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| Logistics guidelines | 17.11.2009

KION logistics guidelines

Doc. – No.:

K – L01 Version:

1.8 Date:

08.10.2010 TABLE OF CONTENTS 1. GENERAL INFORMATION ................................ ................................................................................................5

1.1. KION LOGISTIC CONCEPT: SHARED COMMITMENTS..........................................................................................5 1.2. THE SIX COMPONENTS OF THE LEAN SUPPLY CHAIN .........................................................................................6

1.2.1. Lean SUPPLIERS ...................................................................................................................................6 1.2.2 Lean procurement ...................................................................................................................................6 1.2.3 Lean manufacturing ................................................................................................................................6 1.2.4 Lean warehousing...................................................................................................................................7 1.2.5 Lean transportation .................................................................................................................................7 1.2.6 Lean customers.......................................................................................................................................8

1.3 GLOBAL COMMUNICATION ..............................................................................................................................8 1.3.1 Contacts ..................................................................................................................................................8 1.3.2 Relevant KION business units ................................................................................................................8 1.3.3 Communication means and tools............................................................................................................8

1.4 METHODOLOGY .............................................................................................................................................9

2. PROCUREMENT MANAGEMENT............................. ......................................................................................10

2.1. LOGISTICS AND PROCUREMENT PARAMETERS TARGETS .................................................................................10 2.2. SUPPLIER PRODUCTION SCHEDULING ........................................................................................................10 2.3. ORDERING PRINCIPLES ................................................................................................................................11

2.3.1. Transmission mode...............................................................................................................................11 2.3.2. Order types............................................................................................................................................12 2.3.3 Order confirmation ................................................................................................................................12

2.4. GOODS-IN/DELIVERIES SCHEDULING PRINCIPLES FOR DELIVERIES DUTY PAID (DDP).....................................13 2.5 SAFETY STOCK, CONSIGNMENT AND WAREHOUSING ......................................................................................13

2.5.1 Safety stock...........................................................................................................................................13 2.5.2 Consignment stock................................................................................................................................13

3. PACKAGING .......................................... ..........................................................................................................13

3.1 PACKAGING REQUIREMENTS.........................................................................................................................13 3.2 CONTAINER SPECIFICATIONS ........................................................................................................................14

3.2.1 Characteristics.......................................................................................................................................14 3.2.2 Identification ..........................................................................................................................................14 3.2.3 Design ...................................................................................................................................................14 3.2.4 Management process............................................................................................................................14 3.2.5 Provision/Call off ...................................................................................................................................14 3.2.6 Cleaning ................................................................................................................................................15 3.2.7 Investment/Replacement/Repair...........................................................................................................15

4. DELIVERY DOCUMENTATION ............................. ..........................................................................................16

4.1 LABELLING ..................................................................................................................................................16 4.2 DELIVERY NOTE...........................................................................................................................................16


4.3 CUSTOMS DUTIES ........................................................................................................................................16 4.4 NOTIFICATION .............................................................................................................................................16

5. SHIPMENTS .....................................................................................................................................................16

5.1 INCOTERMS .................................................................................................................................................16 5.2 SHIPMENT RULES.........................................................................................................................................17

6. SUPPLIER RELATIONSHIP MANAGEMENT................... ..............................................................................17

6.1 PURPOSE AND SCOPE ..................................................................................................................................17 6.2 PERFORMANCE MEASUREMENT AND TARGETS...............................................................................................17

6.2.1 Fact based issues (hard facts): 75 %....................................................................................................17 6.2.2 Soft facts: 25 % .....................................................................................................................................18 6.2.3 SUPPLIER Service Level Calculation...................................................................................................18 6.2.4 Linestop definition .................................................................................................................................18 6.2.5 Complete quantity delivery....................................................................................................................19

6.3 LOGISTICS PRODUCT DATA SHEET ...............................................................................................................19 6.4 NEW SUPPLIER SELECTION AND CERTIFICATION: CERTIFICATION AUDIT ......................................................19 6.5 EXISTING SUPPLIER EVALUATION: MEANS AND PROCESS.............................................................................20

