Here is a case study by Dragon Sourcing on Nutritional Company (Vitamin B, Joint Care, Amino Acid, Fish oil, Q10, Calcium Ascorbate & MSM) from Pharma & Medical sector for the year 2017 covering China, India, Russia, Poland, Vietnam, Indonesia, Morocco, Peru, Denmark, Chile, Netherlands, and Japan. For details contact: www.dragonsourcing.com
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Nutritional Company Case Study by Dragon Sourcing
1. Case Study – Multi-Categories
Dragon Sourcing - 龙 源
Delivering sustainable sourcing value from emerging markets
2. 2
Project Objectives & Scope
Objectives
Primary objective is to secure savings through consolidating procurement and sourcing direct from manufacturers in emerging markets
for the following categories.
Scope
This scope is to conduct sourcing in multi countries for below categories:
Sourcing activity in different countries:
Priority Rank Category
2016
# of Sub-
category
# of items Country
Annual spend
in M USD
1 Vitamin B XX XX XX China, India, Russia
2 Joint Care XX XX XX China, India, Russia, Poland, Vietnam, Indonesia
3 Amino Acid XX XX XX China India, Russia, Indonesia
4 Fish oil XX XX XX Morocco, Peru, Vietnam, Denmark, Chile, Netherlands, Japan
5 Q10 XX XX XX World wide
6
Calcium Ascorbate
& MSM
XX XX XX China (quick sourcing)
3. 3
No. Step Deliverables
1.
Demand Analysis
Work with Client to define and understand the products and requirements (specs, volumes, materials, production
technology requirements)
Project Requirement
Questionnaire
Kick-Off Report
2.
Supply Analysis
Identify long list of potential suppliers in the selected markets by leveraging B2B Websites, DS Database, Fair catalogues,
Chamber of Commerce, Magazines, Network, References.
Supplier Long List
3.
Telephone Pre-screening
Selection of suppliers to be included in the RFI/RFP process by telephone pre-screening based on agreed simple criteria
(e.g. capability to make the product, minimum company size, 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
competitiveness and capabilities of the suppliers, including: Background, financial, xxx and product experience, Quality
certification & processes, Social Responsibility, Manufacturing/technology capability, R&D capability
RFI/RFQ Template
Balanced Scorecard
Introduction Letter
NDA
Milestone 1: RFI/RFQ & Scorecard Approved
5.
Conduct RFI/RFQ Administration
The RFI/RFQ is translated to the local languages as relevant, and distributed to the relevant suppliers, with telephone
follow-up to push for maximum participation.
Control Sheet
Completed RFI/RFQs
6.
Analyze RFI/RFQ Responses
Analysis of RFI/RFQ responses, estimation of logistics costs, and preparation of a report which profiles & objectively ranks
the suppliers by capability and competitiveness, including a recommendation for those to be audited.
RFI/RFQ Report
Supplier Profiles
Proposed Shortlist for Audit
Milestone 2: Shortlist for Audit Agreed
Phase 1: Supplier Pre-Qualification
Approach – Phase 1
4. 4
Approach – Phase 2
No. Step Deliverables
7.
Prepare for Audits
Planning the audit schedule, budget, and drafting the Audit Questionnaire that will be used for the supplier self-assessment
and on-site audits.
• Audit Plan
• Audit Questionnaire
8.
Conduct Audits
Distribution of the Audit Questionnaire to suppliers for their self-assessment (and to get them prepared), followed by onsite
audits, with or without xxx buyers, of all the suppliers. Focus is management, logistics, production & quality.
Completed Audit
Questionnaires
9.
Analyse Audit Results
Analysis of the audit results, together with RFI/RFQ results, and preparation of a report that ranks the suppliers, including a
recommendation for those for sample development.
Audit Report
Supplier Audit Profiles
Proposed Shortlist for
Sampling
Milestone 3: Shortlist for Sampling Agreed
10.
Sample Development & Testing
Managing the sample development and testing iterations to determine which suppliers can meet the quality.
Samples
Sample Analysis Reports
11.
Negotiation & Contracting
Conducting final negotiations with the shortlisted suppliers, and facilitating contracting between selected suppliers and
Client.
