Global Sourcing Case Study (Chinese Appliances Market)

Global Sourcing Case study in Appliances Market
Dragon Sourcing - 龙源
Your Tailored Sourcing Approach to LCC Sourcing

Agenda
© 2013 Dragon Sourcing. All rights reserved. 2
1. Context
2. Sourcing Strategy
3. Conclusions and Results

Context
 One of the European leading manufacturers and distributors of major domestic
appliances (washing machines, fridges, freezers, ovens etc.)
 Selected Dragon Sourcing to launch an LCC programme for 5 spend categories in 9
countries
• 5 categories: fan motor, bearing, run capacitor, wot evaporator and yellow glass wool
• 9 countries: China, China Taiwan, Indonesia, Thailand, Malaysia, South Korea, Turkey, Russia and
Ukraine.
 Through the programme, identify and qualify new competitive suppliers in the selected
sourcing countries.

• Steering Committees weekly (conference
call) to review overall progress on all
categories
• Categories follow-up meetings on an ad-
hoc basis to review category issues
• Meeting minutes record main decisions,
planned actions and project status
Dragon SourcingClient
DS CEO
DS Account Manager
CPO
Strategic Sourcing
Manager
Buyer
Buyer
Buyer
Buyer
Buying Analyst China
Buying Analyst India
Buying Analyst
Vietnam
The sourcing programme was managed by a multinational team of Dragon
Sourcing buyers
Buying Analyst
Turkey
Buying Analyst
Ukraine
Buyer

5 spend categories
Fan Motor Bearing

5 spend categories (continued)
Run Capacitor Wot Evaporator Yellow Glass Wool

Agenda
1. Context

• Analyse spend category in detail
– Specifications and quality requirements
– Volumes
– Deadlines
• Analyse supply market and identify
potential suppliers
• Pre-screening potential suppliers through
telephone based on client’s criteria
• Pre-qualify potential suppliers through an
RFI-RFQ process
• Analyse supplier RFI-RFQ responses and
calculate fully delivered price (FOB price,
logistics, import duties, ADT,..), develop
score card
• Shortlist suppliers recommended for audit
based on RFI/RFQ process and score card
• Finalize suppliers for audit
• Make audit schedule and budget
• Audit shortlisted suppliers
• Make a report of audited suppliers
• Build supplier profiles
• Select 2-3 suppliers for sample
development process
• Manage sample development process
• Conduct final negotiations and select
suppliers
• Finalise Contract
Step 1
Supplier identification and
pre-qualification
Step 2
Supplier Selection and contracting
Keyactivities
Dragon Sourcing we nt through the following 2 stage process

– Volumes
– Deadlines
potential suppliers
RFI-RFQ process
score card
development process
suppliers
Step 1
pre-qualification
Step 2
Keyactivities
According to client’s procurement strategy, Dragon Sourcing offering covers
2 steps’ sourcing process

Product drawing
The first step was to develop a comprehensive understanding of the
requirements
Product pictures
Product Wot Evaporator
Yearly Qty XXXXXXpcs
Current
Price
(DDU)/pc
EUR XXX
Target
Price
(DDU)/pc
EUR XXX
Savings
target
-13%
Packagin
g
-96 pcs per
packaging stacked in
a filmed pallet in a
maximum 4 ranks

