Vendor Standards Manual. Version 2.5

Transcription

1 Vendor Standards Manual Version 2.5 Effective February 1,

2 Table of Contents Section Page 1. Contact Matrix Purchase Terms Supply Chain Optimization.8 4. Item and Carton Requirements Carrier Selection and DC Policies Accounts Payable Requirements Non Conforming Merchandise Imports Expense Offset Information Miscellaneous.37 Appendix A Terms of Purchase Indemnification Agreement 2

3 Appendix B S2M4 FAQ s Sample PDF P.O. Contacts at MC Sports MC Sports Buying Staff Missy Arends x642 Women s and Youth Active wear, Outerwear, Winter Accessories Jim Bollman x653 Baseball, Football, Basketball, Fishing Jon Fontius x628 Hunting - Hardlines, footwear and apparel Rob Henderhan x654 Men s Active wear, Hosiery, Licensed Products Scott McBain x641 Fitness, Bikes, Water sports, Hockey, Lacrosse Soccer, Volleyball, Wrestling Mike Borda x613 Golf, Racquet sports, Sports Medicine, Games Accessories and duffels Chris Pearson x625 Winter Sports and Camping Gary Wolfe x603 Men s athletic footwear, cleats, skates Shoe care Tasha Shively x612 Women s and Youth athletic footwear Kim Haik x635 Store Visuals Leslie Peterson x139 Import Coordinator Accounts Payable Kay Wynsma x146 Vendors A-G Kim Thorpe x135 Vendors H-O and T-Z Sheryl Bartolotti x127 Vendors P-S & Nike Jane Porritt x134 Non merchandise vendors Carol Polus x650 Disbursements Manager Supply Chain and Distribution Center Gary Greskowiak x633 Director of Distribution Shelly Fry x604 Director of Allocation,Planning, Supply Chain Traffic Department Karl Rinehart x646 Traffic Manager 3

4 Insurance and Indemnification Sue Potts x637 Risk Coordinator 4

5 Introduction MC Sports continues to make changes to its supply chain practices in order to accelerate the flow of merchandise to the shelf, improve the information available throughout the process, and remove costs from the supply chain. Your partnership in accelerating the supply chain is very much appreciated. Without significant commitments of trading partner time and energy the improvements to date could not have been realized, and the improvements of tomorrow could not be expected. This manual is a resource and roadmap for your use. Please consult it first if you have questions about MC Sports business practices. This information is confidential and should not be disseminated to third parties. MC Sports trading partners may reproduce this manual for their internal use only. Special Notes This manual cancels and supersedes any and all previous written or verbal instructions. Ethical Business Practices MC Sports is committed to operating our business with the highest level of integrity and ethical standards. If you become aware of, or are asked to participate, in an unethical or unlawful matter, MC Sports asks that you immediately call it to our attention. MC Sports will promptly investigate, undertake the necessary corrective action, and take appropriate steps to prevent a reoccurrence. MC Sports will also make any necessary disclosures to the appropriate governmental authorities. Violations may be reported using any of the following methods: Contact MC Sports Management Joseph Smith, Director of Loss Prevention - jsmith@michsport.com Connie Rush, Director of Human Resources crush@michsport.com Dan Winchester Chief Operations Officer dwinchester@michsport.com Contact MC Sports Legal Council Varnum Riddering Schmidt and Howlett Joseph Vogan Bridgewater Place 333 Bridge Street, NW P.O. Box 352 Grand Rapids, MI Contact MC Sports Honor line All reports of possible violations will be held in the strictest possible confidence. 5

6 1. General Purchase Terms and Conditions All MC Sports Purchase orders are offered under the specific and binding terms of the MC Sports Purchase Agreement found in Appendix A of this manual. Vendors are expected to review this agreement and accept it prior to engaging in any transactions with MC Sports. The content of the Terms of Purchase agreement supersedes any other conflicting information contained in this manual or conveyed via verbal, , or any other form of communication. No element of the Terms of Purchase may be waived unless done so in writing by a corporate officer. Please familiarize yourself with these terms and conditions. 1.1 Important Notes regarding MC Sports Purchases 1.1.1) MC Sports will not honor verbal commitments, worksheets (originated either by vendor or MC staff), or other similar documents as valid orders or binding commitments. Only a duly authorized and transmitted MC Sports purchase order document will be recognized as a commitment ) An authorized MC Sports purchase order is always presented as either an EDI 850 purchase order transmission or a computer generated purchase order bearing the POM645 designation in the upper left corner in either paper or PDF format. No other format is authorized or recognized by the company. EDI, paper and PDF formats are all identically subject to the Terms of Purchase Agreement. A sample document is shown in Appendix B for your reference ) Vendors are expected to confirm all items, prices, and dates upon receipt of an order, and before shipping any product. Do not ship product until any discrepancies have been corrected and you are in possession of an updated purchase order document. Adjustments will not be made after receipt of goods ) The Delivery Date on the purchase order is the date MC Sports expects the Goods to deliver to the location specified on the PO. To facilitate a smooth flow of merchandise MC Sports will accept shipments up to 7 days prior to the Delivery Date on the PO ) The Cancel Date is the Date on which the order will be cancelled. It is NOT the last day to deliver. Shipments must be received before the Cancel Date. The MC Sports Buyer must obtain a minimum additional discount of 20% to authorize receipt on or after the cancel date ) Shipments must be filled complete. Shipments received by MC Sports that are less than 80% complete (Units ordered compared to Units received) will be charged a reallocation expense offset charge. An MC Sports Buyer may in advance of first receipt authorize a partial shipment without penalty. This authorization must be given in writing. Backorders remain subject to the cancellation dates specified on the purchase order ) MC Sports will not pay any shipping charges on backorders. Any fees added to invoices or otherwise incurred on backorder shipments will be deducted and an administrative expense 6

