Iron Cast and Machined Components Case study

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Case Study
China Sourcing to Audits for
“15 – 1,500 Kg Iron Cast and Machined Components ”
Dragon Sourcing
Your Tailored Sourcing Approach to Emerging Markets
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Supplier Market screening in China for “Casting Parts”
Context
Our client is a leading packaging equipment supplier from
Europe.
Our client wanted to challenge its current casting supplier
as well as identifying new cost reduction opportunities in
China.
Segments involved:
•Casting Parts (15 to 1,500 Kg)
DS Supplier Market analysis
Objectives
• Collected detailed demand requirements for casting parts
• Identified list of potential suppliers / foundries mainly
focusing on China Foundry Association members
• Developed jointly with the client a RFI/RFQ
• Administered the RFI/RFQ process with suppliers who
have both passed the pre-screening on the phone and
signed NDA to keep client’s name & info confidential
• Developed jointly with the client a supplier scorecard
• Analyzed RFI/RFQ responses and ranked suppliers
• Recommended shortlisted suppliers for Audits
• Conduct Audits with the client
• The client to start cooperation with selected suppliers on
sampling and pilot order
© 2013 Dragon Sourcing. All rights reserved.

© 2012 Dragon Sourcing. All rights reserved. 3
The scope of work included iron casting parts of 20 SKUs
SKU
Weight Per
Unit in Kg
Designation
Painted
Yes / No
1 56 Gear housing No
5 15.7 Bearing No
6 15.7 Bearing No
7 17.1 Bearing No
8 17 Bearing No
9 1,038 Bearing Yes
10 1,350 Side frame Yes
13 932 Side frame Yes
RFQ includes 20 SKUs of weight range from 15.7 Kg to
1,440 kg, made of iron (series number: EN-GJL-250 ),
other key technical specifications were informed to
suppliers in drawings.

Week No.
Project Activity
1 2 3 4 5 6 7 8
1. Demand Analysis
2. Supply Market Analysis
3. Telephone Pre-screening
4. Develop RFI/RFQ
5. Conduct RFI/RFQ Administration

6. Analyze RFI/RFQ Responses

4
Program Schedule: Target was to finalize the program within 8 weeks
Project workflow updated
Done Started Delivery critical Delay
Currently Milestones Not started

Overview of supplier qualification process

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Suppliers for RFI/RFQ
Our approach enabled us to have Shortlisted and Audited 8 suppliers
through a supplier qualification process step by step
Selection of potential
suppliers
Pre-qualified suppliers
On the phone
Administrated the RFIRFQ
Analysis suppliers’
RFIRFQ feedback
316
128
38 24
8
Suppliers For Phone
Interview
Suppliers Passing
Phone Screening
Suppliers Responding
To NDA
Suppliers Responding
To RFIRFQ
Shortlisted For Audit

Company background
Weight
of criteria
Scoring
Max Score
per criteria
Max Point
per criteria
Weight of
the section
How long is your industry experience? 20% 1= <5 years, 2= 5 to 10 years, 3= >10 years 3 0.6
25%
What's your turnover in 2012? 15%
1= Lowest 1/3 of responses, 2= Middle 1/3 of responses, 3= Top
1/3 of responses
3 0.45
How many employees do you have? 15% 1= <50 staff, 2= 50 to 100 staff, 3= >100 staff 3 0.45
Do you have good English capability with engineering/technical staffs as well as
sales/account personals?
25% 0 = Not satisfactory, 1 = Average, 2 = Good 2 0.5
Do you have experience of working with European customer for your casting products? 25% 0 = No, not yet,1 = Yes for the past, 2 = Yes for now 2 0.5
Subtotal 100% 13 2.5 25%
Production Capabilities
Weight
of criteria
Scoring
Max Score
per criteria
Max Point
per criteria
Weight of
the section
Do you have all your processes in house with strong design & fabrication capability? 25% 1 = Can only do casting or machining, 2 = Yes 2 0.5
25%
Can you produce the total 20 client's casting products in house? （ Casting ） 25% 1= No, partly, 2= Yes 2 0.5
Can you 100% meet with the specification of client's casting products? (Machining ） 25% 1= No, partly, 2= Yes 2 0.5
What's your annual production capacity in ton? 25% 1= Lowest 1/3, 2= Middle 1/3, 3= Top 1/3 of responses 3 0.75
Subtotal 100% 9 2.25 25%
Quality Control
Weight
of criteria
Scoring
Max Score
per criteria
Max Point
per criteria
Weight of
the section
Do you have ISO 9001? 20% 0= No, 1= Yes 1 0.2
20%
Do you have ISO 14000? 20% 0= No, 1= Yes 1 0.2
Do you have any other key certificate like TS16949? 20% 0= No, 1= Yes 1 0.2
Can you perform the mentioned testings internally with required equipments? 20% 0= Poor, 1= Satisfactory, 2= Excellent 2 0.4
Do you accept 3rd. party QC and testing to secure the quality? 20% 0= No, 1= Yes 1 0.2
Subtotal 100% 6 1.2 20%
Export Experience
Weight
of criteria
Scoring
Max Score
per criteria
Max Point
per criteria
Weight of
the section
Years of export experience? 30% 0= Not exporting, 1= 5 years less, 2= 5 or above years 2 0.6
20%Do you have export license? 30% 0= No, 1= Yes 1 0.3
Can you handle DDP quote / pricing? 40% 0= No, 1= Yes 1 0.4
Subtotal 100% 4 1.3 20%
Cooperation
Weight
of criteria
Scoring
Max Score
per criteria
Max Point
per criteria
Weight of
the section
Cooperation / Attitude during RFI/RFQ 100%
1= Acceptable, 2= Satisfactory
3= Excellent with great interest
3 3 10%
Subtotal 100% 3 3 10%
Total scoring 35 10.25 100.00%
Criteria definition for manufacturer suppliers’ RFI feedback ranking & scoring

