Here is a case study by Dragon Sourcing on FAN Induction Motors Sourcing Project from the Electrical Components category of Consumer Goods sector for the year 2014 covering China, India, Indonesia, Malaysia, South Korea, Thailand, Turkey, Vietnam. For details contact: www.dragonsourcing.com

1. Sourcing program for Fan induction motors
Case Study
Dragon Sourcing - 龙 源
Your Tailored Sourcing Approach to LCC Sourcing

2. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. Supplier Scorecard
6. RFI/RFQ Analysis
7. Recommendations and Next steps

3. Project Objectives & Scope
To identify, evaluate high quality and competitive suppliers
for fan induction motors to achieve a cost saving and
expanding the supplier base to increase competition for Client
business in the following 8 countries:
• China
• India
• Indonesia
• Malaysia
• South Korea
• Thailand
• Turkey
• Vietnam
We preformed a prescreening process of potential suppliers by
telephone interview, RFI/RFQ, and Balanced Scorecard to fully
understand to the market situation of production.
1. Executive Summary:

4. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. Supplier Scorecard
6. RFI/RFQ Analysis
7. Recommendations and Next steps

5. 2. Approach & Schedule (1/3)
Stage 1: Supplier Identification
No. Step Deliverables
1.
Demand Analysis
Work with Client to define and understand the categories and requirements (specs, volumes, materials,
standards, production technology requirements).
 Project Requirement
Questionnaire
 Kick-Off Report
2.
Supply Analysis
Identify long list of potential suppliers in the countries in scope by leveraging B2B Websites, DS
Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References.
 Supplier Long List
3.
Telephone Pre-screening
Select suppliers to be included in the RFI-RFQ process by telephone pre-screening based on agreed
simple criteria (e.g. capability to make the product, minimum company size, quality certifications,
interest in participating)
 Shortlist for RFI/RFQ
4.
Develop RFI/RFQ
Prepare an RFI/RFQ document, with an aligned Balanced Scorecard that has the objective to pre-
qualify the capabilities of the suppliers, including (but not limited to): Background, Financial, Client and
product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology
capability, R&D capability, cost breakdown structure.
 RFI/RFQ Template
 Balanced Scorecard

6. 2. Approach & Schedule (2/3)
Stage 2: Supplier Pre-Qualification
No. Step Deliverables
5.
Administer NDA (Optional)
Administration and chasing for completion of an NDA with suppliers that have been preselected
 Completed NDAs
6.
Conduct RFI/RFQ Administration
The RFI/RFQ is translated to local languages, as necessary, and distributed to the potential suppliers,
with repeated telephone follow-ups to push for maximum participation and completion.
 Control Sheet
 Completed RFI/RFQs
7.
Analyse RFI/RFQ Responses
Analysis of RFI/RFQ responses and preparation of a report which profiles & objectively ranks the
suppliers, including a recommendation of those that should be audited.
 RFI/RFQ Analysis
Report
 Supplier Profiles
 Proposed Shortlist for
Audit and/or sample
making
8.
Supplier Audit (Optional)
Audit selected suppliers from short list, finish audit report and negotiate price for final bidding.
 Audit report
9.
Contracting management (Optional)
Go sampling or test to confirm the final supplier, and prepare contract, negotiate contract terms with
suppliers to finalize.
 Contract

7. 2. Approach & Schedule (3/3)
Step Who W01 W02 W03 W04 W05 W06 W07 W08 W09 W10 W11 W12 W13 W14
1
Demand Analysis: technical requirements, standards applied,
material specification unit prices and annual volumes.
Client
2
Identify list of potential suppliers in the 6 countries to include
in the RFI/RFQ
DS
3 Telephone pre-screening DS
4 Finalize the RFI/RFQ Client/DS
5 Administer RFI/RFQ DS
6
Develop balance score card to evaluate suppliers according
to RFI/RFQ
Client/DS
7 Analyze responses and select suppliers for audit phase Client/DS
8
Carry out technical and social audits of pre-selected
suppliers
Client/DS
Out of scope for this
initial phase
Milestones
Today
Not started Done
In process Delay
Note that the schedule maybe impacted by the time taken to collect category specifications,
gain deliverable validation, short list suppliers, produce samples & test samples.

8. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. Supplier Scorecard
6. RFI/RFQ Analysis
7. Recommendations and Next steps

9. 3: Demand analysis
Fan Motors (127V or 220 V) with copper, aluminum or copper/aluminum
winding.
• Motor type: Permanent capacitor: (4 poles)
• Direction of rotation: Clockwise from shaft end
• Thermal cutoff: 130℃, 2A 250V
• Jacketed with 4 conductors according to UL758, style 2103;
• Conductors cross section: 22 AWG with 26*ø0.12 bare
copper wires;
• Conductors insulation : PVC 105℃;300v,0.4mm thickness;
• Copper wires helical twisting path: 20 to 25mm;
• External jacket: PVC 105℃, 300v, thickness: 1.0+/-0.1 Black
color;
• Outside cable diameter: 5.9+/-0.1mm
• Conductors helical twisting path: 50 to 70mm
• There must be talc between conductors and external jacket
• the motor construction shall comply with current version of
IEC 60.335-1 and IEC 60.335-2-80

10. 3: Demand analysis
Estimated Annual demand represent 7.7 M USD for 2 Million pieces
Part number TS30 TS40 VA3B Total
Drawing: Fan Motor TS30 alu Fan Motor TS40 alu Fan Motor VA3B -
Market : Brazil & Columbia -
Winding: copper, aluminum or copper/aluminum -
Voltage: 127V or 220 V 127V 220V 127V 220V 127V 220V -
Incoterm: FOB FOB FOB FOB FOB FOB -
Target Price (USD/pc) 3.7 3.7 4.25 4.25 3.4 3.4 -
Yearly demand (Million pcs): 0.21 0.09 0.7 0.3 0.49 0.21 2
Total spend(M USD): 0.78 0.33 2.98 1.28 1.67 0.71 7.74

11. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. Supplier Scorecard
6. RFI/RFQ Analysis
7. Recommendations and Next steps

12. 4: Sourcing process
Total 78 RFI/RFQs sent out and 14 RFQs received.
13 13
4 4 1
118 118
42 42
8
31 31
5 5
1
8 8
3 3
1
18 18
5 5
1
87 87
15 15
0
13 13
2 2
1
9 9
2 2
1
0
50
100
150
200
250
300
Number of suppliers identified Number of suppliers called Supplier passed phone screen Number of RFI/RFQ sent Number of RFI/RFQ received
Fan Induction Motors
Malaysia Indonesia
India Thailand
Turkey Vietnam
China South Korea
297 297
78 78
14

13. 4: Sourcing response
South Korea
1
China
8
Turkey
1
Thailand
1
Vietnam
1
Indonesia
1Malaysia
1
India
Supplier Name Country Score
Supplier 1 China 73.6
Supplier 2 China 69.3
Supplier 3 China 69.0
Supplier 4 China 65.9
Supplier 5 China 63.6
Supplier 6 Malaysia 61.8
Supplier 7 China 61.5
Supplier 8 China 58.1
Supplier 9 Indonesia 51.6
Supplier 10 Thailand 46.3
Supplier 11 Turkey 40.6
Supplier 12 China 34.2
Supplier 13 Vietnam 7.3

14. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. Supplier Scorecard
6. RFI/RFQ Analysis
7. Recommendations and Next steps