Contract(s)
Milestone 4: Contracts Secured
Phase 2: Selection & Contracting
5. Phase 1: Supplier Pre-qualification
Steps
Duration/week
commencing
Week 1 Week 2 Week3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10
Apr. 17 ~
21st
Apr. 24 ~
28th
May 2 ~
5th
May 8 ~
12th
May 15 ~
19th
May 22 ~
26th
May 29 ~
June 1st
June 5 ~
June 9th
June 12 ~
June 16th
June 19~
June 23rd
Phase1
1. Demand Analysis 1
2. Supply Market Analysis 2
3. Telephone pre-screening 2
4. Develop and validate RFI/RFQ 2
5. Administer RFI/RFQ 4
6. Analyze RFI/RFQ Responses 2
Schedule
Not started Done
In process Delay
Phase 1 (Supplier pre-qualification): 10 weeks
1 RFI/RFQ Approved
Shortlist for
Audit Agreed
2
5
7. 39
26 26
4
43
23 23
4
38
20 20
7
63
16 16
7
65
11 11
8
37
5 5
1
74
11 11
1
12
3 3
3
21
8 8
3
63
12 12
3
10
11
8 8
7
11
1 1
1
7
2 2
1
17
6 6
2
6
2 2
1
0
50
100
150
200
250
No. of suppliers
identified &
called
No. of suppliers
passed phone
screening
No. of suppliers
included in
RFI/RFQ
process
No. of RFI/RFQ
received
No. of suppliers
identified &
called
No. of suppliers
passed phone
screening
No. of suppliers
included in
RFI/RFQ
process
No. of RFI/RFQ
received
No. of suppliers
identified &
called
No. of suppliers
passed phone
screening
No. of suppliers
included in
RFI/RFQ
process
No. of RFI/RFQ
received
Vitamin B Joint Care Amino Acid
#ofsuppliers
Indonesia
Vietnam
Poland
Russia
India
China
Progress Review - Vitamin B, Joint Care & Amino Acid
7
193
211
113
55
63
36
55
63
36
13
27
13
8. No. of suppliers identified and called
No. of suppliers passed phone
screening and included in the RFQ
process
No. of RFQ received
Fish oil
UK 7 2 1
Iceland 12 4 1
Norway 27 18 5
Chile 40 10 4
Peru 40 15 1
Morocco 23 8 0
Denmark 31 9 3
Netherlands 19 7 1
Japan 13 3 2
Vietnam 10 0 0
0
50
100
150
200
250
#ofsuppliers
Fish Oil sourcing - Progress review
Progress Review –Fish Oil
8
76
18
222
9. Progress Review - Calcium Ascorbate & MSM
9
124
2 2
31
5 5
0
20
40
60
80
100
120
140
No. of suppliers identified No. of suppliers included in
RFI/RFQ process
No. of RFI/RFQ received No. of suppliers identified No. of suppliers included in
RFI/RFQ process
No. of RFI/RFQ received
Calcium Ascorbate MSM
#ofsuppliers
Calcium Ascorbate & MSM
quick sourcing - Progress review
10. Progress review - Phone Screening Criteria
10
# Type Questions Phone screening Criteria
1 Business type Are you a distributors or Manufacture? Or both?
Better to be direct manufacturer.
But not exclude immediately the distributor, in order to see their price
level and hope some distributor can cover a lot of items with good prices.
2 Production capability
Do you manufacture or able to supply product xxx?
Produce in house or out-sourcing?
Send the Vitamin B / Joint Care / Amino Acid item list to suppliers to
check which items they can supply.
3
Export experience / capability
Have you exported to US before?
Better to have US export experience, so supplier knows what certificate
they need to have in order to export certain products to US. But not to
exclude supplier if they’ve never exported to US before.
4 If not, Are you able to export to US?
Must be able to export to US.
11. 11
RFI Scorecard – weight per section
Section weight % Max. Point
Company Background: 20% 30% 30
Production Capability: 30% 20% 20
Quality Control Management and Certifications: 30% 30% 30
RFQ Completeness: 10% 10% 10
Cooperation Willingness: 10% 10% 10
In total 100% 100
30%
20%
30%
10%
10%
Company Background: 20%
Production Capability: 30%
Quality Control Management and Certifications: 30%
RFQ Completeness: 10%
Cooperation Willingness: 10%
17. 17
Supplier RFI/RFQ Response Summary – China, Vietnam & Indonesia
# Country Supplier name Supplier Type
Declare they’re currently
supplying to xxx
(By their own company or
through distributor)
RFI received
(Y/N)
RFI Score RFQ received
# of categories
quoted
# of item
quoted
# of items with
savings
Total annual savings for
quoted items with
potential savings (USD)
1 China xxxx Distributor No Y xx Y 2 23 12 xxxx
2 China xxxx Manufacture No Y xx Y 3 71 44 xxxx
3 China xxxx Manufacture No Y xx Y 3 5 4 xxxx
4 China xxxx Manufacture No Y xx Y 1 30 24 xxxx
5 China xxxx Manufacture No Y xx Y 1 3 2 xxxx
6 China xxxx Manufacture No Y xx Y 2 12 11 xxxx
7 China xxxx Distributor No Y xx Y 2 12 6 xxxx
8 China xxxx Distributor No Y xx Y 1 2 1 xxxx
9 China xxxx Manufacture No Y xx Y 1 1 0 xxxx
10 Vietnam xxxx Manufacturer Yes, through distributor Y xx Y 1 1 1 xxxx
11 Vietnam xxxx Manufacturer Yes, by their own company Y xx Y 1 5 4 xxxx
12 Vietnam xxxx Manufacturer No Y xx Y 1 1 1 xxxx
13 Vietnam xxxx Distributor No Y xx Y 2 6 1 xxxx
14 Vietnam xxxx Manufacturer No Y xx Y 1 1 1 xxxx
15 Vietnam xxxx Manufacturer No Y xx Y 1 1 0 xxxx
16 Vietnam xxxx Manufacturer No Y xx Y 1 1 0 xxxx
17 Indonesia xxxx Distributor No Y xx Y 3 24 9 xxxx
18 Indonesia xxxx Distributor No Y xx Y 1 1 0 xxxx
19 Indonesia xxxx Manufacturer No Y xx N 0 0 0 xxxx
20 Indonesia xxxx Manufacturer No Y xx N 0 0 0 xxxx
Recommended supplier
Supplier with potential savings but didn’t
answer most of the RFI questions
Note: Suppliers with no score are the ones who didn’t respond to RFI.
