Dragon Sourcing Delivering sustainable sourcing value from emerging

Dragon Sourcing - 龙源 Delivering sustainable sourcing value from emerging markets Phenolic Resin

Agenda © 2020 Dragon Sourcing. All rights reserved. 1. Sourcing Project Introduction 2. Sourcing

Objectives and approach Dragon Sourcing approach Context Client Introduction: • Client has global network of relationships with top chemical manufacturers and raw material suppliers around the world. They are service provider for compounding materials and ingredients with head quarter in USA. Stage 1: Supplier Pre-Qualification 1. Demand Analysis 2. Supply Market Analysis 3. Telephone Pre-screening 4. Develop RFI/RFQ 5. Administer RFI/RFQ 6. Analyse RFI/RFQ Responses Project Objectives: • Identify and recommend new potential competitive supplies manufacturing Phenolic Resins. Geographical scope: China and India Deliverables: • Supplier database • RFI-RFQ template • RFI-RFQ analysis report • Supplier profiles with rankings • DS Recommendation on next steps © 2020 Dragon Sourcing. All rights reserved. Remark: Whole project was done anonymously without revealing client identity to any of the supplier following as per client instructions. 3

Approach & Schedule, Stage 1: Supplier Pre-Qualification No. Steps in Stage 1 1. Demand Analysis Work with client to define and understand the product and requirements (specs, volumes, material, Production technology requirements, current unit prices, others) • Kick-Off Report 2. Supply Market Analysis Identify long list of potential suppliers in the interested target countries by leveraging B 2 B websites, DS database, fair catalogues, Chamber of Commerce, magazines, network, references. • Supplier Long List 3. 4. Deliverables Telephone Pre-screening Selection of suppliers to be included in the RFI/RFP process by telephone pre-screening based on agreed • Shortlist for RFI-RFQ simple criteria (e. g. capability to make the product, min company size, quality certification, Export capability, process interest in participating) Develop RFI/RFQ document Prepare an RFI/RFQ document, with an aligned balanced scorecard that has the objective to pre-qualify the • RFI-RFQ Template competitiveness and capabilities of the manufacturers, including background, financial, client and product • Balanced Scorecard experience, quality certification & processes, social responsibility, manufacturing/technology capability, R&D capability. 5. Administer RFI/RFQ: The RFI/RFQ is translated to the local languages as relevant, and distributed to the suppliers, with telephone follow-up to push for maximum participation. • Completed RFI-RFQ’s 6. Analyze RFI/RFQ Responses: Analysis of RFI/RFQ responses and preparation of a report which profiles & objectively ranks the suppliers by capability, including a recommendation for those to be audited. • RFI-RFQ Report • Supplier Profiles • Proposed Shortlist for Audit. © 2020 Dragon Sourcing. All rights reserved. 5

Project was completed in 8 weeks Week 0 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Jan 15 - 17 Jan 20 – 24 Jan 27 – 31 Feb 03 – 07 Feb 10 – 14 Feb 17 – 21 Feb 24 – 28 March 02 – 06 March 09 - 13 STEPS 1. Demand Analysis 2. Supply Market Analysis 4. Develop RFI/RFQ validated 5. Administer RFI/RFQ 1 Extended Supplier profiles with recommendations. 6. Analyze RFI/RFQ Responses Couple of steps were extended by a week to receive maximum response from the suppliers. © 2020 Dragon Sourcing. All rights reserved. Extended Week Extended for Chinese suppliers. 3. Telephone Pre-screening 6 2