6.5.1 Regular SUPPLIER performance monitoring........................................................................................20 6.5.2 Yearly SUPPLIER performance evaluation ..........................................................................................20 6.5.3 SUPPLIER blacklist...............................................................................................................................20 6.5.4 Logistic audit .........................................................................................................................................21 6.5.5 Performance monitoring: SUPPLIERS Local Council...........................................................................21 6.5.6 Performance monitoring: SUPPLIERS Group Council .........................................................................21

6.6 COMPLAINT MANAGEMENT/ESCALATION PROCESS .........................................................................................21 6.7 EMERGENCY PROCEDURE/PENALTIES ...........................................................................................................22

6.7.1 Late deliveries/Shortage risk.................................................................................................................22 6.7.2 Shortages/Linestops .............................................................................................................................22 6.7.3 Request for earlier delivery ...................................................................................................................22 6.7.4 Goods-in malfunctions ..........................................................................................................................22 6.7.5 Early deliveries ......................................................................................................................................22

7. APPENDIX........................................................................................................................................................23

7.1. SUPPLIER CONTACT SHEET ......................................................................................................................23 7.2. BEST AND WORST SUPPLIER INFORMATION SHEET......................................................................................24 7.3. PRODUCT DATA SHEET.................................................................................................................................25 7.4. PACKAGING.................................................................................................................................................26 7.5. LABELLING ..................................................................................................................................................26 7.6 SHIPMENT REQUEST FORM..........................................................................................................................28 7.7 LINESTOP NOTICE ........................................................................................................................................29 7.8 EDI ............................................................................................................................................................30 7.9 ABBREVIATIONS...........................................................................................................................................31 7.10 LETTER OF AGREEMENT ...............................................................................................................................32


Author Checked Released

Eric Latil Aurélien Badet Mark Seidel Julia Schad Damien Normand Chris Dee Klaus Müller Michele Clarkson

Dirk Sadler

Date: 04.06.2010 Date: 04.06.2010 Date:

Signature:

Signature: Signature:


1. GENERAL INFORMATION

“Our values leadership, innovation and performance make us what we are” . With more than 21,000 employees, and with branches around the world, the KION Group is the European market leader in material handling solutions and is one of the sector’s two largest internationally active companies. The KION Group is at the forefront of its industry when it comes to quality, innovative power and profit success. The KION logistic concepts shown below are fundamental to the future participation of KION SUPPLIERS in the KION lean supply chain. The SUPPLIERS commit themselves to work in accordance with these Guidelines and to implement the required organisation to meet the requirements listed below. These Guidelines are common to all plants and all Group SUPPLIERS. Logistic Guidelines will be sent to all existing KION SUPPLIERS, and potential new SUPPLIERS. Any change will be communicated to the SUPPLIERS.

1.1. KION logistic concept: shared commitments

KION commitments:

• to aim at Excellence together with its SUPPLIERS • to follow-up its SUPPLIERS and enable them to progress • to Institute a real partnership with its SUPPLIERS • to make its SUPPLIERS an active and integral part of KION Group activity

SUPPLIER commitments:

• to meet the express and implied needs of KION Group • to be responsible for their whole performance • to be reactive, alert and efficient • to have a complete transparency towards KION Group • to strive to make new proposals • to be fully involved in KION Group continuous search for improvement


1.2. The six components of the lean supply chain

KION Group is focused on lean philosophy as a major driving force for improvement, and intends to apply this principle to the whole Supply Chain.

1.2.1. Lean SUPPLIERS

Lean SUPPLIERS are able to respond to changes. Their prices are generally lower due to the efficiencies of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean SUPPLIERS deliver on time and their culture is one of continuous improvement. To develop lean SUPPLIERS, KION organisation will

• include SUPPLIERS in its value stream • encourage SUPPLIERS to make the lean transformation • involve them in lean activities

This will help to fix problems and share savings

1.2.2 Lean procurement

Some lean procurement processes are e-procurement and automated procurement. KION uses these processes and is willing to develop them. The key to lean procurement is visibility. SUPPLIERS must be able to "see" into their customers' operations and customers must be able to "see" into their SUPPLIERS' operations. KION organisation might map the current value stream, and together with SUPPLIERS create a future value stream in the procurement process.

