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High precision welded component Case Study
This case study is about a German company seeking to source a high precision welding component from suppliers in China to increase local content. The document outlines the project objectives, milestones, process for identifying suppliers, evaluation of supplier responses, site visits, and recommendation of top suppliers. It provides details on 28 potential suppliers in China, including their production capabilities, quality systems, price quotes, and a scoring methodology to rank them. The top 10 suppliers were recommended to move forward in the audit process, with the top 5 being highlighted for their production experience and potential to meet the client's quality and tolerances needs.
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High precision welded component Case Study
- 1. Case Study High PrecisionWelding Component for German leader in assembly lines © 2012 Dragon Sourcing. All rights reserved. 1
- 2. • Client isan internationally operating German-based market leader in assy lines (for automotive, aerospace, ..) with an annual revenue of € 2 billion. • Client intends to find, assess and develop supplier(s) in China (Shanghai area preferred), but has no local expertise. • Long-term goal is to increase local content. • First product to start with is welding assy; high dimensional accuracy needed. © 2012 Dragon Sourcing. All rights reserved. Initial situation Conquer New Markets Reduce Risk Achieve Savings
- 3. Objectives Overall objectives Identifynew potential competitive suppliers in China Product(s) Base frame DS supplier market analysis ① Develop RFI/RFQ document ② Identify long list of potential suppliers ③ First phone screening of suppliers ④ Administer RFI/RFQ process ⑤ Analyze responses & use balance score card process to rank suppliers ⑥ Recommend suppliers ⑦ Pre-audit by DS ⑧ Joint audit with client ⑨ Initial sampling ⑩ Operative local procurement support by DS © 2012 Dragon Sourcing. All rights reserved.
- 4. 4 MilestonesStarted FinishedNot-started Delayed Projectwas scheduled for 8 weeks period Steps Who W 9 W 10 W 11 W 12 W 13 W 14 W 15 W 16 W 17 0 Kick off meeting Client / DS 1 Analyze the demand and define criteria allowing to qualify potential suppliers DS 2 Develop the RFI/RFQ to include all key qualification criteria Client / DS 3 Identify list of potential suppliers to include in the RFI/RFQ process Client / DS 4 Conduct first phone screening of supplier database to send RFI/RFQ DS 5 Administer RFI process to ensure as high a return rate as possible DS 6 Develop balance score card to evaluate suppliers according to RFI Client / DS 7 Analyze responses and recommend suppliers to take through the auditing process Client / DS 8 Supplier auditing Client / DS © 2012 Dragon Sourcing. All rights reserved. Conquer New Markets
- 5. Steps and numbersof suppliers 5© 2012 Dragon Sourcing. All rights reserved. Activity Suppliers in China Total number of suppliers 188 Suppliers called 188 Shortlisted suppliers after call 104 RFI/RFQ sent 104 Intend to respond 28 Not willing to participate 76 RFI/RFQ received 28 Pre-audit by Dragon Sourcing 11 Joint audit together with client 5
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- 7. Optimization potential insteel chemical composition 7© 2012 Dragon Sourcing. All rights reserved. Standard Item C Mn Si P S V Nb Ti DIN ST50-2 ≤0.35 ≤1.2 ≤0.5 ≤0.035 ≤0.035 DIN ST52-3 ≤0.20 ≤1.60 ≤0.55 ≤0.040 ≤0.040 GB Q275 0.28～0.38 0.50～0.80 ≤0.35 ≤0.045 ≤0.050 GB Q295 ≤0.16 0.80～1.50 ≤0.55 ≤0.045 ≤0.045 GB Q345 ≤0.20 1.00~1.60 ≤0.55 ≤0.040 ≤0.040 0.02~0.15 0.015~0.060 0.02~0.20 Reduce Risk