8
Results of the suppliers’ RFI feedback ranking & scoring
Company
background
Production
Capabilities
Quality Control
Export
Experience
Cooperation
25% 25% 20% 20% 10% base 100
1 Supplier 1 100.00 100.00 100.00 100.00 100.00 100.00 1
2 Supplier 2 100.00 100.00 100.00 100.00 100.00 100.00 1
3 Supplier 3 100.00 100.00 83.33 100.00 100.00 96.67 2
4 Supplier 4 100.00 77.78 100.00 100.00 100.00 94.44 3
5 Supplier 5 100.00 77.78 100.00 100.00 100.00 94.44 3
6 Supplier 6 90.00 100.00 83.33 100.00 100.00 94.17 4
7 Supplier 7 94.00 88.89 83.33 100.00 100.00 92.39 5
8 Supplier 8 94.00 100.00 66.67 100.00 100.00 91.83 6
9 Supplier 9 92.00 100.00 66.67 100.00 100.00 91.33 7
10 Supplier 10 100.00 100.00 66.67 100.00 66.67 90.00 8
11 Supplier 11 100.00 88.89 83.33 76.92 100.00 89.27 9
12 Supplier 12 100.00 77.78 83.33 76.92 100.00 86.50 10
13 Supplier 13 78.00 66.67 100.00 100.00 100.00 86.17 11
14 Supplier 14 94.00 77.78 83.33 69.23 100.00 83.46 12
15 Supplier 15 80.00 66.67 83.33 100.00 100.00 83.33 13
16 Supplier 16 94.00 77.78 66.67 69.23 100.00 80.12 14
17 Supplier 17 80.00 77.78 100.00 46.15 100.00 78.68 15
18 Supplier 18 82.00 77.78 50.00 76.92 100.00 75.33 16
19 Supplier 19 86.00 77.78 50.00 69.23 100.00 74.79 17
20 Supplier 20 72.00 77.78 66.67 69.23 100.00 74.62 18
21 Supplier 21 82.00 55.56 50.00 100.00 100.00 74.39 19
22 Supplier 22 80.00 77.78 50.00 69.23 100.00 73.29 20
23 Supplier 23 94.00 55.56 50.00 69.23 100.00 71.24 21
24 Supplier 24 30.00 55.56 50.00 23.08 66.67 42.67 22
Sections
Total
100%Supplier name RFI Rank#

Quotation Analysis
Example unit casting quotes – SKU 1 collection
SKU 1 Single Casting Unit Quote (€) - RFI Score Chart
72.24
72.44 73.19
73.48 74.29 78.40 81.48 83.05 83.54
83.65
83.65
84.00 87.50 91.00
91.00 92.71
100.97 106.20
107.10
109.20
118.50
132.88
€ 0.00
€ 20.00
€ 40.00
€ 60.00
€ 80.00
€ 100.00
€ 120.00
€ 140.00
Supplier1Supplier2Supplier3Supplier4Supplier5Supplier6Supplier7Supplier8Supplier9Supplier10Supplier11Supplier12Supplier13Supplier14Supplier15Supplier16Supplier17Supplier18Supplier19Supplier20Supplier21Supplier22
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
Casting Price RFI Score

Quotation Analysis
Example Best and Average Fine Machining Costs Per Each SKU
Average and Best Quote Per Sku (€ / pcs)
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
1,800.00
2,000.00
2,200.00
2,400.00
2,600.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Average Price Best price

Supplier Name Total Costs Of Products Total Costs Of Pattern Total Buying Spend RFI Ranking
Supplier 1 € 227,453.80 € 22,600.00 € 250,053.80 3
Supplier 2 € 252,418.17 € 10,833.40 € 263,251.57 6
Supplier 3 € 239,531.60 € 23,990.00 € 263,521.60 1
Supplier 4 € 250,432.00 € 16,400.00 € 266,832.00 4
Supplier 5 € 258,172.28 € 11,071.43 € 269,243.71 12
Supplier 6 € 269,461.27 € 11,961.40 € 281,422.67 20
Supplier 7 € 262,087.78 € 20,500.00 € 282,587.78 9
Supplier 8 € 252,418.17 € 36,844.33 € 289,262.50 10
Supplier 9 € 278,656.00 € 11,053.30 € 289,709.30 16
Supplier 10 € 284,480.00 € 11,180.00 € 295,660.00 2
Supplier 11 € 298,520.75 € 17,924.27 € 316,445.02 7
… … … … …
Quotation Analysis
Example Buying Spend Per Supplier For Each Product Category (SKU 1 ~ SKU 8)