1.2.3 Lean manufacturing

Lean manufacturing systems produce what the customer wants, in the quantity the customer wants, when the customer wants it, and with minimum resources. Lean efforts typically start in manufacturing because they free up resources for continuous improvement in other areas, and create synergy. Applying lean concepts to manufacturing typically presents the greatest opportunity for cost reduction and quality improvement.


KION Group worldwide is deeply engaged in such a process.

1.2.4 Lean warehousing

Lean warehousing means eliminating non-value added steps and waste in product storage processes. Typical warehousing functions are:

• receiving ▪ picking • put-away/storing ▪ packing • replenishment ▪ shipping

Warehousing waste can be found throughout the storage process including: • defective products which create returns • overproduction or over-deliveries • excess inventories which require additional space and reduce warehousing efficiency • excess motion and handling • inefficiencies and unnecessary processing steps • transportation steps and distances • waiting for parts, materials and information • information processes

Each step in the warehousing process should be examined critically to see where unnecessary, repetitive, and non-value-added activities might be so that they may be eliminated.

1.2.5 Lean transportation

Lean concepts in transportation include: • core carrier programs • improved transportation administrative processes and automated functions • optimised mode selection and pooling orders • combined multi-stop truckloads • cross-docking • right sizing equipment • import/export transportation processes • inbound transportation and backhauls

The keys to accomplishing the concepts above include:

• mapping the value stream • creating flow • reducing waste in processes • eliminating non-value-added activities • creating synergy


1.2.6 Lean customers

Lean customers understand their business needs and therefore can specify meaningful requirements. KION Group values speed and flexibility and expects high levels of delivery performance and quality. As a Lean customer, KION Group is interested in:

• establishing effective partnerships • always seeking methods of continuous improvement in the total supply chain to reduce costs

KION Group expects value from the products it purchases and provides value to the consumers with whom KION Group interacts.

1.3 Global communication

1.3.1 Contacts

The establishment of central and local contacts between a SUPPLIER and the KION GROUP is crucial to the durability of the business relationship, central and local contacts must be known (see appendix): KION Group Logistics:

• KION Group logistics contact • SUPPLIER person in charge of KION Group Business must be known

Logistics Local Plant:

• KION Group local Plant Logistics contact person must be made known to the SUPPLIER • SUPPLIER person in charge of day to day business with KION plant must be known

SUPPLIER: KION expects its SUPPLIERS to provide information about

• a daily contact • a backup contact • the logistics and plant manager contact (for escalation purposes)

At any time, the "who is doing what" (Daily contact, Packaging, Logistics planning, Engineering Change Request) must be known within the KION local logistics organisation and within the SUPPLIER’s organisation.

1.3.2 Relevant KION business units

• Basingstoke : United Kingdom • Chatellerault : France • Montataire : France • Aschaffenburg : Germany • Hamburg : Germany • Reutlingen : Germany • Merthyr Tydfil : United Kingdom

1.3.3 Communication means and tools

KION expects its SUPPLIERS to • Use English in all written and spoken communication • Present information factually and in writing


The SUPPLIER will receive the following information regularly:

Orders

backlog

Rolling forecasts

Quaterly Logistical performance.

Yearly Yearly evaluation

Specific announcements (Holidays, large changes in forecast requirements, phase in/out, ….)

Supplier Relationship Improvement Meetings and related action plan

Audit results

Daily / Weekly

As required

For his part, the SUPPLIER will commit himself to inform KION of any major change in his business which could have an impact in satisfying KION Group’s needs. In any case, transparency must be a common agreed rule. NB:

� the inability to speak and write English might bring limitations in working with the SUPPLIER � such SUPPLIERS will remain on a local basis, with no global contract

1.4 Methodology

In principle, Logistics guidelines must be agreed with new and existing SUPPLIERS at KION Group level. Any special, specific arrangements will have to be managed and signed directly with KION local Plants. All relevant parameters will be summarised within the “Product Data Sheet” (see appendix). The agreed “Product Data Sheet” will always be the one at the latest update.