7 offset charge will also be deducted ) Multiple purchase orders, shipping to the same destination, that have delivery dates within 10 days or less of one another, must be consolidated into a single shipment to reduce shipping costs ) MC Sports does not issue purchase orders for Samples of Vendor products and does not pay invoices for samples which have been sent to or left in the possession of our buyers. Vendors who wish samples to be returned should make pickup arrangements with the buyer, or provide a means of prepaid shipping for the samples. MC Sports will not resell sample product in our stores, however, MC Sports does reserve the right to make final disposition of all samples after a reasonable period of evaluation ) MC Sports endorses a No Surprises purchasing policy. Disclosure of any and all details that may be relevant to any aspect of the product s entire retail life cycle is and remains the responsibility of the vendor. Communication of this information to the MC Sports buyer in a timely and thorough manner is imperative. When in Doubt Communicate. 1.2 Insurance and Indemnification Requirements MC Sports is a conduit to the retail market place for products designed and manufactured by other business entities. As such we neither create nor modify products. It is our expectation that the manufacturer or reseller who designs, specifies, creates, and provides the product to us will maintain insurance to cover the various liabilities inherent in today s marketplace. Our expectations on this matter are clearly described in articles 18 and 19 of the Terms of Purchase. In summary these expectations are: 1.2.1) Vendors will maintain General Liability insurance coverage which specifically includes Product liability coverage in the amount of $5,000,000 at all times. This limit may be achieved through a primary policy coupled with Umbrella policy coverage ) Vendors will provide to MC Sports a Certificate of Insurance which lists MC Sports as an additional insured. This certificate shall be provided at the time of the first purchase by MC Sports, and at any subsequent policy renewal periods. The required contents of the certificate are specifically detailed in Appendix A of this manual ) Coverage shall not be terminated without 30 days advance written notice to MC Sports ) All vendors are required to affirmatively acknowledge their agreement to fully appear, defend, indemnify, and hold harmless MC Sports, its affiliates, successors, and assigns, through the execution of a Vendor Indemnification Agreement. A copy of the Indemnification Agreement may be found in Appendix A of this manual ) Failure to provide either the required Certificate of Insurance, or the required Vendor Indemnification Agreement within 30 days of the receipt of the initial MC Sports purchase order will result in delay of invoice payment, and the assessment of an expense offset charge. 7

8 2. Supply Chain Optimization MC Sports remains engaged in multiple efforts aimed at improving the speed, intelligence, and resilience of its supply chain. Vendor partnership in these initiatives is essential to their success. Both MC and the vendor receive substantial benefits. Significant sales increases, reduced stock outs, and increased mutual profitability have all been achieved using the techniques described in this section. Vendors that make the commitment of time and energy to become more sophisticated trading partners are also rewarded with more stable longer term trading relationships. We encourage all vendors to review these matters carefully and discuss with our buyers how they can deepen their trading relationship. 2.1 Electronic Data Interchange - EDI MC Sports requires all vendors with whom our purchases exceed $20,000 annually to trade with us using EDI. It is an efficient, secure, and timely method of transacting business. MC has engaged SPS Commerce, an industry leader, to provide a complete suite of EDI services for us. All EDI data to or from MC travels through SPS Commerce. A uniform and consistent interface has allowed rapid increases in the number of vendors with whom we trade via EDI. Discussion with an MC Sports Buyer is the first step for EDI enablement in all circumstances. Vendors will be allowed 12 months from the beginning of trading with MC Sports to become EDI enabled. Vendors over $20,000 in annual purchases who are unable or unwilling to trade EDI will be subject to an annual expense offset charge ) SPS Commerce Contact information: New Inquiries: Current SPS user contacts: Customersupport@spscommerce.com ClientServices@spscommerce.com SPS Commerce offers EDI options ranging from FTP to Web browser based. If a vendor already has an established relationship with an ecommerce enablement company it is not necessary to change. SPS Commerce has established interconnection relationships with all major Value Added Networks (VANS) and many other third party enablement companies ) MC Sports EDI Mapping Specifications may be downloaded directly from Login to the site with the following credentials: Username: mcsportvendor Password: spscommerce 2.1.3) All vendors must pass SPS Commerce enablement testing before EDI documents will be exchanged. 8

