you current facilities? 3600 For all types of coffee machines that you make; please provide the following information: Coffee machine type Volumes produced in 2009 (in units) Maximum production capacity in units (2010) Please list key customers 2 Option table top premix based machines 1800 3600 units total. Customer 1 4 Option table top premix based machines 700 3600 units total Customer 2 4 Option table top premix based smart card enabled machines 70 3600 units total Customer 3 Others 20 3600 units total Customer 4 Name Certificate No. Date of expiry Certifying Org. Please list what third party Quality registration certificates you have obtained Customer 1 India audit certificate. n/a n/a n/a
  15. 15 15 Supplier Name: xxx - Netherlands Quality control, R&D QC Equipment Yes/No What quality control equipment do you have in-house? miscellaneous appliances, detailed list can be provided. What test equipment do you have in-house? miscellaneous appliances (High Voltage, temperature, salt spray, pressure, flow,…) detailed list can be provided on request What procedures are available for outgoing check? Visual and functional Test after every step in Assembly, High Voltage, 100% Factory Acceptance Test, random tests on customer specific programming's What performance do you achieve on average in out going quality measures(% rejected)? Less than 2% Mechanical Electronics How many engineers? 40 25 Do you have people in your company working as engineering/ development ? If yes, how many? Yes, 65. What is your most innovative product? (why) new tea and milk solutions (ground breaking for industry) Do you hold any patents on certain technologies? Yes Spend in R&D (% of revenue) 25% Location of R&D offices Bruchsal, Germany and Guangzhou China 5 last products developed in house? coffee island with fresh milk, public hot drink vend system, different hot drinks components. experience level of technologies: Yes/No - table top machines Yes - free standing machines Yes - liquid coffee extract Yes - hot water systems Yes - cooling technologies Yes - payment systems Yes - automatic cleaning of machine (CIP) Yes - electronics (development hard-software) Yes © 2013 Dragon Sourcing. All rights reserved.
  16. 16 16 Supplier Name: xxx - Netherlands Products information Current product Coffee machine type Product description Coffee Machine Picture SL 25 Depth: 455 mm, Width: 310 mm Height excl. bean container: 700 mm Height incl. bean container: 810 mm Required free space: Behind: 60 mm, To the right: 70 mm, Over: 330 mm Cold water connection 3/8 2.8 kW/16 A / 230 V/50Hz±15% 38 kg. Water pressure: min. 2- bar - max. 5 bar The SL25 can be supplied with or without a base cabinet SL 50/200 Dimensions: Depth: 455 mm, Width: 450 mm Height excl. bean container: 700 mm Height incl. bean container: 810 mm Required free space: Behind: 60 mm, To the right: SL50: 90 mm SL200: 150 mm, Over: 330 mm Cold water connection: 3/8 2.8 kW/16 A/ 230 V/50Hz±15% 40 kg/B2C 45 kg. Water pressure: min. 2- bar - max. 5 bar SL 300 Depth: 455 mm, Width: 660 mm Height excl. bean container: 700 mm Height incl. bean container: 810 mm Required free space: Behind: 60 mm, To the right: 150 mm Over: 330 mm Cold water connection 3/8 2.8 kW/16 A / 230 V/50Hz±15% 55 kg. Water pressure: min. 2- bar - max. 5 bar © 2013 Dragon Sourcing. All rights reserved.
