Coffee Machine Case Study

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
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.

© 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

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

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

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
8 Chinese Supplier 8 Hubei

Results of the Suppliers Ranking & Scoring
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

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.

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%
appliances
US 8%
appliances
US 10%
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%

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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.

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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

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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
*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
*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

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Supplier Name: xxx - Netherlands
Top 5 Customers
physical delivery
Percentage of sales
Confidential
Confidential
Confidential
Confidential
Confidential
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
Found Year 1890
What is the nationality/region of your company? Dutch
How much capital do you have (in US$)? n/a
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%

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14
Production capacity
Production capacity
products?
Heating & Control systems
Metal Yes Plastic No Others, please specify here
3600
Coffee machine type Volumes produced
in 2009 (in units)
Maximum production
2 Option table top premix
based machines
1800 3600 units total. Customer 1
based machines
700 3600 units total Customer 2
based smart card enabled
machines
70 3600 units total Customer 3
Others 20 3600 units total Customer 4
Customer 1 India audit
certificate.
n/a n/a n/a

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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%
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)
technologies?
Yes
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

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16
Current product
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
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
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

17
17
Supplier Name: xxx - India
Top 5 Customers
physical delivery
Percentage of sales
Customer 1 Vending Dubai 10%
Customer 2 Water India 3%
Customer 5 Vending Singapore 1%
Children labor Y
Health & Safety
Y
Environmental issues
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
Found Year 1989
What is the nationality/region of your company? Indian
How much capital do you have (in US$)? 2 M
Manufacturing beverage vending
machine.
What is the strategic focus of your company? To be number 1.
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%

18
18
Production capacity
Production capacity
products?
INHOUSE SHEET METAL WORK. CONVEYSIRED ASSEMBLY
Metal Yes Plastic No Others, please specify here
60,000
Coffee machine type Volumes produced in
2009 (in units)
Maximum production
2 lane premix based
automatic beverage
vending machine.
2500 10,000 Confidential
3 lane premix based
automatic beverage
vending machine.
4 lane premix based
automatic beverage
vending machine.
ISO 22000 Norway

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19
QC Equipment Yes/No
you have in-house?
Laboratory Yes
Electrical testing station Yes
in-house?
Same as above
outgoing check?
Random lab check
Physical check
Electrical testing station
Less than 1%
yes, how many?
2
What is your most innovative product? (why) Cafemini - Value Engineered Machine
technologies?
No
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

20
20
Current product
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

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Supplier Name: xxx - USA
Top 5 Customers
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%
Children labor Y
Health & Safety Y
Environmental issues 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
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
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%

22
Production capacity
Production capacity
products?
metering & mixing apparatus
Metal 80 Plastic 20 Others, please specify here
12000
Coffee machine
type
Volumes produced in
2009 (in units)
Maximum production
capacity in units
(2010)
Freeze dried n/a 2000 Customer 1
Liquid Concentrate n/a 2000 Customer 2
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

23
QC Equipment Yes/No
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
in-house?
UL required Ground Fault Voltage Test Module
Volume measuring apparatus 5cc to 500cc
outgoing check?
100% Testing of all models produced
Once Test certified, packing is done with a check
list of all items included with model
0% outgoing failures / Warranty failures of less then
1/2 of 1%
yes, how many?
2
What is your most innovative product?
(why)
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

24
Current product
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)

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