9 2.1.4) The following EDI document types are supported by SPS and MC Sports and are required for all EDI vendors unless specifically noted as optional: 850 Purchase Order Stand Alone Blanket and Release 860 Purchase Order Change 856 Advanced Shipping Notice 810 Invoice 855 Suggested purchase order - OPTIONAL 997 Functional acknowledgement 2.2 EDI Document Specific Information 2.2.1) 850 Purchase Order Information MC Sports can send 850 purchase orders configured with several different attributes. It is important that vendors understand each of these and be capable of integrating them into their internal systems. Precise details are included in the 850 EDI specifications which may be downloaded from the SPS Website referenced in In general Vendors should be prepared to see Purchase orders configured as follows: ) Orders may contain either individual items ( i.e. A game table) or Styles (i.e. sized footwear or apparel) with multiple size and color combinations. Some orders may have both types of items on the same P.O ) Orders may be Stand Alone To be shipped as per P.O. terms without further instruction or detail from MC Sports ) Orders may be Blanket and Release A Blanket order is provided to secure quantities of product well in advance. It is never to be shipped. Each time a Blanket order is issued one or more Release orders will be generated against this Blanket order with specific reference to the Blanket order and with specific details for shipment. Each Release order relieves quantities from the commitment made by the Blanket order. Release orders are not additional quantity commitments. Do not duplicate quantities. MC Sports uses Blanket and Release orders in two situations: A. Large quantity purchases to be released over multiple shipments timed at the discretion of the buyer. Example 10,000 units ordered for release in increments of 2000 units over a 6 month period. B. Seasonal Goods ordered prior to the time when a store distribution can be prepared. This technique can be used for both warehouse bulk shipments (internal distribution), and for pack by store shipments (S2M4 external distributions) ) Orders may also contain Prepacks. A prepack is a single carton containing multiple sizes of one style of product, packed together in a fixed ratio. These are sometimes referred to as Musical Size runs and are most common in apparel and footwear. The purchase order will contain one line item reflecting the total number of prepacks ordered, and will also contain details describing the exact 9

10 contents of a single prepack. MC Sports encourages the use of prepacks. The MC Sports buyer must be aware of, and consent to, the use of a prepack at the time of purchase order creation. Prepacks received without prior approval will be subject to expense offset charges ) Orders may also contain retail prices for use in vendor price ticket creation, or preticketing ) Accurate UPC Code information is essential to the smooth operation of many elements of the supply chain including payment of invoices. Vendors are required to provide EAN/UPC numbers to MC Sports buying staff a minimum of 21 days prior to receipt of goods. Codes that are not available until receipt of goods will result in an expense offset charge. See also ) 860 Purchase Order Change ) P.O. Change documents will be generated whenever the MC Sports buyer elects to change any of the following P.O. components: Quantity Delivery or Cancellation date Add additional items to an existing purchase order Cancel items from an existing purchase order ) Upon receipt of a 860 P.O. change document it is the vendors responsibility to notify MC Sports within a reasonable time if it is unable to comply for any reason with the requested change to the purchase order ) 856 Advanced Ship Notice ) A unique ASN document is required for each shipment from EDI trading partners. Each shipment must have a unique shipment number ) Each shipment should be consolidated to a single ASN. Do not send one ASN per carton. Only items actually shipped on that shipment should be present on the ASN ) ASN s must contain carton level detail down to the number of units of each sku packed in each carton. ASN s for S2M4 P.O. s must contain correct store distribution quantity (SDQ) segments ) ASN s must reference the GS1-128 carton label affixed to the exterior of all cartons ) All ASN s must arrive 8 hours prior to the arrival of the merchandise shipment ) The unit of measure on the ASN, must be identical to the unit of measure on the purchase order. In almost all circumstances MC Sports purchase orders are written with a unit of measure equal to EACH, which means 1 unit =1 Retail sale unit ) Violation of any of these items will result in the assessment of an expense offset charge. 10

11 2.2.4) 810 Invoice ) Each purchase order and shipment combination must be billed on a separate 810 invoice. Example: 85% of a purchase order ships today, and the remaining 15% ships one week later. MC expects to receive one uniquely numbered invoice for the first shipment, and a second uniquely numbered invoice for the second shipment ) Vendors should verify receipt of Functional Acknowledgements (997 s) for all invoices transmitted. Contact SPS if a 997 is not received within 48 hours of invoice transmission. (See for Contact info) ) The unit of measure on the Invoice, must be identical to the unit of measure on the purchase order. In almost all circumstances MC Sports purchase orders are written with a unit of measure equal to EACH, which means 1 unit =1 Retail sale unit. When Prepacks are ordered (see ) prepacks should be invoiced not the child skus ) Paper invoices should be discontinued 30 days after EDI enablement by SPS Commerce. Do not send paper invoices in addition to EDI 810 invoices after this time ) 855 Suggested Purchase Order MC Sports can receive and process vendor suggested purchase orders when transmitted in the 855 specification contained on the SPS Website. Vendor Managed Inventory can be facilitated through this process, when combined with Edifice POS reporting (see section 2.5) When MC Sports receives the 855 the appropriate buyer will review it for reasonableness and return an 850 purchase order promptly if the order meets with their approval ) Use of 855 Suggested Purchase Orders requires Buyer approval, the establishment of a block of P.O numbers and appropriate test cycles until both parties agree that they are production ready ) Only items authorized for the program in advance by the buyer may be included on an 855 suggested P.O ) Direct store delivery vendors are encouraged to use this document to facilitate the automatic update and payment of direct store delivery receiving activity. When arranged in advance, an 855 can be automatically received within moments of receipt; this update facilitates the automatic acceptance and processing of an 810 invoice document as quickly as 4 hours later ) 997 Functional Acknowledgement ) Vendors are required to acknowledge receipt of all 850 and 860 documents from MC Sports by transmission of a 997 Functional Acknowledgement document ) Failure to transmit a 997 Functional Acknowledgement for any 850 or 860 document will cause MC Buying staff to spend phone or time confirming the receipt of a document and will 11

