Information on 3PL Services

P O Box 201080 Auckland 2150 New Zealand 20 Verissimo Drive, Mangere Tel (+64 9) 255 0266 Fax (+64 9) 523 8070 Email info@dsl.co.nz Information on 3PL Services P a g e 1 16

Contents Introduction... 3 Why you should choose dsl logistics... 3 Our Guarantee... 3 Receiving and Storage... 4 Inwards... 4 Storage... 4 Stock Control... 5 Packing at Origin... 6 Store Replenishment... 7 Store Transfers... 8 Value Added Services... 9 Performance Reporting... 10 Sample Interactive Performance Report... 11 Company Information... 12 Facilities... 13 Technology / System Integration... 14 Proposed KPIs... 15 Inwards Processing... 15 Outwards Processing... 15 Inventory Variance... 15 References... 16 P a g e 2 16

Introduction We would welcome your RFP and would appreciate the opportunity to make a presentation of our web tracking systems, show you our premises, introduce our staff and answer your questions. All three directors have been with the company for over twenty years. Daniel Silva founded and runs the Importers Institute. John Widdows set up and manages the 3PL operation and Phillip Rashleigh develops all our software. Why you should choose dsl logistics We are a well-established company and experienced providers of 3PL (third party logistics) services. Our clients include leading retailers and wholesalers of fast-moving consumer goods. We have strong partnerships in China, India, Australia and other source countries. These enable us to offer seamless direct-to-store (DTS) solutions when required. We operate from modern secure premises near Auckland airport and have ample storage capacity. Our Internet tracking systems, provide the ability to track individual SKUs from origin to final delivery to store. Our unique IT systems are sophisticated and sold to 3PL operators internationally. They were developed in-house by operators over a period of fifteen years. We modify them for each client, so clients do not need to modify their systems. We do not charge clients for integration costs it is what we do. We are neutral on the selection of couriers and overseas forwarders and make our bulk rates available to clients with no hidden mark-ups. We own and operate a steam tunnel and comprehensive pressing and stock preparation facilities to ensure garments arrive in the stores ready for sale. Our Guarantee We are so confident in the quality of services that we offer new clients an initial period of six months, during which the contract can be terminated by the client, for no cause and with no obligation. P a g e 3 16

Receiving and Storage Inwards Stock is counted and checked off against suppliers documentation upon arrival. Any further tasks that are required, such as QA, are then performed. When these processes are completed, the goods are put away in a pre-allocated location ready for picking. At this point, our system automatically emails a report listing any discrepancies between the suppliers documentation and our count. Any issues detected during QA are also reported. The stock-on-hand record is immediately updated and visible through our website. Example of an inwards report with discrepancies Storage We have a number of different storage types: bulk pallet locations for overflow or bulk items, pick faces locations that we use for replenishment picking purposes, and our GOH (garment on hanger) static and overhead railing system. We have sufficient space in our four warehouses to store hangers and other accessories, subject to a separate storage charge for the space used. The storage costs for stock are automatically calculated by the system with reference to items on hand at the end of each day. P a g e 4 16

Stock Control We offer a couple of options. We have a stock control team that performs on-going cyclic stock counts on all our pick bays on a client-by-client basis. This ensures stock is accurate, and it also assists us in providing accurate picks, and a very high percentage of DIFOT. We are able to give you the details of this type of counting process if you require it to be approved by your auditors. One of our large clients dispensed with the annual stock count altogether, relying exclusively on the cyclical counts. The cost of both the cyclical counts and one annual stock count are included in our processing fees. We will perform cyclical counts even when an annual stock count is required, as we rely on that process to maintain order fulfilment accuracy. Where an annual stock count is required, we need to agree with the client on a period of no stock movements, sufficient to perform the task. This varies according to the number of units to be counted. Some clients require more than one stock count in a year. In those cases we charge for that work based on our normal hourly rate. You can check on all inwards and outwards movements of any SKU to reconcile stock-on-hand. All stock reports can be downloaded in Excel format P a g e 5 16

Packing at Origin Some retailers have moved to a mixed model, where some base lines are packed at origin (typically in Shanghai and Shenzhen) and consolidated with replenishment lines for storing and subsequent pick-and-pack in our Auckland DC. The packed-at-origin cartons are cross-docked to stores immediately on arrival. We receive a data stream from the agents in China, which enables us to provide visibility in our website at item level, regardless of whether the carton was packed in China, Melbourne or in Auckland. Although these models reduce the volumes processed through our DC, they result is a very substantial cost saving for our clients and we fully support them. Example of a tracked delivery to store P a g e 6 16

