Dragon Sourcing successfully conducted a strategic sourcing project for a U.S.-based testing instrument manufacturer, aiming to secure competitive suppliers for 20 critical sheet metal items. The client’s objectives included reducing procurement costs while identifying suppliers across China, Turkey, Vietnam, and Mexico. With an annual spend of $ 48K on these items, this effort targeted substantial cost savings and sustainable supplier partnerships.
Project Overview: The sourcing process began with a comprehensive analysis of the client’s requirements, focusing on product specifications, volumes, and target prices. Dragon Sourcing initially identified 236 potential suppliers and, through telephone pre-screening, shortlisted 87 qualified candidates for the RFI/RFQ stage.
Steps and Approach:
- RFI/RFQ Distribution and Follow-Up: After preparing RFI/RFQ documents tailored to supplier evaluation, Dragon Sourcing distributed them across the selected suppliers, encouraging maximum participation through follow-ups. This resulted in 15 responses: 10 from China, 3 from Vietnam, and 2 from Mexico.
- Supplier Scoring and Ranking: The top 14 suppliers were evaluated, achieving an average RFI score of 69. Notable scores included 93, 89, and 85, reflecting the competitive capabilities of the suppliers from China and Vietnam.
Key Results:
- Cost Savings Potential: Analysis revealed substantial cost-saving opportunities, with projected savings between 1% and 63%. The top supplier offered potential savings of USD 30,040, while the average supplier savings ranged from $ 5,000 to $ 25,000.
- Tooling Cost Analysis: Of the suppliers, 11 provided tooling costs, which ranged from $2K to $53K. Notably, these suppliers committed to covering new tooling expenses once their initial tooling lifespan of 50,000 shots was met.
- ISO-Certified Suppliers: The four recommended suppliers held ISO 9001 and ISO 14001 certifications, ensuring quality and environmental standards. These suppliers also demonstrated strong references and capabilities across various industries, including electrical, furniture, and machinery.
Top Supplier Recommendations:
Based on RFI scores and approximate saving figures, we recommended 4 suppliers. 3 of these suppliers are based in China, and 1 is based in Vietnam. The client gained access to a cost-efficient supply chain with high-quality suppliers, strategically enhancing their procurement operations.