Demand Analysis, Yearly volumes and spend was collected at the project kick off stage, # SKU Name Packaging Lbs Units 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 RE 01220 -050 RE 01221 -050 RE 01201 -057 RE 01137 -057 RE 01214 -057 RE 01202 -157 RE 01223 -537 RE 01120 -275 RE 01203 -057 RE 01132 -057 RE 01218 -050 RE 01212 -050 RE 01131 -057 RE 01121 -057 RE 01206 -050 RE 01134 -275 RE 01209 -057 RE 01213 -057 RE 01200 -057 RE 01216 -057 RE 01147 -050 RE 01257 -057 RE 01251 -552 RE 01145 -057 SP-6701 Resin - 50# Bag SP-1068 Pellets - 50# bag SP-1044 Resin - 55. 115# Bag HRJ-1367 Resin - 55. 115# Bag SP-560 Resin - 55. 115# Bag SP-1045 P Resin - Pastille Form SP-6877 Resin - 537 lb drum FRJ-425 Resin - 275# Drum SP-1055 Resin - 55. 115# Bag HRJ-11041 Resin - 55. 115# Bag SP-6700 Resin - 50# Bag SP-25 Resin - 50# Bag HRJ-10518 - 55. 115# Bag FRJ-551 Resin - 55. 115# Bag SP-1077 Resin - 50# Bag HRJ-1166 - 275# Fiber Drum SP-134 Resin SP-553 Resin - 55. 115# Bag SP-103 Resin - 55. 115# Bag SP-6600 Resin - 55. 115# Bag HRJ-11995 Resin - 50# bag Rezilite 888 - 25 kg bag SRF-1524 Resin - 250 kg drum HRJ-11331 Resin - 25 kg bag SP-6701 Resin - 50# Bag SP-1068 Pellets - 50# bag SP-1044 Resin - 55. 115# Bag HRJ-1367 Resin - 55. 115# Bag SP-560 Resin - 55. 115# Bag SP-1045 P Resin - Pastille Form SP-6877 Resin - 537 lb drum FRJ-425 Resin - 275# Drum SP-1055 Resin - 55. 115# Bag HRJ-11041 Resin - 55. 115# Bag SP-6700 Resin - 55. 115# Bag SP-25 Resin - 50# Bag HRJ-10518 - 55. 115# Bag FRJ-551 Resin - 55. 115# Bag SP-1077 Resin - 50# Bag HRJ-1166 - 275# Fiber Drum SP-134 Resin SP-553 Resin - 55. 115# Bag SP-103 Resin - 55. 115# Bag SP-6600 Resin - 55. 115# Bag HRJ-11995 Resin - 50# bag Rezilite 888 - 25 kg bag SRF-1524 Resin - 551. 15# Drum HRJ-11331 Resin - 25 kg bag 50 50 55. 115 537 275 55. 115 50 55. 115 50 275 55. 115 55. 115 XXX XXX XXX XXX XXX XXX Total © 2020 Dragon Sourcing. All rights reserved. 7 XXX Annual Volume Cost in $US (Lbs) XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Spend in $US XXX XXX XXX XXX XXX XXX $ XXX

Dragon Sourcing has developed an online sourcing tool (GSP) to manage sourcing projects end to end. The GSP provides: • A central database of hundreds of thousands of suppliers • Management of sourcing projects from start to finish. • Tools to facilitate supplier research, pre-screening, RFI-RFQ administration & qualifying supplier through ranking process and generating supplier profiles. ü Complete unique online platform suitable for Global Strategic Sourcing process. ü http: //gsp. dragonsourcing. com © 2020 Dragon Sourcing. All rights reserved.

‒ As a first step, extensive supplier data base was built leveraging multiple sources of information & from existing DS database. P ng i uild B © 2020 Dragon Sourcing. All rights reserved. 9 lier p sup d ba a t a se S in G

‒ Pre-screening process was initiated after receiving client validation, ‒ This process was to filter the long list of identified suppliers prior moving them to the RFI-RFQ step re g enin e r c -s ss p a p o av ria t e t i r e” c h ust M “ s lier p Sup © 2020 Dragon Sourcing. All rights reserved. 10 .

‒ Supply market analysis was shared in the weekly progress and final RFQ report. China India Total 55 53 108 • Supplier passed pre-screening so far, XX XX 58 • Suppliers failed pre- screening so far, XX XX 79 • Number of RFI-RFQ sent XX XX 58 • Don't intend to respond XX XX 38 XX 20 Process Steps Supplier Identification • Suppliers identified Pre-screening (Completed) RFI-RFQ Administration (Completed) port e R l a • Number of RFI-RFQ received XX Data © 2020 Dragon Sourcing. All rights reserved. 11 ctu f e. A h t m ro

Phenolic Resins Supply Market Analysis, Supplier rejection analysis were shared for each step, Pre-screening and RFI-RFQ administration. 5 Example for Pre-screening rejection analysis 5 6 29 13 Only producing polymer wax, polymer resin or others. Suppliers not resumed office due to outbreak of coronavirus Cannot export Company shutdown Traders/distributors or Importers only. Only producing modified resins in lump form 21 1 Example for RFI/RFQ rejection analysis 7 12 Not interested to continue Producing phenolic resins in different grade used in plywood, ink, colours industry Cannot meet the technical requirement / quality standard Producing Rosin modified Phenolic Resin 9 9 Disclosed now, Trading Company. 12

Post pre-screening the suppliers, RFI-RFQ process was administered to filter out most capable suppliers. s ple m a x ile e f o r lier P p p Su 13 f ide l s ew

Post pre-screening the suppliers, RFI-RFQ process was administered to filter out most capable suppliers. w sli e f e l xamp e e l i f o lier Pr Supp 14 des

‒ Category specific technical questions were added in the RFI relevant to the Phenolic Resin to understand supplier production capability and capacity. ides am w sl e f e pl x ile e f o r r. P pplie Su 15

Suppliers Assessment, Suppliers were assessed and ranked based on the Company profile, Scoring and ranking of the suppliers are done on the GSP, p xam le ew of f s iers l p up E 16 © 2020 Dragon Sourcing. All rights reserved.

