ADEOSUPPLIERSMANUALCHINA

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THIS SUPPLIER MANUAL IS PROPERTY OF ADEO.

DATAS AND DOCUMENTS INSIDE THIS MANUAL ARE FOR INFORMATION PURPOSES ONLY.

THE SUPPLIER MANUAL DOES NOT CONSTITUTE A CONTRACTUALLY BINDING DOCUMENT.

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INTRODUCTION p.4

ADEO CODE OF ETHICS p.5

QUALITY PRODUCT AND REFERENCING p.8

1 / QUALITY AMONGST SUPPLY CHAIN p.8

2 / COOPERATION MILESTONES p.9

2.1 Evaluation/Audit p.9

2.2 Controlplanreview p.9

2.3 Documentcollection p.9

2.4 Duringproduction p.9

2.5 Pre-shipmentinspection p.9

2.6 Loadinginspections p.9

3 / MARKET FEEDBACK MANAGEMENT p.10

3.1 Deliveryclaims p.10

3.2 MeasureofcustomerSatisfaction p.10

3.4QualityAccident p.10

4 / PACKING p.10

REFERENCING p.11

1 / LOG FORM PURPOSE p.11

2 / HOW TO FILL A LOG FORM p.11

PRIVATE LABEL POLICY p.17

ORDER p.19

1 / GLOBAL PROCESS p.19

1.1 Theglobalprocess p.19

1.2 Theorderingprocess p.20

2 / ORDER FOLLOW-UP p.23

2.1 Orderfollow-upsteps p.23

3 / ORDER DOCUMENTS p.24

3.1 StatusCC p.24

3.2 Statusconfirmed(gelée)andcountersigned p.25

3.3 Packinglistandinvoice p.26

3.4 Leadtime p.27

4 / ORDER MODIFICATIONS ANDSPECIFIC CASES p.29

4.1 ‘Degel’ p.29

4.2 RushShipment’AirShipment’ p.29

5 / MUTUAL COMMITMENTSAND KPI’S p.30

6 / AND TOMORROW . . . p.31

PAYMENT p.32

1 / PAYMENT APPLIED BY ADEO SERVICES p.32

1.1 Acceptedpaymentmethods p.32

1.2 LetterofCredit p.32

TRANSPORT p.34

1 / TRANSPORT ORGANIZATION AND WORKFLOW p.35

1.1TransportWorflow p.35

2 / SHIPMENT RELEASE p.36

3 / FORWARDER p.37

4 / BOOKING p.37

5 / INCOTERM p.37

6 / LEADTIME p.38

7 / CONSOLIDATION AND FCL p.39

7.1 Consolidation p.39

7.2 FCL p.39

8 / SHIPPING DOCUMENTATION p.39

SUPPLIER SCORECARD p.46

1 / MEASURING AND IMPROVING PERFORMANCE p.46

1.1SupplierScorecard p.46

GLOSSARY p.47

CONTENT PAGE

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We are constantly striving to achieve Customer Satisfaction. It is the best way to gain customer loyalty and to gain new market share. Every day through as millions of customer pas through our tills, we demonstrate Together, our operational capacity to make available to our customers tens of thousands of quality products from around the world.In these times of strong mutations, we must continue to adapt to ‘crosschannel business’ and strengthen our social and environmental responsibilities. ‘Zero defect’ production, on-time and faster delivery, respect for our environment and the rights of our employees: all of these challenges are the foundation of our future developments.It is for this reason that we have designed for you a practical guide explaining outlining our requirements and our processes. Make good use of this guide, do not hesitate to suggest improvements to enhance and facilitate the partnership link that unites us.

Yours sincerely, Bruno Pottié,Director of Global Sourcing and International Supply Chain

INTRODUCTION

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ADEO CODE OF ETHICS

By establishing this Code of Ethics, ADEO and its companies seek to demonstrate their commitment to human rights, in particular concerning the fight against child labour, forced labour, and slavery, and their commitment to the many international ethics guidelines, including those of the International Labour Organization (I.L.O.), the United Nations’ Universal Declaration of Human Rights, and the European Convention on Human Rights.Suppliers to ADEO and its’ subsidiary companies agree to respect and enforce with their subcontractors, suppliersand/or sister companies the following principles. ‘Suppliers’ shall mean any entity directly providing goods and/or services to ADEO:

• Requirement of legal compliance with all applicable laws and regulations including but not limited to laws related to labour, worker health and safety, protection of the environment, corruption, and consumer safety.