12 result in the assessment of an expense offset charge. 2.3 Ship 2 Mark 4 (S2M4) MC Sports has in cooperation with selected vendor partners achieved substantial improvements in sales, inventory turns, margin, and markdowns through the implementation of a process which is called Ship 2 Mark 4 (S2M4). Others may refer to this process as Pack by Store, Cross Dock, or Pack by Door. In S2M4, MC Sports provides a purchase order which includes a store distribution (an SDQ segment). EDI is a prerequisite to S2M4. The vendor promptly picks the product by store and packs it by store. All skus for one store are packed together in one or more cartons. Cartons are then labeled with the GS1-128 Label showing MC Sports Distribution Center as the Ship 2 location. Each carton shows the destination store in section G of the label as the Mark 4 information. A consolidated ASN with SDQ segments is sent to MC and it is used to swiftly process the merchandise through the distribution center without repackaging. A consolidated invoice is submitted for payment. This process saves a great deal of time and labor and allows dramatic reductions of safety stock while increasing sales, margin and turn. This process also avoids the significant freight cost of store direct shipments. Please contact the appropriate MC Sports buyer if you have the capability to trade in this manner. Appendix B of this manual contains S2M4 Frequently Asked Questions for your reference ) Accuracy is essential when trading using S2M4. MC Sports expects 100% accurate shipments. All S2M4 shipments are audited by MC Sports internal quality assurance staff members. A random representative sample of each shipment is audited against the ASN documentation. Each S2M4 shipment must meet our internal audit threshold for accuracy. In the event that the sample falls below our standard, a second larger sample will be audited. If the accuracy of the larger sample does not meet our standard, then the entire shipment will be detail checked. Detail check in for the entire shipment nullifies the speed and labor savings of S2M4. Any S2M4 shipment that is inaccurate enough to require full detail check in will be assessed an expense offset charge ) Fill Rate is important when trading using S2M4. MC Sports expects that a minimum of 95% units ordered on an S2M4 order will be filled as ordered. Orders that are filled below 95% will be subject to an expense offset charge ) Timely shipment of S2M4 orders is essential when trading using S2M4. In most cases orders will be generated on a weekly basis. MC Sports expects to receive shipment of an S2M4 order within 7 days of the order date. Unless a longer shipment cycle time is agreed to in advance, S2M4 orders not received at the MC Distribution center within 10 days of the date of order will be subject to an expense offset charge ) S2M4 may also be used for seasonal initial orders. In this process the initial commitment will be made using the Blanket and Release P.O. process described in When used for seasonal orders and do not apply ) MC Sports does not accept Back orders in the S2M4 program. All orders are Fill Once and Kill 12

13 any unshipped balance unless otherwise noted on the PO ) Vendors sending S2M4 orders of 20 cartons or more, are requested to master pack cartons to reduce the number of shipping units to as few as possible. Once cartons are master packed, follow the "Carrier Selection" guidelines in section 4, of the MC Sports Vendor Standards Manual ) Vendors participating in the S2M4 program will be expected to jointly set goals, objectives, and forecasts with the MC Sports buyer and planner/allocator to achieve performance targets for sales, inventory turn and Gross margin return on Investment (GMROI). Vendors participating in the S2M4 program consistently receive the highest MC Sports Scorecard ratings and in turn grow their assortment and their sales with MC Sports. 2.4 Rapid Restock Program Vendors who are not able to participate in S2M4 due to internal capability constraints may choose to participate in MC Sports Rapid Restock program. Many aspects of this program are similar and although not quite as impactful as S2M4 it has been very beneficial in increasing inventory turn and reducing safety stock. In the Rapid Restock program MC Sports creates a Purchase order for shipment in bulk to its distribution center. Using the ASN this shipment is allocated to stores before the shipment arrives so that the DC can immediately distribute the product. GS1-128 Carton labels are required for all shipments in the Rapid Restock program. EDI is a prerequisite for participation in the Rapid Restock program 2.4.1) Fill Rate is important when participating in the Rapid Restock program. MC Sports expects that a minimum of 95% units ordered on an S2M4 order will be filled as ordered. Orders that are filled below 95% will be subject to an expense offset charge ) Timely shipment of Rapid Restock orders is essential. In most cases orders will be generated on a weekly basis. MC Sports expects to receive shipment of a Rapid Restock order within 7 days of the order date. Unless a longer shipment cycle time is agreed to in advance, Rapid Restock orders not received at the MC Distribution center within 10 days of the date of order will be subject to an expense offset charge ) MC Sports does not accept Back orders in the Rapid Restock program. All orders are Fill Once and Cancel ) Vendors participating in the Rapid Restock program will be expected to jointly set goals, objectives, and forecasts with the MC Sports buyer and planner/allocator to achieve performance targets for sales, inventory turn and Gross margin return on Investment (GMROI). Vendors participating in the Rapid Restock program consistently receive higher than average MC Sports Scorecard ratings and thereby outperform other providers in terms of assortment and sales growth at MC Sports. 13