  17. 17 17 Supplier Name: xxx - India Business information Top 5 Customers Customers Industry Country/Area of physical delivery Percentage of sales Customer 1 Vending Dubai 10% Customer 2 Water India 3% Customer 3 Water India 2% Customer 4 Water India 2% Customer 5 Vending Singapore 1% COMPLIANCE WITH LOCAL LAW ( Y / N ) Children labor Y Health & Safety Y Environmental issues Y confidentiality agreement Y GENERAL INFORMATION Supplier name xxx City Noida Province Uttar Pradesh Zip code 201301 Contact person Mr. xxx Job title Director Email xxx Phone number 00.00.00.00.00 Fax number 00.00.00.00.00 Website www.xxx.com BUSINESS INFORMATION Found Year 1989 What is the nationality/region of your company? Indian How much capital do you have (in US$)? 2 M What is your core business? Manufacturing beverage vending machine. What is the strategic focus of your company? To be number 1. Number of employees 226 Turnover 2007 2008 2009 2010 1 M 300,000 5 M 10 M % Sales exports to the main markets North America (%) South America (%) EU (%) Asia/Pacific (%) 0% 0% 0% 100% © 2013 Dragon Sourcing. All rights reserved.
  18. 18 18 Supplier Name: xxx - India Production capacity Production capacity What are your core technologies in your current products? INHOUSE SHEET METAL WORK. CONVEYSIRED ASSEMBLY What is the in-house part production capability? what is the main material? (plastics, metal etc..) Metal Yes Plastic No Others, please specify here What's your maximum amount of machine you can assemble in a year with you current facilities? 60,000 For all types of coffee machines that you make; please provide the following information: Coffee machine type Volumes produced in 2009 (in units) Maximum production capacity in units (2010) Please list key customers 2 lane premix based automatic beverage vending machine. 2500 10,000 Confidential 3 lane premix based automatic beverage vending machine. 2500 10,000 Confidential 4 lane premix based automatic beverage vending machine. 10 4,000 Confidential Name Certificate No. Date of expiry Certifying Org. Please list what third party Quality registration certificates you have obtained ISO 22000 Norway © 2013 Dragon Sourcing. All rights reserved.
  19. 19 19 Supplier Name: xxx - India Quality control, R&D QC Equipment Yes/No What quality control equipment do you have in-house? Laboratory Yes Electrical testing station Yes What test equipment do you have in-house? Same as above What procedures are available for outgoing check? Random lab check Physical check Electrical testing station What performance do you achieve on average in out going quality measures(% rejected)? Less than 1% Mechanical Electronics How many engineers? 2 2 Do you have people in your company working as engineering/ development ? If yes, how many? 2 What is your most innovative product? (why) Cafemini - Value Engineered Machine Do you hold any patents on certain technologies? No Spend in R&D (% of revenue) 5% Location of R&D offices Noida 5 last products developed in house? 2 lane café mini, 4 lane café plus,. experience level of technologies: - table top machines Y - free standing machines Y - instant coffee Y - pour over / filter coffee N - hot water systems Y - cooling technologies Y - payment systems N - automatic cleaning of machine (CIP) Y - electronics (development hard-software) Y © 2013 Dragon Sourcing. All rights reserved.
  20. 20 20 Supplier Name: xxx - India Products information Current product Coffee machine type Product description Coffee Machine Picture Café Mini •2 LANE PREMIX BASED VENDING MACHINE: • Model : Atlantis 2.0 •Canister Capacity : 1 kg •Number of Options : 2 lane •Dispensing Speed : 3 cups/min •Net Weight : 8 kg •Power : 1100 watts •Voltage : 220v / 50hz •Dimensions : 332 x 355 x 585mm Vendor 2-3 Lane • 2/3 LANE BASED HEAVY DUTY VENDING MACHINE : •Dispensing Rate : 4 cups per minute •Canister Capacity : 1.2 kg •Start up Time : 20 minutes •Voltage : 220V - 50HZ •Power : 2KW •Width : 330mm •Depth : 440mm •Height : 690mm •Net Weight : 25 kgs © 2013 Dragon Sourcing. All rights reserved.
