Cotton Bags for Luxury Retail Brand Case Study

Dragon Sourcing - 龙源
Delivering sustainable sourcing value from emerging markets
Cotton Bags For Luxury Retail Brand
Case Study

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Agenda
1. Sourcing Project Introduction
2. Sourcing Approach
3. Conclusions

• SUPPLIER PRE-
QUALIFICATION
Stage 1
• SAMPLING
Stage 2
• FACILITY
AUDIT
Stage 3
• CONTRACT
Stage 4
• Client Introduction & Project Objectives,
• Dragon Sourcing approach in 4 steps
 Client Introduction: Client is a leading French luxury brand selling high end footwear, bags and life style products.
Client want to qualify a price competitive supplier from emerging market in a short period of 4 weeks able to offer
cotton bags for life style product range.
 Project Objectives: Identify and qualify list of potential manufacturers in India by leveraging DS database and finding
new suppliers by running Request for Information/Request for Quote (RFI-RFQ) process through procurement and
sourcing direct from manufacturers for 11 SKU’s of cotton bags.
 Supplier key requirement: Supplier should have experience in developing cotton bags for luxury brands, must be
able to offer saving, export capability and able to develop samples.
 Quality Management and Social compliance certification will be considered as advantage.

- Total 11 SKU’s with and without gusset styles were included for RFI-RFQ
process with estimated volume to half a million pieces.
100% Soft Cotton - 1 side Brushed - Inside the Dust Bag Sizes of Pouches (mm) Estimated
Quantities in
PCSDescription Reference# Product Pictures Height Width Gussets
POUCH 1 150404 650 650 190 37,700
POUCH 2 XX XX XX XX XX
POUCH 5 XX 580 350 - XX
POUCH 6 XX XX XX - XX

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Agenda
3. Conclusions

1. STAGE 1: Supplier pre-qualification
2. STAGE 2: Sampling
3. STAGE 3: Facility Audit
4. STAGE 4: Contract
- Sourcing Approach,

- Following steps were covered under stage 1: Supplier Pre-Qualification
No. Step Deliverables
1.
Demand Analysis
Work with client to define and understand the Products and requirements (specs, volumes, current unit
prices, delivery destinations of delivery/consumption). Collect samples of the products in order to ensure
potential suppliers fully understand them
• Kick-Off Report
2.
Supply Market Analysis
Identify list of potential manufacturers in India leveraging DS database and finding new suppliers.
• Potential Supplier List
3.
Telephone Pre-screening
Selection of manufacturers to be included in the RFI/RFP process by telephone pre-screening based on
agreed simple criteria e.g. capability to make the product, can export, quality certifications, interest in
participating, etc.
• Shortlist for RFI-RFQ
process
4.
Develop RFI/RFQ document
Prepare an RFI/RFQ document that has the objective to pre-qualify the competitiveness and capabilities of
the manufacturers, including: background, financial, client and product experience, quality certification &
processes, social responsibility, manufacturing/technology capability, R&D capability.
• RFI-RFQ Template
5.
Administer RFI/RFQ:
The RFI/RFQ is distributed to the relevant manufacturers, with telephone follow-up to push for maximum
participation.
• Completed RFI-RFQ’s
6.
Analyze RFI/RFQ Responses:
Analysis of RFI/RFQ responses, estimation of logistics costs, and preparation of a report, which profiles &
objectively ranks the manufacturers by capability and competitiveness, including a recommendation for
those to be audited.
• RFI-RFQ Report
• Supplier Profiles
• Proposed shortlist for
sampling and audit.

Steps Week 1 Week 2 Week 3 Week 4
1. Demand Analysis
2. Supply Market Analysis
3. Telephone Pre-screening
4. Develop RFI/RFQ
5. Administer RFI/RFQ
6. Analyze RFI/RFQ Responses
1
RFI/RFQ approved
2
- Stage 1: Supplier Pre-Qualification timeframe.
- Project was completed within 4 weeks as per schedule.
Supplier profiles with
recommendations.
Not started Done
Inprocess Delay

1. Selected list of potential suppliers were added according to the category specific information,
2. Pre-screening was performed to filter the list of suppliers’ with the specific key requirement on
this project.
3. RFI-RFQ process was run with selected suppliers qualifying to the client requirement.
STEPS India
Potential suppliers added to the project 20
Suppliers passed pre-screen process based on must have criteria’s 5
RFI/RFQ Sent 5
Intend to respond 5
RFI/RFQ Received 5
- Stage 1- Supply Market Analysis:
- Process metrics follow up as per Country wise.