14 2.5 Point of Sale Data Availability MC Sports provides point of sale data each week to Edifice Information Management ( ). This data is then reformatted by Edifice into Excel pivot table based reports which can be used by vendors to assess the success of their products in MC Sports stores. Edifice provides these reports for a modest fee to the vendor community. MC has found that vendors who are skilled in the interpretation of this data and rigorous in its use have become invaluable as trading partners. MC internal staff members are able to view the identical reporting which is available to the vendor, and it has become an indispensible tool in managing the flow of inventory in the MC Sports supply chain. Vendors are strongly encouraged to subscribe to this service ) MC Sports does not issue EDI 852 Product Activity Documents to any vendor. Edifice can provide POS data formatted as an 852 document if this is the desired format for your business ) MC Sports does not send printed or electronic reports including sales reports or stock status reporting to vendors. Contact Edifice to obtain this information ) Vendor Managed Inventory can be accomplished using Edifice Data and an 855 suggested purchase order (See section 2.2.5). 14

15 3. Item and Carton Requirements 3.1 Item Marking Requirements 3.1.1) All items must be marked with a EAN/UPC bar code that is compliant with the GS-1 US Guidelines. ( ). Human readable characters under the barcode are required to comply with the GS-1 US guidelines ) MC Sports supports only the following EAN/UPC bar code types - UPC A or EAN ) EAN/UPC s must be assigned at the Product ID/color/size level. Each item variation must have its own UPC. Any items labeled and sold as Assorted (i.e. a random or structured collection of similar items marked with the same UPC) must be clearly disclosed to the buyer at the time of purchase ) No other barcodes should be present on the item when it is unpacked for presentation at retail ) Vendors are required to provide EAN/UPC numbers to MC Sports buying staff a minimum of 21 days prior to receipt of goods. Codes that are not available until receipt of goods will result in an expense offset charge. See also ) MC Sports supports the use of Manufacturer s suggested retail pricing (MSRP) in many cases. The absence or presence of an MSRP on products must be clearly disclosed to the MC Sports buyer at the time of purchase. MSRP Prices must be printed using a minimum font size of 12 points ) MSRP Pricing (if present) and EAN/UPC Codes must be displayed immediately adjacent to one another on the product ) Products may also be ticketed with MC Sports retail price tickets. The MC Sports buyer will specify the ticket format, and ticket placement with vendors on a case by case basis. Prices must be printed using a minimum font size of 12 points ) Products should be marked with the required barcode in the following locations: Apparel Tops Hang tag at left sleeve or at the neck through garment s label Apparel Bottoms Hang tag at waist through the garment s label Hardgoods Label at front upper right of packaging Footwear Label at narrow end of box not on lid ) Labels and tags when applied must not obscure significant product attributes, packaging text, or diminish or damage the product in any way. Labels or tags referencing any other retailer or an incorrect price will be removed and an expense offset charge incurred ) All hang tags must be securely attached using a plastic swift attach device (a.k.a. Tagger-Tail). Strings looped around buttons and tags attached with pins are not permitted. 15

16 3.1.12) Failure to properly mark an item will result in an expense offset charge and a delay in merchandise availability to the retail floor. 3.2) Item Packing Requirements 3.2.1) All items must be packed one UPC per carton ) Mixed UPC s in a carton are only allowed under the following circumstances: Direct to store shipments The item has been purchased as a prepack see The item has been purchased as an assortment see The purchase order is part of the MC S2M4 program see 2.3 Very small items where the complete quantity ordered of that item can be packed with other items complete quantity ordered into a single standard sized shipping container in order to consolidate cartons shipped ) Cartons must be strong enough to protect the product from reasonably foreseeable crushing and puncture damage during handling and transit through the supply chain to the retail store ) MC Sports recommends the use of tamper evident security tape on all cartons containing multiple units of product ) MC Sports encourages the use of biodegradable and recycled packaging materials. The MC Sports Greenpack program not only assists manufacturers with packaging material selection, but also assists in reduced overall packaging material use ) Packing which fails to meet these requirements or results in excessive transit damage will result in expense offset charges in addition to any freight claims. 3.3 Carton Labeling Requirements MC Sports requires legible GS1-128 (Formerly UCC-128) format labels on all cartons. This requirement applies to both EDI and Non EDI vendors. The label must accurately describe the contents and destination ) MC Sports carton label specifications may be downloaded directly from the SPS Commerce vendor portal located at Login with these credentials: Username: mcsportvendor Password: spscommerce 3.3.2) Non EDI vendors may omit the SSCC-18 barcode from the carton label ) Each carton must be labeled with the label affixed to the side of the carton. Preferred label placement is on the upper right corner of the shortest side panel of the carton ) Vendors may not reuse SSCC-18 carton ID numbers for 1 year after their initial use. 16