  21. 21 Supplier Name: xxx - USA Business information Top 5 Customers Customers Industry Country/Area of physical delivery Percentage of sales Customer 1 QSR Global 7% Customer 2 Bev North American 6% Customer 3 Distribution USA 5% Customer 4 Bev USA 5% Customer 5 Institutional USA 5% COMPLIANCE WITH LOCAL LAW ( Y / N ) Children labor Y Health & Safety Y Environmental issues Y confidentiality agreement Y GENERAL INFORMATION Supplier name xxx City Watertown Province Wisconsin Zip code 53094 Contact person xxx Job title President Email xxxx Phone number 00.00.00.00.00 Fax number 00.00.00.00.00 Website www.xxx.com BUSINESS INFORMATION Found Year 1958 What is the nationality/region of your company? USA How much capital do you have (in US$)? n/a What is your core business? design & manufacturing of food & beverage equipment What is the strategic focus of your company? remain the industry pioneer Number of employees 49 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(%) 80% 0% 7% 13% © 2013 Dragon Sourcing. All rights reserved.
  22. 22 Supplier Name: xxx - USA Production capacity Production capacity What are your core technologies in your current products? metering & mixing apparatus What is the in-house part production capability? what is the main material? (plastics, metal etc..) Metal 80 Plastic 20 Others, please specify here What's your maximum amount of machine you can assemble in a year with you current facilities? 12000 For all types of coffee machines that you make; please provide the following information: Coffee machine type Volumes produced in 2009 (in units) Maximum production capacity in units (2010) Please list key customers Freeze dried n/a 2000 Customer 1 Liquid Concentrate n/a 2000 Customer 2 Name Certificate No. Date of expiry Certifying Org. Please list what third party Quality registration certificates you have obtained Sanitation Std 18 Karma Inc xxxx 2010 NSF/ANSI Electrical Safety Karma Inc E-30291 xxxx 2010 CUL Electrical safety Karma inc xxxx 2010 CE Electrical safety Karma Inc xxxx 2010 CCE © 2013 Dragon Sourcing. All rights reserved.
  23. 23 Supplier Name: xxx - USA Quality control, R&D QC Equipment Yes/No What quality control equipment do you have in-house? 100% incoming component inspection Y Refrigeration vacuum pum Y Refrigeration scales Y Refrigeration volume guages Y Hot & Cold temperature sensors Y What test equipment do you have in-house? UL required Ground Fault Voltage Test Module Volume measuring apparatus 5cc to 500cc What procedures are available for outgoing check? 100% Testing of all models produced Once Test certified, packing is done with a check list of all items included with model What performance do you achieve on average in out going quality measures(% rejected)? 0% outgoing failures / Warranty failures of less then 1/2 of 1% Mechanical Electronics How many engineers? 1 1 Do you have people in your company working as engineering/ development ? If yes, how many? 2 What is your most innovative product? (why) Do you hold any patents on certain technologies? YES Spend in R&D (% of revenue) Less than 5% Location of R&D offices Wisconsin USA 5 last products developed in house? experience level of technologies: - table top machines YES - instant coffee YES - liquid coffee extract YES - hot water systems YES - cooling technologies YES - payment systems NO - automatic cleaning of machine (CIP) YES - electronics (development hard-software) YES © 2013 Dragon Sourcing. All rights reserved.
  24. 24 Supplier Name: xxx - USA Products information Current product Coffee machine type Product description Coffee Machine Picture YCC 80B • Wattage 1260w • Removable water tank capacity: 2.5l • Bean container: 350g • Dimension (W x D x H/mm): 370x290x420 • Weight: 10kg • Boiler: Water heater/Steam heater Dual type • Pump pressure : 16 bar • Auto power off : 3 hours • Voltage/Hz : 110 – 240V / 50-60Hz YCC 50 • Adjustable fineness: 450 µm – 750 µm • Adjustable coffee outlet : 30cc -200cc • Full automatic cappuccino system • Automatic cleaning system • Pre brewing system • Energy saving system • Easy attachment & detachment of brewer unit • Ion Filter for scale prevention: exchange every 200 -300l • User friendly Iconic display (LCD) © 2013 Dragon Sourcing. All rights reserved.
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