then an extensive supplier data base is built leveraging multiple sources of
information
Company and contact information
No.
Product
category
Supplier
name
Province City Website Source
Contact
Person
Email Telephone Mobile
1
Wot
Evaporator
Supplier 1 Hubei Jingzhou www.jztaijia.com alibaba
Ms.
Leanne
Zhang
jztaijia@hotmail.
com
86-716-
8390039
86-15090741821
2
Wot
Evaporator
Supplier 2 Anhui chuzhou
http://czszhjd.cn.chi
na.cn/
www.china
.cn
Ms.Pan
974558514@qq.
com
86-550-
3218529
3
Wot
Evaporator
Supplier 3
Guangdon
g
Foshan
http://shop1357754
242527.cn.alibaba.c
om
alibaba Ms.Lei
stella.120401@g
mail.com
86-757-
23611800
n/a
4
Wot
Evaporator
Supplier 4 Shandong Jinan www.bestarinc.com alibaba Mr. Yuan
nolan1118@hot
mail.com
86-531-
58661438
13806406935
5
Wot
Evaporator
Supplier 5
Guangdon
g
Zhongsha
n
www.jhczs.com.cn alibaba
Mr. Pingpo
Zhao
jhczs@yahoo.co
m.cn
86-760-
88315530
13923325660
6
Wot
Evaporator
Supplier 6 Henan Xinxiang www.xxhtea.com
www.china
.cn
Manager
Feng
guangbao@126.
com
86-373-
2683188
86-
15090081811;86-
15937353227
7
Wot
Evaporator
Supplier 7 Zhejiang Ningbo
www.nbzhenglin.co
m
made-in-
china
Mr. Wind
404991763@qq.
com
ningbozhenglin
@live.cn
86-574-
88651922
13757420083
Sources of Information - China
Website
name websites Remark
Alibaba www.alibaba.com
B2B for all over
the world
Global
Sources
www.globalsources.
com
B2B for all over
the world
Gongchang
www.gongchang.co
m
B2B for all over
the world
Tradekey www1.tradekey.com
B2B for all over
the world
ECVV www.ecvv.com
B2B for all over
the world
EC21 www.ec21.com
B2B for all over
the world
Hellotrade www.hellotrade.com
B2B for all over
the world
Trade Asia
www.etradeasia.co
m B2B for Asia
Asian
Products
www.asianproducts.
com B2B for Asia
made in
china
www.made-in-
china.com BSB for China
Alibaba
China china.alibaba.com BSB for China
CHINA.CN www.china.cn BSB for China
CCCME www.cccme.org.cn
China Chamber of
Commerce for
electrical &
mechanical
products
Baidu www.baidu.com
TOP 1 source
engine in China

Then, a telephone pre-screening process is carried out to select the suppliers to
be included in the RFI/RFQ process
Product criteria No.1 criteria No.2 criteria No.3 criteria No.4 criteria No.5 criteria No.6
Fan Motors
min production
capability:
3 million pcs
ISO9001
Export experience
to western
world
if no experience,
interested in
developing
export
business?
R&D dept inside
the company?
experience
working for
MDA
Yellow Glass
Wool
min production
capability:
8 million s.m.
ISO9001
Export experience
to western
world
if no experience,
interested in
developing
export
business?
R&D dept inside
the company?
experience
working for
MDA
Run
Capacitors
min production
capability:
2 million pcs
ISO9001
Export experience
to western
world
if no experience,
interested in
developing
export
business?
R&D dept inside
the company?
No need
Wot
Evaporator
min production
capability:
1 million pcs
ISO9001
Export experience
to western
world
if no experience,
interested in
developing
export
business?
R&D dept inside
the company?
experience
working for
MDA
Bearings
min production
capability:
3 million pcs
ISO9001
Export experience
to western
world
if no experience,
interested in
developing
export
business?
R&D dept inside
the company?
No need