17 3.3.5) SSCC-18 Carton numbers must be included with the 856 ASN document for all cartons shipped ) GS1-128 labels should never be applied over important text or images if the shipping carton is also used as the display carton at retail. This directive takes precedence over whenever they are in conflict ) Cartons that are not labeled correctly will be subject to an expense offset charge. 3.4 Garment On Hanger Program (GOH) MC Sports supports the practice of inserting hangers into garments as early as possible in the supply chain (GOH). GOH has been proven to speed product to the selling floor, improve the consistency of presentation and reduce total costs for merchants that have embraced it. Vendors who are able to provide this enhanced level of service receive higher MC Sports Scorecard ratings, and in turn grow their assortment and sales with MC Sports ) MC Sports has partnered with Hangers Plus to provide a consistent supply of hangers at various manufacturing centers around the world. Contact information for Hangers Plus: insidesales@hangersplus.us 3.4.2) MC Sports supports the Voluntary Interindustry Commerce Standards (VICS) committee s Voluntary Guidelines to Floor Ready Merchandise. These are available at ) To promote a uniform appearance in the retail store all hangers used at MC Sports must be Clear and utilize a Wire neck ) Authorized VICS hangers which can be used for shipment to MC Sports are limited to the following hangers only: VICS Model # Description Used For Clear Top hanger Tops Men s, Women s, Youth Clear Outerwear hanger Heavy weight outwear Clear Long Pinch clip Bottoms Men s Women s Youth 3.4.5) Equivalent hangers to those listed above, which meet the VICS standards, may be purchased from other suppliers without further approval from MC Sports ) Use of any other style of hanger without the preapproval of the MC Sports buyer will result in an expense offset charge ) Flat or GOH status as well as hanger type and any related fees or charges must be clearly communicated to the MC Sports buyer at the time of purchase order acceptance - See

18 4. Carrier Selection and Distribution Center Policies Selection of the correct method of shipment minimizes costs and speeds the merchandise through the supply chain. Please follow the routing instructions below carefully. In the event of any questions please contact the MC Sports Traffic Department at ) Shipments to: MC Sports Distribution Center 3070 Shaffer Road S.E. Grand Rapids, MI Shipment Weight/Size/Origin Truckload lbs, Over 750 Cubic Feet, or 6+ GMA pallets Correct Carrier Call for Routing - 48 hours prior to desired pickup for Routing. LTL 200 to 4999 Lbs, Under 750 Cubic feet, less than 6 GMA pallets. Origin in Southern California only Ability Tri Model - Carson CA Ext 129 LTL 200 to 4999 Lbs, Under 750 Cubic feet, less than 6 GMA pallets. Origin in IL, IN, WI, OH, MO, IA, and KY only Dayton Motor Freight LTL 200 to 4999 Lbs, Under 750 Cubic feet, less than 6 GMA pallets Origin All other areas except MI ABF Freight System OR YRC Transportation Michigan Origin Over 200 Lbs Call for Pickup at least 48 hours prior to desired pick up time Lbs UPS Ground Collect Contact for UPS account information. UPS Ground Collect shipment over 20 cartons must call for specific shipping instructions. P.O. Number must be listed in Package Reference Number 2 field 18

19 This table should be referenced for all shipments to the MC Sports Distribution Center only ) Shipments that are not routed as per these guidelines will be subject to an expense offset charge. 19

20 4.2) Shipments to MC Sports Retail Stores Store address information may be downloaded from the SPS Commerce vendor portal at Login with the following credentials: Username: mcsportvendor Password: spscommerce Shipment Weight/Size/Origin Up to 199 Lbs Correct Carrier UPS Ground Collect Call for Account Number P.O. Number must be listed in Package Reference Number 2 Field Over 199 Lbs Originating in IL,IN,WI,OH,MO, IA, and KY Dayton Motor Freight Over 199 Lbs Originating in MI Call for Pickup Over 199 LBS Originating All other States ABF Freight System OR Yellow Transportation This table should be referenced for all shipments to MC Sports retail store locations only 4.2.1) Shipments that are not routed as per these guidelines will be subject to an expense offset charge. 4.3) Distribution Center Receiving Policies MC Sports Distribution Center is committed to the accurate and timely receipt of vendor shipments, as well as the fastest possible transit of goods to the retail sales floor. Proper vendor shipping and packing as described in Sections 1.1, 2.3-4, and 3 above make dramatic differences in the speed and quality of DC processes. Shipments that do not conform to these polices will be subject to expense offset charges ) All deliveries to the MC Sports Distribution Center require appointments ) Appointments for shipments tendered to the carriers listed above in the routing table will be 20

