Identifying new potential competitive suppliers in China for gas pump

Gasoline Pump Case Study
october 2010
Dragon Sourcing - 龙源
Your Tailored Sourcing Approach to Asia

© 2010 Dragon Sourcing. All rights reserved.© 2010 Dragon Sourcing. All rights reserved. 2
Background
• Client is a service company in the fuel distribution industry; namely in the sales, distribution,
repair and maintenance of fuel distributors and other fuel equipment.
• Across Europe, Client benefits from a recognized expertise in the fuel distribution business
and therefore has developed the confidence of many important players in Europe.
• Interested in identifying and qualifying new potential competitive suppliers in China for Gas
Pump
• Selected Dragon Sourcing as Procurement Service Provider responsible for managing the
supplier sourcing and qualification process
2© 2010 Dragon Sourcing. All rights reserved.

© 2010 Dragon Sourcing. All rights reserved.
• Shortlist suppliers based on
RFI/RFP process
• Audit shortlisted suppliers
• Select 2-3 suppliers for sample
development process
Conduct final negotiations and select
suppliers
• Finalise Contract
• Analyse spend category in detail
– Specifications and quality
requirements
– Volumes
– Deadlines
• Analyse supply market and
identify potential suppliers
• Pre-qualify potential suppliers
through an RFI process
• Manage RFP process with pre-
qualified suppliers
• Analyse supplier responses and
calculate fully delivered price
(logistics, import duties,..)
• Develop Business case and
implementation plan
Dragon Sourcing covered the end-to-end sourcing process
Feasibility Analysis
Supplier Selection
and Contracting
Procurement Operations
• Manage P/O and agree payment
terms and details (L/Cs,..)
• Check in process production quality
• Conduct pre-shipment QC
• Arrange logistics
• Manage supplier performance
• Monitor new sourcing opportunities
Keyactivities

RFI/RFP process
development process
• Manage sample development
process
• Conduct final negotiations and
select suppliers
requirements
– Volumes
– Deadlines
qualified suppliers
(logistics, import duties, ADT,..)
implementation plan
Supplier Selection
and Contracting
Keyactivities
Dragon Sourcing service offering covers the end-to-end sourcing process

© 2010 Dragon Sourcing. All rights reserved.© 2010 Dragon Sourcing. All rights reserved.
The first step was to develop a comprehensive understanding of the functional
requirements
CASING
Dimension 510 mm x 440 mm x 1550 mm
HYDRAULICS
SYSTEM
Pumping unit with degazing , inlet filter (100 micron), non
return valve (equivallent to Bennett) - ATEX
Frame : Thickness 1,5 mm minimum Flowrate 80lpm with downsizing capability (50lpm)
No stainless steel
Meter 4 pistons equivallent to market leader ATEX with
direct coupling on the pumping unit
Powder coating - white paint - treated against corrosion
Non return valve at the output of the meter
(equivallent to York)
Drip plate at the bottom of the pump Swivel Hose connection
Bolt fixing inside the pump No Hose
Separate cladding panel up and down with tighteness at
the top
No Nozzle
Door closing with key ATEX Hang up contact
Air flow barrier for ATEX compliance OIML 117 compliance
Noozle hang up at the top
CE Marking
ELECTRONIC
SYSTEM
Dual channel Pulser (eltomatic or equivallent) - 50 pulses
– ATEX
OPTIONS
Pump fully ATEX approved
Eex three phase motor 400V Hose mast
Calculator Volume - single side - 5 digits Manual pump (see picture at the bottom of this table)
Single phase motors Eex 220V ATEX

A key requirement was to identify suppliers that have ATEX and CE
certification
ATEX (Appareils destinés à être utilisés en
ATmosphères EXplosibles )The ATEX
standard describes what equipment and work
environment is allowed in an environment with
an explosive atmosphere
The CE(conformité européenne ) certifies
that a product has met EU consumer safety,
health and environmental requirements.