Next step is to administer the RFI-RFQ process
RFI- Contact Information
信息征询 - 公司联系方式
Please fill the orange cells 请填写橙色表格
Dragon Sourcing contact
龙源联系人
Email
电子邮件
Tel
电话
Fax
传真
Mobile phone
手机
COMPANY INFORMATION
公司信息
1-1
Company Name
公司名称
1-2
Address
地址
1-3
Town
城市
1-4
Province
省份
1-5
Company website
公司网址
CONTACT INFORMATION
联系信息
1-6
Contact Person
联系人
1-7
Title
职位
1-8
Email
电子邮件
1-9
Tel
电话
1-10
Fax
传真
1-11
Mobile phone
手机
Contact detail
information
I. Company Background
公司信息
2-1
Is the company a manufacturer, distributor or broker ?
贵司是工厂，还是分销商，或代理？
2-2
If you are a manufacturer, please describe your commercial
approach for export market (direct or Indirect Sales,
through agents …)
如果贵公司是工厂，请描述您在出口业务的商业渠道（直接
或间接销售，通过代理…）
2-3
Do you belong to any group? If yes, can you provide us the
name of parent holding company?
贵司是否属于任何一个集团公司？如果是，可否告知总公司
的名字？
2-4
What are your main type of products?
贵司的主要生产产品是？
Company
Profile
III. Production Capacity
生产能力
3-1
Total maximum production capacity for wot evaporator in 2013 (pcs / year)
预计 2013 年丝网蒸发器最大生产能力 ( 套 / 年 )
3-2
Actual annual production for wot evaporator in 2012 (pcs / year)
2012 年丝网蒸发器实际年产量 ( 套 / 年 )
3-3
What processing capabilities are included in your wot evaporator production? Are these
processes in-house or sub-contractors?
贵司生产丝网蒸发器包含哪些加工工艺？哪些是自行完成，哪些工艺是由承包商完成？
Process
生产工艺
In house(Y/N)
自行生产 ( 是 / 否 )
Sub-
contractor(Y/N)
外包 ( 是 / 否 )
3-4 Do you have R&D center, is it in your factory? 贵司是否
有专门的研发中心？是在工厂里嘛？
Production
Capacity
IIII. Quality, Environmental and Product Certification
质量 , 环境与产品认证
Yes / No
是 / 否
Date of
Certificate
发证日期
Expiration date
过期日期
Certificate
number
证书编号
Certifying Org.
发证机构
3-6
What quality and environmental registrations
do you have?
贵司目前已通过何种质量 / 环境体系认证 ?
ISO 9001
ISO 140001 or EMAS
Name of Certificate
证书名称
Date of
Certificate
发证日期
Expiration date
过期日期
Certificate
number
证书编号
Certifying Org.
发证机构
3-7
Other company/product certifications do you
have?
其他公司质量管理证书后者产品认证证书？
Quality and
certificate

Company and contact information RFI/RFQ Process follow up
Product
category
Supplier
name
Province City
RFI/RFQ sent Intend to respond Last call follow up RFI received RFQ received
Y/N Date Y/N
If no,
reason
Date Comment Y/N Date
If no,
reason
Y/N Date
If no,
reason
Wot
Evaporator
Supplier 1 Hubei Jingzhou Yes
20-Feb-
13
Yes 28-Feb-13
completed RFI-
RFQ
Yes
28-Feb-
13
Yes
28-Feb-
13
Wot
Evaporator
Supplier 2 Anhui chuzhou Yes
20-Feb-
13
Yes 28-Feb-13
replied RFI but
not complete,
ask supplier to
update it
Yes
5-Mar-
13
Yes
5-Mar-
13
Wot
Evaporator
Supplier 3 Guangdong Foshan Yes
26-Feb-
13
Yes 6-Mar-13
not complete
RFI-RFQ
Yes
6-Mar-
13
Yes
6-Mar-
13
Wot
Evaporator
Supplier 4 Shandong Jinan Yes
25-Feb-
13
Yes 6-Mar-13
completed RFI-
RFQ
Yes
27-Feb-
13
Yes
27-Feb-
13
Wot
Evaporator
Supplier 5 Guangdong Zhongshan Yes
20-Feb-
13
Yes 5-Mar-13
completed RFI-
RFQ
Yes
5-Mar-
13
Yes
5-Mar-
13
Wot
Evaporator
Supplier 6 Henan Xinxiang Yes
20-Feb-
13
Yes 6-Mar-13
not complete
RFI-RFQ
Yes
27-Feb-
13
Yes
27-Feb-
13
Wot
Evaporator
Supplier 7 Zhejiang Ningbo Yes
20-Feb-
13
Yes 5-Mar-13
not complete
RFI-RFQ
Yes
5-Mar-
13
Yes
5-Mar-
13
During the RFI-RFQ process, an RFI-RFQ control sheet is used to follow up the
whole process