24. RFQ summary - Calcium Ascorbate & MSM
24
Raw Material
No.
Item Description Supplier
Produce in-house
or outsourcing?
FOB price / Kilo
(in USD)
MOQ (kg) Port of Loading Payment Term
xxxxx
CALCIUM ASCB. GRAN.
DC ( 97% VIT (RM 7127)
xxxxx outsourcing xxxxx xxxxx Shanghai TT in advance
xxxxx
VIT C - CALCIUM
ASCORBATE 99% 2H20
xxxxx In-house xxxxx xxxxx Shanghai 100% T/T in advance
xxxxx MSM
xxxxx in house xxxxx xxxxx Shanghai T/T PAY IN ADVANCE
xxxxx in house xxxxx xxxxx Tianjin 100%TT againest BL copy
xxxxx in house xxxxx xxxxx Tianjin TT or LC
xxxxx in house xxxxx xxxxx Shanghai
40%TT in advance,the balance60%
t/t upon the copy of B/L.
xxxxx in house xxxxx xxxxx Shanghai T/T100% IN ADVANCE
P.S.
Due to the continuous shortage of supply for Ascorbic Acid in Chinese market, according to supplier the market prices has
been increased up to xx at the highest point.
Since xxx Calcium are the derivative products of Ascorbic Acid, so the supply is difficult as well.
For the moment, it’s difficult to find suppliers to quote for these two items,
either supplier doesn’t want to quote, or doesn’t have any storage for supply, so they can’t quote.
25. 25
Supplier Recommendation – Chinese suppliers
No. Country Supplier name Business Type
RFI
Score
# of item
quoted
# of items
with potential
savings
Potential
Annual Saving
in USD
Reason for recommending
1 China xxxx
Direct
manufacturer
xx 71 44 xxxx
• Have quoted xx items,xx items with potential annual saving xx USD.
• xx years production experience in the industry, Customers around the world.
• Over xx export to North America and Europe, with xx years export experience.
• ISO9001 certified, ISO 14001 certified
2 China xxxx
Direct
manufacturer
xx 30 23 xxxx
• Have quoted xx items, xx items with potential annual saving xxUSD.
• Over xx export to North America and Europe, with xx years export experience.
• Excellent and quick response with competitive prices.
• ISO9001 certified.
3 China xxxx
Direct
manufacturer
xx 12 10 xxxx
• Have quoted xx items, xx items with potential saving xx USD.
• xx years production experience in the industry with xx professional R&D Staffs.
• Over xx years export experience, able to quote xx incoterm: FOB, CIF and DAP or DDP.
• ISO9001 certified.
4 China xxxx
Direct
manufacturer
xx 3 2 xxxx
• Have quoted xx items, xx items with potential annual saving xxxx USD.
• Professional in L-THEANINE
• xx years production experience in the industry, with KOSHER certification
• Over xx export to North America and Europe, with xx years export experience.
• ISO9001 certified. KOSHER certified.
5 China xxxx
Direct
manufacturer
xx 5 4 xxxx
• Have quoted xx items with annual potential saving xxxx USD. competitive price.
• xx years production experience in the industry, with over xxxx Factory size.
• Over xxx years export experience, with strong local industry background
• ISO9001 certified.
6 China xxxx Distributor xx 12 6 xxxx
• Have quoted xx items,xx item with potential annual saving xxxx USD.
• Over xxx years export experience, with several strong suppliers, quoted
competitive price.
7 China xxxx Distributor xx 23 12 xxxx
• Have quoted xxxx items,xx item with potential annual saving xxxx USD.
• Have several strong suppliers, quoted competitive price.