Carton meas.
(LXWXH in cm)
Qty/ctn
(pcs)
20'c QTY (ctn)
without pallet
20'c QTY (ctn)
with pallet
40'c QTY (ctn)
without pallet
40'c QTY
(ctn) with
pallet
What kind of certification do you have (ISO, Environment friendly, etc) Yes / No Date of Certificate
Do you have certificiate: ISO 9000?
Other company certifications do you have?
Certificate
Name Date of Certificate
1-
Quality Control
Certifying Org.
Certifying Org.
Then, an RFI/RFP process was administered to filter out most capable
suppliers
Gas Pump Component
Name
Gas Pump
Component
Reference
Type of
Materials
Precise
Description of
the Part
Is this component
made in your
factory (Y/N)
what kind of certificate
does this component
respect ATEX,CE Etc.
Can you provide
the picture of the
component?
250
pcs
500
pcs
1000
pcs
Casing
Pumping Unit
Flow Meter
Valve
Swivel Hose Connection
Manual Pump
Three Phase motor
Dual Channel Pulser
Mechanical Calculator
Electronic calculator with
5 digit display screen
Total Price (USD)
Gas Pump Descripition FOB Price (USD)Component Description
Product and price
information
Quality Management
Packaging
To: Jacy (先生
Email : jacy@dragonsourcing.com
Tel number : 021-6141 3974
Fax number : 021-6141 3966
Supplier Name
Contact Person
Title
Email
Tel
Fax
Mobile phone
Alternative Contact Person
Title
Email
Tel
BUSINESS INFORMATION
Is your company a manufacturer,
Which year was your company founded?
What is the workfloor size (m²)?
How many employees do you have?
Capital in million RMB
General Information
CONTACT INFORMATION
Contact Information & Intend To Respond
公司信息　及　答复意向
Please, complete this "Intent to Respond" page print and fax before December 25, 2009
于12 25日前请填写此答复意向, 打印后传真
Dragon Sourcing Ltd. 龙源限公司
Contact detail
information
Business
information
Domestic Europe USA Other% of turnover exported to

Non-food Project Control Sheet - PP Trolley
RFP
Sent
1st
Follow
Up
2nd
Follow
Up
Supplier
Name
City
Re-
gion
Date Date Date Date Remark
Equivalent
product
FOB US$
Small
FOB US$
Middle
FOB US$
Large
FOB US$
per set
FOB
Port
Sample
Charge per
set
Producti
on Lead
Time
Supplier 1
Shen-
zhen
Guang-
dong
21-Nov N/A N/A 20-Nov
very professional and
spontaneous
20-Nov US$5.40 US$7.60 US$9.00 US$20.00
Shen-
zhen
US$50.00
15th
Feb.07
Supplier 2
Wen-
lin
Zhe-
jiang
17-Nov 20-Nov 21-Nov 20-Nov
Professional supplier,
with a competitive
price; cooperative
20-Nov US$6.48 US$9.12 US$10.80 US$24.00
Ning-
bo
US$100.00
60-90
days
Supplier 3
Shen-
zhen
Guang-
dong
17-Nov 18-Nov 18-Nov
very professional and
spontaneous
18-Nov US$6.75 US$9.50 US$11.25 US$25.00
Shen-
zhen
US$100.00 45 days
Supplier 4
De-
qing
Zhe-
jiang
17-Nov 20-Nov 22-Nov
good supplier,
supportive;
22-Nov US$7.02 US$9.88 US$11.70 US$26.00
Ning-
bo
US$50.00 85 days
Supplier 5 Rui-an
Zhe-
jiang
17-Nov 20-Nov 21-Nov 20-Nov
Missing information
received by 22-Nov
4-Dec US$6.21 US$8.74 US$10.35 US$23.00
Ning-
bo
US$100.00 45 days
Supplier Contact
Information
RFP Received
Intend to Respond
Received
During the tender process, the suppliers’ willingness to collaborate and to
provide complete and accurate information was also assessed
Gas Pump Project – Control Sheet