- 8. Price analysis 8© 2012Dragon Sourcing. All rights reserved. Supplier Province Steel Tooling cost Unit price Target price Saving 1 Zhejiang Q345 $476 $756 $1,199 37% 2 Zhejiang Q345 $4,000 $798 $1,199 33% 3 Jiangsu Q345 $0 $800 $1,199 33% 4 Fujian Q275 $0 $864 $1,199 28% 5 Shandong Q275 $0 $900 $1,199 25% 6 Jiangsu Q345 $0 $928 $1,199 23% 7 Zhejiang Q275 $0 $1,000 $1,199 17% 8 Fujian Q275 $0 $1,027 $1,199 14% 9 Guangdong Q345 $0 $1,045 $1,199 13% 10 Jiangsu Q295 $0 $1,050 $1,199 12% 11 Guangdong Q345 $230 $1,076 $1,199 10% 12 Zhejiang Q275 $4,840 $1,195 $1,199 0% 13 Jiangsu Q345 $240 $1,220 $1,199 -2% 14 Guangdong Q345 $5,200 $1,250 $1,199 -4% 15 Guangdong Q345 $0 $1,296 $1,199 -8% 16 Jiangsu Q345 $0 $1,319 $1,199 -10% 17 Jiangsu Q295 $0 $1,369 $1,199 -14% 18 Shanghai Q345 $0 $1,450 $1,199 -21% 19 Guangdong Q275 $1,000 $1,750 $1,199 -46% 20 Jiangsu Q275 $800 $1,850 $1,199 -54% 21 Jiangsu Q295 $0 $1,951 $1,199 -63% 22 Zhejiang Q275 $0 $1,952 $1,199 -63% 23 Jiangsu Q345 $0 $2,069 $1,199 -73% 24 Shanghai Q345 $0 $2,240 $1,199 -87% 25 Guangdong Q275 $0 $2,240 $1,199 -87% 26 Jiangsu Q275 $0 $2,433 $1,199 -103% 27 Jiangsu Q275 $0 $2,460 $1,199 -105% 28 Shanghai Q275 $1,300 $6,250 $1,199 -421% Conquer New Markets ReduceRisk Achieve Savings
- 9. FOB price comparison 9©2012 Dragon Sourcing. All rights reserved. 756 798 800 864 900 928 1,000 1,027 1,045 1,050 1,076 1,195 1,220 1,250 1,296 1,319 1,369 1,450 1,750 1,850 1,951 1,952 2,069 2,240 2,240 2,433 2,460 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Achieve Savings
- 10. © 2012 DragonSourcing. All rights reserved. 10 Supplier locations Xinjiang Gansu Jiangxi Zhejiang BEIJING Jiangsu Guangxi Hunan Hubei Qinghai Ningxia Shaanxi Anhui Fujian Neimongu Shanxi Shandong Xizang Sichuan Yunan Guizhou Henan Jilin Liaoning Hebei Guangdong Gansu SHANGHAI Hong Kong Taiwan Heilongjiang Province Quantity Fujian 2 Guangdong 6 Jiangsu 11 Shandong 1 Shanghai 3 Zhejiang 5 Total 28 Conquer New Markets
- 11. Score card ranking 11©2012 Dragon Sourcing. All rights reserved. Supplier Company background Business information Quality management Production Corporate responsibility Cooperate Price Total point Average Ranking Province 5% 10% 25% 25% 5% 5% 25% based on 100 1 78.79 65.63 100.00 90.00 100.00 85.71 100.00 92.29 68.30 1 Zhejiang 2 100.00 84.38 80.00 85.00 100.00 85.71 100.00 88.97 68.30 2 Zhejiang 3 66.67 57.81 75.00 85.00 100.00 57.14 100.00 81.97 68.30 3 Jiangsu 4 87.88 59.38 75.00 70.00 100.00 57.14 100.00 79.44 68.30 4 Jiangsu 5 66.67 57.81 95.00 87.50 100.00 85.71 60.00 79.03 68.30 5 Zhejiang 6 66.67 84.38 75.00 100.00 100.00 57.14 60.00 78.38 68.30 6 Guangdong 7 66.67 53.13 75.00 95.00 100.00 42.86 80.00 78.29 68.30 7 Shandong 8 66.67 70.31 75.00 85.00 100.00 57.14 80.00 78.22 68.30 8 Guangdong 9 90.91 100.00 75.00 100.00 100.00 57.14 40.00 76.15 68.30 9 Jiangsu 10 75.76 85.94 40.00 100.00 100.00 57.14 80.00 75.24 68.30 10 Jiangsu 11 90.91 92.19 40.00 90.00 100.00 57.14 80.00 74.12 68.30 11 Fujian 12 75.76 64.06 75.00 75.00 100.00 57.14 60.00 70.55 68.30 12 Jiangsu 13 66.67 42.19 45.00 70.00 100.00 57.14 100.00 69.16 68.30 13 Fujian 14 75.76 85.94 40.00 75.00 100.00 57.14 80.00 68.99 68.30 14 Guangdong 15 75.76 57.81 60.00 82.50 100.00 42.86 60.00 67.34 68.30 15 Guangdong 16 78.79 73.44 75.00 55.00 100.00 57.14 60.00 66.64 68.30 16 Jiangsu 17 66.67 68.75 55.00 92.50 100.00 57.14 40.00 64.94 68.30 17 Jiangsu 18 66.67 53.13 95.00 70.00 100.00 57.14 20.00 62.75 68.30 18 Guangdong 19 