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Creating Value with an Outsourced International Purchasing Office for a large FMCG company in China

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Creating Value with an Outsourced International Purchasing Office for a large FMCG company in China

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    1. Creating Value with an Outsourced International Purchasing Office for a large FMCG company in China

    2. © 2008 Dragon Sourcing. All rights reserved. 2 Agenda Context Sourcing Process Governance Model Results and conclusions

    3. © 2008 Dragon Sourcing. All rights reserved. 3 Context A global consumer-goods company headquartered in USA. It has operations in more than 40 countries and sells its products in over 180 nations worldwide. 50,000 employees sells food, beverage and household products Launched a “Direct to manufacture LCC sourcing” initiative Selected Dragon Sourcing to manage the programme

    4. © 2008 Dragon Sourcing. All rights reserved. 4 Agenda Context Sourcing Process Governance Model Results and conclusions

    5. © 2008 Dragon Sourcing. All rights reserved. 5 Dragon Sourcing service offering covers the end-to-end sourcing process

    6. © 2008 Dragon Sourcing. All rights reserved. 6 Dragon Sourcing service offering covers the end-to-end sourcing process

    7. © 2008 Dragon Sourcing. All rights reserved. 7 The first step is to develop a comprehensive understanding of the need and of the functional requirements, e.g.: laminated packaging

    8. © 2008 Dragon Sourcing. All rights reserved. 8 Then, an RFI/RFP process is administered to filter out most capable suppliers

    9. © 2008 Dragon Sourcing. All rights reserved. 9 Suppliers’ competitiveness is first measured on an FOB basis

    10. © 2008 Dragon Sourcing. All rights reserved. 10 Then all relevant information is collected to calculate DDP prices

    11. © 2008 Dragon Sourcing. All rights reserved. 11 Finally a Go/no Go decision to proceed is given based on the savings potential vs the risk associated with changing suppliers

    12. © 2008 Dragon Sourcing. All rights reserved. 12 Dragon Sourcing service offering covers the end-to-end sourcing process

    13. © 2008 Dragon Sourcing. All rights reserved. 13 Short-listed suppliers are audited to assess long-term partnership opportunities

    14. © 2008 Dragon Sourcing. All rights reserved. 14 Collected information is shared with customer through detailed audit reports

    15. © 2008 Dragon Sourcing. All rights reserved. 15 Audit outcome is summarized in a rated profile of each supplier

    16. © 2008 Dragon Sourcing. All rights reserved. 16 The final supplier selection relies on the short-listed suppliers’ offers, audits and sample quality

    17. © 2008 Dragon Sourcing. All rights reserved. 17 Dragon Sourcing service offering covers the end-to-end sourcing process

    18. © 2008 Dragon Sourcing. All rights reserved. 18 Quality is regularly monitored during production and at pre-shipment

    19. © 2008 Dragon Sourcing. All rights reserved. 19 QC Reports provide detailed information concerning production quality

    20. © 2008 Dragon Sourcing. All rights reserved. 20 Supplier performance is closely monitored and new potential suppliers regularly audited in order to manage the supplier for continuous improvement

    21. © 2008 Dragon Sourcing. All rights reserved. 21 Agenda Context Sourcing Process Governance Model Results and conclusions

    22. © 2008 Dragon Sourcing. All rights reserved. 22 The China sourcing programme is managed via a series of frequent conference call meetings Business Model Dragon Sourcing is a service provider assisting customer in sourcing and procurement activities Customer places Purchase Orders directly with selected suppliers and suppliers invoice directly Customer Customer pays DS a fixed monthly mgmt fee + evaluates every quarter Dragon Sourcing performance Communication Steering Committees weekly (conference call) to review overall progress on all categories Categories follow-up meetings on an ad-hoc basis to review category issues Meeting minutes record main decisions, planned actions and project status

    23. © 2008 Dragon Sourcing. All rights reserved. 23 During these meetings, projects’ status and issues are discussed

    24. © 2008 Dragon Sourcing. All rights reserved. 24 Agenda Context Sourcing Process Governance Model Results and conclusions

    25. © 2008 Dragon Sourcing. All rights reserved. 25

    26. © 2008 Dragon Sourcing. All rights reserved. 26 Savings range from 15 to 32% depending on the product and the “as-is” sourcing situation

    27. © 2008 Dragon Sourcing. All rights reserved. 27 In addition to savings, the Client benefits from a range of other benefits from our “Sourcing on Demand” service Reduced sourcing risks in terms of: CSR Capacity/availability/delivery reliability Quality Total Supply Chain transparency Sourcing process (RFI, RFP, Audits, QCs,…) Knowledge about the suppliers (regular visits by client) Assurance that product is really made to the spec Pro-active market intelligence about category opportunities and innovative products in China Flexibility to increase/reduce sourcing capacity on Demand Window to other asian countries (e.g.: Vietnam, Malaysia,…)

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