Out of 570 suppliers initially identified, 56 suppliers replied to the RFI-RFQ, the
vast majority of them being in China
570
132
56
16
Main reason for not sent RFI-RFQ:
-Eliminated by telephone pre-screening
-Not produce we required
-Trading company
-Not valid contact details
Main reason for not reply RFI-
RFQ:
-Can’t meet the requirement/drawing
-Think RFI-RFQ is too complicated
-Prefer directly do business with final client
Among received 56 suppliers:
49 from China, 1 from China Taiwan, 2 from
South Korea, 1 from Russia, 1 from
Ukraine and 2 from Turkey

© 2012 Dragon Sourcing. All rights reserved.
Contact information
Company name Supplier 6
Town Xinxiang
Province Henan
Website
Contact person
Tel
E-mail
Company background
Year Founded 2003
Ownership private
Capital US$ 3 M
Work floor size (m²) 16,000 m2
Have export license
(Y/N)
Yes
How many years of
export experience
6 years
Business Overview
Turnover (in USD)
2013 20 M
2012 14 M
2011 11 M
% Sales Export to Main Markets
US (%) 0%
EU (%) 30%
Japan (%) 0%
Rest of the world (%) 40%
Total 70%
Top 3 Customers
Customer name Industry Country Sales %
Vestel Fridge Turkey 30%
Videocon Fridge India 25%
Godrej fridge India 15%
Based on the RFI-RFQs, company profiles are developed
Production
Total maximum production capacity in 2013 1 M pcs
Total maximum production capacity in 2013 300 K pcs
Process In-House (Y/N) Sub-contractor(Y/N)
pipe cut Yes No
pipe bender Yes No
welding Yes No
electrophoresis Yes No
dusting or Electroplating No Yes
packaging Yes Yes
Production Capacity
Quality & Environmental Registration
Certificate Yes / No
Date of
certificate
Expiration date
Certifying
organization
ISO 9001 Yes June-29-2012 June-28-2014
Kainxin certification
(Beijing)ltd
ISO 140001 or
EMAS
No
Quality certifications
Certificate Yes / No
Date of
certificate
Expiration date
Certifying
organization
CE No
UL No
Quality Control

Factory Entrance Workshop 1 Workshop 2
Workshop 3 Machinery 1 Machinery 2
Factory Pictures
…and factory pictures collected

