One of our Norwegian clients, who is a major supplier of premium children’s cots in the global market, recently contacted us. They asked us to deliver sustainable procurement savings by identifying competitive suppliers in Mexico and Turkey through a rigorous evaluation.
Based on the detailed case study, Dragon Sourcing carried out a comprehensive sourcing project for carrycots in Mexico and Turkey, spanning a period of 13 weeks. The team identified 59 potential vendors, obtained 27 signed NDAs, and received 6 complete RFI/RFQ responses.
Key findings include:
- All responding suppliers can develop molds in-house or via outsourcing, and they are willing to accept existing molds from the client.
- Most sellers primarily assemble products for industries like automotive and electronics, with only one Turkish supplier having limited baby product experience.
- Initial quotes showed negative savings ranging from 9% to 143% compared to current costs.
- Major cost drivers were high component prices (64% of total cost), fixed textile import costs ($41.60 per unit), and additional expenses for user guides, pallets, markups, and assembly.
- Mexican suppliers face a 16% local tax, while Turkish suppliers pay 14% in local and export taxes.
- The sea freight from Mexico to Rotterdam is approximately 2.5 times higher than that from Turkey.
The project evaluated vendors using a detailed scorecard across 10 categories. The top-ranked suppliers were Supplier 3 (Turkey), scoring 62.6 points, and Supplier 2 (Turkey), scoring 57.7 points.
For the next steps, Dragon Sourcing recommends:
- Auditing the 5 shortlisted sellers
- To obtain more accurate quotations, we provide samples and 3D drawings.
- Focusing on reducing component costs, particularly for the Crusi CC Base and Frame
Despite the initial higher costs, further negotiation and optimization could potentially yield savings in future rounds.