2. PROCUREMENT MANAGEMENT

2.1. Logistics and procurement parameters targets

For all components purchased in Europe, and in accordance with the local ABC categories as determined by KION Group, the logistic parameters are as follows:

All figures are maximum Lean Targets A B CMaximum

Leadtime deliveryor Fixed period

- flexibility and reactivity

improvement14 21 35 calendar days

Delivery frequencyMinimum Order Qty

Fixed sized lot3 (*) 14 84 days of consumption

Maximum container coverage in days of consumption

≤ 1 (**) 10 ≥≥≥≥ 21 days of consumption

NB : - 1 week = 7 calendar days. - ABC classes : according to local Plant purchasing volume. - (*) ie : A class components should be delivered every 3 days. (2 deliveries / week) - (*) ie : Minimum Order Quantity for A class components should not exceed 3 days of consumption. - (**) ie : Stock coverage for any single A class components containers should not exceed 1 day of consumption.

- inventory improvement

(one piece flow)

For all other countries, i.e. Turkey, and elsewhere in the world, logistic parameters will have to be discussed and agreed with the departments concerned (Purchasing, Logistics) and will be governed by consideration of Total Cost.

2.2. SUPPLIER production scheduling

The SUPPLIER must guarantee permanent transparency regarding his production capacity. The SUPPLIER is requested to commit himself to meeting any short-notice increase in requirement by KION Group. The SUPPLIER must guarantee that at any time of its production, it can identify its components (batch, series, etc…). The SUPPLIER will always apply FIFO principle to deliver KION Group.


Funnel principle / frozen zone

NB:

� for holidays, whether or not the SUPPLIER closes, it is his responsibility to adapt his capacity in the early months before the closure period, to meet KION Plant needs

2.3. Ordering principles

To reach our lean targets, the pull system will be implemented wherever possible.

2.3.1. Transmission mode

Orders can be sent to SUPPLIER by: � email � letter (post) � fax � or EDI

For EDI, the SUPPLIER will be requested to adapt his IT system in order to enable an efficient exchange of data with the KION IT system. The SUPPLIER must advise the KION Group of any inability to meet this request.


2.3.2. Order types

Generally, goods are ordered under the terms of an outline agreement. Nevertheless, several types of orders might be used:

� loose orders � delivery schedules (showing firm call-offs and forecast call-offs outside the firm period) � kanban call offs � daily sequence order

Each KION local plant will normally produce and transmit its delivery schedules weekly. Individual KION plants will issue rolling forecasts valid for 12 months. These forecasts remain forecasts until they become firm orders in accordance with the lead-times agreed.

Ordering profile: example

0

50

100

150

200

W W+2 W+4 W+6 M+2 M+4 M+6 M+8 M+10weeks/months

quan

titie

s

confirmed orders forecasts

>> +/- 20 % (pure indication)

The forecasts have to be considered by the supplier in order to control

the production and procurement of raw material in sufficient time.

order frozen period

+/-20%

+/-15%

+/-0%

+/-5%

2.3.3 Order confirmation

Order confirmation is required for specified parts only. Otherwise, order confirmation is not required. Each local plant will specify its own specific parts which require an order confirmation. NB:

� delivery schedules showing cumulative receipts, backlogs and forecasts are the preferred method

� SUPPLIERS are responsible for ordering their own components from their own SUPPLIERS � KION Group plants are not to become involved in this process


2.4. Goods-In/Deliveries scheduling principles for Deliveries Duty Paid (DDP)

The delivery date on the order is the date for the goods to be delivered to the plant or to the KION local off-site store whatever the Incoterm is (same process for DDP, EXW, and other Incoterms). For DDP Deliveries:

� opening hours for KION plant will be locally communicated to the SUPPLIER; � reception time windows with precise time slot must be agreed with KION local Plant; � out of the agreed opening hours and time slot, and without KION Plant written agreement,

delivery can be rejected; � there may be several different off-loading points for a shipment of goods from one single

SUPPLIER; � methods of unloading (rear or side) for KION plant will be locally communicated to the

SUPPLIER; � goods intended for a specific individual or department must be clearly stated as such on the bill

of lading and on the labels attached to the goods. The associated delivery note(s) and invoice (s) should also show this information.

For EXW Deliveries, SUPPLIER will take into account KION carrier requirements.