Scorecard-Wot Evaporator
Supplier 1
Supplier 1
Company Background
Weight of
criteria
Scoring
Max Score
per criteria
Weight of the
section
Score per criteria Supplier's answer
Year Founded 10%
1= After 2010
2= Between 2000 to 2010
3= Between 1990 to 2000
4= Before 1990
4
25%
Capital in USD 10%
1= Less than 10M
2= Between 10 to 20M
4= More than 30M
4
Workfloor size (m2
) 10%
1= Less than 10,000m2
2= Between 10,000 to 15,000m2
3= Between 15,000 to 20,000m2
4= More than 20,000m2
4
Number of Employees 10%
1= Less than 99
2= Between 100 & 199
3= More than 200
3
How many workers? 5%
1= Less than 30
2= Between 30 and 50
4= More than 100
4
How many office staff? 5%
1= Less than 10
3= More than 20
3
How many R&D (engineers)? 5%
1= Less than 10
3= More than 20
3
English Speakers 5%
0=No
1=Yes
1
Do you have export experience to western world (EU, US) ？ 10%
0=No
1=Yes
1
Do you have experience working for MDA (major domestic appliance)?
10%
0=No
1=Yes
1
Turnover in 2012 in USD 5%
1= Less than 10M
4= More than 30M
4
Turnover in 2011 in USD 5%
1= Less than 10M
4= More than 30M
4
% of the turnover dedicated to Export 5%
1= Less than 10%
2= Between 10 to 30%
3= Between 30 to 50%
4= More than 50%
4
Years of Export Experience 5%
1= Less than 2 yrs
2= Between 2 & 5 yrs
3= More than 5 yrs
3
Subtotal 100% 3 25% 0
Corporate responsibility
Weight of
criteria
Scoring
Max Score
per question
Weight of the
section
Score per criteria Supplier's answer
Does the supplier adhere to all rules and regulations in respect to child
labor?
33%
0=No
1=Yes
1
5%
Does the supplier adhere to all rules and regulations in respect to
environmental issues?
33%
0=No
1=Yes
1
Does the supplier adhere to all rules and regulations in respect to health
and safety issues?
33%
0=No
1=Yes
1
Subtotal 100% 1 5% 0
Production Capacity
Weight
of
criteria
Scoring
Max Score
per
question
Weight of
the section
Score per
criteria
Supplier's
answer
Maximum production capacity for wot evaporator in 2013
(pcs/year)
25%
1= Between 1M to 5M
2= Between 5M to 10M
3= Over 10M
3
20%
Actual annual production for wot evaporator in 2012
(pcs/year)
25%
1= less than 1 M
2= Between 1M to 5M
3= Between 5M to 10M
4= Over 10M
4
Are all manufacture processes in-house or sub-contractors
except zinc finishing?
20%
0=No
1=Yes
1
Are zinc finishing processes in-house or sub-contractors? 5%
0=No
1=Yes
1
Do you have R&D center, is it in your factory? 25%
0=No
1=Yes
1
Subtotal 100% 2 20% 0
Quality, Environmental and Product Certification
Weight
of
criteria
Scoring
Max Score
per
question
Weight of
the section
Score per
criteria
Supplier's
answer
Company Certifications
ISO 9001 20%
0=No
1=Yes
1
20%
ISO 140001 or EMAS 20%
0=No
1=Yes
1
Product Certifications (CE or UL or others) 20%
0=No
1=1 certificate
2=2 certificates
3=over 2 certificates
3
Are you aware of the RoHS Directive 2011/65/EC in force in
the European Community?(Y/N)
20%
0=No
1=Yes
1
Are you aware of the Regulation 1907/2006 REACH in force
in the European Community?(Y/N)
20%
0=No
1=Yes
1
Subtotal 100% 1 20% 0
Cooperation
Weight
of
criteria
Scoring
Max Score
per
question
Weight of
the section
Score per
criteria
Supplier's
answer
Completeness of RFI 35%
0= Poor
1= Satisfying
2= Excellent
2
10%
Completeness of RFQ 35%
0= Poor
1= Satisfying
2= Excellent
2
Company pictures available 15%
0=No
1=Yes
1
Timeliness of response 15%
0= poor
1=Satisfying
2=Excellent
2
Subtotal 100% 2 10% 0
Price Competitiveness
Weight
of
criteria
Scoring
Max Score
per
question
Weight of
the section
Score per
criteria
Supplier's
answer
DDU price (compare to current price EUR 6.78) 100%
0= no savings
1= savings between 1%~13%
2= savings over 13%~20%
3= savings over 20%
3 20%
Subtotal 100% 3 20% #VALUE!
Total scoring 12 100% #VALUE!
The RFI-RFQ responses are analyzed using a score card validated by the client.
Company
Profile
Production
Capacity
Quality and
certificate
RFQ
Cooperation

Example of a score card – wot evaporators category
Country
Supplier
Name
Company
Background
Corporate
responsibility
Production
Capacity
Quality
control and
certificate
Cooperation
Price
Competitiveness
Total
Rank by
score
card
Rank by
price
25% 5% 20% 20% 10% 20%
max score
100
China Supplier 1 18.75 5.00 8.44 11.43 8.11 13.33 65.06 1 1
China Supplier 2 17.50 5.00 6.22 11.43 8.11 6.67 54.93 2 2
China Supplier 4 23.33 5.00 8.89 8.57 8.11 0.00 53.90 3 4
China Supplier 6 19.58 5.00 8.44 8.57 8.11 0.00 49.71 4 6
China Supplier 7 17.50 5.00 8.44 8.57 7.30 0.00 46.81 5 7
China Supplier 5 19.17 5.00 8.44 8.57 5.41 0.00 46.59 6 5
China Supplier 3 14.58 5.00 8.44 2.86 7.30 6.67 44.85 7 3
Average 51.63
65.06
54.93 53.90
49.71
46.81 46.59 44.85
Supplier 1 Supplier 2 Supplier 3 Supplier 6 Supplier 7Supplier 4 Supplier 5

