Aluminum Die- Casting Case Study

Your Tailored Sourcing Approach to Low Cost Countries

Aluminum die-casting case study

February, 2012

Demand Analysis: heating block and meat mincer

© 2011 Dragon Sourcing. All rights reserved.

Item description Product picture Qty per annum

(in units)Current US$ FOB purchasing price

Meat mincer in aluminum 150,000 US$ X.XX

Heating block in aluminum 500,000 US$X.XX

3

Project approachSteps April May June July

W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13 W14

1Collect detailed spend information about the category such as technical requirements, standards applied, material specification, drawings, pictures, consolidated volume by consuming factories, and current unit prices

2 Collect one representative sample of the products to be sourced in our Shanghai, HCMC, Mumbai and Istanbul offices

3 Identify list of potential suppliers in Vietnam, Thailand, Indonesia, China and Turkey to include in the RFI / RFQ process

4Develop the RFI / RFQ to include all key supplier qualification criteria (e.g.: financial, technology, manufacturing capability, corporate responsibility, quality…) and quotation requirements

5 Administer the RFI / RFQ process

6Analyze responses and use balance score carding process together with management team to rank suppliers and recommend suppliers which client needs to take through a formal qualification process

7 Jointly develop with our client the structure of the audit report

8 Carry out audits (either alone or jointly with clients auditors or buyers) for the short listed suppliers that appear attractive and competitive based on RFI/RFQ process

9 Issue audit reports and rank suppliers based on audit and price competitiveness

10 Recommend which suppliers to move to sample development stage and manage sample development stage

11 Based on sample quality select suppliers with who to enter into final contract negotiations and support the contract negotiation process

MilestonesStarted FinishedNot-started Delayed

Phase 2: Supplier qualification (Optional)

SCHEDULE TO BE DEFINED


4

We identified 346 suppliers in China, Thailand, Indonesia, Vietnam and Turkey and received 27 RFI/RFQs

Intend to respond

RFI-RFQ received

RFI-RFQ sent

Suppliers initially identifiedCN 173 THAI 51 IN 40 VN 35 TUR 47

Give upCN 88 THAI 41 IN 28 VN 15 TUR 25

Intend to respond receivedCN 11 THAI 4 IN 3 VN 4 TUR 7

Only RFI receivedCN 3 THAI 2 IN 1 VN 2 TUR 6

RFI and RFQ receivedCN 8 THAI 2 IN 2 VN 1 TUR 0

19729

346

RFI-RFQ sent CN 113 THAI 45 IN 36 VN 19 TUR 32 245

14 13

Not Confirmed yetCN 14 THAI 0 IN 5 VN 0 TUR 0

19

Not received yetCN 0 THAI 0 IN 0 VN 1 TUR 1

2


5

Reasons for not participating in the RFI-RFQ:

Reasons for not participate China Thailand Indonesia Viet Nam Turkey Total Percentage

Not sent RFI/RFQ

Contact detail not valid 22 2 0 4 15 43 43%

Only produce stamping or plastic ; focus on one Industry like automotive ;produce other metal products not alu

27 2 2 12 0 43 43%

Not interested in the project 9 0 0 0 0 9 8%

Trading company 2 0 1 0 0 3 3%

Focus on domestic market 0 1 1 0 0 2 2%

Others 0 1 0 0 0 1 1%

Sub Total 60 6 4 16 15 101 100%

Don't intend to respond

Can not produce ; the products are complex; focus on other industry 44 24 18 1 6 93 47%

RFI is too complex; not interested in the project 34 9 5 2 19 69 35%

Can produce but don’t think they can meet client strict requirements 2 0 0 9 0 11 5%

Have submitted quotes to client earlier several times 0 0 1 0 0 1 1%

client’s current supplier 1 0 0 0 0 1 1%

Others 7 8 4 3 0 22 11%

Sub Total 88 41 28 15 25 197 100%

Total 148 47 32 31 40 298 -© 2011 Dragon Sourcing. All rights reserved.

6

China: We have received RFI/RFQ from 11 Chinese suppliers

No. Supplier Name Province City WebsiteRFI/RFQReceived

(Y/N)

CECED/GC

received(Y/N)

Confidential letter

received (Y/N)

1 Zhejiang Ningbo Both Y Y Y



4 Zhejiang Ningbo Only RFI N N


6 Zhejiang Taizhou Both Y Y Y

7 Jiangsu Nanjing Both Y Y Y

8 Jiangsu Yixing Both Y Y N

9 Jia ngsu Suzhou Only RFI N N

10 Guangdong Foshan Both Y N N

11 Shandong Qingdao Only RFI N N

Shanghai

Gansu

Jiangxi

Zhejiang

Jiangsu

Guangxi

Hunan

Hubei

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

Shanxi Shandong

Sichuan

Yunan

Guizhou

Henan

Jilin

Liaoning

Hebei

Guangdong

Gansu

Heilongjiang

Beijing

Tianjin

Taiwan


7


(Y/N)

CECED/GC

received(Y/N)