Minimum price Below Average Above Average Maximum price ‒ Price analysis was done for the 30 suppliers responded to the RFQ. # RFI Ranking from total 20 suppliers Price given are in lbs (pound) Supplier name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 8/20 7/20 13/20 17/20 4/20 1/20 20/20 15/20 16/20 19 20 6/20 2/20 18/20 10/20 5/20 19/20 11/20 14/20 9/20 3/20 Supp 1 Supp 2 Supp 3 Supp 4 Supp 5 Supp 6 Supp 7 Supp 8 Supp 9 10 Supp 11 Supp 13 Supp 14 12 15 Supp 16 Supp 17 Supp 18 Supp 19 Supp 20 No. of SKU's offered 17 12 9 9 9 8 5 4 3 2 13 2 2 2 1 1 1 Country India India China India China India China FOB Price $0. 87 FOB Price - FOB Price $ XX FOB Price - FOB Price $ XX FOB Price - FOB Price - # #SKU 1 RE 01220 -050 Annual Volume (LBS) 112, 700 2 RE 01221 -050 88, 350 $1. 03 $ 1. 02 - $ XX - - - - 3 RE 01201 -057 54, 178 $1. 08 $ 0. 99 $1. 10 $ XX - - - - - 4 5 6 RE 01137 -057 RE 01214 -057 RE 01202 -157 54, 123 52, 084 XX $0. 94 $1. 08 - $1. 10 $ XX - - - - $ XX - - - $ XX - - 7 RE 01223 -537 XX - - $ XX - - - - 8 RE 01120 -275 XX $0. 87 - - - $ XX - - - - $ XX 9 RE 01203 -057 XX - - - $ XX - $3. 81 - - - - 10 RE 01132 -057 XX $0. 94 $ 0. 99 $1. 10 - - - - - 11 RE 01218 -050 XX $0. 87 - - $ XX $ XX - - - - 12 RE 01212 -050 XX $0. 98 $ 0. 99 - - $ XX - - - 13 RE 01131 -057 XX $1. 08 $ 0. 99 $1. 10 - - - - $ XX 14 RE 01121 -057 XX $0. 94 $ 0. 99 $1. 10 $ XX - - - 15 RE 01206 -050 XX $1. 03 $ 0. 99 $1. 10 $ XX - - - - at $ XX D - - 16 RE 01134 -275 XX $0. 90 - - - $ XX - 17 RE 01209 -057 XX $0. 94 $ 0. 99 - - - - - 18 RE 01213 -057 XX - $ 1. 20 $1. 10 - - - - 19 RE 01200 -057 XX $0. 96 $ 1. 02 - - - - 20 RE 01216 -057 XX - - - $ XX $ XX 21 RE 01147 -050 XX - - $ XX - 22 RE 01257 -057 XX $0. 96 $ 0. 99 - - - 23 RE 01251 -552 XX - - $ Xx - - 24 RE 01145 -057 XX $0. 95 $ 1. 02 $1. 10 - - © 2020 Dragon Sourcing. All rights reserved. ort-p e r al actu- - - - - - - - - - $ XX - - - - - - $ XX - - - - - - - $ XX - - - - - - - $ XX - - - - - $ XX - the m o a f- r -

Logistics cost was considered from FOB China & India to DDP XXX, USA. § Loading on container on manufacturing site EXW Price § Container transportation to China & India seaports. § Export documents expenses, transportation & other taxes § Handling & loading of the container on the vessel FOB Price § Sea freight from China & India FOB port to destination port New York - USA. § Destination port handling cost & terminal charges § Haulage cost to final destination § Additional fees (BAF & CAF) § Custom Clearance § Fuel taxes Charges Port Security, etc. § Import duty § Insurance cost based on the CFR value. § Port Infrastructure fees Chinese & Indian suppliers quotation © 2020 Dragon Sourcing. All rights reserved. § Loading cost on truck 18 DDP Price Delivered Duty Paid price