2.5 Safety stock, consignment and warehousing

2.5.1 Safety stock

Depending on the criticality of the component and the ability of the SUPPLIER to meet KION Group requirements (in time delivery, lead-time…), the SUPPLIER will be asked to hold a safety stock at his own facility or at another location. The quantity of components for this stock will be specified by the local KION plant. This stock is SUPPLIER owned.

2.5.2 Consignment stock

According to the ability of the SUPPLIER to deliver in Just in Sequence or Just in Time, he may be asked to provide a consignment stock either in the KION local Plant or in a nearby off-site store. This stock is SUPPLIER owned, and in that case deliveries will not be EXW. Consignment stock management rules will be specified by the KION Local Plant in agreement with the SUPPLIER with reference to the KION Consignment Contract. The main principle will be min/max ordering. Changes in requirement due to KION engineering changes will be notified by the KION local plant to the SUPPLIER at least three months in advance, in order to avoid having to scrap material.

3. PACKAGING

3.1 Packaging requirements

KION Group requirements are: � avoidance of “one way” packaging � avoidance of any waste of packaging such as wood, plastic, paperboard � components should be directly “deliverable” to the production line


� focus on the use of recyclable packaging as environmentally-friendly behaviour � only one reference/handling unit. (no mix at all except with KION local plant written agreement)

3.2 Container specifications

3.2.1 Characteristics

Standard containers must: � be based on the use of KION Plant standard containers � ensure suitable protection of the goods � be stackable � avoid the use of wooden pallets, unless of the European type with a maximum load of one tonne � avoid any repacking on site (see container coverage targets)

Stillages (mesh crates, europallets) must:

� have a base of 1200 mm x 800 mm max � be no more than 1000 mm high

Handling boxes must:

� have a maximum weight of 15 Kg � have a maximum base of 600 x 400 and 280mm height

3.2.2 Identification

Recyclable and specific containers must be visually identified: “Plant name” and/or “SUPPLIER”. Pool containers (standard: for example KLT, mesh crates, etc….) do not require any identification.

3.2.3 Design

Design for any specific container will have to be validated by each KION Plant. It is the SUPPLIER’s responsibility to propose the most suitable container to prevent the goods from being damaged at any stage during shipment, handling, and putting into store.

3.2.4 Management process

For any new part, any container will be defined in close link with the SUPPLIER. Then, it will be tested and agreed by KION Local Plant. A packaging sheet per component will summarise and explain how to put components in the container (see appendix for example).

� Parts and quantities must be suitable for the container type � Non-conforming containers may be sent back to the SUPPLIER at his own charge � Any unapproved repacking by KION Plant staff may be charged to the SUPPLIER � Local Packaging Guidelines might apply to further detailed plant requirements � Recyclable containers must be managed through the KION web tool (BoxLog). The SUPPLIER

will be trained on that tool by the KION local plant

3.2.5 Provision/Call off

The calculation for container provision will be done by the SUPPLIER and the KION Group Plant by means of the KION standard calculation tool. In the case of a shortfall in container provision in the course of regular business, the SUPPLIER must notify the KION Plant. In case of container shortage, the SUPPLIER may be allowed to use other types of container and packaging ONLY with the written agreement of the KION local Plant.


3.2.6 Cleaning

The KION local Plant is responsible for cleaning containers before each shipment (elimination of scrap and swarf). The SUPPLIER is responsible for keeping the containers clean.

3.2.7 Investment/Replacement/Repair

Responsibility must be agreed between the SUPPLIER and the KION Plant.


4. DELIVERY DOCUMENTATION

4.1 Labelling

Label’s standards will be either Odette or VDA according to countries.

BASIC REQUIREMENTS

Norm UCC EAN 128 or 39 Length 210 mm (see appendix) Height 74 or 148 mm (see appendix)

Support White paper or plastified paper Readable Directly readable by the operator and its barcode reader without removing strips and packaging Readable by the operator and by barcode reader up to one metre away.

Characteristics Barcode and relevant information on a plain surface

4.2 Delivery note

According to KION Plants and procedure, delivery notes shall be sent either by paper or by EDI (see matrix above for the required fields).

4.3 Customs duties

SUPPLIER will provide any documentation required for customs issues.

