Coffee Machine Case Study

1

Case Study

Worldwide “Automatic Coffee Machines”

Dragon SourcingYour Tailored Sourcing Approach to Emerging Markets

© 2013 Dragon Sourcing. All rights reserved. www.dragonsourcing.com

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Worldwide Suppliers Market Screening for “Automatic Coffee Machines”

Context

Our Client was an American consumer-goods company with commercial activities in more than 100 countries.The Client , currently buying in Europe, wanted to identify a new strategic region to source their Automatic Coffee Machines in order to implement the best cost-efficient strategy possible.

Segment involved:-Automatic Coffee Machines

DS Supply Market analysis Objectives

• Collect detailed spend information about the categories such as technical requirements, standards applying, material specifications, volume and current unit prices by Client’s consuming factories.

• Identify a list of potential suppliers worldwide to include in the RFI/RFP process by leveraging the web, external databases, and various networks of experts.

• Develop the RFI / RFP – jointly with client – to include all key suppliers qualifications criteria (e.g.: financial, technology, manufacturing capability, corporate responsibility, quality…).

• Administer RFI / RFP process to ensure as high a return rate as possible.

• Analyze responses, prices and use balance score carding process to rank suppliers and recommend suppliers per category which client needs to take through their auditing process in order to potentially qualify them.

• Provide Client with a profile for all of the suppliers recommended to be audited.

© 2013 Dragon Sourcing. All rights reserved.

© 2013 Dragon Sourcing. All rights reserved. 3

Suppliers Screening220 suppliers were initially identified in 27 countries, 151 passed first screening.We received 28 complete RFI and another incomplete 6.

No. Country Total Identified Passed Phone Screening RFI Sent Intended To

Respond RFI Received

1 Greater China 68 67 37 11 92 India 18 18 15 5 53 Brazil 6 6 3 3 34 Netherlands 6 1 2 2 25 USA 8 4 4 3 26 Canada 3 2 2 2 27 France 2 2 2 1 18 Switzerland 9 2 2 1 19 Spain 7 3 3 1 110 Germany 5 4 3 1 111 Turkey 1 1 1 0 112 Korea 6 6 5 3 013 UK 12 5 5 0 -14 Singapore 10 9 3 0 -15 Argentina 3 3 1 0 -16 Italy 32 1 1 0 -17 Ireland 1 1 1 0 -18 Denmark 1 1 1 0 -19 Romania 1 1 1 0 -20 Indonesia 9 9 0 - -21 Thailand 4 4 0 - -22 Bulgaria 2 1 0 - -23 Belgium 2 0 - - -24 Monaco 1 0 - - -25 Sweden 1 0 - - -26 Portugal 1 0 - - -27 Austria 1 0 - - -

Total 220 151 92 34 28


Our approach enabled us to pre-select 28 suppliers out of 151 potential companies identified.

Selection of potential suppliers

Pre-selection of suppliers

Sending & Follow-up of the RFI/RFQ

Analysis of the suppliers’ RFI/RFQ

Suppliers RFI process

28

92

151

0

20

40

60

80

100

120

140

160

Passed First Screening RFI sent RFI received

CanadaUSAArgentinaBrazilThailandIndonesiaKoreaSingaporeIndiaRomaniaBulgariaTurkeyNetherlandAustriaBelgiumDenmarkGermanySpainPortugalSwedenMonacoSwitzerlandItalyFranceIrelandUKGreater China


Reasons Analysis for not sending RFI to 59 suppliers & Reasons Analysis for the 58 suppliers which did not respond

Reasons not to send RFI

23

1620

05

10152025

Cannot produce Trading companies

Could not bereached

Reason no intend to respond

27

10 11 10

0102030

Tradingcompanies

Notinterested

Domesticonly

Suppliers to whom RFI were not sent 59

Cannot produce 23

Could not be reached 16

Trading companies 20

Did not intend to respond 58 Cannot produce 27 Trading companies 10 Not interested in the project 11 Domestic market only 10

Cannot produce


Heilongjiang

Gansu

Jiangxi

Zhejiang

BEIJING

Jiangsu

Guangxi

Hunan

Hubei

Ningxia

Shaanxi

Anhui

Fujian

Neimonggu

Shanxi Shandong

Sichuan

Yunan

Guizhou

Henan

Jilin

LiaoningHebei

Guangdong

Gansu

Taiwan

SHANGHAI

Chinese Suppliers Locations5 suppliers are located in Zhejiang province ; 2 suppliers are located in Guangdong provinceHubei and Shanghai provinces both have 1 supplier each

