ductile pipes case study

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Case Study

China “Ductile Pipes”

Dragon SourcingYour Tailored Sourcing Approach to Emerging Markets

© 2013 Dragon Sourcing. All rights reserved. www.dragonsourcing.com

2

Supplier Market screening in China for “Ductile Pipes”

Context

Our Client is an European company specialized in pipes and fittings for construction and engineering.

The Client wanted to better understand the current market of Ductile Pipes in China and find new suppliers at lower costs.

Segments involved:

•Ductile Pipes

•Pipe Tees

•Pipe Bends

•Couplers

•Valves

•Fittings

•Fire Hydrants

DS Supply Market analysis

Objectives

• Collect detailed spend information about the categories such as technical requirements, standards applying, material specifications, volume and current unit prices by Client’s consuming factories.

• Identify a list of potential suppliers based in China to include in the RFI/RFP process by leveraging the web, external databases, and various networks of experts.

• Develop the RFI / RFP – jointly with client – to include all key suppliers qualifications criteria (e.g.: financial, technology, manufacturing capability, corporate responsibility, quality…).

• Administer RFI / RFP process to ensure as high a return rate as possible.

• Analyze responses, prices and use balance score carding process to rank suppliers and recommend suppliers per category which client needs to take through their auditing process in order to potentially qualify them.

• Provide Client with a profile for all of the suppliers recommended to be audited.

© 2013 Dragon Sourcing. All rights reserved.

3

Program Schedule: Target was to finalize the program within 14 weeks

Project Workflow Updated

Done Started Delivery critical Delay

Currently Milestones Not started


Process Steps Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Spend Analysis

Collect information from Client 1

Questions clarification by Client 1

Supplier Identification

Identify a list of potential

suppliers in China2

Develop the RFI/RFQ jointly with

Client1

RFI/RFQ Process

RFI/RFQ to be finalized &

approved by Client1

RFI/RFQ send out & follow up 5

Develop the score card jointly

with Client2

Analyze responses & rank

suppliers2

Collect quotation and calculate

DDP price1

For the Chinese market, our approach enabled us to pre-select 20

suppliers out of 92 suppliers Identified.

Selection of

potential suppliers

Pre-selection of

suppliers

Sending & Follow-

up of the RFI/RFQ

Analysis of the

suppliers’ RFI/RFQ

4

No. of supplier

92

73

48

25 20

0

20

40

60

80

100

Suppliers

identified

RFI/RFQ

sent

Not intend to

respond

RFI received Valid RFI

Number of Suppliers

Suppliers

Identified

RFI/RFQ

Sent

Did Not

Intend To

Respond

RFI

ReceivedValid RFI


5

Heilongjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Ningxia

Shaanxi

Anhui

Fujian

Neimonggu

Shanxi Shandong

Sichuan

Yunan

Guizhou

Henan

Jilin

Liaoning

Hebei

Guangdong

Gansu

Taiwan

SHANGHAI

Suppliers Locations9 suppliers are in Liaoning province; 5 suppliers are in Shandong province;

3 suppliers are in Shanxi province; Hebei, Henan, Hubei provinces each has 1 supplier.

No. Supplier Name Province

1 Supplier 1 Hebei

2 Supplier 2 Henan

3 Supplier 3 Hubei

4 Supplier 4 Liaoning









13 Supplier 13 Shandong





18 Supplier 18 Shanxi




© 2013 Dragon Sourcing. All rights reserved. 6√ xcan produce can’t produce

Categories Suppliers Can Produce5 suppliers can produce the 6 categories of products, 1 supplier can produce 5 categories,

1 supplier can produce 4 categories, 5 suppliers can produce 3 categories, 4 suppliers can produce 2 categories,

4 suppliers can only produce 1 category

No. Supplier Name Pipes Fittings Air Valves Hydrants Couplers Gate Valves Total Categories