DDU prices are then calculated
FOB Price
(supplier)
Freight forwarding, customs
DDU Price
Shanghai
SHANGHAI
Gansu
Jiangxi
Zhejiang
BEIJING
Jiangsu
Guangxi
Hunan
Hubei
Ningxia
Shaanxi
Anhui
Fujian
Neimongu
Shanxi Shandong
Sichuan
Yunan
Guizhou
Henan
Jilin
Liaoning
Hebei
Guangdong
Gansu
Heilongjiang
1
2
3
4
5
Supplier
FOB price
(USD/pcs)
Quantity
(pcs/containter)
DDU Price
(USD/pcs)
DDU Price
(EUR/pcs)
20' 40' 40' HQ 20' 40' 40' HQ 20' 40' 40' HQ
Supplier 1 $100.99 960 2112 2112 130.24 125.95 125.95 100.00 96.70 96.70
Supplier 2 $107.62 960 2112 2112 136.79 132.58 132.58 105.03 101.80 101.80
Supplier 3 $109.27 960 2112 2112 138.45 134.24 134.24 106.30 103.07 103.07
Supplier 4 $124.67 960 2112 2112 153.88 149.67 149.67 118.15 114.92 114.92
Supplier 5 $128.64 960 2112 2112 157.86 153.66 153.66 121.21 117.98 117.98
Supplier 6 $129.14 960 2112 2112 158.36 154.15 154.15 121.59 118.36 118.36
Supplier 7 $158.94 960 2112 2112 188.22 184.02 184.02 144.52 141.29 141.29
6
7

Example of DDU price calculations – wot evaporator
These 3 suppliers’ quotation are 6%~13% lower than
client’s current price but higher than the target price
€ 112.25
€ 97.68

Category Country Supplier name City Province
Score card
ranking
price
ranking
Strength weakness
wot
evaporator
China Supplier 1 Jingzhou Hubei 1 1
good score card ranking and price
is just achieve target price
wot
evaporator
China Supplier 2 Chuzhou Anhui 2 2 good score card ranking
price is higher than target price
but lower than current price
back up for
wot
evaporator
China Supplier 4 Hefei Anhui 3 4
strong company backgroud, about
2010 employees
price is higher than current price
back up for
wot
evaporator
China Supplier 3 Foshan Guangdong 7 3
pirce is ranked No.3 but higher
than target price lower than
current price
-from the factory's pictures, the
factory is old and not clean
-Total 145 employees
back up for
wot
evaporator
China Supplier 7 Ningbo Zhejiang 5 7
The factory's pictures seems O.K.
and they have similar packaing
experience according to their
pictures
-the price is the highest among
the 7 RFQ
-the factory is old but acceptable
about 550 employees
Finally the quotations and the scorecard are used to select suppliers to be audited

– Volumes
– Deadlines
potential suppliers
RFI-RFQ process
score card
development process
suppliers
Step 1
pre-qualification
Step 2
Keyactivities
According to client’s procurement strategy, Dragon Sourcing offering covers
2 steps’ sourcing process