N° Company Name Province

1 Chinese Supplier 1 Guangdong

2 Chinese Supplier 2 Guangdong

3 Chinese Supplier 3 Shanghai

4 Chinese Supplier 4 Zhejiang




8 Chinese Supplier 8 Hubei


Results of the Suppliers Ranking & Scoring


US

Sup

plie

r 1

US

Sup

plie

r 2

Can

ada

Sup

plie

r 2

Can

ada

Sup

plie

r 1

Net

herla

nds

Sup

plie

r 1

Net

herla

nds

Sup

plie

r 2

Ger

man

y S

uppl

ier

Sw

itzer

land

Sup

plie

r

Fran

ce S

uppl

ier

Spa

in S

uppl

ier

Turk

ey S

uppl

ier

Chi

na S

uppl

ier 2

Chi

na S

uppl

ier 6

Chi

na S

uppl

ier 3

Chi

na S

uppl

ier 1

Chi

na S

uppl

ier 5

Chi

na S

uppl

ier 9

Chi

na S

uppl

ier 4

Chi

na S

uppl

ier 7

Chi

na S

uppl

ier 8

Indi

a S

uppl

ier 1

Indi

a S

uppl

ier 5

Indi

a S

uppl

ier 4

Indi

a S

uppl

ier 2

Indi

a S

uppl

ier 3

Bra

zil S

uppl

ier 2

Bra

zil S

uppl

ier 1

Bra

zil S

uppl

ier 3

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50 7.50 7.35 7.45 7.32 7.50 7.50 7.50 7.36 7.28 7.25

6.78

5.69 5.65 5.66 5.29

5.07 4.84

4.21

2.78 2.57

5.00

3.97

3.19 2.81

2.25

5.27

4.12 3.83

Company background Quality Control Production capability Cooperation Total

North America Europe China India Brazil


Current status

• Based on the RFI process DS identified new promising regions for sourcing their Automatic Coffee Machines. Top-ranked suppliers from each region were recommended to the Client.

• Based on DS recommendations, the Client audited factories in China, Turkey, and Brazil.

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Supplier Name: xxx - ChinaBusiness information

Top 5 Customers

Customers Industry Country/Area of physical delivery

Percentage of sales

Customer 1 Small appliances Italy 35%

Customer 2 Electrical appliances

US 10%


US 8%


US 10%


Europe 5%

COMPLIANCE WITH LOCAL LAW ( Y / N )

Children labor Y

Health & Safety Y

Environmental issues Y

confidentiality agreement Y

GENERAL INFORMATIONSupplier name xxx

City Foshan

Province Guangdong

Contact person xxx

Job title Marketing Manager

Email xxxxx

Phone number +86-000-00000000

Fax number +86-000-00000000

Website www.xxx.com

BUSINESS INFORMATIONFound Year 1988

What is the nationality/region of your company? China

How much capital do you have (in US$)? 58,000,000

What is your core business? R&D, Production and Marketing for Small

Domestic Appliances

What is the strategic focus of your company? To be the global competitive electrical appliances manufacturer

Number of employees 16300

Turnover(in USD)

2007 2008 2009 2010

450 M 500 M 620 M 300 M

% Sales exports to the main markets

North America (%)

South America (%)

EU (%) Asia / Pacific(%)

30% 6% 55% 4%

http://www.xxx.com/

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Supplier Name: xxx - China Production capacity

Production capacity What are your core technologies in your current products?

What is the in-house part production capability? what is the main material? (plastics, metal etc..) Metal Yes Plastic Yes Others, please specify here

What's your maximum amount of machine you can assemble in a year with you current facilities? 200K/month

For all types of coffee machines that you make; please provide the following information:

Coffee machine type Volumes produced in 2009 (in units)

Maximum production capacity in units (2010) Please list key customers

Fully Automatic 50k 110K Customer 6

Coffee Pod Machine 110k 500k Customer 7

Capsule Machine 230k 600k Customer 8

15 Bar Machine 250k 550k Customer 9

3.5 Bar Machine 120k 600k Customer 10

Name Certificate No. Date of expiry Certifying Org.