Lowest DDP price Below client DDP price Above client DD price ‒ DDP price comparison & savings analysis were shown to the client. # RFI Ranking Price given are in lbs (pound) Supplier name No. of SKU's offered Country 1 8/20 2 7/20 3 13/20 4 17/20 5 4/20 6 1/20 7 20/20 8 15/20 9 16/20 10 6/20 11 2/20 12 12/20 13 18/20 14 10/20 15 5/20 16 19/20 17 11/20 18 14/20 19 9/20 20 3/20 Supp 1 Supp 2 Supp 3 Supp 4 Supp 5 Supp 6 Supp 7 Supp 8 Supp 9 Supp 10 Supp 11 Supp 12 Supp 13 Supp 14 Supp 15 Supp 16 Supp 17 Supp 18 Supp 19 Supp 20 17 12 9 9 9 8 5 4 3 2 13 2 2 2 1 1 1 India India China India China India China DDP Price DDP Price DDP Price DDP Price DDP Price # #SKU Annual Volume (LBS) Client DDP Price/ Price Lbs 1 RE 01220 -050 112, 700 $ XX $1. 04 - - $ XX $XX $ XX - - $ XX - - - 2 RE 01221 -050 88, 350 $ XX $1. 21 $1. 19 - $ XX - - - - 3 RE 01201 -057 54, 178 $ XX $1. 27 $1. 16 $1. 28 $ XX - - - - - 4 RE 01137 -057 54, 123 $ XX $1. 11 - - - - - $ XX - - - - - 5 RE 01214 -057 52, 084 $ XX - - $1. 28 - - - - $ XX - - - 6 RE 01202 -157 XX $1. 27 - $1. 28 $ XX - - - - 7 RE 01223 -537 XX $ XX - - - - - - - 8 RE 01120 -275 XX $1. 04 - - - $ XX - - - - $ XX 9 RE 01203 -057 XX $ XX - - - - - - - 10 RE 01132 -057 XX $1. 11 $1. 16 $1. 28 - - - - - 11 RE 01218 -050 XX $1. 04 - - $ XX $ XX - - - - - 12 RE 01212 -050 XX $1. 15 $1. 16 - - $ XX - - - 13 RE 01131 -057 XX $1. 27 $1. 16 $1. 28 - - - - $ XX - - - - - 14 RE 01121 -057 XX $1. 11 $1. 16 $1. 28 $ XX - - - - - 15 RE 01206 -050 XX $1. 21 $1. 16 $1. 28 $ XX - - - - - 16 RE 01134 -275 XX $1. 07 - - - $ XX - - - $XX - - - - - 17 RE 01209 -057 XX $1. 11 $1. 16 - - - - $ XX - - 18 RE 01213 -057 XX $ XX - $1. 39 $1. 28 - - - - - $ XX - - - 19 RE 01200 -057 XX $1. 14 $1. 19 - - - - - 20 RE 01216 -057 XX $ XX - - - $ XX $ XX - - - $ XX - 21 RE 01147 -050 XX $ XX - - $ XX - - - - - 22 RE 01257 -057 XX $1. 14 $1. 16 - - - - $ XX - - - - - 23 RE 01251 -552 XX $ XX - - - - - 24 RE 01145 -057 XX $1. 13 $1. 19 $1. 28 - - - - $XX - - - - - © 2020 Dragon Sourcing. All rights reserved.

Shortlisted Could be considered Not shortlisted Suppliers location – China ‒ Manufacturer locations of the suppliers as per country wise were highlighted in the map RFI Scoring Supplier name City Province 84 XXX Shanghai 83 XXX Shandong 81 XXX Jiangsu 75 XXX ina h C or 68 62 f e l XXX p am x E XXX Shandong XXX Guangxi XXX Shandong Location of the Suppliers Marked © 2020 Dragon Sourcing. All rights reserved. ly, n o 20

RFI Score 76 RFI Ranking 4 Supplier company profiles as per ranking wise was

Conclusions ü Whole project was carried out in 8 weeks with total 108 suppliers identified ü 20 suppliers responded to the RFI-RFQ document. ü Most of the suppliers were failed as they were producing phenolic resin for different applications other than rubber. Many Chinese suppliers were not reachable and/or not interested to continue which seems impact due to Coronavirus situation which had started in China over this period. ü All the recommended suppliers were top ranking suppliers with substantial savings. ü Savings were achieved from several suppliers with highest saving of US$ 1. 21 M from Indian supplier based on 17 SKU’s. ü As a next step, Dragon Sourcing recommended to send original samples to shortlisted suppliers & collection of available samples & sample development from same set of suppliers. ü Overall based on the DS Report, It helped client to shortlist and possibly partner with most potential suppliers from the target countries. © 2020 Dragon Sourcing. All rights reserved. 23