Generating savings, creating momentum and training client resources for low value high consumable products. Know more here: https://www.dragonsourcing.com/china-sourcing-company/

1. Dragon Sourcing
Your Tailored Approach to Emerging Markets
China Case Study
MRO Electrical Spare Parts
Shanghai 2013

2. 1. Objectives
Context
Objectives
Generating savings, creating momentum and training client
resources for low value high consumable products.
DS Strategic Sourcing
Objectives
 Data collection pack analysis
 Identify list of potential suppliers in China to include in the RFI / RFQ
process by leveraging the web, external databases and various
networks of experts
 Develop the RFI/RFQ – jointly with Client – to include all key supplier
qualification criteria (e.g.: financial, technology, manufacturing and
services capability, corporate responsibility, quality, etc.) and
quotation requirements
 Sign NDA with suppliers before sending RFI/RFQ
 Administer the RFI/RFQ process to ensure as high a return rate as
possible including quotation, and credentials’ visible outlets from
supplier
 Analyze responses and use balance score card developed together
with Client management team to rank and recommend suppliers
which Client needs to take through a formal qualification process
 Jointly develop with Client the audit questionnaire
 Jointly develop or modify contract contents based on needs (when it
is needed).
 Carry out audits (when relevant) (either alone or jointly with Client
auditors or buyers) of the suppliers that appear attractive and
competitive based on the RFI/RFQ process
 Issue audit reports (when relevant) and rank suppliers based on audit
and price competitiveness
 Choose suppliers for formal bidding
 Saving analysis and suppliers selection after formal bidding
 Finalize contract and start engagement
© 2013 Dragon Sourcing. All rights reserved. 2

3. 2. Project Timeline
Jul Aug Sep Oct.
Steps Who W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13 W14 W15 W16
0 Kick off meeting Client/DS
1 Data collection pack analysis Client/DS
2 Identify list of potential suppliers Client/DS
3
Develop the RFI/RFQ to include all key
qualification criteria.
Client/DS
4
Conduct first phone screening to select
suppliers to send the including NDA
DS
5
Administer NDA process ton ensure high
return rate
DS
6
Administer RFI/RFQ process to ensure
as high a return rate as possible
DS
7
Develop balance score card to evaluate
suppliers according to RFI/RFQ
Client/DS
8
Based on RFI/RFQ analysis, make
recommendations for audit
Client/DS
9 Potential suppliers site meeting Client/DS
10 Commodity define Client/DS
11 Saving analysis and supplier selection Client/DS
12 Supplier audit Client
13 Finalize contract and start engagement Client/DS
TODAY
3© 2013 Dragon Sourcing. All rights reserved.
Steering
Committee
Started FinishedNot-started Delayed
Stakeholders &
project team

4. 3. Demand Analysis: Electrical spare parts total 207 brands worth RMB 9.6M. 30 main
brands(RMB 4.7M) were selected for RFQ. 173 brands items number below 5 and 4
brands purchased from manufacturers are not selected for RFQ.
© 2013 Dragon Sourcing. All rights reserved. 4
1232
155
9.6 4.7
0
200
400
600
800
1000
1200
1400
Indirect MRO Electrical spare parts Selected for RFQ
Electrical spare parts total RMB 9.6M, 6.2% MRO spendM RMB

5. 3. Demand Analysis: RMB 4.7M Spend on top 30 brands with Siemens representing RMB
2.6M or 55% of the spend on the top 30 brands
© 2013 Dragon Sourcing. All rights reserved. 5
0
500
1,000
1,500
2,000
2,500
3,000
Spend per brandk RMB

6. 4. RFI/RFQ Strategy: Do to the large percentage of spend with Siemens, Siemens and other
brands were evaluated separately in RFI/RFQ
• Siemens is the main brand used in electrical spare parts, total 232 items and 55% the send
• Siemens Strategy: have Siemens recommended 1st grade agents compete for the business
• Other Brands: Consulate the spend with 3 MRO Distributors
© 2013 Dragon Sourcing. All rights reserved. 6
Sign contract with
suppliers with list
price and fixed
discount rate
Existing items unit price
below RMB 10k: purchase
from Current Supplier with
best price
New items/unit price
above RMB 10k items:
enquire from 3 suppliers,
choose the most competitive
price and establish material
code in master data
Items with savings: purchase
from recommended new
suppliers with fixed price
Sign frame
contract with 3
suppliers
Items with no quote/savings:
double check specs and
reconfirm with new suppliers,
choose the most competitive
price
items with unreasonable
savings: reconfirm with
suppliers compared with
Client current price, choose
the most competitive price
Other 29 BrandsSiemens