21 made by the carrier with MC Sports on behalf of the vendor. No further vendor action is required ) Shipments on all other carriers require the vendor or the carrier to schedule an appointment at least 48 hours prior to the desired delivery time ) All purchase orders on a shipment must be referenced when scheduling an appointment ) Contact the MC Traffic Department at to schedule an appointment 4.3.2) Consolidation - In the event that a vendor receives multiple purchase orders from MC Sports all purchase orders with delivery dates within 10 days of each other should be consolidated into a single shipment unless otherwise instructed by the MC Sports buyer or traffic department. See also ) The Bill of Lading must reference all purchase order numbers contained in the shipment 4.3.4) A Packing list must accompany the shipment and must also reference all purchase orders in the shipment ) Pallets - MC Sports recommends that all LTL freight be palletized using 48 x 40 GMA style 4 way pallets for all shipments ) MC Sports will exchange pooled type pallets for like pallets at time of delivery if noted on the bill of lading. MC Sports will not accept any pallet charges on invoices ) Freight Claims As per MC Sports Terms of Purchase (see Appendix A) all goods are purchased FOB Destination (MC Sports Distribution Center or MC Store) unless otherwise agreed to in writing. The FOB point listed on the MC Sports purchase order will determine the action taken when goods damaged in transit arrive at MC Sports receiving dock ) Claims in FOB Destination shipments are the responsibility of the vendor. Damaged goods will be refused, documented, and tendered back to the carrier for claim activity by the vendor. MC Sports will assist in providing appropriate documentation ) Claims in FOB Shipping Point shipments are the responsibility of MC Sports. Vendors will be paid for the complete shipment and MC will file a claim with the carrier ) Truckload shipments arranged by MC Sports will be considered Shipper Load and Count type shipments, unless the Bill of Lading specifically identifies Driver Load and Count on it. If the load s security seal is intact upon arrival, all damage or shortage will be considered to be Vendor s responsibility due to either improper loading, packing, or counting. MC Sports will make prompt and reasonable notification of damaged or shorted goods. Damaged or shorted goods will be deducted from MC Sports payment to the vendor. Damaged goods will be held for vendor disposition for no more than 90 days. After 90 days they will be deemed to be abandoned and disposed of ) Purchase order FOB terms will be strictly applied in the event of a loss exceeding 25% of the value of a truckload shipment regardless of MC Sports involvement in arranging the transportation ) All carriers used for MC Sports shipments must have sufficient cargo insurance to protect the 21

22 interests of MC Sports and the vendor while the goods are in transit. MC Sports regularly verifies minimum cargo coverage of $250,000 per shipment for any carrier it selects for use. If the vendor is selecting the carrier, then the vendor must verify the presence of an active insurance policy with sufficient coverage limits to cover the complete loss of the load. 22

23 5. Accounts Payable Requirements MC Sports strives for clear, concise, and positive communications with all vendors. Many business transactions are processed by a small number of staff members. The procedures outlined in this manual help us insure that invoices are processed in a timely and accurate manner. Vendor knowledge of, and adherence to these requirements helps insure these goals are met. 5.1) Invoice Requirements - See also for EDI specific requirements 5.1.1) Each purchase order and shipment must be billed on a separate invoice ) Non EDI Vendors should send paper invoices to the following address only: MC Sports Corporate Office Attn Accounts Payable 3070 Shaffer Rd S.E. Grand Rapids, MI ) No invoices should be sent to, or left at an MC Sports retail store at any time ) Invoices for Non EDI vendors may be submitted via in PDF format with prior approval by the MC Sports Accounts payable department. Contact MC Sports Accounts payable at to obtain the correct address for submission ) Each invoice must contain the following information: MC Sports Purchase order number Vendor Name, remit to address, phone and fax number One unique, numeric invoice number Shipped to which MC Sports location Pro or BOL number Carrier name Shipment number of cartons and weight Units shipped by Sku, including UPC, description, and style if applicable Unit cost and extended cost ) If a receivables factor is utilized by a vendor than the factor remit to information must be included on each invoice in place of the vendor remit to information ) Invoice numbers must never be reused ) MC Sports does not accept freight charges added to vendor invoices. All merchandise shipments must be shipped either Freight Collect using MC Sports preferred carriers or Prepaid. The Purchase order freight terms in place at time of delivery will be used as the sole reference for this matter ) All invoices are processed based on the date of receipt of goods. In the event that vendor 23

24 ships early and MC Sports buyer elects to accept the shipment, payment calculations will be based on the original delivery date specified on the purchase order. 5.2) Vendor Address File 5.2.1) For payment security reasons all vendor address or remit to information changes must be communicated in writing. Such notice must be sent on company letterhead and include the signature of a senior company officer. Verbal updates will not be accepted ) Changes can be mailed to the address listed in 5.1.2, or may be faxed to Attention Accounts Payable Department ) All change request documents must contain the following information: Old parent company and New parent company names (include DBA if applicable) Previous and new company address Previous and new factor name and address (if applicable) Factor Release if no longer factoring or changing factors Description and effective date of change 5.2.4) A minimum of 30 days advance notice is requested for all changes of this nature. 5.3) Disputing Check Deductions 5.3.1) All disputes must be initiated within 60 days of the date payment is made ) All disputes must be placed in writing and sent via or letter to the address listed above in section ) All disputes must include the following details Check date and number Purchase order number Invoice number Disputed amount Explanation of vendors request for payment Documentation to support vendors request for payment. Relevant documents usually include Invoice copy, packing slip, Proof of delivery, 24

25 5.4) Proof of Delivery Invoices for which MC Sport cannot verify receipt will have Proof of Delivery Requested by the Accounts Payable department ) MC Sports accepts only documents that contain the signature of an MC Sports employee. A Bill of lading which does not contain a signature will not be accepted as a valid Proof of Delivery. MC Sports will also accept UPS or Fed Ex electronic delivery records as proof of delivery ) Proof of delivery documents should be sent via to the MC Sports Accounts payable processor or Faxed to Attention Accounts Payable ) All proof of delivery documents must include the following information: Signature of MC receiving employee Date of Delivery MC purchase order number Carrier Carriers identification number (PRO#, BOL #, Tracking Number) 25

