Asia Sourcing Update for ISM - FINAL 5-11
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Transcript of Asia Sourcing Update for ISM - FINAL 5-11
NILFISK-ADVANCEGLOBAL SOURCING UPDATE
A Mid-Size Company Perspective
May 2011
Randy Christoffersen
Vice President of Procurement
Nilfisk-Advance Inc.
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Nilfisk-Advance, Inc. Confidential
Company Background Global Sourcing Background Strategic Approach--Preferred Supplier Report Examples of Parts Successfully Sourced in Asia Lessons Learned Q&A
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Agenda
Nilfisk-Advance, Inc. Confidential
Global leader in professional cleaning equipment Member of the NKT Group in Denmark $1B in annual sales (NKT sales are $3B)
• North American sales are $300M 50+ sales offices worldwide Major manufacturing locations in US, Mexico, Europe &
China Headquarters in Copenhagen, Denmark U.S. Headquarters in Plymouth, MN
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Company Background
Nilfisk-Advance, Inc. Confidential
North America Plant Locations
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Seattle, WA
Plymouth, MN
Springdale, ARPhoenix, AZ
Queretaro, MX
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Core Businesses
Our businesses are• Industrial and commercial cleaning equipment• Professional high-pressure cleaning equipment• Consumer vacuum and high-pressure cleaning equipment• Services and accessories
Our customers include• Manufacturers• Commercial businesses• Institutions• Contract cleaners• Automotive businesses• Agricultural businesses• Building & construction companies • Service companies
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Net Sales by Product Category
Vacuum cleaners 25%
Other sales 11%
Floor care machines 39%
High pressure cleaners 18%
After-sales market 7%
Nilfisk-Advance’s New Mission Statement
Nilfisk-Advance’s Mission Statement:“We enable sustainable cleaning worldwide to improve quality of life”
•We provide superior easy to use, ergonomic products (for the users)
•We ensure a better and healthier life when our products are used (cleaner working- and everyday environment)
•We provide the best equipment – but we do not perform the cleaning
•We deliver the most efficient products for our customers
•We work to avoid unnecessary depletion of natural resources (water, chemicals, etc.)
•We work against discrimination, corruption, etc.
•We are a provider of equipment to remove any type of dust, dirt, litter, waste, debris, etc.
•We are a global organization
•Our products reach every location on the globe
•We are agile enough to adjust to all needs – globally
•We embrace the increasing global need for cleaning
STRATEGIC DIRECTION
Global Sourcing Progress & Targets
GROUP TARGET
% LCC 2008 % LCC 2009 % LCC 2010 YTD % LCC 2011 FC % LCC 2012 FC % LCC 2013 FC0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Chart Title
Global Sourcing Background
Nilfisk-Advance has been sourcing in Asia for about 15 years.
We currently utilize our own purchasing office in China (DGSO) and a trading company in Taiwan (JCD)
We opened a plant and sourcing office in Mexico in 2009.
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Nilfisk-Advance, Inc. Confidential
Locations of DGSO and JCD
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DGSO
JCD
Nilfisk-Advance, Inc. Confidential
China & Taiwan Sourcing Offices
DGSO was set up in 2005 Dongguan, China to facilitate communication with Chinese speaking factories.
JCD is a trading company established in the mid-1990’s in Taiwan.
Primary duties of our Asia offices include:• Identify potential new suppliers• Obtain quotes• Negotiate with our guidance• Execute tooling & F/A orders (including tooling agreements)• Schedule and track shipments• Arrange freight consolidation amongst all the factories• Follow-up on accounting issues• Work with factories on quality/delivery issues to determine root cause
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Nilfisk-Advance, Inc. Confidential
2010 imports from Asia:• 84 Containers• $8M in spend• 50+ active suppliers in 2010
Organization Structures Manager Tactical buyers Quality rep Logistics coordinator
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Background: Asia
Nilfisk-Advance, Inc. Confidential
Background: Mexico/Queretaro
We have a full time procurement team on the ground at our largest factory in Queretaro, Mexico.