4.4 Notification

Standards to be used for the delivery note and the invoicing: EDIFACT, VDA 4913, 4906.... (see appendix)

5. SHIPMENTS

5.1 Incoterms

The preferred Incoterm within the KION Group is Ex Works (EXW). If the Incoterm is EXW, the SUPPLIER must contact the KION Group carrier (URBAN) using the relevant notification form to arrange collection of the goods (see appendix). If the Incoterm is EXW, and in the case of any problem with the KION Group carrier, the SUPPLIER will inform the KION plant in writing. The KION local Plant will feed this information into the SUPPLIER Service Level calculation in order not to affect the SUPPLIER if the KION carrier is directly responsible. Some other Incoterms might be used. For instance FOB (Free On Board) for Asia.


NB: � the type of Incoterms does not interfere with the calculation of the SUPPLIER Service Level � a KION Plant may have several delivery addresses

5.2 Shipment rules

For DDP Incoterm: � As required by KION local Plant, the lorry must always be contactable by telephone if needed.

When requested the telephone number is to be communicated to KION local Plant. � KION Plant Opening hours have to be respected. � For DDP deliveries the SUPPLIER will inform KION Plant Goods-In of the time window delivery

for any delivery. KION Plant might ask SUPPLIER to adjust this time. � Costs of returns due to problems in quality or uncoordinated early shipment are debited to the

SUPPLIER unless carrier responsibility is demonstrated. � Costs of returns due to transportation troubles are debited to the SUPPLIER for DDP shipments. � In case of back-shipping-address deviating from order address, it has to be communicated to

KION during the conclusion of a contract in writing. For EXW Incoterm:

� The SUPPLIER will have to use KION Group carrier (exceptions have to be agreed with KION). � Pick up time windows must be communicated to KION carrier using agreed form. � The SUPPLIER must make sure that he is well aware of the delivery lead-time and of the rules

for delivery. � Any problem must to be reported in writing to the KION Plant. � The name of the KION Group Logistic provider must be known to the SUPPLIER.

6. SUPPLIER RELATIONSHIP MANAGEMENT

6.1 Purpose and scope

The KION Group Target is to establish transparency, mutual trust, openness, fact based and 2-way communication for business performance. KION Group is keen on sharing data between SUPPLIERS and all KION Group local plants. The common and shared goals of SUPPLIERS and KION GROUP should, therefore, be to:

� achieve business process excellence � increase productivity and cash flow � improve operational efficiency and quality � increase SUPPLIER visibility � respond faster to change and opportunity � enable innovation � profit from a strong, flexible, lean supply chain � arrange discussions, formal feedback, performance management and recognition

6.2 Performance measurement and targets

The SUPPLIER is expected to deliver the right quantity, at the right time at the right quality. From the logistics point of view, SUPPLIER performance will be evaluated on the points listed below.

6.2.1 Fact based issues (hard facts): 75 %

� SUPPLIER Service Level : 70 %


� LINESTOP : 30 %

6.2.2 Soft facts: 25 %

� 1 : Cooperation and improvement willingness : 20 % � 2 : Communication : 20 %

o Transparency o Openness o Warning system

� 3 : Reliability : 30 % � 4 : Reactivity and flexibility : 30 %

6.2.3 SUPPLIER Service Level Calculation

The SUPPLIER Service Level is calculated as follows:

• Whatever Incoterm is used, the SUPPLIER must deliver goods in time so that they arrive at the KION plant at the receipt date stated in the delivery schedule. In case of shipment difficulties, it is the SUPPLIER’s responsibility to inform the KION plant in writing, without delay.

• KION Plants only accept deliveries on the scheduled delivery day (D)

The delivery must be done on the right date, with the right quantity and with the correct packaging to achieve full service level. Any partial delivery will be considered as not delivered for the missing quantity and measured as not delivered. Deliveries before or after D (D+1 or D-1) will be considered as not “on time”.