1 Supplier 1 √ √ X X √ X 3

2 Supplier 2 √ √ X X X X 2


4 Supplier 4 √ X X X X X 1

5 Supplier 5 X X √ X X √ 2

6 Supplier 6 √ √ √ √ √ √ 6

7 Supplier 7 √ √ X X X X 2



10 Supplier 10 √ √ √ √ √ √ 6

11 Supplier 11 X √ √ √ √ √ 5

12 Supplier 12 X √ X X √ X 2


14 Supplier 14 X X √ √ X √ 3

15 Supplier 15 √ √ X X √ X 3

16 Supplier 16 X √ X √ √ √ 4

17 Supplier 17 X √ X X X X 1

18 Supplier 18 √ √ √ √ √ √ 6

19 Supplier 19 √ √ √ √ √ √ 6

20 Supplier 20 √ √ √ √ √ √ 6

© 2013 Dragon Sourcing. All rights reserved. 7

Criteria Definition for Suppliers Ranking & Scoring

Company background Weight of criteria ScoringMax Score per

criteria

Max Point per

criteria

Weight of the

section

How many years in the business 30% 1= Less than 5 Yrs 2= Between 5 to 10 Yrs 3= More than 10 Yrs 3 0.30

15%Workfloor size (m2) 30% 1= Less than 30,000m2 2= 30,000m2 to 100,000m2 3= 100,000m2 to 300,000m2 4= over 300,000m2 4 0.30

Number of Employees 20% 1= Less than 100 2= 100 to 500 persons 3= over 500 persons 3 0.20

Turnover in 2010 in USD 20% 1= Less than 5 million 2= Between 5 and 20million 3= 20 million than 100 million 4= More than 100 million 3 0.20

Subtotal 100% 13 1 15%

Quality Control Weight of criteria ScoringMax Score per

criteria

Max Point per

criteria

Weight of the

section

ISO 9000 (Y/N) 30% 0=No 1=Yes 1 0.30

30%

ISO 14000 (Y/N) 25% 0=No 1=Yes 1 0.25

Do you have the listed product certificate?

BS EN 545 5% 0=No 1=Yes 1 0.05

BS EN 598 (sewerage) 5% 0=No 1=Yes 1 0.05

ISO 2531 5% 0=No 1=Yes 1 0.05

WRc-NSF BS 6920 5% 0=No 1=Yes 1 0.05

WRAS for EPDM rubber 5% 0=No 1=Yes 1 0.05

WRAS for Cement Mortar lining to Pipes 5% 0=No 1=Yes 1 0.05

Wras for air valve 5% 0=No 1=Yes 1 0.05

BS 750 Hydrants 5% 0=No 1=Yes 1 0.05

BS 5155/ EN 593 Butterfly valves 5% 0=No 1=Yes 1 0.05

Subtotal 100% 11 1.00 30%

Production capability Weight of criteria ScoringMax Score per

criteria

Max Point per

criteria

Weight of the

section

Production capacity for 2010 5% 1 0.05

20%

Do you produce the listed products in house?

Pipes 7.5% 0=No 1=Yes 1 0.08

Fittings 7.5% 0=No 1=Yes 1 0.08

Air Valves 5% 0=No 1=Yes 1 0.05

Hydrants 5% 0=No 1=Yes 1 0.05

Couplers 5% 0=No 1=Yes 1 0.05

Gate Valves 5% 0=No 1=Yes 1 0.05

How many Pipes listed in the RFQ can you produce? 7.5% 1= Less than 30% 2= 30% to 50% 3= over 50% 3 0.08

How many Fittings listed in the RFQ can you produce? 7.5% 1= Less than 30% 2= 30% to 50% 3= over 50% 3 0.08

How many Air Valves listed in the RFQ can you produce? 5% 1= Less than 30% 2= 30% to 50% 3= over 50% 3 0.05

How many gate Valves listed in the RFQ can you produce? 5% 1= Less than 30% 2= 30% to 50% 3= over 50% 3 0.05

How many couplings listed in the RFQ can you produce? 5% 1= Less than 30% 2= 30% to 50% 3= over 50% 3 0.05

How many hydrant listed in the RFQ can you produce? 5% 1= Less than 30% 2= 30% to 50% 3= over 50% 3 0.05

Can you meet the requirements in terms of max. test pressure allowable? (Y/N) 5% 0=No 1=Yes 1 0.05

Can you meet the requirements for Coating? 5% 0=No 1=Yes 1 0.05

Can you meet the requirements for Lining? 5% 0=No 1=Yes 1 0.05

Do you have a traceability system from raw material to mass production?(Y/N) 5% 0=No 1=Yes 1 0.05

Can you produce moulds internally as per customer´s requirements? 5% 0=No 1=Yes 1 0.05

