A detailed case study on PE film and the major objective of this project is to qualify new suppliers from 11 low cost countries for our client, one of the largest packaging manufacturers in the world.

1. Dragon Sourcing - 龙源
Your Tailored Sourcing Approach to LCC sourcing
PE Film Case Study
1

2. 2
Agenda
A. Context and Products
B. Sourcing Strategy
C. Results & Conclusions
2© 2011 Dragon Sourcing. All rights reserved.

3. 3
Suppliers location
Client location
© 2011 Dragon Sourcing. All rights reserved.
Company Profile:
• One of the worlds’ largest packaging company
• Revenue of 40 Billion Euros (2009)
• Operating Income of 2 Billion Euros (2009)
• Provides employment to around 200,000 people across the globe
The objective of the project was to try and qualify new suppliers from 11 low
cost countries for our client, one of the largest packaging manufacturers in
the world
Tunisia, Yemen, Egypt, Malaysia, Thailand, Vietnam, India, China,
Romania, Poland, Morocco

4. © 2011 Dragon Sourcing. All rights reserved. 4
Various dimensions and requirements of LDPE Polyethylene Shrink Film
were included in the project
Country Product Description
Annual
Quantity
(tons)
Picture
Europe
Material LDPE
Width:1280mm
&1300mm
Gusset: 545mm
&500mm
Thickness: 100μ
300
Latin America
(Factory 1)
Material LDPE
Width:1300mm
Gusset: 560mm
Thickness: 95μ
400
Latin America
(Factory 2)
Material LDPE
Width:1300mm
Gusset: 560mm
Thickness: 105μ
250
Latin America
(Factory 3)
Material LDPE
Width:1300mm
Gusset: 560mm
Thickness: 95μ
12000
Latin America
(factory 4)
Material LDPE
Width:1280mm
Gusset:560mm
Thickness: 100μ
280

5. © 2010 Dragon Sourcing. All rights reserved. 5
Agenda
A. Context and Products
B. Sourcing Strategy
C. Results & Conclusions
5© 2011 Dragon Sourcing. All rights reserved.

6. © 2011 Dragon Sourcing. All rights reserved. 6
The first step is to develop a comprehensive understanding of the product
requirements
Product Name LDPE Polyethylene Shrink Film
Picture
Specification
Material LDPE
Width :1300mm
Gusset : 560mm
Thickness : 95μ
Quality Requirements
Shrink Ratio: 60% +/- 5%
Hot Shrink : <45 kpa
Cold Shrink: >1200 kpa
Elmendorf Tear Resistance : >5000mN
Annual Quantity 12000 Tons

7. V. Quality, Environmental and Product Certification
Yes / No
Date of Certificate Certifying Org.
What quality and
environmental registrations do
you have?
ISO 9001
ISO 14000
OSHAS 18000
ISO 22000 / HACCP
BRC
Others
Are you fully familiar with EU
& South American regulations
concerning the product listed
in RFQ page? (Y/N)
VI. Quality Control and Testing Equipment
Do you have an air-
conditioned laboratory in
accordance with international
standards to manage your QC
? YES/NO
How do you manage the
traceability in the production
process ?
Testing Equipment
Please list quality control
equipment that you have in-
house
© 2010 Dragon Sourcing. All rights reserved. 7© 2011 Dragon Sourcing. All rights reserved.
An RFI/RFQ process is administered to filter out the most capable suppliers
from the 11 countries.
Quality
Management
DRAGON SOURCING
To :
Email :
Tel number :
Mobile :
Fax number :
COMPANY INFORMATION
Company Name :
Address :
Town :
Province :
Company Website :
CONTACT INFORMATION
Contact Person :
Title :
Email :
Tel :
Fax :
Mobile phone :
BUSINESS INFORMATION :
Is your company a manufacturer, distributor, or agent ?
What date was your company founded?
How much is your registration capital ?
What is your turnover in million ?
2009 2008
Contact
detail
information
Business
information

8. 0
50
100
150
200
250
300
350
400
Number of suppliers
identified
Number of RFI/RFQ
sent
Intend to respond Number of RFQ
received
Tunisia
Yemen
Egypt
Malaysia
Thailand
Vietnam
India
China
Romania
Poland
Morocco
Number of RFI/RFQ
received
Pre-qualified
supplier
© 2011 Dragon Sourcing. All rights reserved. 888
Around 365 suppliers had been identified in Asia, Europe and Africa for PE
film. 21 suppliers responded to the RFI/RFQ, however only 12 went through
the full pre-qualification process
Main reasons not to send
RFI:
- No more producing
- Not valid contact details
- Trading company
Main reason not to respond
to RFI/Q
- Can’t export
-Don’t have the material
requested
-- Can’t do the modification
requested
365
250
1221