7 suppliers specialized in gas pumps replied to the RFI-RFQ questionnaire.
35
19
9
7
Identified Suppliers Sent RFI-RFQ Intent-to-Respond Replied RFI-RFQ
Selection
of
Potential
Suppliers
Pre-
Selected
Suppliers
Sending &
Follow up
of the RFI-
RFQ
16 suppliers did not have the capability
or were not specialized to manufacture
gas pumps
10 suppliers did not reply to Intent-to-
Respond
Possible Reasons:
- Cannot make required
products
- Do not have Export License
- Minimum Production
Capacity
- Not interested to cooperate
RFI-RFQ
Collection
2 suppliers did not successfully
complete
The questionnaire
Model Pictures

Supplier list and their location in China
SHANGHAI
Taiwan
Heilongjiang
Shanghai
Gansu
Jiangxi
Zhejiang
BEIJING
Jiangsu
Guangxi
Hunan
Hubei
Ningxia
Shaanxi
Anhui
Fujian
Neimongu
Shanxi
Shandong
Sichuan
Yunan
Guizhou
Henan
Jilin
LiaoningHebei
Guangdong
Gansu
TIANJIN
Supplier CE ATEX Province Website
Supplier 1 Y Y Zhejiang www.chinalanfeng.com
Supplier 2 Y Y Zhejiang www.chinahongyang.com/
Supplier 3 Y Y Henan www.censtar.com/
Supplier 4 Y N Zhejiang www.chinarealtech.com/
Supplier 5 N N Zhejiang www.datianmachine.com/
Supplier 6 N N Fujian www.rxfueldispenser.com/

We collected detailed component costs breakdowns
485.005.00106.0035.0010.0031.007.0015.0060.0065.00151.00Supplier 1
917.0030.00200.0060.0020.00110.0013.0030.0060.00144.00250.00Supplier 5
816 .0020.00212.0050.0025.00127.004.0025.0070.00133.00200.00Supplier 4
657.0010.00102.004.0027.0050.009.0035.00100.00130.00190.00Supplier 3
676.0080.00135.0095.0020.0040.008.0020.0050.0090.00138.00Supplier 2
Total
Manual
Pump
Electroni
c
calculator
Mechanic
al
Calculator
Dual
Channel
Pulser
Three
Phase
motor
Swivel
Hose
Connection
ValveFlow Meter
Pumping
Unit
CasingGas Pump
Cheapest Price
Most Expensive Price

Logistics costs were tabulated to offer expected landed prices in Europe.
DDP Quotation
600
750 760
800
850
900
1000
600
800
750
800
900 910
1100
0
200
400
600
800
1000
1200
Zhejiang
Lanfeng
Wenzhou
Realtech
Censtar Rongxing New
Century
China Hongyang Zhejiang Datian Beijing Sanki
EURO
No Hose and Nozzle Complete Pump
Supplier
1
Supplier
2
Supplier
3
Supplier
4
Supplier
5
Supplier
6
Supplier
7

RFI/RFP process
development process
process
select suppliers
requirements
– Volumes
– Deadlines
qualified suppliers
implementation plan
Supplier Selection
and Contracting
Keyactivities

A scorecard was created to benchmark the capabilities of the 7 suppliers
Supplier Name
Company
Background
Business
Information
Human
Resources
Corporate
Responsibility
Inventory
Management
Production &
Technology
Quality
Management
Cooperation
Price
Competitiveness
Total
Rank
Weight 0.05 Weight 0.15 Weight 0.10 Weight 0.05 Weight 0.05 Weight 0.20 Weight 0.20 Weight 0.10 Weight 0.10 Over 1.00
Supplier 1 0.04 0.14 0.08 0.05 0.04 0.18 0.16 0.10 0.00 0.78 1
Supplier 2 0.05 0.11 0.10 0.05 0.05 0.13 0.20 0.10 0.00 0.77 2
Supplier 3 0.05 0.15 0.08 0.05 0.04 0.14 0.15 0.09 0.00 0.74 3
Supplier 4 0.03 0.12 0.05 0.05 0.05 0.15 0.14 0.10 0.00 0.69 4
Supplier 5 0.05 0.09 0.09 0.05 0.05 0.12 0.16 0.08 0.00 0.68 T-5
Supplier 6 0.04 0.08 0.07 0.05 0.05 0.16 0.15 0.08 0.00 0.68 T-5

