St Gobain

St Gobain

Background

St Gobain Packaging is one of the 2 world’s largest company specializing in glass packaging for the food and beverage industries. Saint Gobain Packaging wanted to challenge its current carton supplier base in Europe by conducting a benchmarking exercise in China and in Vietnam. Saint Gobain asked Dragon Sourcing to support its sourcing initiative to find corrugated plate suppliers capable of covering their demand of roughly 4 millions plates/year spread over 10 different references.

Approach

  • Collected detailed demand requirements for corrugated cardboard sheets
  • Identified more than 250 suppliers to involve in RFI process
  • Qualified through the RFI process 28 Chinese suppliers and 2 Vietnamese suppliers capable of meeting Saint Gobain’s requirements
  • Created a scorecard in order to pre select suppliers to include in RFQ process.
  • Run RFQ process with pre-selected suppliers to develop understanding of FOB price points in China and calculated DDP prices delivered to St Gobain location
  • Based on RFQ analysis, audited 13 suppliers in China and in Vietnam.
  • Recommended suppliers who can match Saint Gobain requirements in order to move to sample development stage

Results

Identified and audited 13 suppliers capable of meeting client’s technical requirements.

Obtained best possible FOB and DDP prices to benchmark with current European prices

Lack of DDP competitiveness led St Gobain Packaging to replicate same process in Eastern Europe.

Metso Minerals

Metso Minerals

Background

Metso Minerals (part of the Metso Group) is the world’s market leader in rock and mineral processing equipment with a turnover of approximately €1.5b per year. Steel castings is one of the largest spend category currently sourced globally across the 5 continents. In order to rebalance a growing country risk as well as identify new cost reduction opportunities, Metso Minerals looked at China as a long term strategic source of supply for its large steel castings requirements.

Approach

  • Selected steel castings part numbers representative of Metso’s total steel castings spend
  • Segmented the sample set into 9 bidding packages
  • Qualified through an RFI process 17 Chinese suppliers capable of responding to Metso’s requirements
  • Run RFQ process with short listed suppliers to measure competitiveness of Chinese suppliers vs. current sources
  • Developed detailed steel castings cost model of Chinese suppliers to confirm reliability of RFQ process
  • Calculated total costs of delivery from ex-works China to Metso factories
  • Develop business case for moving an increased volume of steel castings to China

Results

Identified 20% factor cost advantage for China vs. current LCC sources, mostly driven by advantages in labor and energy

Evaluated medium to longer term risk of moving to China (currency, materials and energy shortages)

Made recommendation for moving approximately 25% of the global steel castings spend to China with associated business case

Developed implementation plan for re-sourcing initiative

Proposed program governance structure for completing process over 18 months period