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Company Information
Company Name
Address
City
Province
Company Website
Contact Person Information
Contact Person
Title
Email
Tel
Mobile phone
Business Information
When was your company founded? 2005 (grown from the old factory)
What's the nature of your company? Private
How much is your registration capital ? 9.7M USD
What’s the size of your factory? 106,000 ㎡
Turnover in million of 2012 （ USD) ? 45M USD
People who’re capable of English? 10
Total Employee Officer Engineering Quality Control Worker
More than 500 80 46 166 960
%Sales exports to the main markets
Europe U.S. Asia Others
18% 15% 50 17%
Can you list your typical customers?
Customer Industry Country End Product
SULZER PUMP Germany
Pump & Valve
parts
NACCO
FORKLIFT
CASTING
U.S.
Engineering
Machinery
NISSAN
MACHINING
CASTINGS
Japan Auto parts
Production / Testing / Export Experience
Can you do casting, machining and painting in house? Yes
Which ways do you produce casting? Sand casting, die casting etc.
Which materials can you handle? Iron, steel etc.
What’s the weight range you can handle for casting? 1 ~ 1,500kg
What’s the dimension range you can handle for casting? Not limited
What’s your max production capacity per year in ton? 60,000 ton
What’s your actual production capacity in ton in 2012? 40,000 ton
How many years of export experience do you have? More than 20 years
Do you have export license? Yes
Can you handle DDP price for your customer? Yes
Can you proceed testing internally? Yes
Ultrasound Y Chemistry Y
Brinell Hardness Y Mechanical Property Y
Microstructure Y Nondestructive Test Y
ISO 9001 Y ISO 14001 N
Other certificates or requirements you’re compliant with? TS 16949 etc.
Unit Quotation Display (€)
Item 1 187.50 Item 11 2,950.00
Item 2 187.50 Item 12 3,630.00
Item 3 240.63 Item 13 2,564.00
Item 4 240.63 Item 14 2,560.00
Item 5 99.53 Item 15 2,588.00
Item 6 99.53 Item 16 2,604.00
Item 7 114.22 Item 17 2,484.00
Item 8 114.06 Item 18 2,560.00
Item 9 2,826.00 Item 19 2,560.00
Item 10 3,450.00 Item 20 2,696.00
Reamark & DS Comments
1. Use aluminum pattern
2. Quotes including fine machining
3. It’s a very big and famous casting & machining manufacturer in north China
Company Profile
Example Supplier Casting Industry Co., Ltd. (1/2)

Audit
Example segment definition for supplier audit performance scoring

1515
Supplier
Audit
Score
English Ability
European
Oriented Client
Visible Machining Level
Towards Client’s Products
Visible Quality
Control Level
Supplier 1 66 Normal Bizer
In house, compliant fine
machining seems achievable
Normal
Supplier 2 80 Good Wirtgen, Dorrenberg
Outsourced, compliant fine
Good
Supplier 3 55 Normal
65% exported to
Europe but no current
German clients
Outsourced, not leading DS to
visit the machining facility
Normal
Supplier 4 83 Normal Artu, Saint-Gobain
Good
Germany Ministry of
Railways, Siemens
In house, compliant fine
Good
60% exported to
Europe
Normal
Ebro, Lemken
Rogelberg, Var
Fine machining in house only
available for the first 8 SKUs
Normal
Supplier 8 71 Normal Laso, Rossi
Good
Audit
Example audit performance overview

 Background
• 100% casting & 40% fine machining done in house
• It's a well organized casting factory in South China, quality control, documentation system and workshop
managing are standardized and regulated.
• 15% exported to European market and Laso and Rossi are their important clients in that area and their biggest
market is for the North America (60%), Josam is the typical client there.
• The outsourced machining factory is quite famous in the local province and their capability is indeed visually
good.
• * Preferably DS would recommend this supplier for the sampling stage.
 Location & Traffic
• The factory is 1 hour’s drive away from the city where is about 1.5 hours’ fly away from Shanghai. The outsourced
machining factory is just near the city centre. Both factories are quite near the port of exporting. (20 minutes’
truck away)
Audit
Example DS comments on audited supplier

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Project Outcome
• Identified and audited 8 high quality suppliers capable of meeting client’s technical requirements
• Obtained best possible FOB & DDP prices for the client to compare with their target prices
• Provided client a clear and reliable cost break down analysis for the purchasing in China including
costs of casting, pattern, rough machining, fine machining, painting and logistics etc.
• Benefited from suppliers’ technical advices, the client has considered to modify some drawings to
make the products more practical and durable

Iron Cast and Machined Components Case study

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