Target: SUPPLIER Service Level ≥≥≥≥ 95%

NB:

� early deliveries are prohibited unless previously agreed in writing � for Just In Time deliveries, any delivery has to be delivered maximum 2 hours after the

requested “date + hour” to be “in time”

6.2.4 Linestop definition

The quantity of Linestops is calculated as the quantity of ordered lines missing due to proven late deliveries by the SUPPLIER. A LINESTOP means that trucks are blocked on the production line (not produced according to the initial schedule) regardless of quantity. Any LINESTOP will be officially notified to the SUPPLIER, by mailing a request for a corrective action plan through Linestop Notice (see appendix).

Target: NO linestop


6.2.5 Complete quantity delivery

The SUPPLIER is expected to deliver the full ordered quantity.

Target: FULL quantity deliveries

6.3 Logistics Product Data Sheet

For all new components, a Product Data Sheet will be agreed between the SUPPLIER and KION Group local Logistics in order to summarise all logistic parameters (see appendix for example):

� Part N° � Designation � Delivery leadtime (to plant) � Minimum order quantity � Delivery frequency � Delivery address � SUPPLIER container type � Qty/container � Qty of container in the potential loop � Safety stock by SUPPLIER

Should any parameters change, the Product Data Sheet will be updated accordingly.

6.4 New SUPPLIER Selection and certification: Certi fication Audit

Any potential new SUPPLIER will be audited by a KION Team. The SUPPLIER Logistic Audit form is a KION Standard. All audit forms will be filled in and communicated in English. KION SUPPLIER audit main topics:

� general questions � quality � logistics � R&D � data exchange

The Logistics quotation is made from the following criteria:

� management and logistics organisation � logistics strategy � logistics planning � logistics process : Sourcing � logistics process : Production � logistics process : Despatch

Audit Notation is done out of 100 points. The acceptance of a SUPPLIER as an official SUPPLIER to the KION Group as a whole depends upon the results of the audit.


6.5 Existing SUPPLIER evaluation: means and process

6.5.1 Regular SUPPLIER performance monitoring

A SUPPLIERS Logistic Performance is monitored on a quarterly basis, and can be done on a monthly basis. This information is available at any time for the SUPPLIER and can be sent to him by Logistics departments. NB:

� Best and Worst SUPPLIERS of the month (from the Logistic point of view) are indicated at the entrance of any KION Plant (see appendix).

6.5.2 Yearly SUPPLIER performance evaluation

Once a year, a SUPPLIER is evaluated by all the Departments concerned. The SUPPLIER is then quoted on a Quality Cost Leadtime (QCL) basis for series parts only. Logistics Performance is notified by means of the SUPPLIER performance sheet.

Weight in yearly evaluation (%)

Quality 40%

Logistics 40%

Purchasing and R&D 20%

The SUPPLIER is then graded in accordance with the table below:

� A: satisfactory � B: acceptable � C: improvement required through an official action plan � D: suspension of any new business, and if no improvement, suspension for current business (=

blacklisted SUPPLIER) This yearly evaluation for logistics is based on:

� hard facts 75 %: service rate, Linestops, respect of packaging, full quantity deliveries � soft facts 25 %: quality of service

As a result of this yearly evaluation, some SUPPLIERS might be asked for drastic improvements to avoid suspension. Some others might be blacklisted.

6.5.3 SUPPLIER blacklist

A SUPPLIER can be blacklisted either locally or centrally. Local blacklist:

� action plan to be managed locally (SUPPLIER local Council) � awareness and support of SUPPLIER central Council

Central blacklist:

� central decision about continuing or not with the SUPPLIER and potential consequences. � full support of SUPPLIER Group Council � action plan to be managed locally (SUPPLIER local Council) � full transparency for all KION factories


NB: � any blacklisted SUPPLIER is liable to receive no further requests for any quotation from any

plant within the whole KION GROUP � any SUPPLIER well ranked in one KION Plant and badly ranked in another will be asked to

match his performance to the best level whatever the volume is

6.5.4 Logistic audit

According to the level of SUPPLIER performance, SUPPLIER audits might be done during the year. Audits lead and conducted by one factory are relevant for all factories.