Subtotal 100% 30 1.00 20%

Price competitiveness Weight of criteria ScoringMax Score per

criteria

Max Point per

criteria

Weight of the

section

Price competitiveness 70% 0 0.7025%

Mould cost 30% 0 0.30

Subtotal 100% 0 1.00 25%

Cooperation Weight of criteria ScoringMax Score per

criteria

Max Point per

criteria

Weight of the

section

Cooperation during RFI 50% 0= Poor 1=Satisfying 2=Excellent 2 0.5010%

Cooperation during RFQ 50% 0= Poor 1=Satisfying 2=Excellent 2 0.50

Subtotal 100% 4 1.00 10%

Results of the Suppliers Ranking & Scoring

Suppliers Scorecards

Company background Quality Control Production capability Cooperation

(Score)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

Su

pp

lier

No

.13

Su

pp

lier

No

.8

Su

pp

lier

No

.4

Su

pp

lier

No

.11

Su

pp

lier

No

.16

Su

pp

lier

No

.12

Su

pp

lier

No

.17

Su

pp

lier

No

.1

Su

pp

lier

No

.20

Su

pp

lier

No

.6

Su

pp

lier

No

.2

Su

pp

lier

No

.3

Su

pp

lier

No

.10

Su

pp

lier

No

.18

Su

pp

lier

No

.19

Su

pp

lier

No

.9

Su

pp

lier

No

.15

Su

pp

lier

No

.7

Su

pp

lier

No

.5

Su

pp

lier

No

.14

Only produce

pipes

5.02

34%

3.98

18%

3.20

13%

4.08

99.6% 3.57

80%3.32

68%

2.58

82%

Produce fittings

and other categories

(no pipes)

5.73

100%

100%

5.70

100%

94%

5.69

86%

100%5.32

65%

80%

5.11

41%

81%

4.90

77%

84% 4.27

100%

100%

4.25

100%

100%

3.91

100%

100%3.53

78%

93%2.79

N/A

Mainly produce pipes & fittings

4.45

Valve

100%3.27

Valve &

hydrant

100%

Other

categories

8© 2013 Dragon Sourcing. All rights reserved.

Recommended Suppliers & Their Locations

No. Supplier Name Province Score Category

1 Supplier 1 Liaoning 5.73 Pipes & Fittings

2 Supplier 20 Liaoning 5.70 Pipes & Fittings

3 Supplier 6 Shanxi 5.69 Pipes & Fittings

4 Supplier 2 Hubei 5.32 Pipes & Fittings

5 Supplier 10 Shanxi 4.90 Pipes & Fittings

6 Supplier 11 Liaoning 4.08 Fittings

7 Supplier 13 Henan 5.02 Pipes

8 Supplier 5 Liaoning 4.45 Valves

Heilongjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Ningxia

Shaanxi

Anhui

Fujian

Neimongu

ShanxiShandong

Sichuan

Yunan

Guizhou

Henan

Jilin

Liaoning

Hebei

Guangdong

Gansu

Taiwan

SHANGHAI

9© 2013 Dragon Sourcing. All rights reserved.

10

Current status

• Client & DS successfully realized a joint audit of the 6 top-ranked suppliers

• Client passed an order for products co-developed with one of the 6 suppliers identified

and audited by DS. New suppliers found with the help of DS allowed substantial cost

reductions.


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Company Profile

Example Supplier Pipes & Fittings Co., Ltd. (1/3)

COMPANY INFORMATION

Company name Example Supplier Pipes & Fittings Co., Ltd.

Town Shenyang

Province Liaoning

Company website http://www.ExampleSuppliercom

Contact person Mr. Zhang

Title Sales Manager

Email [email protected]

Telephone number +86-592-8888-8888

Fax +86-592-8888-88888

Mobile phone +86-188-8888-8888

COMPANY BACKGROUND

Manufacturer, trader or both Manufacturer

Own brands Yes

Foundation Year 1994

Ownership Joint-Venture

Capital in USD 40 million

2010 turnover in USD 12 million

Work floor size (m²) More than 20,000

Number of employees in total 200

Can your commercial / technical liaison speak English? Yes

COMPANY TURNOVER

2010 2009 2008 2007

USD 63 million USD 32 million USD 87 million USD 90 million

NUMBER OF PEOPLE IN THE POSITIONS

Sales & management R&D staff QCProduction

supervisionLogistics

15 6 2 159 2

TOP 5 DOMESTIC CUSTOMERS

Customer Industry Location % of sales Type of product

Customer 1

Drinking

Water and

Sewage

Authorities

in China

Chinese

Province 1Ductile pipes, Fittings

Customer 2Chinese


Customer 3Chinese


Customer 4Chinese


Customer 5Chinese


TOP 5 EXPORT CUSTOMERS

Customer Industry Location % of sales Type of product

Customer 1Water

AuthorityJordan Ductile pipes, Fittings

Customer 2Water

AuthorityMauritius Ductile pipes, Fittings

Customer 3Sewage

Water

Authority

Kuwait Ductile pipes, Fittings

Customer 4Water

AuthoritySaudi Arabia Ductile pipes, Fittings

Customer 5Water

AuthorityLibya Ductile pipes, Fittings


http://www.examplesuppliercom/

mailto:[email protected]

