Case Study on sourcing Sodium Chlorate as raw material from China.

Dragon Sourcing - 龙源 Delivering sustainable sourcing value from emerging markets

Sodium Chlorate (NaClO3) Sourcing Case Study

Shanghai, July 2016

© 2016 Dragon Sourcing. All rights reserved. 2

Agenda

1. Introduction

2. Approach

3. Suppliers involved in the RFI/RFQ

4. Quotation overview

5. Supplier profile Example

3

Introduction

Background

Client is a Brazilian pulp and paper company, with production capacity exceeding six million tons of pulp and paper produced in seven factories distributed in five Brazilian states. Much of this production is exported. The company has many distributor centers around the world and five branch offices in Brazil, China, Hungary, USA and Switzerland. The project is to identify capable and competitive suppliers for Sodium chlorate used in pulp and paper industry in China to allow the client having alternative source in China.

Geographical scope China supply market

Deliverables: RFQ Supplier profiles

© 2016 Dragon Sourcing. All rights reserved.


Product Specifications

Product name Specs Picture & packagingSodium chlorate (NaClO3)

Sodium chlorate MIN. 96,5% •Physical aspect: Cristal•Purity MIN. 96,5%; •SODIUM BROMATE 0 TO 999 PPM;•POTASSIUM 0 TO 1,5%; •SODIUM SULFATE 0 TO 100 PPM;•INSOLUBLE 0 TO 0,2%; IN BULK.


Agenda

1. Introduction

2. Approach





Approach – Phase 1

No. Step Deliverables

1.Demand AnalysisWork with client to define and understand the products and requirements (specs, volumes, materials, production technology requirements)

Project Requirement Questionnaire

Kick-Off Report

2. Supply AnalysisIdentify 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-screeningSelection 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, Client 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 AdministrationThe 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 ResponsesAnalysis 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

AuditMilestone 2: Shortlist for Audit Agreed

Phase 1: Supplier Pre-Qualification


Agenda

1. Introduction

2. Approach





Suppliers involved in the RFI/RFQ

26

11

5

0

5

10

15

20

25

30

Identified suppliers Supplier invited forRFI/RFQ

Suppliersresponded

Reasons for not being invited or not responding to the RFI/RFQ•Not relevant•Not willing to participate•Don’t produce or trader or agency•No longer producing•Always postponing and has not replied•Factory cannot export•Wrong contact details•No answering on the phone


Supplier locations

Supplier name Region City1 Supplier 1 Liaoning Dalian2 Supplier 2 Hunan Changsha3 Supplier 3 Guangdong Guangzhou4 Supplier 4 Tianjin Tianjin5 Supplier 5 Sichuan Chengdu

Xinjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Qinghai

Ningxia

Shaanxi Anhui

Fujian

Neimongu

Shanxi Shandong

Xizang

Sichuan

Yunan

Guizhou

Henan

Jilin

LiaoningHebei

Guangdong

Gansu

SHANGHAI

Hong Kong

Taiwan

Heilongjiang

Sichuan

TIANJIN


Agenda

1. Introduction

2. Approach






Company Manufacturer / Trader

Annual production in Metric Ton

US$ FOB China price / Metric Ton

Sea freight cost for a 20’ container to

SANTOS port Brazil

US$ CIF Santos (Brazil) price

1 Supplier 1 Both 30,000 $645

US$2,200

$733

2 Supplier 2 Both 20,000 $625 $713

3 Supplier 3* Manufacturer N/A $656 $744

4 Supplier 4Trader

(factory cannot export)

70,000 $675 $763

5 Supplier 5 Manufacturer 50,000 $670 $758

For 20’ sea freight calculation, loading based on 25 Metric Tons, hence sea freight fees account for US$88/Ton

Nota Bene*: Supplier 3 only send a quote instead of completing the RFI/RFQ, hence no company profile available


Agenda

1. Introduction

2. Approach





Company ProfileSupplier 1

GENERAL INFORMATION

Supplier Name Supplier 1

City Dalian

Province Liaoning

Contact person Mr. Ao

Job title Sales Rep.

Email Confidential

Phone number Confidential

Fax number Confidential

Mobile Confidential

Website Confidential

BUSINESS INFORMATION

Found Year 2005

Ownership State-holding

Manufacturer, distributor, or agent Both Manufacturer and Trader

Capital in million RMB N/A

Work floor size (m²) N/A

Number of employees 180

License for self import/export (Yes/No) Yes

Years of export experience 6

PRODUCTIONYears of experience in Sodium chlorate 30

Production capacity per year in Tons 30,000

TURNOVER IN MILLION RMB

2010 2009 2008130 115 106

% SALES EXPORT TO MAIN MARKETS IN 2009 = 0%

EU (%) US (%) Japan (%) Rest of the world (%)

N/A N/A N/A N/A CUSTOMER BASE

Customers Country Industry % of sales

N/A N/A N/A N/A

QUALITY & ENVIRONMENTAL REGISTRATIONCertificate Yes/No

N/A Yes

N/A Yes

COMPLIANCE WITH LOCAL LAW

Do you adhere to all rules and regulations in respect to child labour? No

What is the age of your youngest and older employee? 23~65

How many hours per week, including overtime are working your employee on a regularly scheduled basis? 40

Are all your employees working in a safe, healthy and clean working place? Yes

Do you adhere to all rules and regulations in respect to environmental issues? Yes

Are you willing to sign a confidentiality agreement? (Y/N) Yes


Company ProfileSupplier 1

PRODUCTION EQUIPMENTS

Main equipments Quantity Description

Electrobath 2 sets Make NaClO3 with NaCl

Storing pool 4 Store liquid

Crystalizing tank 2 Crystalize NaClO3

Separator 2 Separate water from crystalized NaClO3

Dryer 1 Dry the surface of solid NaClO3

QUALITY CONTROL

How many QC people in your company? 16

What quality control equipment do you have in-house? N/A

How long do you keep QC record form? 3 years


Company Profile Supplier 1

FACTORY PICTURES

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Case Study on sourcing Sodium Chlorate as raw material from China.

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