66.67 62.50 55.00 85.00 100.00 57.14 40.00 62.44 68.30 19 Guangdong 20 57.58 46.88 75.00 92.50 100.00 57.14 20.00 62.30 68.30 20 Shanghai 21 66.67 50.00 65.00 67.50 100.00 57.14 40.00 59.32 68.30 21 Guangdong 22 87.88 64.06 55.00 87.50 100.00 57.14 20.00 59.28 68.30 22 Jiangsu 23 48.48 67.19 45.00 80.00 100.00 57.14 40.00 58.25 68.30 23 Jiangsu 24 57.58 46.88 75.00 35.00 100.00 57.14 60.00 57.92 68.30 24 Shanghai 25 69.70 51.56 50.00 80.00 100.00 28.57 40.00 57.57 68.30 25 Zhejiang 26 66.67 56.25 55.00 80.00 100.00 57.14 20.00 55.57 68.30 26 Shanghai 27 78.79 67.19 60.00 25.00 100.00 57.14 20.00 44.77 68.30 27 Jiangsu 28 66.67 39.06 20.00 70.00 100.00 57.14 20.00 42.60 68.30 28 Jiangsu Reduce Risk Achiev e Saving s
- 12. Recommendation after ranking 12©2012 Dragon Sourcing. All rights reserved. 92 89 82 79 79 78 78 78 76 75 74 71 69 69 67 67 65 63 62 62 59 59 58 58 58 56 45 43 0 10 20 30 40 50 60 70 80 90 100 Supplier score Average • DS recommended to audit the top 10 (green highlighted) suppliers at first. Reduce Risk
- 13. Pre-audit results 13© 2012Dragon Sourcing. All rights reserved. Supplier ranking according to score card Original quotation Rank according to pre-audit Updated quotation City Province 9 $1,319 1 $1,319 Wuxi Jiangsu 1 $756 2 $1,478 Hangzhou Zhejiang 6 $1,250 3 $1,350 Foshan Guangdong 10 $1,050 4 Suzhou Jiangsu 7 $900 5 $1,150 Qingdao Shandong 8 $1,045 6 Foshan Guangdong 3 $928 7 $928 Nantong Jiangsu 19 $1,296 8 Foshan Guangdong 16 $1,369 9 Give up Suzhou Jiangsu 5 $1,000 10 $1,235 Ningbo Zhejiang 4 $800 11 $1,200 Wuxi Jiangsu Reduce Risk
- 14. Top 5 suppliersof pre-audit 14© 2012 Dragon Sourcing. All rights reserved. Rank according to audit Comments 1 • All equipment in house • Many German customers • Familiar with ISO 2768-m standard • Quality system needs to be improved • Capable of manufacturing product 2 • All equipment in house • Good quality management • Familiar with ISO 2768-m standard • Highly increased quotation • Capable of manufacturing product 3 • Biggest company audited • Very good quality system • German customers • Familiar with ISO 2768-m standard • Equipment is very good, but CNC can't process product (dimension limit) - would need to outsource • Have potential manufacturing product, outsourcing needs to be checked 4 • All equipment in house • Quality system not very good • Some experience with ISO 2768-M standard • Have potential to work with client if quality management is improved 5 • All equipment in house • Quality system not very good • Some experience with ISO 2768-M standard • Have potential to work with client if quality management is improved • Have potential to work with client if squareness tolerances can be proved
- 15. Company profile example Scoring92.29 Ranking out of 28 1 15 COMPANY INFORMATION Company Name Address Town Province Company Website CONTACT PERSON INFORMATION Contact Person Title Email Tel Fax Mobile phone BUSINESS INFORMATION What date was your company founded? 2001 How much is your registration capital (RMB)? 19 million What's the nature of your company? (Private, state owned, joint venture, etc) Private What is your turnover in million RMB ? 2011 2010 2009 2008 100 50 25 15 How many square meters(m²) does your factory occupy ? 20000 How many employees do you have? 170 How many employees can communicate in English? 3 Does your company have an export license ?