Please list what third party Quality registration certificates you have obtained

Korea certificate EK XXXXXXX 2011 Korea Cert.

Europe certificate CE XXXXXXX Unlimited Eurocorp.


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Supplier Name: xxx - China Quality control, R&D

QC Equipment Yes/No

What quality control equipment do you have in-house?

Life Test Laboratory Yes

Safety Test Laboratory Yes

XRF Yes

ICP-AES Yes

GC-MS Yes

What test equipment do you have in-house?

Earth resistance tester

Test board of four-item electrical Specification

Withstand voltage measuring device

Leakage current tester

Power meter

What procedures are available for outgoing check?

Material inspection

Safety inspection

System inspection

Finished products inspection

PQC

What performance do you achieve on average in out going quality measures(% rejected)?

0-4%

Mechanical Electronics

How many engineers? 25 15

How many engineers for development? 35

What is your most innovative product? (why) Full automatic coffee machine

Do you hold any patents on certain technologies?

Yes

Spend in R&D (% of revenue) 2%

Location of R&D offices In House

5 last products developed in house? Card management type vending machine, Multifunction mixed coffee machine

experience level of technologies: Yes/No

- table top machines Yes

- instant coffee Yes

- liquid coffee extract No

- pour over / filter coffee No

- hot water systems Yes

- cooling technologies No

- payment systems No

- automatic cleaning of machine (CIP) Yes

- electronics (development hard-software) Yes


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Supplier Name: xxx - China Products information

Current product

Coffee machine type Product description Coffee Machine Picture

Automatic Espresso Coffee Machine CM4809A/CM4809

*15 bar electromagnetic pressure pump*Thermoblock heating system to ensure the precise temperature and instant steam**1.2L large detachable transparent water tank*250g coffee bean box capacity*Short brewing time for full-bodied espresso with perfect cream*With high pressure frothing function for making cappuccino*LCD digital programmable menu settings with blue light for your easy operation*Fully intelligent system to remind user the facing problem and how to settle promptly*Adjustable strength and particle size for different tastes

Automatic Espresso Coffee Machine CM4802

*15bar electromagnetic pressure pump*Thermoblock heating system to ensure the precise temperature and instant steam*1.8L large removable transparent water tank*200g coffee bean box capacity*Short brewing time for full-bodied espresso with perfect cream*Professional milk frothing device: sucks milk and delivers creamy milk froth directly into cup, excellent for cappuccino making*LCD digital programmable menu settings with green light for your easy operation

Automatic Espresso Coffee Machine CM4801

*15bar electromagnetic pressure pump*Die-casting aluminum heating boiler*1.8L large removable transparent water tank*200g coffee bean box capacity*Short brewing time for full-bodied espresso with perfect cream*Professional milk frothing device: sucks milk and delivers creamy milk froth directly into cup, excellent for cappuccino making*Hot water spout to produce ho water over 90 : ideal for tea or other hot beverage ℃


1313

Supplier Name: xxx - NetherlandsBusiness information

Top 5 Customers


Percentage of sales

Confidential

Confidential

Confidential

Confidential

Confidential


Children labor Y

Health & SafetyY

Environmental issuesY

confidentiality agreementY

GENERAL INFORMATIONSupplier name xxxx

City Son

Province Son

Zip code xxx

Contact person Mr. xxx

Job title Global Business Director / CEO

Email xxx

Phone number '+31-00-0000000

Fax number +31-00-0000000

Website www.xxx.com


What is the nationality/region of your company? Dutch

How much capital do you have (in US$)? n/a

What is your core business?

Development, Manufacturing, sales, service and operating of vending, horeca machines and dispensers

What is the strategic focus of your company? n/a

Number of employees 21,1250 (Direct 1150)

Turnover(in USD)

2007 2008 2009 2010

Confidential xx xx xx


North America (%)

South America (%) EU (%) Asia / Pacific(%)

0% 10% 80% 10%


http://www.xxx.com/

1414

Supplier Name: xxx - Netherlands Production capacity


Production capacity

What are your core technologies in your current products?

Heating & Control systems

What is the in-house part production capability? what is the main material? (plastics, metal etc..)

Metal Yes Plastic No Others, please specify here

What's your maximum amount of machine you can assemble in a year with you current facilities?