16 Chinese suppliers were finally selected for a first round of audits
Visited by
No. Province City Supplier name Product Client DS Remark
score card
ranking
1 Jiangsu Changzhou Supplier 1 Fan Motor x 1
2 Zhejiang Ningbo Supplier 2 Fan Motor x 2
3 Zhejiang Ningbo Supplier 3 Fan Motor x 3
4 Zhejiang Ningbo Supplier 4 Fan Motor x x Joint visit 5
5 Zhejiang Ningbo Supplier 5 Bearings x 1
6 Zhejiang Taizhou Supplier 6 Bearings x 10
7 Zhejiang Ningbo Supplier 7 Run Capacitor x 6
8 Zhejiang Wenzhou Supplier 8 Run Capacitor x 1
9 Anhui Xuancheng Supplier 9 Run Capacitor x 3
10 Anhui Guangde Supplier 10 Run Capacitor x 5
11 Shanghai Shanghai Supplier 11 Run Capacitor x x Joint visit 2
12 Jiangsu Yangzhou Supplier 12 Yellow Glass Wool x 3
13 Liaoning Dalian Supplier 13 Yellow Glass Wool x
need requirments
confirmation
1
14 Hubei Jingzhou Supplier 14 Wot Evaporator x 1
15 Guangdong Shenzhen Supplier 15 Fan Motor x 4
16 Guangdong Foshan Supplier 16 Fan Motor x 6

An audit schedule and budget is developed
Agenda Timing Transportation
Cost
(RMB)
Cost (EURO)
From hotel to
supplier No.1
8:00 - 8:30 By rented car
Visit supplier No.1 8:30-11:30 -
Lunch 11:30-12:00 - 180/p 22.5/p
From supplier 1 to
supplier 2
12:00 - 15:00 By rented car
Visit supplier No.2 15:00-18:00
Go to Ningbo airport 18:00-19:00
Dinner 19:00-19:50 180/p 22.5/p
From Ningbo to
Guangzhou
20:50-22:55 plane 1668/p 208.5/p
Stay in Guangzhou lodging 700/room 87.5/room
From Shanghai to
Guanghzou
For the 2nd
DS person
plane 1776/p 222/p
Stay in Guangzhou
For the 2nd
DS person
lodging 700/room 87.5/room
Total 5204 650.5
No. Category Supplier name City Province
Score card
ranking
price ranking
1 Run capacitor Supplier 11 Shanghai Shanghai 2 3
2 back up for fan motor Supplier 4 Ningbo-Yinzhou Zhejiang 5 3
1RMB=0.125EUR

Short-listed suppliers are audited to assess long-term partnership opportunities
Audit
questionnaire
Audit report
Audit
summary
Objectives
• Meet top management and sales management teams
• Present order details
• Refine supplier offer understanding
• Understand organisation
• Validate manufacturing capabilities
• Visit factory and check work conditions
Topics
• General Management
• Order management
• Shipping / packaging
• Planning process
• Goods flow
• Procurement
• Purchasing
• Production
• Quality…

Audit outcome is summarized in a rated profile of each supplier

The final supplier selection relies on the short-listed suppliers’ offers, audits and
sample quality
Supplier
Name
Final
Ranking
Supplier 1 1
Supplier 2 4
Supplier 3 2
Supplier 4 5
Supplier 5 3
Audit summary
Suppliers’ quotation
Samples
Supplier
summary
Supplier
capabilities
Supplier
assessment

Agenda
1. Context

Remark Bearing Wot Evaporator
• We totally sent 132 RFI-RFQ and
received 56 responses, 49 suppliers are
from China
• The main reasons for suppliers
declining to participate the project is
they can’t meet client requirements
• Left and below chart are the
comprehensive analysis for suppliers
respond the RFI-RFQ , you will find
Chinese suppliers are on the top for
each category
Fan Motor Run Capacitor Yellow Glass Wool
Chinese supplier Chinese supplier Chinese supplier
Chinese supplier
Chinese supplier
Chinese supplier Chinese
supplier
Chinese suppliers remain most competitive country for this case despite cost
increase in China

 Access to a very competitive local raw materials supply base
 Huge domestic market which creates economies of scale in the supply base
 Presence of all the large international players to both source from China and manufacture in
China which raises the performance level of all the suppliers
 Local suppliers highly interested in international business to increase the company’s reputation in
oversea’s market
Interestingly, Chinese suppliers remain the most attractive cost and currency
inflation, key reasons are

Dragon Sourcing - 龙源
Your Tailored Sourcing Approach to LCC Sourcing
Presented By: Dragon Sourcing

Global Sourcing Case Study (Chinese Appliances Market)

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