Subject: Vendor Compliance Program Purpose: To identify costs incurred for vendors not complying with shipping/packing/marking/bill of lading/return to vendor/ticketing/palletizing instructions. Background: The Vendor Compliance Program (VCP) is implemented to recover expenses caused by vendors’ noncompliance for merchandise shipped to and through our operations. Vendor’s merchandise will flow through our Distribution Centers and stores and on to the selling floor in a efficient manner, if vendors follow the detailed requirements outlined in this guide. Distribution Centers, and stores, will submit data for the purpose of recovering costs incurred by vendor nonconformance. The Exchange will charge the contractor for any costs incurred as a result of nonconformance. Nonconformance may include but is not limited to the compliance violation(s) below. As detailed in the Vendor Compliance Cost Structure below, Exchange HQ Cooperative Advertising will process charges to recover costs caused by vendor/supplier shipments to our distribution centers and stores that are not compliant with the purchase order terms and conditions. In the event vendors require additional information, the Exchange contact information is provided on each claim.

Arm y & Air Force Exchange Service Vendor Compliance Cost Structure Updated: 27 March 2015 TAMS Rate Code VC.0

Description

Rate Desc

Base Administrative / Processing fee.

Rate

AAFES Cost $170

Delivery / Shipping Date Compliance $150

VCD.1 VCD.2 VCD.3

FOB Origin PO. ► Shipped >72 hours before/after Scheduled Ship Date - SSD ► Supplier window is 7 days…3 days either side of SSD

Per Box Number of POs

VCD.4 VCD.5 VCD.6 VCD.7 VCD.8 VCD.9 VCD.10 VCD.11 VCD.12

$0.464 Calculated $13.660 Calculated $150

FOB Destination PO: ► Rec'd >72 hours before/after Required Delivery Date - RDD ► Supplier window is 7 days…3 days either side of RDD Port of Embarkation / Debarkation Errors ► Customs documentation error(s). Product specifications, quantity, content, nomenclature, etc. ► Insufficient data to manifest shipment. ► Multiple / split shipments. Supplier made more than one shipment against the same purchase order or SKU on the purchase order. .

VCD.13

► Missed Delivery Appointment. You established an appointment to deliver merchandise at our Distribution Center and did not make delivery in at the agreed appointment time.

VCB.1 VCB.2

Failure to consolidate purchase orders into one BOL

Per Box Number of POs

$0.464 Calculated $13.660 Calculated $150

Per Box Number of POs

$0.464 Calculated $13.660 Calculated $150

Per Box Number of POs Date Appointment made: DD MMM YY Carrier who made appointment: ---------- carrier name here ----------Carrier who actually delivered: ---------- carrier name here ----------Appointment Time/Date TIME DD MMM YY Arrival Time/Date TIME DD MMM YY Offload Time/Date TIME DD MMM YY

$0.46 Calculated $13.660 Calculated

$100

Bill of Lading (BOL) Compliance

VCB.3 VCB.4 VCB.5 VCB.6 VCB.7 VCB.8

PO #, carton qty, and/or department number not listed individually or accurately on BOL Failure to list PO # in .Special Instructions. section on BOL BOL error resulting excess freight charge. BOL does not contain contact information Bill of lading marked prepaid should be collect Bill of lading marked collect should be prepaid

Number of POs

$170 $15.16 Calculated $170 $170 Actual $ $170 $170 $170

Physical Carton Compliance VCP.1 VCP.2 VCP.3 VCP.4 VCP.5 VCP.6 VCP.7 VCP.8 VCP.9 VCP.10 VCP.11 VCP.12 VCP.13 VCP.14 VCP.15 VCP.16 VCP.17 VCP.18 VCP.19 VCP.20 VCP.21 VCP.22 VCP.23 VCP.24 VCP.25 VCP.26 VCP.27

Multiple PO.s in one carton

PO number incorrect or not listed

Per Box Number of POs Per Box Number of POs

Style # incorrect or not listed (except Crossdock 2)

Per Box Number of POs

Color incorrect or not listed (except Crossdock 2)

Per Box Number of POs

Size incorrect or not listed (except Crossdock 2)

