Background
Danone is one of the largest food and beverage companies in the world experiencing significant year-on-year sales growth in China. Danone decided to open its own yoghurt factory in Beijing and hence looked to Dragon Sourcing for support in the following 2 areas:
- Find dairy farms within a 300 Km radius of the factory to ensure a stable and long-term supply of pure fresh milk sources to the factory.
- Find air freight suppliers able to deal with their logistic requirements in terms of volume and “cold chain” quality requirements .
Approach
- Collected detailed demand requirements for milk sources and services requirements for multimodal door to door operation
- Analyzed the possible sources to find dairy farms in target regions and underlying cost drivers
- Qualified through RFIs local dairy farms and Chinese suppliers capable of responding to Danone’s logistic requirements
- Visited the short listed dairy farms jointly with Danone French milk expert to investigate and identify the capacity and quality of the farms
- Asked short listed suppliers to provide solutions to maintain the “cold chain” and developed a clear delivery process from Beijing factory to Guangzhou airport.
- Run RFQ process with suppliers to select preferred partners
- Developed detailed cost model of Chinese suppliers to confirm reliability of RFQ process
- Conducted negotiations jointly with Danone and finalized suppliers’ selection
- Finalized terms for contracting in line with Danone legal terms and conditions
Results
Qualified a pool of dairy farms in Beijing and Tianjin with required milk capacity
Worked out with Air Freight suppliers cold chain process from Beijing Factory to Guangzhou warehouse by using isotherm covers
Organized effective fresh milk collection route for a rented 20T milk truck to ensure the 4℃ cold chain delivery to Beijing yogurt factory
Proposed an alternative by using refrigerated trucks