3600



Maximum production capacity in units (2010)

Please list key customers

2 Option table top premix based machines

1800 3600 units total. Customer 1

4 Option table top premix based machines

700 3600 units total Customer 2

4 Option table top premix based smart card enabled machines

70 3600 units total Customer 3

Others 20 3600 units total Customer 4



Customer 1 India audit certificate.

n/a n/a n/a

1515

Supplier Name: xxx - Netherlands Quality control, R&D

QC Equipment Yes/No


miscellaneous appliances, detailed list can be provided.


miscellaneous appliances (High Voltage, temperature, salt spray, pressure, flow,…) detailed list can be provided on request


Visual and functional Test after every step in Assembly, High Voltage, 100% Factory Acceptance Test, random tests on customer specific programming's


Less than 2%



Do you have people in your company working as engineering/ development ? If yes, how many?

Yes, 65.

What is your most innovative product? (why)

new tea and milk solutions (ground breaking for industry)


Yes


Location of R&D offices Bruchsal, Germany and Guangzhou China

5 last products developed in house? coffee island with fresh milk, public hot drink vend system, different hot drinks components.

experience level of technologies: Yes/No

- table top machines Yes

- free standing machines Yes

- liquid coffee extract Yes

- hot water systems Yes

- cooling technologies Yes

- payment systems Yes

- automatic cleaning of machine (CIP) Yes

- electronics (development hard-software) Yes


1616

Supplier Name: xxx - Netherlands Products information

Current product


SL 25 Depth: 455 mm, Width: 310 mmHeight excl. bean container: 700 mmHeight incl. bean container: 810 mmRequired free space:Behind: 60 mm, To the right: 70 mm, Over: 330 mmCold water connection 3/82.8 kW/16 A / 230 V/50Hz±15% 38 kg.Water pressure: min. 2- bar - max. 5 bar The SL25 can be supplied with or without a base cabinet

SL 50/200 Dimensions:Depth: 455 mm, Width: 450 mmHeight excl. bean container: 700 mmHeight incl. bean container: 810 mmRequired free space:Behind: 60 mm, To the right: SL50: 90 mmSL200: 150 mm, Over: 330 mmCold water connection: 3/82.8 kW/16 A/ 230 V/50Hz±15%40 kg/B2C 45 kg.Water pressure: min. 2- bar - max. 5 bar

SL 300 Depth: 455 mm, Width: 660 mmHeight excl. bean container: 700 mmHeight incl. bean container: 810 mmRequired free space:Behind: 60 mm, To the right: 150 mmOver: 330 mmCold water connection 3/82.8 kW/16 A / 230 V/50Hz±15%55 kg.Water pressure: min. 2- bar - max. 5 bar


1717

Supplier Name: xxx - IndiaBusiness information

Top 5 Customers


Percentage of sales

Customer 1 Vending Dubai 10%

Customer 2 Water India 3%



Customer 5 Vending Singapore 1%


Children labor Y

Health & SafetyY



GENERAL INFORMATIONSupplier name xxx

City Noida

Province Uttar Pradesh

Zip code 201301

Contact person Mr. xxx

Job title Director

Email xxx

Phone number 00.00.00.00.00

Fax number 00.00.00.00.00

Website www.xxx.com


What is the nationality/region of your company? Indian

How much capital do you have (in US$)? 2 M

What is your core business? Manufacturing beverage vending

machine.

What is the strategic focus of your company? To be number 1.


Turnover 2007 2008 2009 2010

1 M 300,000 5 M 10 M


North America (%)

South America (%) EU (%) Asia/Pacific (%)

0% 0% 0% 100%


http://www.xxx.com/

1818

Supplier Name: xxx - IndiaProduction capacity

Production capacity


INHOUSE SHEET METAL WORK. CONVEYSIRED ASSEMBLY


Metal Yes Plastic No Others, please specify here


60,000



Maximum production capacity in units (2010)


2 lane premix based automatic beverage vending machine.