Store Replenishment We have a number of picking options available. For picking from bulk into pre packs, we would use our voice-scan-directed wave pick system. This provides us with fast accurate store picks. All packs or stock that have been prepared for retail can be shipped to the stores in accordance with your specifications (SOP). We can ship in flat packs, hanging bags or a mixture of both. We are neutral on our clients choice of courier service and can quote our best wholesale rates at cost. We use the transfer of files between clients systems and our WMS to provide the automated pick requests. We do not normally accept work that involves operating a client-provided WMS, as that model does not allow us to use the management features of our WMS. We work to agreed KPIs with respect to all deliveries into store. Scan-packing from a wave pick P a g e 7 16

Store Recalls and Returns We accept recalls sent from stores to the DC for further processing in accordance with instructions. The same applies to client returns. With respect to goods held for a supplier and the return of faulty goods, we store the goods in a virtual sub warehouse in our WMS, so they are kept separate from the normal stock. Goods can be moved from the sub warehouse and either destroyed, returned to the supplier, or given to charity at a time specified by the client. You have full visibility of the contents of sub warehouses in the same way that you can see your stock in our website. Main flat pack storage area Hand pressing stations P a g e 8 16

Value Added Services We are experienced with conducting quality control procedures as part of the inwards processing of stock. Most clients request us to perform basic checks, such checking labels and price ticket accuracy. Our staff are experienced with garment handling and will also provide a basic level of QA. Where a more in-depth level of QA is required, for example checking on stitch counts, colourfastness and the like, some clients choose to have their own expert located in the DC, either permanently or on a visiting basis. We provide them with office space and IT support on a straight cost-recovery basis. To support this option, we have developed a web-based model that gives full visibility of movements in to and out of the QA virtual warehouse. There is no additional cost involved. Our Garment Care division is well resourced with in-house steaming and pressing facilities. We have a 5-chamber Veit steam tunnel with a capacity of 1,200 units per hour, on average. The settings can be adjusted, depending on the processing requirement, to do more than double that. We also have specialised equipment that enables us to further process garments to ensure they are at their best when they get to your retail stores. We provide in-house a range of additional value added services such as re-printing and applying price tickets, swing tags etc. We outsource sewing or dry-cleaning work to Apparel Solutions, with whom we have worked successfully for a number of years. Steam tunnel Specialised loading bay for hanging bags Trouser presses Shirt Formers P a g e 9 16

Performance Reporting dsl logistics manages its 3PL process by using robust and accurately measured KPIs, which need to be clear and documented prior to the start of the contract. Our online web site provides live KPI information for any current or previous period. We encourage our clients to hold regular performance review meetings. The next page is an example of an actual client report. High-pick aisles P a g e 10 16

Sample Interactive Performance Report P a g e 11 16

Company Information dsl logistics has been in business since 1986 and currently employs approximately 60 fulltime staff. There are three working Directors, five office staff who work on administration, with the balance being involved in the 3PL operation. Our warehouse manager has been with the company for over ten years. The main 3PL facility operated by dsl logistics is a licensed Customs Bonded Warehouse facility and a MAF (MPI) Authorised Transitional Facility (ATF). It is a modern purpose-designed 4,200 square metre building situated on a visible corner site within a newly developed business park close to Auckland International Airport. The business park has a number of security cameras set amongst the buildings, and there are signs to this effect throughout the area. The corner site of dsl logistics is fully fenced with a 2.6-metre high perimeter electric fence. Key access to the facility and building is provided only to authorised personnel. Security lighting is installed throughout the facility and all access doors are alarmed and monitored 24/7. Multiple CCTV cameras are strategically positioned externally and internally and these provide visual recording of all movement activity up to 30 previous days. At dsl logistics, we have a zero-tolerance policy on theft. The site is also equipped with monitored fire sprinklers and all security features and applications are regularly inspected and maintained. dsl logistics holds $10 million of public liability insurance. As we do not own our clients goods, we cannot insure them and clients are required to carry adequate insurance on their stock. Insurance companies regularly vet our premises and security systems. The majority of our clients are engaged in the fast-moving consumer goods trade, which is our main area of expertise and experience. A number of trade references and their contact details are listed in this document. You are most welcome to contact any or all of the references listed. Customs-controlled area P a g e 12 16