9. Supplier profile is shared with customer
© 2011 Dragon Sourcing. All rights reserved. 9
Production Capacity
Can manufacture as per the specification given in the RFQ
(Yes/No)
Yes
Number of years manufacturing polyethylene shrink film 10
Maximum production capacity (tons/year) in2009. 9000
Actual annual production (ton/year in 2009) 5400
How many colours can you print 8
Can print with water based ink Yes
Automated palettization at the end of the machine line (Yes/No) No
How are pallets protected for transportation ? Protection film
Can do treatment on the film
(Yes/No) ?
Anti UV Treatment Yes
Electrostatic charge Yes
Have machines to offer
Min Width Max Width Min Perimeter Max Perimeter
3cm 3150cm 6cm 630cm
Manufacturing Equipment
Name Quantity
3 LAYER EXTRUDER 4
2 and 1 LAYER EXTRUDER 9
PRINTING MACHINE 6
BAG MAKING MACHINE 12
Type of printing can offer
(Printing machines)
Name Quantity
8 COLOR PRINTING 1
6 colour PRINTING 1
2 colour PRINTING 1
Production Capacity
Raw material buying from
Raw material County Percentage Frequency
BASF-YPC
1810D
China 40% Once a month
BASF-YPC
2426H
China 35% Once a month
Sinopec
Shanghai 602
China 20% Once a month
Quality Management
Fully familiar with EU & South American regulations concerning the
product listed in RFQ page? (Y/N)
Y
Number of QC people 4
QC methodology during production & Final inspection IPQC and FQC
What performance do you achieve on average in out going quality
measures (% rejected)?
1%
Do you monitor customer complaints Yes/No? Yes
Do you have laboratory to mange QC ? Yes/No No
Quality registration certificates
ISO 9001 Yes 26-Aug-2009 AMT
ISO 14000
OSHAS 18000
ISO 22000 /
HACCP
Others ROHs 22-Mar-2010 SGS
Quality control equipment in-house
1 Mikrotest
2 Crockmeter m
3 tensile test
4 SIMCO

10. Supplier profile is shared with customer (cont’d)
Factory Entrance Production Floor Production Floor
Factory overview Warehouse Lab
© 2011 Dragon Sourcing. All rights reserved.

11. © 2011 Dragon Sourcing. All rights reserved. 11
Company
Background
Business
Information
Corporate
Responsibility
Production
Capacity
Quality
Management
Quality
Control and
Testing
Equipment
Cooperation
Price
Competitive
ness
Total
max
100%
Weight 15% Weight 15% Weight 5% Weight 15% Weight 15% Weight 5% Weight 5% Weight 25% 100%
Supplier 1 14% 12% 5% 11% 10% 5% 4% 17% 75% 1 Egypt
Supplier 2 8% 12% 5% 13% 8% 5% 4% 17% 71% 2 China
Supplier 3 8% 12% 5% 13% 6% 4% 5% 17% 69% 3 Romania
Supplier 4 7% 9% 5% 14% 0% 5% 3% 17% 60% 4 India
Supplier 5 6% 10% 5% 7% 6% 4% 5% 17% 59% 5 India
Supplier 6 11% 8% 5% 11% 0% 1% 4% 17% 56% 6 Vietnam
Supplier 7 9% 7% 5% 13% 3% 5% 4% 8% 54% 7 India
Supplier 8 10% 8% 5% 7% 3% 0% 3% 17% 53% 8 Thailand
Supplier 9 8% 7% 5% 12% 0% 3% 1% 17% 53% 9 China
Supplier 10 6% 8% 5% 9% 5% 2% 4% 8% 46% 10 Malaysia
Supplier 11 3% 3% 5% 6% 0% 3% 3% 17% 39% 11 Thailand
Supplier 12 7% 5% 5% 12% 0% 2% 1% 8% 39% 12 China
CountrySupplier Name Rank
15%
15%
5%
15%15%
5%
5%
25%
Company background
Business information
Corporate responsibility
Production capacity
Quality management
Quality control & testing equipment
Cooperation
Price competitiveness
The RFI responses are analyzed using a scorecard

12. © 2010 Dragon Sourcing. All rights reserved. 12© 2011 Dragon Sourcing. All rights reserved. 12
Then all relevant information is collected to prepare DDP quotations
Supplier Country
PE Shrink film
FOB unit price
in USD
Transportation
costs
DDP in USD
Supplier 1 Egypt 8.80 2.20 11.00
Supplier 2 China 7.50 2.40 9.90
Supplier 3 Romania 8.00 2.20 10.20
Supplier 4 India 7.20 2.20 9.40
Supplier 5 India 8.30 2.40 10.70
Supplier 6 Vietnam 7.30 2.40 9.70
Supplier 7 India 9.40 2.60 12.00
Supplier 8 Thailand 8.70 2.60 11.30
Supplier-9 China 7.90 2.50 10.40
Supplier-10 Malaysia 9.10 2.80 11.90
Supplier-11 Thailand 7.80 2.50 10.30
Supplier-12 China 9.60 2.80 12.40

13. © 2010 Dragon Sourcing. All rights reserved. 13© 2011 Dragon Sourcing. All rights reserved.
Finally, suppliers’ quotation are compared to target prices to identify those
worth keeping in the process and estimate potential savings
DDPPRICEINUSD
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Supplier -1 Supplier -2 Supplier -3 Supplier -4 Supplier -5 Supplier -6 Supplier -7 Supplier -8 Supplier -9 Supplier -10 Supplier -11 Supplier -12
Current DDP Price

14. China
In this case only 3 suppliers (from India, Vietnam and China) showed potential
savings, however the savings potential were too low to warrant moving to the full
qualification process
14
India Vietnam
Egypt
Potential Savings: LOW
6.5% DDP
Supplier Quality: GOOD/AV.
Good to satisfactory supplier based
on RFI scorecard
Potential Savings: LOW
2% DDP
Supplier Quality: GOOD
Satisfactory supplier based on RFI
scorecard
Potential Savings: LOW
3% DDP
Supplier Quality: GOOD/AV.
Good supplier based on RFI
scorecard and visit
Potential Savings: None
Supplier Quality: GOOD
Satisfactory supplier based on
RFI scorecard
© 2011 Dragon Sourcing. All rights reserved.