Per Box Number of POs

Unnecessary packing materials/pins

Per Box Number of POs

Invalid Purchase Order

Per Box Number of POs

Merchandise received in poor condition

Per Box Number of POs

Pre-pack detail not provided on outside of carton

Per Box Number of POs

$170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated

LDU, Carton, and Pallet Compliance VCC.1 VCC.2 VCC.3 VCC.4 VCC.5 VCC.6 VCC.7 VCC.8

Style, Colors and or Sizes mixed in a carton (excludes cross dock shipments)

$278 Boxes Rehandled Number of POs

No packing slip provided. Overshipment Resulting excess freight charge

Boxes Rehandled Number of POs

VCC.9 VCC.10 VCC.11 VCC.12 VCC.13 VCC.14 VCC.15

$0.52 Calculated $15.16 Calculated $170 $170 Actual $ $0.52 Calculated $15.16 Calculated $170

Failure to follow ISPM-15 pallet & wood packing mat guidelines ( import & export )

Incorrect Casepack

Per Pallet Boxes Restacked Number of POs Boxes Rehandled Number of POs

$7.00 Calculated $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated

Merchandise Compliance VCM.1 VCM.2 VCM.3 VCM.4 VCM.5

Incorrect Style

VCM.6 VCM.7 VCM.8 VCM.9 VCM.10

Incorrect Size

VCM.11 VCM.12

Incorrect Color

VCM.13 VCM.14 VCM.15

If returned, Inbound Freight Component If returned, Return Freight Component Boxes Rehandled Number of POs If returned, Inbound Freight Component If returned, Return Freight Component Boxes Rehandled Number of POs

VCM.16 VCM.17 VCM.18 VCM.19

Boxes Rehandled Number of POs Return Freight Component

Size strip tape missing from folded garments (if specified)

If returned, Inbound Freight Component If returned, Return Freight Component Boxes Rehandled Number of POs

$170 $0.52 Calculated $15.16 Calculated Actual $ $170 Actual $ Actual $ $0.52 Calculated $15.16 Calculated $170 Actual $ Actual $ $0.52 Calculated $15.16 Calculated $170 Actual $ Actual $ $0.52 Calculated $15.16 Calculated

Shipping / Carrier Compliance VCS.1 VCS.2 VCS.3 VCS.4 VCS.5 VCS.6 VCS.7 VCS.8 VCS.9 VCS.10 VCS.11 VCS.12 VCS.13 VCS.14 VCS.15 VCS.16 VCS.17 VCS.18 VCS.19 VCS.20 VCS.21 VCS.22 VCS.23 VCS.24 VCS.25 VCS.26 VCS.27 VCS.28 VCS.29 VCS.30 VCS.31 VCS.32 VCS.33 VCS.34 VCS.35 VCS.36

Incorrect Carrier used

$150 Added freight charges incurred.

Live unloads not scheduled or not on time Incorrect information entered into TMS Carrier accessorial charges at origin loading location

Charges incurred

Failure to request routing via TMS Incorrect weight entered into TMS Incorrect cube entered into TMS Incorrect carton count entered into TMS Truck / container ordered not used. Dry run. Incorrect ship point Incorrect delivery location

Number of POs Number of POs Number of POs Expenses of the truck/trailer not used Excess freight charges w/ ship pt Excess freight charges w/ ship pt

Storage fee after 10th day awaiting RA# Number of POs Detention charges/Storage Charges Denied Returns Cost

Didn't provide cnt. Van and seal info 24 hrs of cnt departing vendors dock

Number of POs Freight costs incurred

Actual $ $200 $150 $150 Actual $ $150 $150 $13.66 Calculated $150 $13.66 Calculated $150 $13.66 Calculated $150 Actual $ $150 Actual $ $150 Actual $ $150 $13.66 Calculated Actual $ $150 $13.66 Calculated Actual $ $170

Fee per container

Late delivery to port

Fee per container Number of POs

Pallet Loading-Failure to load by PO

Fee per box Number of POs

Trailer Loading-Failure to load trailer by PO then Style

Fee per box Number of POs

$55.50 Actual $ $150 $150.00 Calculated $13.66 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated

Ticketing Compliance VCT.1 VCT.2 VCT.3 VCT.4 VCT.5 VCT.6 VCT.7 VCT.8 VCT.9 VCT.10 VCT.11 VCT.12 VCT.13 VCT.14 VCT.15 VCT.16 VCT.17 VCT.18 VCT.19 VCT.20 VCT.21 VCT.22 VCT.23 VCT.24 VCT.25 VCT.26

AAFES furnished tickets not on merchandise

Per Garment Fee Fee per Box Fee per PO

$0.60 $0.52 $15.16

Ticket placement errors

Per Garment Fee Fee per Box Fee per PO

$0.60 $0.52 $15.16

Random ticket errors found in pre-ticketing (10 or more)

Per Garment Fee Fee per Box Fee per PO

$0.50 $0.52 $15.16

Merchandise is not pre-ticketed

Per Garment Fee Fee per Box Fee per PO

$0.60 $0.52 $15.16

Per Ticket Removed Per Ticket Applied Fee per Box Fee per PO

$0.30 $0.60 $0.52 $15.16

Per Ticket Removed Per Ticket Applied Fee per Box Fee per PO

$0.30 $0.60 $0.52 $15.16

No ASN received at time of receipt at Distribution Center

Fee per Box Fee per PO

$0.52 $15.16

Inaccurate ASN/Carton contents do not match ASN

Fee per Box Fee per PO

$0.52 $15.16

Carton Label not scannable/Defective

Fee per Box Fee per PO

$0.52 $15.16

No UCC 128 label on carton/misplaced

Fee per Box Fee per PO

$0.52 $15.16

ASN does not include Carton Detail

Fee per Box Fee per PO

$0.46 $13.66

AAFES provided vendor tickets

Tickets on merchandise are for a different retailer

$170 Calculated Calculated Calculated $170 Calculated Calculated Calculated $170 Calculated Calculated Calculated $170 Calculated Calculated Calculated $170 Calculated Calculated Calculated Calculated $170 Calculated Calculated Calculated Calculated

E-Business Compliance VCA.1 VCA.2 VCA.3 VCA.4 VCA.5 VCA.6 VCA.7 VCA.8 VCA.9 VCA.10 VCA.11 VCA.12 VCA.13 VCA.14 VCA.15 VCA.16

Failure to respond to Outbound Transactions with accurate 997 acknowledgement

VCA.19 VCA.22 VCA.24 VCA.25

Removed from cross dock to manual processing 810 invoice is technically wrong requiring retransmission 856 ASN Transmission Errors 855 VMI Technically wrong requiring retransmission

AP.1 AP.2 AP.3 AP.4

Multiple/Duplicate invoices Sending paper invoice in addition to EDI invoice Incorrect pricing No PO#/incorrect PO# on invoice

$170 Calculated Calculated $170 Calculated Calculated $170 Calculated Calculated $170 Calculated Calculated $150 Calculated Calculated $25

Per Invoice Per Transmission Per Transmission

$170 $25 $75 $25

Accounting Compliance Rates

AP.5 AP.6

Returned check due to address change Returned ACH payment due to incorrect bank information

Per invoice Per invoice Per invoice Per invoice

$150 $150 $100 $75

Per invoice

$75

Per invoice

$50

Merchandise Shipping Compliance VCO.1 VCO.2 VCO.3 VCO.4 VCO.5 VCO.6 VCO.7 VCO.8 VCO.9 VCO.10 VCO.11 VCO.12 VCO.13 VCO.14 VCO.15 VCO.16 VCO.17 VCO.18 VCO.19

Sent as a set and ordered as a separate; vice versa

Boxes Rehandled Number of POs

Sent in Bulk but ordered as a pre-pack and vice versa

Boxes Rehandled Number of POs

Pre-pack quantities not packed as ordered

Boxes Rehandled Number of POs

Pre-pack top/bottom sizes do not match

Boxes Rehandled Number of POs

Set top/bottom not bundled or packaged

Boxes Rehandled Number of POs

Hang merchandise not on VICS Hangers

Boxes Rehandled Number of POs

Freight charged within a Commercial Free Zone

$170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated $170 $0.52 Calculated $15.16 Calculated Actual $