Vendors - Agenda

2. Vendors.com - Agenda • The 5 W’s and the H • Vendor Lost Sales • Vendor Lead Time System • Break • Vendor Item Reference List (VIRL) • S.M.A.R.T • Quick Response Score Card • Vendor Report Card • ASN Compliance • Questions?

3. WHAT? WHO? WHEN? WHERE? WHY? HOW? Vendors.com – 5 W’s and the H

4. Vendors.com WHAT? • One of ACE’s most thorough databases, offering several electronic tools. • A comprehensive communication vehicle (I.e news within Ace, department information, forms and files, programs, news, Ace Hardware web site, E-Tools, retailer store lists, web connect, credit authorization, tool box.

5. Vendors.com ACE SUPPLIER COMMUNITY!!! WHO?

6. Vendors.com Monthly Hits

7. Vendors.com • WHEN? • Introduced to our vendor community in June, 2000. • Evolutionary database: many new systems/tools available since its introduction (I.e. SMART, Vendor Report Card, VIRL, Promo Planning) • WHERE? • Web based application: www.acehardware-vendors.com

8. Vendors.com - Security • Enter your firewall ID and Password (case sensitive) • Enter your toolbox ID and Password (case sensitive)

9. Vendors.com WHY? • Drive Sales • Savings – Drive Down Unneeded Costs • Identify Trends • Helps to ensure Vendor and ACE have aligned information • Continuously improve upon the supply chain process

10. Vendors.com How???

11. Lost sales--What to discuss • What is the definition of “lost sales”? • How are lost sales calculated? • What are my screen options? • What are some key terms within this screen? • How should I analyze lost sales? • What are the benefits and expectations of lost sales?

12. What is the definition of “lost sales”? • When a Retail Support Center (RSC) is unable to fill a retailer’s order for a particular item • Lost sales affect all phases of the supply chain • Ace updates, tracks, and formulates a percentage of lost sales on a daily basis

13. How are Lost Sales calculated? • Total amount demanded by all retailers minus the total demand not filled by inventory within the past seven days • Calculated in dollars, units, and eaches • Direct effect on service, represented by service level percentage

14. What are my screen options? • Seven main lost sales screens • RSC List for an Item • Store Demand and Sales • Stock Status • Item Forecast and Promotional Data • Bulletin Information • Move Tag Information • Aggregate Forecast

15. RSC List for an Item • Basic Lost Sales Screen • Supplies information for all RSCs • Allows comparison among all warehouses to help detect possible shipping issues

16. RSC List for an Item--Key Terms • LOST—Units or dollars lost (last 7 days) • DEMAND—Units or dollars demanded (last 7 days) • INV—Units currently in stock • SDUE—On order • BBO—Bulletin back order • Retailer sign-up for promoted items • MVT—Movetags • Product is at RSC but not in inventory

17. RSC List for an Item--Key Terms • ODP—Overdue Purchase Order • PO is past its expected arrival date • GTF—Greater than Forecast • Current demand is greater than TRIM (buying system) monthly forecast • ADV—Advertised item during current month • MTG QTY—Quantity of movetag in RSC • DAYS OUT—Days out-of–stock

18. RSC List for an Item--Key Terms • $U (Dollar and Unit Value) • “At the end of each quarter, we establish unit and dollar sales class for every sku per RSC on the basis of last 12 months sales” • A=Top 10% • B=10%-25% • C=25%-50% • D=Remaining 50%, other than X • X=Less than $75 sold in last 12 months, Less than 15 units sold in last 12 months • Example: CB • Dollar class C=25%-50% • Unit class B=10%-25%

19. Store Demand and Sales • Allows user to view item demand by store for each RSC • Information sorted by Demand or Order Date Then Demand • Key Terms • Demand (each)—total quantity demanded by dealer store • Sales (each)—total quantity sent to store from RSC

20. Stock Status • Allows vendor to view purchase order line status associated with item • Useful for spotting backorder issues or receipt issues at an RSC • Lists item by RSC