COMPANY INFORMATION
Company Name DS/SY/003
Factory Address XX
City XX
Province XX
Country India
Company Website XX
COMPANY BACKGROUND
Year Founded 1999
Business Type: Manufacturer, or trader ? Manufacturer
Printiingin-house / outsource In house
Number of sewing machines 300 Machines
Monthly production capacity for cotton
bags
0.5 M pcs of cotton bags
Export License ? (Y/N) Yes
Be able to export to Europe? (Y/N) Yes
Export Experience (Years) 20 Years
Work Floor Size ( Square meters) 15,000 Sqm
Total Employee Number 547
HUMAN RESOURCES
Factory
Workers
Quality Control
staff
Technical Staff
/ R&D Engineer
Sales &
Management
Others
Employee No. 450 20 10 20 47
ANNUAL TURNOVER
2018 2017
Total sales turnover (in M
USD)
USD XX M USD XX M
MAIN MARKET
Europe (%) US (%) Asia (%) Domestic (%)
Rest of the
world
(%)
% of Sales 45 XX XX XX XX
TOP 3 CUSTOMER
Customer
Name
Industry Country % of Sales
Type of
Product
Top 3
Customers
XX Luxury Retail USA 18 Table Linen
XX Luxury Retail US & France 5 Cotton bags
XX Retail NL 9 Dust bags
CERTIFICATIONS
Certificate Y/N Date of Certificate
Date of
Expire
ISO 9001:2008
Quality management systems
Yes 07.09.2018 12.07.2021
Ccorporate Social Responsibility
SA 8000
Yes XX XX
QUALITY CONTROL MANAGEMENT
General Production Defective Rate (% rejected)? 1.2 %
Accept 3rd party QC? (Y/N) Yes
- Stage 1
- Supplier profile’s were shared with the client with our ranking,
RFI Score 90
RFI Ranking 1 / 5

FACTORY PHOTOS
Factory overview Inside the factory floor
Production floor Sewing Workshop Printing Workshop
Lab & Testing Warehouse Showroom
- Stage 1
- Supplier factory picture were shared with the client for overview of the
supplier facility.

- Price analysis was done for all the 5 suppliers,
1 2 3 4 5
Supplier name DS/TH/001 DS/EZ/002 DS/SY/003 DS/MA/004 DS/PP/005
Descriptio
n
Ref #
FOB Client
Buying Price
($)
FOB Price in
$US
Difference
(%)
FOB Price in
$US
Difference
(%)
FOB Price in
$US
Difference
(%)
FOB Price in
$US
Difference
(%)
FOB Price in
$US
Difference
(%)
POUCH 1 150404 XX $ 1.71 27% $ 2.28 2% $ 2.02 13% $ 2.70 - 16 % $ 3.05 - 31 %
POUCH 2 XX XX $ XX XX $ XX XX $ XX XX $ XX XX $ XX XX
Descriptio
n
Quantities
Client spend
in $US
Supplier 1:
Spend in
$US
Savings in
$US
Supplier 2:
Spend in
$US
Savings in
$US
Supplier 3:
Spend in
$US
Savings in
$US
Supplier 4:
Spend in
$US
Savings in
$US
Supplier 5:
Spend in
$US
Savings in
$US
POUCH 1 37,700 $ XX XX $ 23,299 $ 85,956 $ 1,810 $ 76,116 $ 11,649 $ 101,790 - $ 14,024 $ 114,985 - $ 27,219
POUCH 2 XX XX XX XX XX XX XX XX XX XX XX XX
Current
spend
Supplier 1
total spend
Total saving
%
Supplier 2
total spend
Total saving
%
Supplier 3
total spend
Total saving
%
Supplier 4
total spend
Total saving
%
Supplier 5
total spend
Total saving
%
Total spend in $US $ XX $ XX 28.6% $ XX 6.2% $ XX 18% $ XX - 15. 8% $ XX - 23 %
Saving Value $ XX $ XX $ XX $ XX $ XX
Shortlisted for sampling.

DS/TH/001 DS/EZ/002 DS/SY/003
- High quality samples were developed from the shortlisted suppliers within
short period of time,
Samples were developed for selected styles with and without gusset,
Example of the developed sample from one the style.

- Post sample development, plan was framed to audit the recommended supplier.
- Following sections were covered in the hybrid model of audit process,
** Dragon Sourcing has experienced team for performing Technical and Social Corporate Responsibility (CSR)
audit or hybrid model combing both.

- Supplier business license and certification’s were collected during the audit
process and shared with the client,

- Supplier scoring with overall comments and corrective action plan was
shared with the client,

- Recommended supplier was passed in the audit,
- Proforma Invoice was raised to the client under buy/resell model,

- Purchase order was awarded to the shortlisted supplier post negotiation,

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Agenda
3. Conclusions

Conclusions
 Whole project was carried out in 8 weeks (4 week for supplier qualification and another 4 weeks for
sampling, supplier facility audit and contract)
 Shortlisted suppliers for sampling were credential with the certification and production capability as per
client mandatory requirement.
 High quality samples were developed following original sample within a short period of time.
 Client was happy with the quality and workmanship of the samples developed and finalized one
supplier for next step.
 Audit was immediately planned and the supplier facility was approved based on the audit results.
 Audited supplier was awarded with the contract post price negotiation, production lead time, payment
terms and others.
 Overall based on DS strategic sourcing process, It helped client to place order on time with high
savings and samples to showcase.
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Cotton Bags for Luxury Retail Brand Case Study

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Cotton Bags for Luxury Retail Brand Case Study