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Company Profile


PRODUCTION & TECHNOLOGY

Pipes & FittingsDo you manufacture these products in house? (Y/N) Yes

What is the annual Production/Capacity in units? 500,000 Tons

What is the actual production in 2010 in units? 280,000 Tons

What is the range of the products (dimensions) requested that

you can produce? (mm)

Max DN2600

Average 300-1200

Min DN80

What is the range of the products (weight) requested that you

can produce? (Kg)

Max 77

Average N/A

Min 11088

Can you meet the requirements for max test pressure? Yes

What are the raw materials used for production? Pig Iron

Can you produce for both uses (water and sewage)? Yes

Can you meet the requirements for Coating? Yes

Can you meet the requirements for Lining? Yes

Are you willing to label the pipe with Client branding? Yes

What would be the tooling cost of the labelling? N/A

What would be the life expectancy of the mould? N/A

How is the cement liner applied to the products? spray

How is the external coating applied to the different products and how is this controlled? automatic/spray

Traceability System MTC

MOULDING Pipes & FittingsWhat kind of moulding are used for these products? sand mould

Can you produce moulds internally? Yes

What kind of materials are used for the moulding? pig iron

Do you have equipment maintenance plan regulations? Yes

MELTING Pipes & FittingsWhat kind of methods are used to melt iron? Blast Furnace

How is the temperature controlled during melting? around 1200C

What kind of equipment is used for temperature control?Mid-frequency furnace

smelting

What kind of equipment is used for chemical composition control? Frequency reacting

boiler

HEAT-TREATMENT AND TEMPERATURE CONTROL Pipes & Fittings

What equipment is used for annealing? Please describeAnnealing Furnace

45m-long

How is temperature controlled during annealing? automatically

What kind of equipment is used for temperature control? N/A

QUALITY, ENVIRONMENTAL AND PRODUCT CERTIFICATION

QUALITY & ENVIRONMENT Yes / No Date of Cert. Certifying Org.

Do you have certificate: ISO 9000? Yes 2009.01.14 SGS

Do you have certificate: ISO 14000? Yes 2009.02.18 SGS

PRODUCTS CERTIFICATIONS Yes / No Date of Cert. Certifying Org.

Pipes and fittings

BS EN 545 Yes N/A SGS

BS EN 598 (sewerage) Yes N/A SGS

ISO 2531 Yes N/A SGS

WRc-NSF BS 6920 No

WRAS for EPDM rubber Yes N/A SGS

WRAS for Cement Mortar lining to Pipes Yes N/A SGS

Couplers and Flange Adaptors No

BS EN 545 Yes N/A SGS

ISO 2531 Yes N/A SGS

Do you have other certifications? Specify No

Would you pursue a DWI accreditation ? Yes

QUALITY CONTROL AND TESTING EQUIPMENT

Do you test all products produced and if so what method is used? Yes

What quality control equipment do you have in-house?

CMM, X-Ray, surface

measuring system, Linear

Height600, tensile test

machine, etc.

What performance do you achieve on average in out going quality

measures(% rejected)?N/A

What control procedures are in place if a product fails the specific test?

e.g. full isolation of that batch so that further tests are carried out so

they can determine the exact route cause to the problem and fix it?

Production is temporarily

stopped until the source of

defect is detected and

corrected

Test-to-failure Technique:

Does the company use Test-to-failure (TTF) technique on product

safety and/ or performance?

Yes

Quality Plan:

Does the company build quality plan base on Failure Mode and Effect

Analysis (FMEA) model or risk level in complying to specification?

Yes

Material Control:

Does the company have strict control on the grade of the materials

being used?

Yes


13

Company Profile


Factory Pictures

Factory Entrance Workshop Workshop Workshop

Workshop Workers Machinery

R & D Raw Material Warehouse Finished Goods Warehouse Products Showroom


ductile pipes case study

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