21. Stock Status-Key Terms • FILL DC—The original order RSC, focuses on full case to break case warehouses • FC Inv—Inventory currently in future change status • FC SDUE—Item quantity on order in future change status • RESQ—Reserve Quantity • ALT STK—Alternate stock item • Substitute for backordered items • ALLOC—Allocation; order limit per retailer

22. Item Forecast and Promotional Data • Displays following data: • Item demand—past two years plus current year • Item forecast—weighted average of previous years’ information • Includes regular demand and bulletin demand • Demand reflected in eaches • Lists item information for particular RSC

23. Item Forecast--Key Terms • LT Days—Lead time input in buying system • LT Variance—Lead time input vs. lead time actual • MADP—Mean Absolute Deviation Percentage • Describes reliability in demand versus forecast • Stable range is .01-.25 • Higher than .55 considered ‘lumpy’ • QTY HELD—Promotional hold quantity

24. Bulletin Information • Retailer sign-up for promoted items • Merchandise promised by Ace to retail stores • Lists store and bulletin quantity by RSC • Key terms • EARLY SHIP—Earliest date RSC will ship item to retail store • PROMISE DATE—The date a retailer is promised to receive a bulletin order

25. Move Tag Information • This screen shows the location of merchandise in its selected warehouse • Key Terms • Serial Number—used by RSC to accept order • Move tag status—provides location within RSC • STAGED—Put away • NO POST—On shipping dock, not put away • PRINTED—Movetag has been printed at RSC, will soon be attached with product and binned • BARCODE—Issue with barcode on item, made manually at RSC

26. Aggregate Forecast • Provides a lump-sum forecast of all warehouses for one item • Different than ‘projected purchases report’ • Vendor can see seasonal trends and boost production to prevent backorders • Contains stock and bulletin information for last two years plus current year • Promoted months appear in yellow

27. How should I analyze lost sales? • Items in RSC List for an Item screen listed by RSC • Focus on these columns to address critical issues • LOST—Item sales lost (top outs, dollars lost) • SDUE—On order quantity • ODP—Orders past ETA date • DAYS OUT—Days out of stock • Identifying outs that should not be occurring and take action

28. How should I analyze lost sales? • Pent-up demand occurs when an item is out of stock more than a week • A retailer who didn’t receive an item ordered the first week will re-order the next week • A normal week’s demand becomes exaggerated • Necessary to have more product available than demand to cover pent-up demand

29. What are the benefits andexpectations of lost sales? • Benefits • Focus on opportunities with most impact to service • Quick reference guide to item demand, purchase order arrival, and backorder issues • Expectations • Below service goal--Review daily • At or above service goal--Review at least twice/week

30. Lead Time • What is Lead Time? • What is Lead Time Variance? • Where do you go on Vendors.com to view your Lead Time? • What are the components of Lead Time? • How does Lead Time/Lead Time Variance effect the ordering of product? • Why do you need an accurate Lead Time? • What are the benefits of analyzing Lead Time? • What does Ace ask of its vendors?

31. What is Lead Time? Lead Time is the total amount of time it takes a purchase order to move through the supply chain. The monitoring of time begins after an order is “cut”/placed at ACE, and ends once the entire purchase order is put to stock at the the retail support center.

32. What is Lead Time Variance? Lead Time Variance, expressed as a percent, is a way to measure how consistent a supply chain’s lead time actually is. If the variance is high, then some part(s) of the supply chain are less consistent in actually meeting their stated lead time. Example: Current stated lead time is 10 days. Lead time variance is 50%. Ace will receive product anywhere between 5 and 15 days of placing an order.

33. The components of lead time..Summary Screen • Average PO acknowledgement days – The number of days it takes the vendor to acknowledge/receive a purchase order. • Average ASN Days – Average number of days it takes the vendor to ship, or generate an ASN for a purchase order. • Average Transit Days – Average number of days it takes the purchase order to arrive and be checked in at the RSC. (The time starts to calculate once the ASN is generated and stops calculating once the order is checked in at the RSC)

34. Components of lead time cont…. • Average Net Receipt Days – Average number of days it takes the RSC to check in an order and get it completely put to stock. The number of days will continue to accumulate until the ENTIRE order is put to stock. • Average Lead Time Total – The sum of the totals that are listed above make up the average lead time total. • Average Lead Time Variance – The difference between the current lead time and the average lead time. A negative number here is GOOD.