The supplier selection relied on the short-listed suppliers’ offers, company
profiles and quality of design
Supplier City Province FOB price
250 500 1000
1 Wenzhou Zhejiang US$ 870 US$ 860 US$ 820
2 Zhengzhou Henan US$ 900 US$ 880 US$ 850
3 Wenzhou Zhejiang US$ 1500 - -
4 Wenzhou Zhejiang US$ 1000
5 Xiamen Fujian US$ 1088 US$ 1050 US$ 1000
6 Wenzhou Zhejiang
Models designed by the 7 suppliers
Departments
English
Speakers (Y/N)
Sales &
management
Y
R&D staff N
Quality Control N
Factory Workers N
Adhere to all
rules and
regulations in
respect to
Y
(Y/N) Y
Y
Inventory records available in real-
time (Y/N)
Y
FIFO process (Y/N) Y
Formal & documented Inventory
Management System (Y/N)
N
Inventory records computerized
(Y/N)
Y
Child labor
Environmental issues
Health and safety issues
Inventory Management
15
10
300
Corporate Responsibility
Human Resources
People in Each Position
Quantity
12
Casing
Pumping Unit
Flow Meter
Valve
Hose Connection
Hose
Manual Pump
Single Phase Motor
Three Phase Motor
Dual Channel Pulser
Mechanical Calculator
Electrical Calculator with 5 digit
display screen
Y
Y
Y
N
N
Y
Y
Y
Y
N/A
Production & Technology
Parts Produced In-House (Y/N)
Y
Y
Date of
certificate
Certifying
organization
N/A
Y EWC
N/A
Date of
certificate
Certifying
organizationY
Y
Y
UL
Y
Y
0.01%
1-
2-
3-
4-
N/A
Formal QC criteria for in-house quality control? (Y/N)
Do you have online inspection? (Y/N)
What performance do you achieve on average in out
going quality measures (% rejected)?QC Equipment
CE
OIML
Others
Inspection Process
Others
Product certification
Certificate
ATEX
Quality Control
Quality & Environmental Registration
Certificate
ISO 9000
ISO 9001
ISO 14000

Based on the scorecard, we selected 4 suppliers for auditing…which led to
the selection of the final supplier
Supplier Ranking
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6
Price Competitiveness
Cooperation
Quality Management
Production & Technology
Inventory Management
Corporate Responsibility
Human Resources
Business Information
Company Background
The suppliers DS & client visited

RFI/RFP process
development process
process
select suppliers
requirements
– Volumes
– Deadlines
• Analyse supply market and identify
potential suppliers
qualified suppliers
implementation plan
Supplier Selection
and Contracting
Keyactivities

A production plan was built to monitor the order and to schedule timely quality
inspections
• Based on the claimed production capacity,
Dragon Sourcing and supplier agrees on the
production schedule
• Develop a detail QC criteria with the client
• DS staff chose randomly several gas pump to
test the performance

QC Reports provided detailed information concerning production quality and
led to corrective action plans
Pictures of Defective
Non return valve to be inserted
Non return valve included
with the pumping unit.
Deliverable: pumping unit+
1st seal+non return valve+
2nd seal+bolts and screws
(correct lengths)
For the first order, it will be an
external valve in brass. For
future orders, it will be an
internal valve.
Follow the reference pictures.
Sticker must include: everything
in the green circle and the Atex
number of the switch
manufacturer (not the pump
Atex number)
Oil gun switch with Atex
sticker + certificate
Cable gland to include ATEX
and CE markings
Follow the reference pictures.
Sticker must include: everything
in the green circle and the Atex
number of the switch
manufacturer (not the pump
Atex number)
All glands must be replaced
both at top and bottom.
Change the number of glands
from 6 to 8
Change the number of glands
from 6 to 8
(add 1 small and 1 big)

Conclusions
• Found a capable supplier, who can respect all European standard at a price point within the
client’s target
• It’s the first complete gas pump sourced from china for the European market
• Built a long-term/ exclusivity agreement with the supplier
• We trained the supplier to enable him to meet all European standards
• Successfully delivered production orders

Identifying new potential competitive suppliers in China for gas pump

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