Facilities The main dsl logistics warehouse occupies an area of 4,200 square metres and has a stud height of 12 metres, within which is a configuration of standard and narrow isle high rise racking which supports both bulk pallet and individual item picking. Our second warehouse houses our GOH service. This comprises approximately 1,200 square metres of static and overhead railing system, and further isles of 10 metre high narrow isle pick faces where we can store flat-packed items of stock. In the same building we have the following equipment: Five-chamber Veit steam tunnel Multiple steam irons and Veit ironing vacuum boards Veit automatic shirt formers Veit multi-formers used in the preparation of jackets, skirts, blouses and dresses Veit automatic pant formers Manual press machines We are in the process of extending our current storage and processing facility by 75%, and also taking on further space within a few hundred metres of our main complex. In total this will give the company approximately 10,500 square metres of useable space of which approximately 7,000 square metres are allocated. Space is allocated to clients based on a required footprint that is worked out prior to moving into the facility. There is always an allowance made to accommodate growth, whether seasonal or permanent. A continuous capacity management process enables an assigned client footprint space to be expanded or decreased to meet the changing demands of client stock management as well as enable fill optimization of the warehouse capacity by dsl logistics. Hanging garment storage P a g e 13 16

Technology / System Integration dsl logistics uses custom written in-house software for all its applications. Our objective with software development is to make any application robust, reliable, easy to use and smart. Software development at dsl logistics is conducted using tools provided by Microsoft. All of dsl logistics in-house applications use Microsoft SQL Server as the back-end database, and run on a Windows platform. An electronic Cubiscan and weighing station that integrates tightly with the dsl logistics WMS is used for all courier dispatches. dsl logistics has used IT to its competitive advantage since it started in 1986. In the early 1990 s dsl logistics pioneered the use of EDI as a means of streamlining customs clearances in New Zealand for goods shipped from Australian retailers and manufacturers and were heavily involved in the first trials of paperless import entries with NZ Customs. dsl logistics developed a Warehouse Management System (WMS), Trackstock, that has been in existence since 1996 and was specially developed for 3PL operations. It provides RF capability for: Inwards processing Outwards Scan Packing Inventory relocation/pick face Replenishment Location product verification Stock item look up Because our software is written in-house, changes that are required for each client can be made quickly and efficiently. This provides the client with more flexibility. When moving to dsl logistics as a 3rd Party Provider, the clients do not need to change their internal systems. We use the transfer of files from your ERP system to look after inwards, outwards, returns and stock control functions of the 3PL process. We send you back any information you require for loading back into your system the same way. There is no cost for this integration service, it is what we do for new clients. dsl logistics has a sophisticated online web tracking system. From here you can track the progress of both your inwards and outwards orders, get PODs with delivery time-stamps and recipient names. You can also get live updates on both stock on hand and performance under the KPIs. This information is available 24/7. P a g e 14 16

Proposed KPIs These KPIs are put forward as examples for discussion. They are modelled on KPIs currently in use with other clients. The final form would take account of service level requirements and volumes. Inwards Processing Target 98%, Breach 95% Percentage of inwards orders checked in and put away by 6 pm on the working day following the date of receipt of the cargo at the dsl logistics warehouse. Outwards Processing Target 98%, Breach 95% Percentage of outwards orders received before 6.00 am to be shipped out on the same day and delivered in accordance with the courier KPIs. Fulfilment Target 99%, Breach 98% Percentage of outwards units ordered that can be shipped at the time of order and are shipped. Inventory Variance Target 99%, Breach 98% Any cumulative losses calculated on a yearly basis that are below 98% will be credited, on a landed cost basis, by dsl logistics. P a g e 15 16

References Please feel free to contact some or all of these references. COMPANY CONTACT TEL Chea Ying +61 409 545 605 Julie Michell +61 3 9859 9111 Barbara Emerson +64 21 882 554 Ian Cameron +61 3 9237 2209 Vinessa Urlich +64 9 304 0995 Mark Glidden +64 9 444 9424 Dale Buckley +61 400 920 232 Russell Mullane +61 448 553 256 Gail Cornish +61 3 9486 9277 We have worked with DSL for over twenty years. They have provided excellent service as the New Zealand 3PL contractors for our Sussan and Suzanne Grae divisions. I recommend their services. Russell Mullane, CFO, Sportsgirl / Sussan Group We had problems with large delays in order processing and serious inaccuracy in stock recording with our previous logistics service provider. We decided to move 700 pallets to DSL and to deliver seven un-opened containers. The DSL team achieved a complete move of all 700 pallets and deconsolidation of seven containers within a week, clearing backlog orders within one day of the container doors opening. I can t speak highly enough of the service and the attention that DSL gave SENCO. Mark Glidden, General Manager, Senco Brands (NZ) Limited P a g e 16 16