6.5.5 Performance monitoring: SUPPLIERS Local Council

According to the local level of SUPPLIER performance, a SUPPLIER may be requested to implement actions to improve his Key Performance Indicators. A meeting will then be organised in order to remove procedural errors and to improve working processes. Such an action plan will be monitored by the KION SUPPLIERS local Council. (All action plans will be based on PDCA principle “Plan Do Check Act”)

6.5.6 Performance monitoring: SUPPLIERS Group Council

On a regular basis, KION Purchasing, KION R&D, KION Quality and KION Logistic will hold meetings in order to evaluate SUPPLIER relationships. Any major issues in a KION local plant will be reported to this KION SUPPLIERS Council. This Council will focus specifically on poor SUPPLIERS in order to improve their performance drastically so that they may provide efficient support to KION Local Plants. An action plan will then be implemented and driven forward by the KION SUPPLIER Council with 100% transparency for all KION local Plants and departments concerned.

6.6 Complaint management/escalation process


6.7 Emergency procedure/penalties

6.7.1 Late deliveries/Shortage risk

Late deliveries will be notified to the SUPPLIER. A written answer will be expected. It is assumed that the SUPPLIER will do his best to meet the KION Plant requirements. Any shipment for overdue delivery and required by plant to avoid a linestop, will be charged and paid by the SUPPLIER (whatever the Incoterm).

6.7.2 Shortages/Linestops

In case of shortage (production blocked because of late deliveries due to the SUPPLIER), an official Shortage Notice is sent to the SUPPLIER (see appendix). The SUPPLIER must reply:

� in writing, stating his ability to make good any shortfall � stating his best delivery � stating his action plan through 8D report to avoid any other such trouble

Any shortage attributable to the SUPPLIER may be invoiced at EUR 1250 per blocked truck Linestops are counted as a MINUS for SUPPLIER Logistic Performance.

6.7.3 Request for earlier delivery

A SUPPLIER may be requested formally for earlier deliveries in the case of increasing requirements. A SUPPLIER’s ability to meet this request will count as a PLUS for SUPPLIER Performance.

6.7.4 Goods-in malfunctions

This deals among other things with: � wrong quantity per container � partial delivery � wrong delivery address � wrong or missing label � wrong container

Any attributable malfunction could be invoiced to the SUPPLIER depending on the time wasted in the KION plant for counting, sorting, etc… Goods-in malfunctions are counted as a MINUS for SUPPLIER Logistic Performance.

6.7.5 Early deliveries

As inventory is an important lean issue, the SUPPLIER is asked not to deliver earlier unless previously agreed in writing, but to deliver just in time. Early deliveries may be rejected by KION local Plant Goods-in and sent back at the expenses of the supplier.


7. APPENDIX

7.1. SUPPLIER Contact Sheet

KION Logistics Contacts : …………………………………………. KION Local Logistics Contacts : …………………………………………. (daily business) KION Local Logistics Manager : …………………………………………. SUPPLIER Logistics Contact : :…………………………………………. (daily business) SUPPLIER Sales Manager : …………………………………………. URBAN Logistics Contact : …………………………………………. (daily business) URBAN Manager : …………………………………………. URBAN = KION Group Logistical Provider and Carrier


7.2. Best and worst SUPPLIER information sheet

SAMPLE


7.3. Product data sheet

SAMPLE


7.4. Packaging

7.5. Labelling

� Odette Label OTL1/Galia ETI1 Big size - 210 x 148mm

Multiple-way packaging One-way packaging

Loading unit label Packaging label Pallet

Loading unit label

Cover

Packaging label

Pallet

SEATING SUPPLIER SAMPLE


� VDA Label 4902/4 Big size - 210 x 148mm

� VDA Label 4902/4 Small size - 210 x 74mm

PROFILE AG

SAMPLE

URBAN D-22000 HAMBURG

SAMPLE


7.6 Shipment Request Form

SAMPLE


7.7 Linestop notice

SAMPLE


7.8 EDI


7.9 Abbreviations

ERP = Enterprise Resource Planning system EXW = Ex Works Incoterm DDP = Duty Delivery Paid Incoterm


7.10 Letter of agreement

LETTER OF AGREEMENT

Supplier name: Name of the signatory: On behalf of the above mentioned company, I hereby acknowledge the receipt of the KION Logistics Guidelines (version 1.8) and commit to work in accordance with these Guidelines. ______________________ Place, Date ______________________ Signature supplier

Supplier company stamp

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