Confidential letter

received (Y/N)

1 Nakornprathom Aomyai Both Y Y Y

2 Bangkok Bangkok Only RFI Y Y

3 Bangkok Bangkok Only RFI N N

4 Samut Sakorn Amphur Muang Both Y N Y

Thailand: We have received RFI/RFQ from 4 suppliers


© 2011 Dragon Sourcing. All rights reserved.8

Indonesia: We have received RFI/RFQ from 3 suppliers

Tangerang

Bekasi, Bandung, Karawang Timur, Karawang

Barat


(Y/N)

CECED/GC received

(Y/N)

Confidential letter received

(Y/N)

1 West Java Tangerang Both Y Y Y

2 West Java Tangerang - Both Y Y Y

3 West Java Bekasi - Only RFI N N


Dong Nai

HCM City


(Y/N)

CECED/GC received

(Y/N)

Confidential letter

received (Y/N)

1 Dong Nai Bien Hoa Only FRI N Y

2 HCM City HCM City Both Y Y Y

3 HCM City HCM City Only RFI N N

Vietnam: We have received RFI/RFQ from 3 suppliers

10


(Y/N)

CECED/GC received

(Y/N)

Confidential letter received

(Y/N)

1 MARMARA REGION BURSA Only RFI N N

2 MARMARA REGION BURSA Only RFI N N

3 MARMARA REGION ISTANBUL Only RFI N N

4 MARMARA REGION ISTANBUL Only RFI N N

5 MARMARA REGION IZMIR Not received yet N N

6 MARMARA REGION KOCAELI Only RFI N N

7 MARMARA REGION KOCAELI Only RFI N N

Turkey: We have received RFI from 7 suppliers


11

RFI score sum up for 9 Chinese suppliers according to the scoring category

Remark:-The Chart’s legend is ordered by the ranking of the RFI score.-We remove the score of “corporate responsibility” and split into other categories-We indicate the highest and lowest score on the chart to see the gap among suppliers and we found the gap between highest and lowest score on each category are quite big even more than 50%.


12

RFI score sum up for 4 Thailand suppliers according to the scoring category


13

RFI score sum up for 3 Indonesia suppliers according to the scoring category


14

RFI score sum up for 3 Vietnam suppliers according to the scoring category


15

RFI score sum up for 6 Turkey suppliers according to the scoring category


16

Average score for each country

Remark:-We use the same tool to scoring the 5 countries’ suppliers.-The average score of China is the highest 67 points but close to Vietnam and Indonesia.-Thailand and Turkey get the lower score below 60 points.


17

Meat mincer FOB price and mould cost comparison for 8 Chinese suppliers and 1 Indonesia supplier.

We have cross checked the price with this supplier, they can’t decrease in order

to assure the quality

Pls see below remark area Pls see below

remark area


Chinese supplier 2

Chinese supplier 3

18

Heating block FOB price and mould cost comparison for 8 Chinese suppliers


Client Chinese supplier 1

Chinese supplier 2

Chinese supplier 3

Chinese supplier 4

Chinese supplier 5

Chinese supplier 6

Chinese supplier 7

Chinese supplier 8

19

Heating block FOB price and mould cost comparison for 2 Thailand suppliers, 2 Indonesia suppliers and 1 Vietnam supplier

Thailand Indonesia Vietnam


Client


ChinaRecommended Chinese suppliers to take through audit process.

Country China

Supplier name Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6

Province Zhejiang Zhejiang Zhejiang Guangdong Jiangsu Zhejiang

RFI/RFQ received Both Yes Both Yes Both Yes Both Yes Both Yes Both Yes

Main Product

SHARP products, motorcycle

accessories, lamp accessory, Medical

device

Boiler parts, Motorcycle

accessories, Auto parts

Aluminum die castingOEC: Auto parts,

furniture, lamp accessories

Did-casting products

Motorcycle accessories,

Lamp, gasoline engine

accessories

Reason for recommending

• Very aggressive & cooperative for doing business with client• Know mould very well.• High RFI score but quotation is too high

• The factory capability seems good• High RFI score• Have long experience on die casting products

•The factory capability seems good• Very aggressive & cooperative for doing business with client• Good RFI score

• The factory capability seems good• Good RFI score• The price of meat mincer is good and heating block very close to current price

• Very aggressive & cooperative for doing business with SEB• Main products are exported• Quotation is O.K.

• Very aggressive & cooperative for doing business with SEB• Good price

RFI score 86 points 82 points 75 points 73 points 63 points 60 points

RFI ranking

No.1 in 9 ranked Chinese suppliers, and all 25 ranked

suppliers for 4 countries

No.2 in 9 ranked Chinese suppliers, and all 25 ranked

suppliers for 4 countries

No.3 in 9 ranked Chinese suppliers, and No.4 in all 25

ranked suppliers for 4 countries







RFQ score 0 point0 point

(The price is higher but not too much)

0 point(The price of meat mincer is too high)

38 points 0 point (The price are very close to current

price)50 points

Business

Aluminum Die- Casting Case Study