Supplier with potential savings but didn’t
answer most of the RFI questionsRecommended supplier
26. 26
Supplier Recommendation – Indian suppliers
No. Country
Supplier
name
Business Type
RFI
Score
# of item
quoted
# of items
with
potential
savings
Potential
Annual
Saving in
USD
Reason for recommending
8 India xxxx
Direct
manufacturer
(Current
Supplier)
xx 8 4 xxxx
• Have quoted xx items, xx items with potential annual saving xxxxx USD.
• Top xx RFI ranking among Indian suppliers.
• Over xxx years production experience in the industry.
• Over xxx years export experience, over xxx export to North America and Europe.
• Excellent and quick response with so much competitive price.
• ISO9001 certified, ISO 14001 certified, GMP certified.
9 India xxxx Trader xx 39 13 xxxx
• Have quoted xx items, xx items with potential annual saving xxxx USD.
• Over xx years production experience in the industry.
• Over xxx export to North America and Europe.
• GMP certified, HALAL certified.
10 India xxxx
Direct
manufacturer
xx 6 4 xxxx
• Have quoted xx items, xx items with potential annual saving xxxx USD.
• Excellent and quick response with so much competitive price.
• Over xx years export experience.
• ISO9001 certified, GMP certified, HACCP certified, HALAL certified.
11 India xxxx
Direct
manufacturer
xx 6 3 xxxx
• Have quoted xxx items,xxx items with potential annual saving xxxx USD.
• TOP RFI ranking.
• xxx years production experience in the industry, over xxx years export experience.
• Excellent and quick response with so much competitive price.
• ISO9001 certified, GMP certified, HACCP certified, HALAL certified, KOSHER certified.
12 India xxxx
Service
provider
xx 16 7 xxxx
• Have quoted xx items, xx items with potential annual saving xxxx USD.
• Excellent and quick response with so much competitive price.
• ISO9001 certified, GMP certified, HALAL certified.
13 India xxxx
Direct
manufacturer
xx 1 1 xxxx
• Have quoted xx item with potential annual saving xxx USD.
• Over xx years production experience in the industry.
• Over xx years export experience, over xx export to North America and Europe.
• ISO9001 certified, GMP certified.
Recommended supplier Supplier with potential savings
but didn’t respond to RFI
27. 27
Supplier Recommendation – Indian, Russia & Poland suppliers
No
.
Country
Supplier
name
Business Type
RFI
Score
# of
item
quoted
# of items
with
potential
savings
Potential
Annual
Saving in
USD
Reason for recommending
14 India xxxx
Direct
manufacturer
xx 1 1 xxxx
• Have quoted xx item with potential annual saving xxxx USD.
• Over xx years production and export experience in the industry.
• Excellent and quick response with so much competitive price.
• ISO9001 certified, ISO14001 certified, GMP certified.
15 India xxxx
Direct
manufacturer
xx 7 2 xxxx
• Have quoted xx items, xx items with potential annual saving xxxx USD.
• Over xx years production and export experience in the industry.
• Able to quote with 3 incoterms (FOB, CIF and DDP)
• GMP certified, KOSHER certified.
16 India xxxx
Direct
manufacturer
xx 12 10 xxxx
• Have quoted xx items, xx items with potential annual saving xxxx USD.
• Highest Total saving value among Indian suppliers.
• They declared they’re currently supplying to xxx through distributor.
• Didn’t respond to RFI questions.
17 India xxxx
Direct
manufacturer
xx 3 3 xxxx
• Have quoted xx items with potential saving xxxxUSD.
• Didn’t respond to RFI questions.
18 Indonesia xxxx Distributor xx 24 9 xxxx
• Have quoted xx items, xx items with annual potential saving xxxx USD.
• xxx years export experience in related.
• Annual turnover xxxx USD.
• able to quote with 3 incoterms (FOB, CIF and DDP)
19 Russia xxxx
Distributor in Russia
but has offered
supplies from its
direct manufacturers
in China
xx 81 8 xxxx
• Have quoted xxx items, xx items with potential annual saving xxxx USD.
• Capability to supply directly from China to USA, avoiding additional costs.
• Wide capabilities to widen collaboration in direction of herbal extracts, amino acids etc.
• Xx years on the market, Able to quote with 3 incoterms (FOB, CIF and DDP)
20 Russia xxxx
Direct
manufacturer
xx 1 1 xxxx
• The only, direct manufacturer of collagen in Russia.
• Have quoted xx item with potential annual saving xxxx USD.
• Founded in xxxx, has great experience on the market.
• HACCP certified, HALAL certified
21 Poland xxxx Distributor xx 12 2 xxxx
• Have quoted xx items, xx items with potential annual saving xxx USD.
• The only supplier from Poland with potential items for savings.
• xx years export experience, able to quote with 3 incoterms (FOB, CIF and DDP)
Recommended supplier Supplier with potential savings
but didn’t respond to RFI