35. Components of lead time..Detail Screen • PO# - Displays the purchase order numbers that were received by the vendor during the selected time frame. • PO Date – Displays the date the purchase order was placed from ACE. • PO Acknowledgement Date – The date the order was received by the vendor • PO Acknowledgement Days – The number of days it takes a vendor to receive a purchase order. • ASN Date – The date the purchase order was shipped.

36. Components of lead time cont… • ASN Days – Average number of days it takes the vendor to ship, or generate an ASN for a purchase order. • Receipt Date – The date the purchase order was received by the RSC. • Transit Days – The average number of days it takes an order to arrive and be checked in at the RSC. • Put Away Date – The date the purchase order was put to stock.

37. Components of lead time cont… • Net Receipt Days – The number of days it takes the RSC to put the purchase order to stock • Lead Time Total – The sum of the totals that are listed above make up the average lead time total • Lead Time Variance – The difference between the current lead time and the average lead time expressed as a percent • Carrier – The carrier that delivered the purchase order to the RSC • City of Origin – The city that the purchase order was shipped from • State of Origin – The state that the purchase order was shipped from

38. How do I extract this data? • Click on the download button • A message box will appear telling you exactly where the information will be downloaded • Find the downloaded file and open it in excel

39. How does lead time effect the order process? • Background of Ace Hardware’s replenishment system • OPA – Order Policy Analysis • Service level goals, cost of items, lead time/ lead time variance, and item forecasts • By running an OPA our replenishment system is determining what the most profitable order cycle should be

40. Lead time’s effects cont… • The greater the lead time variance the shorter the order cycle (time between orders) will end up being • Creating shorter order cycles results in more safety stock being carried

41. Why do you need an accurate lead time? • Lead time variance will be close to ZERO! • A more accurate order policy analysis • A reduction in the amount of safety stock that ACE carries • ACE will only order what it needs to meet demand instead of trying to meet a vendors erratic lead time • MAXIMIZE INVENTORY TURNOVER

42. Benefits of analyzing lead time • Allows you to get to the root cause of a lead time issue • Identify those RSC’s that have longer than normal lead times • Saves you time • Identify the stage(s) in the order cycle where lead time issues may arise

43. What does ACE ask of its vendors? • Monitor your detailed lead time very closely • Obtain a projections report from your respective analyst • Analyze how you are shipping your product • Are you using preferred carriers? • Are you or should you be shipping through the cross-dock? COMMUNICATE COMMUNICATE COMMUNICATE

44. Vendor Item Reference List - Summary • Provides listing of items stocked in ace retail support centers • Various vendor / item information provided: Examples: ace #, mfr #, centralization network, case pack, item cost, UPC code • Multi-functional system: navigation panes, point and click functionality, zoom in, hand tool, find

45. Vendor Item Reference List - Summary • Reviewed by vendor at least on a semi-annual basis • Identifies case pack, case weight, item cost discrepancies • Identifies price structure • Identifies where we stock merchandise

46. Why You Should Use the VIRL • Correct Manufacture Numbers • Is Ace ordering the correct item? • Price Discrepancies • Monitor price of items to ensure they are correct • Correct Case Packs and Weight • Accurate ordering information • Will help with ASN compliance

47. S.M.A.R.T. • Summary of topics covered • Main menu selections • Category Summary • Analyzing and updating your options under category summary • What we expect of you

48. WHAT IS IT? • A supply chain management system which allows the user the ability to access and or update • Purchase order information • SKU information • Projected sales losses

49. S.M.A.R.T. MAIN MENU • Enables the user the ability to • Selections you will have access to • RSC(retail support center) • PO NUMBER • PO DATE • UPC CODE • MFR NUMBER • Selections not available • PLANNER • ANALYST • BUYER • GIS • ACE NUMBER

50. Category summary screen • Accessing • From the S.M.A.R.T ‘main selection’ page click ‘process’ • Double clicking the topics under category summary will bring up a complete listing • Simplicity and ease of access • Allows the user the ability to easily access entire listing which need regular monitoring and updating