7. 5. RFI/RFQ Progress
© 2013 Dragon Sourcing. All rights reserved. 7

8. 6. Supplier Location Analysis
Xinjiang
Gansu
Jiangxi
Zhejiang
BEIJING
Jiangsu
Guangxi
Hunan
Hubei
Qinghai
Ningxia
Shaa
nxi
Anhui
Fujian
Neimongu
Shanxi Shandong
Xizang
Sichuan
Yunan
Guizhou
Henan
Jilin
Liaoning
Hebei
Guangdong
Gansu
SHANGHAI
Hong Kong
Taiwan
Heilongjiang
CHONGQING
Sichuan
Client site
Province # of suppliers
Shanghai 56
Taiwan 30
Guangdong 18
Jiangsu 12
Beijing 7
Zhejiang 5
Fujian 5
Tianjin 3
Shandong 3
Sichuan 1
Inner Mongolia 1
Grand Total 141

9. 0
10
20
30
40
50
60
70
80
90
100 Supplie score out of 100 by section breakdown
Business information
Production
Quality system
Cooperation
7. Scorecard - Non-Siemens Suppliers (1/2)
© 2013 Dragon Sourcing. All rights reserved. 9
Average 64
Current supplier
S1 S2 S3 S4 S4 S5 S6 S7 S8 S9 S10 S11 S12 S13 S14 S14 S15 S16 S17 S18 S20S19 S21
Supplier
Business information Production Quality system Cooperation Total
30% 35% 30% 5% 100%
1 29 35 30 4 98
2 20 33 30 5 87
3 30 23 30 3 87
4 21 28 30 4 84
5 22 26 30 5 83
6 25 33 15 5 77
7 23 31 12 5 70
8 21 22 23 3 69
9 21 33 11 4 68
10 19 28 15 5 68
11 20 28 15 3 67
12 20 28 15 3 67
13 16 29 15 4 65
14 21 28 11 4 64
15 24 20 15 3 62
16 19 28 11 3 61
17 13 28 12 4 58
18 20 24 11 3 58
19 23 18 12 3 55
20 15 19 15 4 53
21 12 22 12 3 49

10. 7. Scorecard –Siemens Suppliers (2/2)
© 2013 Dragon Sourcing. All rights reserved. 10
Business
information
Production Quality system Cooperation Total
Weight 30% 35% 30% 5% 100%
Supplier 22 27 25 30 3 85
Supplier 23 25 25 30 3 84
Supplier 24 26 25 15 3 69
Supplier 25 14 19 0 3 36
Current supplier

11. 0
500
1,000
1,500
2,000
2,500
Current spend Average 2nd Best quote Best
Total spend for 29 brands and savingsk RMB
-RMB96k
(4.6%)
-RMB301k
(14.2%)
-RMB308k
(14.6%)
8. Saving Analysis: Savings postnatal for Siemens items was up to 16% and other
brands was up to 14%
© 2013 Dragon Sourcing. All rights reserved. 11
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
Current spend Average 2nd Best quote Best
Total spend and savings for Siemens spare parts
k RMB
-RMB348k
(13%)
-RMB390k
(15%)
-RMB424k
(16%)

12. 8. Saving Analysis: Total Potential savings combined for 30 brands was 15.6 to 9.7%
(RMB 733K to 457K)
• Savings range was calculated base on current price.
• Regardless suppliers, we selected the best quote, the 2nd best quote and the average savings quote when actually we get some savings.
• Quotations above current Client quotes are not taken into consideration
© 2013 Dragon Sourcing. All rights reserved. 12
0
600
1,200
1,800
2,400
3,000
3,600
4,200
4,800
5,400
Current spend Average 2nd Best quote Best
Total spend for Siemens and 29 brands and savings
-RMB692k
(14.7%)
-RMB733k
(15.6%)
-RMB457k
(9.7%)