• Prohibition of child labour, as per applicable local legislation or I.L.O. convention 138 (15 years old), whichever standard is more stringent;

• prohibition of hazardous work and night work for persons under the age of 18;

• abolition of forced labour and human trafficking: prohibition of any use of slavery or forced, bonded or unpaid prison labour in any manner or form whatsoever, particularly any work or service performed by a person involuntarily under the menace of penalty and/or without pay; prohibition of engagement in human trafficking or the hiring of trafficked persons and retention of original personal employee identification documents; no restriction of freedom of movement (with the exception of local regulations) and no collection of deposits as a condition of employment;

• freedom of association and collective bargaining: respect for the legal right of employees to associate and bargain collectively without interference; if association and/or collective bargaining is restricted by local legislation, alternative means for worker representation shall be promoted;

• worker health and safety: prohibition of any infringement of or damage to employee health and/or safety rights at the workplace and employer-provided worker accommo-dation; minimum standards include access to potable water, adequate sanitary facilities and adequate personal protective equipment, accident prevention, provision of employee health and safety trainings and a suitable person responsible for health and safety management.

1 / FUNDAMENTAL PRINCIPLES:

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• environment: ADEO is committed to ensuring compliance with all applicable local and international environmental protection regulations including all laws related to air emissions, water discharges, toxic substances and hazardous waste disposal, transportation, storage and handling. ADEO and its companies encourage efficient use of available resources and reduction of the environmental footprint by recycling, using recycled material, limiting the use of natural resources and reducing or eliminating ingredients which are harmful to the environment;

• prohibition of discrimination in all aspects of employment, including hiring, pay, benefits, promotion, access to training, termination and retirement on the basis of race, caste, ethnic and national origin, age, religion, political affiliation or non affiliation, gender, marital status, sexual orientation, or any other personal characteristic .

ADEO CODE OF ETHICS

1 / FUNDAMENTAL PRINCIPLES (NExT)

• Pay: observance of all regulations including lawful collective agreements pertaining thereto, particularly as concerns pay, hiring fees, and benefits; requirement of provision of wage statements and labour contracts to workers; • working hours: observance of all regulations pertaining

thereto, particularly as concerns regular and overtime working hours, rest breaks and rest days; requirement of voluntary overtime only, one day of rest within every seven day working

period and adherence to a maximum 72 hour work week (including overtime hours);

• harassment, abuse or discipline: prohibition of any form of harassment, including of a sexual or psychological nature, and of any form of abuse, including of a physical, psychological or verbal nature; prohibition of monetary disciplinary measures; requirement of written disciplinary procedures;

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• Consumer safety is a top priority for ADEO and/or its companies; the supplier hereby agrees, with full knowledge of the facts, to scrupulously respect the applicable rules on this matter, as well as the technical and legal requirements established by the standards and regulations in force (laws, regulations, recommendations, customs), whether French, Euro-pean, or foreign, that apply to the products and their packaging, such that they may be freely sold in the countries in which ADEO and/or its companies are established.

• Social or other relationships with suppliers that could give rise to suspicions of employees of ADEO and/or its companies and/or any of its partners or representatives influencing the supplier for business purposes, suspicions of the supplier providing preferential treatment, or of ADEO employees personally benefiting – directly or indirectly – from the personal relationship with the supplier (including gifts, in-kind or financial advantages) are prohibited. Employees of ADEO and/or its companies and/or any of its partners or representatives shall not give, promise or offer anything of value to current or potential suppliers with the intention or appearance of influencing a business decision that would favour ADEO. Equally the supplier shall not offer any gifts to Adeo Employees.