15. 5: Supplier scorecard
Company Profile Weight of criteria Scoring Max Score per criteria Weight of the section
Company founded years 5% 0= Not provide; 1= Less than 5 years; 2= 5 to 10 years; 3= 10 to 20 years; 4= Above 20 years 4
20%
Registered capital? (USD) 5% 0= Not provide;1= Less than 5 Million; 2= 5-10 million; 3= 10-20 Million; 4= More than 20 million 4
Turnover in 2013 ? (USD) 5% 0= Not provide; 1= Less than 5 million; 2= 5-10 million; 3= 10-30 million; 4= More than 30 million 4
Workfloor size (M2) 5% 0= Not provide; 1= Less than 10000 M2; 2= 10000 to 20000 M2; 3= Above 20000 M2; 3
Employees number 10% 0= Not provide; 1= Less than 200 staff; 2= 200-500 staff; 3= 500 to 2000 staff; 4= More than 2000 staff 4
How many people speak english? 10% 0= No; 1= 1 to 3 people; 2= 4 to 10 people; 3= Above 10 people 3
Export licence 5% 0= No; 1= Yes; 1
Export experience 5% 0= No experience; 1= 1 to 5 years; 2= 5 to 10 years; 3= More than 10 years; 3
Have subsidiaries in other countries? 5% 0= No; 1= Yes; 1
Supply products to SDA industry? 10% 0= No; 1= Yes; 1
Percentage of turn over coming from SDA industry 5% 0= No; 1= less than 10%; 2=10% to 30%; 3= 30% to 50%; 4= Above 50% 4
Have SAM /international customers? 10% 0= No; 1= Yes; 1
Work with Client group before? 5% 0= No; 1= Yes; 1
% of export 10% 0= No export; 1= less than 20% export; 2= 20% to 50% export; 3= Above 50% export 3
Profile of Top 3 Customers 5% 0= Not provided; 1= Only small local customers ; 2= Some national customers; 3= Some international customers 3
Subtotal 100% 40 10%
Production capability Weight of criteria Scoring Max Score per question Weight of the section
Main type motor 5% 1= Only other motors; 2= Only Fan motors; 3= Fan and other motors 3
50%
How many fan motor assembly lines? 8% 1= less than 3; 2= 3 to 5; 3= Above 5; 3
Monthly production capacity of fan motors 12% 1= Less than 100K pcs; 2= 100K to 200K pcs; 3= 200K to 400K pcs; 4= Above 400K pcs; 4
Current free monthly production capacity? 15% 1= Less than 100K pcs; 2= 100K to 200K pcs; 3= above 200K 3
All production processes in house? 5% 0= No; 1= Yes; 1
Outsourced process or component 5% 1= Main parts outsourced; 2= some important parts outsourced; 3= Less important parts outsourced;4= No outsourced; 4
Aluminum winding experiance 10% 0= No; 1= Yes; 1
RD team exist and size 5% 0= No; 1= less than 5; 2= 5 to 10; 3=10 to 20; 4= above 20 4
# of workers with 5 years experience 5% 1= Less than 100 staff; 2= 100-200 staff; 3= 200 to 500 staff; 4= above 500; 4
Equipment list available 5% 0= No; 1= Yes; 1
Preventative maintenance programme 5% 0= No; 1= Yes; 1
Maintenance cycle: 5% 1= Yearly; 2= Monthly; 3= Weekly; 4= Daily 4
Documented Inventory Managemnt System 5% 0= No; 1= Yes; 1
ERP system 5% 0= No; 1= Yes; 1
FIFO 5% 0= No; 1= Yes; 1
Subtotal 100% 36 30%
Quality system Weight of criteria Scoring Max Score per question Weight of the section
Certificates
ISO 9001 5% 0= No; 1= Yes 1
30%
ISO 14001 5% 0= No; 1= Yes 1
CE 5% 0= No; 1= Yes 1
UL 5% 0= No; 1= Yes 1
OHSAS18001 5% 0= No; 1= Yes 1
Any other certificate? 5% 0= No; 1= Yes 1
ROHS 5% 0= No; 1= Yes 1
REACH 5% 0= No; 1= Yes 1
Incoming material QC 5% 0= No; 1= Yes 1
Daily on-line QC 5% 0= No; 1= Yes 1
100% QC for finished goods? 5% 0= No; 1= Yes 1
Final products inspection and report 5% 0= No; 1= Yes 1
Average reject rate 5% 1= above 0.3%; 2=0.1% to 0.3%: 3= 0.05% to 0.1%; 4= Less than 0.05% 4
On line reject rate in 2013 5% 1= above 0.3%; 2=0.1% to 0.3%: 3= 0.05% to 0.1%; 4= Less than 0.05% 4
PPM customer in 2013 10% 1= Above 1000; 2= 500 to 1000; 3= 300 to 500; 4= less than 300; 4
Warranty term 5% 1= less than 1 year; 2= 1 to 2 years; 3= 2 to 3 years; 4= above 3 years; 4
Accept 3rd party QC 5% 0= No; 1= Yes 1
QC records 5% 0= No; 1= Yes, less than 1 year; 2= Yes, 1 to 3 years; 3= Yes, above 3 years; 3
Test equipment in house 5% 0= No; 1= Have less than 8 devices; 2= Have 8 to 10 devices; 3= Have 10 to 13 devices; 4= Have all devices 3
Subtotal 100% 35 30%

16. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. Supplier Scorecard
6. RFI/RFQ Analysis
7. Recommendations and Next steps

17. 6: RFI/RFQ analysis
DS suggest send samples to selected suppliers with good RFI scores and
quotes close to Client prices

18. 6: RFI/RFQ analysis – RFI scoring

19. Agenda
1. Executive Summary
2. Approach & Schedule
3. Demand Analysis
4. Sourcing Response
5. RFI/RFQ Analysis
6. Supplier Scorecard
7. Recommendations and Next steps

20. 7. Recommendations and Next steps
Overview:
• Turkey: Only 1 supplier quote and price is much higher than Client, suppliers confirmed Turkey is mainly import
from South Asia;
• India: No quote received, supplier mainly produce industrial motors.
• Thailand: Only 1 quote received and price is much higher than Client, and not quote all motors.
• Vietnam: All suppliers reject quote without sample, only 1 supplier provide price range for reference and similar
to Client price. Seems suppliers have ability to produce but very weak on R&D;
• Indonesia: Only 1 supplier quote and price much higher than Client;
• Malaysia: 1 supplier quote much higher price than Client, another supplier quote very good price but as found
totally collect price from a China supplier (same one as DS sourced in China);
• South Korea: The quote is much higher than Client, suppliers suggest buy from China;
• China: Some suppliers quote very good price with potential 15% savings(1.2M) totally. Suppliers request for
samples to make accurate quotes.
Next steps:
1. DS suggest send samples to good RFI/RFQ potential suppliers to ask for accurate quote.
2. Vietnam looks is a potential supply market, suggest send samples to suppliers to ask for quote.
3. Audit selected suppliers.