Plant was opened in 2009.
Staff consists of:• One manager• One project manager• Three direct buyers• One indirect buyer• One procurement engineer
Primary duties include:• Identify potential new suppliers• Obtain quotes & negotiate pricing• Execute tooling & F/A orders (including tooling agreements)• Pay suppliers• Work with factories on quality/delivery issues to determine root cause• Lead major supplier performance resolution
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Nilfisk-Advance, Inc. Confidential
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Preferred Supplier Strategic Overview
• General InformationSpend/Part Count Data
‘Stoplight’ CategoryGrowth Indicator
Comments about Factory/Capabilities# of Visits
We use a R/Y/G approach to manage our sourcing process:
Successful Supplier Examples Suppliers - China
• Power Cords and Cord Sets• Certifications for all agencies we’ve needed (UL, CSA, TUV, etc.)• Draws their own wire, extrudes jacket, twists wire, assembles,
molds plugs, etc.
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - China
• Steel fabricator (punching/stamping/bending/welding/polishing/etc.)• 1 Robotic Welder• Small capacity injection mold machines• Good quality systems
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - China
• Machined parts with tight tolerances• ISO 9001:2008 Certified
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - China
• Aluminum & Magnesium Die Castings and Machining• ISO 9001, TS 16949 Certified• Yellow because of decline in process control in 2010
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Squeegee Frames
Polisher Frames
Brush Decks
Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - China
• Injection Molding, assemblies, and loose tolerance machining/stampings
• Parent company also makes terminal blocks, fuse blocks, and circuit breakers.
• Yellow because of lack of investment in recent years
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Dust Skirt for OBS
Brush Skirt Housing
Gimbal
Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - Taiwan
• Permanent Mold Aluminum and Machining• ISO 9002, QS 9000, TS16949 Certifications• World class supplier
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - Taiwan
• Wire Harnesses, wire assemblies, and printed circuit boards• ISO 9002, QS 9000, TS16949 Certifications• Strongest in harnesses
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - Taiwan
• Gear Manufacturing from raw steel to finished product• ISO 14001, TS16949, QS 9000. Certifications
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - Taiwan
• Molded rubber parts bonded to steel (small)• ISO 9001-2000 and TS 16949:2002
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - Taiwan
• Push-pull and static cable assemblies• ISO 9001-2000, ISO 14001 Certifications
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Nilfisk-Advance, Inc. Confidential
Successful Supplier Examples Suppliers - Taiwan
• Ductile and grey iron castings and processing• ISO 9001-2000, ISO 14001 Certifications
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Nilfisk-Advance, Inc. Confidential
Lessons Learned--Overall
Many commodity categories can be sourced successfully in Asia and Mexico. Categorizing suppliers facilitates success. Be cautious about suppliers “over-promising.”
Due diligence processes (such as supplier assessment) need to be the same worldwide.
Recognize you will have longer lead times and larger pipelines. This can be mitigated with warehousing in some situations. Expect occasional air freight will be required.
Keep quote packages to a few parts if possible. Focus on higher volume parts with high labor content. Clear technical specifications are a must.
Low cost tooling is a critical advantage in Asia.
New products can be developed globally, but timeframes may be extended.
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Nilfisk-Advance, Inc. Confidential
Lessons Learned—Organization & Structure
“Feet on the ground” in the region is absolutely critical. You cannot manage day-to-day details with Asia suppliers from the U.S. Language barriers with smaller suppliers can be significant.
Central (dedicated) U.S. project management is highly recommended. Identify and prioritize projects. Track progress regularly and relentlessly.
Involving other key functions in the process can facilitate faster progress. Quality Engineering Operations Leadership
Regular visits by U. S. project managers and leadership to key suppliers are important.
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Nilfisk-Advance, Inc. Confidential
Q&A
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Nilfisk-Advance, Inc. Confidential