• Fight against corruption: Requirement of compliance with all applicable legislation against corruption ADEO does not allow or engage in corruption or unethical practices of any kind ADEO makes business decisions free from any conflict of interest–decisions that are impartial, based on sound business reasoning and without personal gain. Employees of ADEO and/or its com-panies and/or any of its partners or representatives shall not give, promise or offer anything of value to current or potential suppliers with the intention or appearance of influencing a business decision that would favour ADEO. Equally the supplier shall not offer any gifts to Adeo Employees.

ADEO CODE OF ETHICS

2 / CODE OF CONDUCT:

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QUALITY PRODUCT & REFERENCING

1 / QUALITY AMONGST SUPPLY CHAIN

AUDIT

TCF/QDB

PODUCTION CHECK

LOADINGINSPECTION

DELEVERY CLAIM

RETURN RATEQUALITY

ACCIDENT

PSICONTROLPLAN

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QUALITY PRODUCT & REFERENCING

1.1Evaluation/Audit• In order to get referenced by Adeo, Local Team

will first visit your production plant twice.• The first visit is an Evaluation covering most

aspects of your current business.• The second visit is an Audit of your quality

and production systems.• During our cooperation, similar audits

might be conducted on regular basis or as individual event to insure a reliable cooperation.

2 / COOPERATION MILESTONES

1.2Controlplanreview• Adeo’s basic quality expectations are

defined for each type of product in a document called ‘control plan’.

• As quality requirements for packing and packaging are the common to the whole range, Adeo defined a ‘book of packaging’ including the packaging and packing rules as well as related control plan.

• To ensure Adeo and the supplier all agree on those expectations, local teams shall review together with you the related control plans.

• This shall happen before product validation.

1.6Loadinginspections• In order to prevent logistic concerns, we might

conduct or sub-contract Loading Inspection.• The Loading Inspection Process is defined

in annexes.• Based on those control results, Adeo might

ask you to take particular actions.

1.3DocumentCollection• In order to answer local regulation as

well as quality expectations, mandatory documents are required for each reference.

• You shall provide those documents before production starts and confirm their content with Adeo.

• Those documents contains, but not only, Certificate of origin, CE Certification, packaging design, product technical description, user manual . . .

• A complete list of required documents is included inside the control plan.

1.5Pre-shipmentinspection• In order to guarantee products quality,

every production may inspected before shipment and may be subcontracted to a third party inspection company.

• The PSI process is defined in annexes.• Based on those control results, Adeo might

ask you to take particular actions.• If the result of such inspection is failed, a

rework and new inspection may be required at the cost of the supplier.

1.4Duringproduction• In order to guarantee products will match

Adeo’s expectations, we might conduct or order some DuPro QC.

• Those controls shall be ordered and paid by Adeo.

• Adeo shall inform you 1 day before such control.

• Based on those control results, Adeo might ask you to take particular actions.

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QUALITY PRODUCT & REFERENCING

3.1DeliveryClaims• Adeo Business Units record every claims at

delivery to their warehouses.• When recurrent delivery claims related

to one supplier are identified, Adeo shall initiate the Loading Inspection Process.

3.2MeasureoftheCustomerSatisfaction• Adeo Business Units record every claims

from final customer and final user.• Based on the total turn over per reference,

Adeo shall inform you about quality performance and request immediate Corrective and Preventive Actions, especially for high return rate.

3 / MARKET FEEDBACK MANAGEMENT

4 / Packing

3.3QualityAccident• Adeo consider as Quality Accident any

Major Quality Claim.• This include return rate over 10%, any cases

of people injuries, and products recall.• In case of such situation happens, Adeo

will request from you immediate and total involvement and cooperation to solve the case as soon as possible.

‘Adeo’s quality expectations regarding packaging and packing are defined in a set of documents called ‘book of packaging’.

It contains most common rules as well as some specific local market rules (Such as Russia or Ukrain).

In many cases, we define our own packaging specifications. In case we did not define them for a certain product, you shall strictly follow the ‘book of packaging’.

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REFERENCING

1 / LOG FORM PURPOSE:

The ADEOSERVICES LOG FORM may be sent to you by our purchasing offices abroad to allow you to input your product data into our database. A product inserted in this database is later on published on a system called ecatalog and can be seen by all our product managers worldwide.