(yes or no) yes How many years of export experience do you have? 3 Do you have European / international customers? If yes, which ones? yes What is the percentage of turnover distributed to: Domestic Western Europe North America Rest of the World 75% 10% 8% 7% Who are your top 3 Clients? Clients Industry Country % of sales 1 Dazhong Agricultural machinery China 31% 2 Hangzhou AizhiEngineering machinery China 12% 3 Hangzhou Youjia machinery China 10% QUALITY CONTROL What quality and environmental registrations do you have? Yes / No Date of Certificate Certifying Org. Date of Expiry ISO 9000 Yes 3/12/2010 Peking Tianyi Certificate Authority 3/11/2013 ISO 14000 Yes 8/15/2010 China quality earnest center 8/14/2013 Others (please list) Do you have the instrument in house?(Yes or No) Instrument description and brand Other specification Welding quality test instrument yes welding inspection ruler height 0～40mm 、150° Measure table yes flat 3500×2500mm Painting test yes High precision coating thickness gauge 0～1250μm Do you have the equipment in house?(Yes or No) X axis measuring stroke(mm) Y axis measuring stroke(mm) Z axis measuring stroke(mm) 3D measuring equipment yes 2500 1500 1000 How long do you keep QC record form? 6 years CORPORATE RESPONSIBILITY Do you adhere to all rules and regulations in respect to child labour? Yes How many hours per week, including overtime are working your employee on a regularly scheduled basis? 50 hours Do you have any Ethical and Environmental Policies with independent verification of these policies? Yes Are you willing to sign a confidentiality agreement? Yes
- 16. 16© 2012 DragonSourcing. All rights reserved. PRODUCTION What's your company's main products? crawler tractor crawler bulldozer、Great horsepower wheeled tractor、 welded structure、sheet metal parts、hardware What raw material does your company main process? Q235、Q345、45＃、hot rolling 40Cr、copper、aluminium Do you process ST 50-2 before? Yes Do you process according to tolerance requirement DSN ISO2768-m? Yes Do you have equipment list? (Yes/No) Yes How much capacity do you have to accept new orders? n/a Worker Engineer R&D Quality Control Management Sales How many people do you have in these positions? 145 6 17 6 28 23 How many employees in your company is qualified for CAD? 50 How long does your employee work in your company in average? 3 years What's your worker's average monthly salary? RMB 3,000 How many shift does your company work? How many hours one shift? 2 shifts, 8 hours per shift Do you have an organization chart? (Yes/No) Yes EQUIPMENT Equipment In house or outsourced? Equipment qty Equipment In house or outsourced? Equipment qty WEDM In house 2 CNC Machining center In house 3 Laser cutting In house 1 MAG welding In house 40 CNC plasma cutting In house 1 Welding robot Outsource Stamping In house 1 Sand blasting In house Turning In house 6 Paint Outsource Milling In house 5 Company profile example
- 17. 17© 2012 DragonSourcing. All rights reserved. FACTORY PICTURES Company profile example
- 18. • Client hasgot three potential suppliers in Shanghai area out of a long list of over 180 companies. • Client can move on and develop suppliers as first and second source. • Client can increase local content through the new suppliers. • Basing on a broader supply base, cost reduction on an international basis can be achieved. © 2012 Dragon Sourcing. All rights reserved. Results Conquer New Markets Reduce Risk Achieve Savings Achieve Savings
- 19. Dragon Sourcing Your TailoredApproach to Emerging Markets Dragon Sourcing Tel: +43 664 88518030 christian.santner@dragonsourcing.com BME Symposium Berlin 2012 Beschaffung in Low Cost Countries und Emerging Markets Kosten senken, Risiken vermeiden, Märkte erobern © 2012 Dragon Sourcing. All rights reserved. 19