2500 10,000 Confidential







ISO 22000 Norway


1919

Supplier Name: xxx - IndiaQuality control, R&D

QC Equipment Yes/No


Laboratory Yes

Electrical testing station Yes


Same as above


Random lab check

Physical check

Electrical testing station


Less than 1%




2

What is your most innovative product? (why) Cafemini - Value Engineered Machine


No


Location of R&D offices Noida

5 last products developed in house? 2 lane café mini, 4 lane café plus,.

experience level of technologies:

- table top machines Y

- free standing machines Y

- instant coffee Y

- pour over / filter coffee N

- hot water systems Y

- cooling technologies Y

- payment systems N

- automatic cleaning of machine (CIP) Y

- electronics (development hard-software) Y


2020

Supplier Name: xxx - IndiaProducts information

Current product


Café Mini •2 LANE PREMIX BASED VENDING MACHINE:• Model : Atlantis 2.0 •Canister Capacity : 1 kg •Number of Options : 2 lane •Dispensing Speed : 3 cups/min •Net Weight : 8 kg •Power : 1100 watts •Voltage : 220v / 50hz •Dimensions : 332 x 355 x 585mm

Vendor 2-3 Lane • 2/3 LANE BASED HEAVY DUTY VENDING MACHINE : •Dispensing Rate : 4 cups per minute •Canister Capacity : 1.2 kg •Start up Time : 20 minutes •Voltage : 220V - 50HZ •Power : 2KW •Width : 330mm •Depth : 440mm •Height : 690mm •Net Weight : 25 kgs


21

Supplier Name: xxx - USA Business information

Top 5 Customers


Percentage of sales

Customer 1 QSR Global 7%

Customer 2 Bev North American 6%

Customer 3 Distribution USA 5%

Customer 4 Bev USA 5%

Customer 5 Institutional USA 5%


Children labor Y

Health & Safety Y



GENERAL INFORMATION

Supplier name xxx

City Watertown

Province Wisconsin

Zip code 53094

Contact person xxx

Job title President

Email xxxx

Phone number 00.00.00.00.00

Fax number 00.00.00.00.00

Website www.xxx.com


What is the nationality/region of your company? USA

How much capital do you have (in US$)? n/a

What is your core business? design & manufacturing of food & beverage equipment

What is the strategic focus of your company? remain the industry pioneer


Turnover(in USD)

2007 2008 2009 2010

n/a n/a n/a n/a


North America (%) South America (%)

EU (%) Asia / Pacific(%)

80% 0% 7% 13%


http://www.xxx.com/

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Supplier Name: xxx - USA Production capacity

Production capacity


metering & mixing apparatus


Metal 80 Plastic 20 Others, please specify here


12000


Coffee machine type

Volumes produced in 2009 (in units)

Maximum production capacity in units

(2010)


Freeze dried n/a 2000 Customer 1

Liquid Concentrate n/a 2000 Customer 2



Sanitation Std 18 Karma Inc xxxx 2010 NSF/ANSI

Electrical Safety Karma Inc E-30291 xxxx 2010 CUL

Electrical safety Karma inc xxxx 2010 CE

Electrical safety Karma Inc xxxx 2010 CCE


23

Supplier Name: xxx - USA Quality control, R&D

QC Equipment Yes/No


100% incoming component inspection

Y

Refrigeration vacuum pum

Y

Refrigeration scales Y

Refrigeration volume guages

Y

Hot & Cold temperature sensors

Y


UL required Ground Fault Voltage Test Module

Volume measuring apparatus 5cc to 500cc


100% Testing of all models produced

Once Test certified, packing is done with a check list of all items included with model


0% outgoing failures / Warranty failures of less then 1/2 of 1%




2

What is your most innovative product? (why)


YES

Spend in R&D (% of revenue) Less than 5%

Location of R&D offices Wisconsin USA

5 last products developed in house?

experience level of technologies:

- table top machines YES

- instant coffee YES

- liquid coffee extract YES

- hot water systems YES

- cooling technologies YES

- payment systems NO

- automatic cleaning of machine (CIP) YES

- electronics (development hard-software) YES


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Supplier Name: xxx - USA Products information

Current product


YCC 80B • Wattage 1260w• Removable water tank capacity: 2.5l• Bean container: 350g• Dimension (W x D x H/mm): 370x290x420• Weight: 10kg• Boiler: Water heater/Steam heater Dual type• Pump pressure : 16 bar• Auto power off : 3 hours• Voltage/Hz : 110 – 240V / 50-60Hz

YCC 50 • Adjustable fineness: 450 µm – 750 µm• Adjustable coffee outlet : 30cc -200cc• Full automatic cappuccino system• Automatic cleaning system• Pre brewing system• Energy saving system• Easy attachment & detachment of brewer unit• Ion Filter for scale prevention: exchange every 200 -300l• User friendly Iconic display (LCD)


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