26 6. Non Conforming Merchandise MC Sports uses the term Non Conforming merchandise to refer to four types of product which are from time to time found in our supply chain. Each of these is listed below along with our policy regarding them. Please reference MC Sports Terms of Purchase sections 5-7, 9, 11 and 12 for additional information. 6.1) Over shipments 6.1.1) Quantities shipped in excess of the purchase order will not be received. MC Sports buyer at their sole discretion may elect to accept such product. In this case a minimum additional discount of 20% will be deducted from the cost of the over shipped units ) MC Sports Distribution center will hold over shipped product for 7 days pending the MC buyer s disposition. After 7 days over shipped goods without disposition, will without further notice, be returned to the vendor at vendors cost and risk. 6.2) Substitutions 6.2.1) Items shipped in substitution of items ordered by MC Sports will not be received. MC Sports buyer at their sole discretion may elect to accept such product. In this case a minimum additional discount of 20% will be deducted from the cost of all substituted product ) MC Sports Distribution center will hold substituted product for 7 days pending the MC Sports buyer s disposition. After 7 days goods without disposition, will without further notice, be returned to the vendor at vendors cost and risk. 6.3) Defective Product 6.3.1) Defective products returned to MC Sports after purchase by the customer will be transported back to the distribution center for central processing and Return Authorization Request to the Vendor ) MC Sports encourages vendors to work with their MC Buyer to establish a defective products allowance. This allowance, which is agreed to in advance of purchases, will be deducted by MC from remittances. Use of a defective allowance minimizes process expense for both MC and the vendor and prevents assessment of further expense offset charges to the vendor ) Vendors that require defective product to be processed via the traditional Request for Return Authorization method will be charged using the following item cost structure: MC Sports landed cost + Freight back to the Returns center + 5% Administrative expense offset. 26

27 6.3.4) Repaired or replacement items will not be accepted. Please credit our account instead. Goods received as repair or replacement items will be considered free goods ) Shipments of defective product are tendered to the vendor s carrier of choice on a Freight collect FOB MC Sports Distribution Center basis ) Defective allowance goods, and destroy in field goods for which credit has been received, will be rendered unusable for their intended purpose, and then to the greatest degree feasible will be recycled ) In order to reduce capital tied up in defective inventory and associate effort securing return authorizations, each fiscal year the first $250 of a vendor s product returned to MC will be inventoried and destroyed without attempting to secure an RA from the Manufacturer. Credit for these goods will be deducted from our next remittance. 6.4) Recalled Product 6.4.1) Product which has been determined by MC Sports to be unsafe or unsuitable for sale or otherwise fails to meet the warranty requirements expressed in the MC Terms of Purchase as referenced in sections will be removed from sale and will be assembled at the MC Sports Distribution center for disposition as mutually agreed by MC Sports and the vendor ) Product that must be removed from sale generates significant revenue loss, damages MC Sports brand reputation, and creates disruption in item assortment plans. As a result all goods that are subject to recall will be charged back using the following cost structure: MC Sports landed cost + Freight back to the Returns center + 10% Administrative expense offset+ Lost Gross Margin Dollars as determined by the MC Buyer ) Product which is recalled from MC Sports stores for purposes of seasonal inventory adjustment, guaranteed sale, stock balancing, GMROI improvement or other mutually agreed to purpose, will not be subject to the cost structure outlined in The MC Sports buyer will negotiate all terms with the vendor in advance before product is removed from sale ) MC Sports Accounts Payable assigns a Recall Control Number to each recall situation (6.4.2 and types). This number is referenced in all internal communications and must be referenced on all credit memos and other correspondence. The proper Recall control number can be obtained from either the buyer or Accounts payable. 27

28 7. Direct Import Information The United States Customs and Border Protection service announced new regulations known as the Importer Security Filing (ISF) in November of These rules are also commonly called 10+2 These rules began to phase into effect in January of 2009 and were fully implemented January 26, All Import shipments to MC Sports (and all other US consignees) must comply with these regulations or they risk being detained and fined. MC Sports expects all vendors sourcing product outside the United States to be familiar with these regulations and skilled in the proper execution of Import documentation. 7.1) MC Sports Customs Broker/Freight Forwarder Expeditors International of Washington Inc. Documents Supervisor Contact: Ms. Laura Gherardini Ms. Renee Douglas Phone: Address: Metro Airport Center Drive Building M2 Suite 110 Romulus, MI ) Questions regarding Import shipments should be first directed to Expeditors before contacting either the MC Sports Import Coordinator or Traffic Manager ) All fines incurred as a result of ISF 10+2 violations that are not clearly the responsibility of MC Sports or its Agents will be presumed to be the vendors responsibility and an expense offset charge will be incurred. 7.2) Pro Forma Invoice Requirements 7.2.1) In addition to any requirements of the 10+2 rules, the following information is required for Letter of Credit processing at MC Sports. Letters of credit will not be opened until all information is provided to the MC Sports Import department. MC Sports Purchase Order number Description + Quantity+ Price in US Dollars for each line item of the P.O. Beneficiary name and address Advising Bank name and address Harmonized Tariff Schedule (HTS) number Manufacturer name and address Shipper name and address Container Stuffing location Country of Origin 28