2 / HOW TO FILL LOG:

1. PleaseuseoriginalMicrosoftExcelsoftwaretoopenthelogform.

2.WhenopeningtheExcelfile,pleaseclick‘Activatethemacros’onthewindowthatappears,soastoallowthemacrosonthefile.Itwillhelpyouavoidmistakes.

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REFERENCING

NB. OF PRODUCTS: no need to fill, it will be calculated automatically.SUPPLIER NAME: please fulfill the complete name.

TYPE OF INCOTERM: please chose only FOB.TERMS OF PAYMENT: you can choose from the list.CURRENCY: please choose USD.EXPIRING DATE: at least, it should be six months.

YELLOw: compulsive to fill.

GREY: it is calculated automatically. Please do not fill anything in it.

RED COLOR: it there is any mistake, it will show red color.

RED COLOR: the file can’t be saved! Please correct.

3.Pleaseinsertsupplier’snamebeforefillingtheinformationabouttheproducts.

4.Definitionofbackgroundcolors

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REFERENCING

ColuMnsAKtoAn:productinformation

COLUMN A: No need to change.COLUMN B: Photo picture of the product. Please compress the size of product picture.COLUMN C: Supplier Product Code It is limited to 16 characters.COLUMN D: EAN13 Unit Bar Code of product. The new products do not need to fill in.COLUMN E: Short Product Description. It is limited to 70 characters. It should describe the type, color, packaging, material and other. informations about your product.COLUMN F: UVC Type Please chose PCE.COLUMN H: Pallet Type If no pallet, please choose ‘no pallet’. Column J-Additional product details. It is limited to 255 characters.COLUMN K: Product Country of Origin. Please choose China.

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REFERENCING

ColuMnsltoX 5. ColuMnsAKtoAn 产品价格等信息

黄色，必填项

Automatically calculated, no need to fill in.

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REFERENCING

ColuMnsAotoBB:logisticaldatasCOLUMN AO-NB of Unit Please only key in 1.COLUMN AP-NB of Sub lev. No need to fill in.COLUMN AQ-GROSS weight Compulsory to fil in.COLUMN AR TO AT: compulsory to fill in.COLUMN AU-VOL: it will calculated automatically.COLUMN AV TO BB: please fill in if there is any inner carton..

ColuMnsBCtoBPlogisticaldatasCOLUMN BC-NB of Unit It will calculated automatically.COLUMN BD-NB of Sub level: Must be filled in.COLUMN BE-GROSS weight: Must be filled in.COLUMN BF TO BH: must be filled in.COLUMN BI-VOL: it will be calculated automatically.

Please key in if thereis any pallet.

产品内箱包装信息,根据实际情况选填。

产品销售包装信息,黄色必填, 灰色自动计算。

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ColuMnsBQ-BTquantityincontainer

ColuMnBVtoBX:EAncodeandplaceofincoterm

The quantity in container should be a multiple of quantity of outer cartons.

Maximun weights and volumes per type of container (TC).

Type TC Maximum weight Maximum Volume

20’ 23,6T 28,71 cbm

40’ 22T 58,89 cbm

40 HC 21,9T 66,38 cbm

整数倍

REFERENCING

Compulsory to fill in.

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PRIVATE LABEL POLICY

‘In order to provide to our customers the best value for money for all markets where it is present and to differ from its competitors, ADEO has developed a proactive policy of Private Label products’.

• The Private Label product ranges represent a significant share of sales for ADEO, and are expected to grow even more.

• ADEO has chosen to offer its products under Private Label Brands organized by segments or ‘Universe’, rather than under a corporate brand. In this way a private label range can be distributed in all Business Units.Ex: Aki/Leroy Merlin/Bricocenter . . .

• ADEO Business units DIY superstores and proximity DIY stores use 15 private label brands dedicated to them, each brand has a defined products perimeter.

15 ADEO brands at the core of our markets MSB/GSB

• Warehouse stores of ADEO use 9 private label brands dedicated to them, each brand has a defined product perimeter.

9 ADEO brands at the core of our markets (Depot stores)

ADEO own private Label policy

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PRIVATE LABEL POLICY

Relationship with suppliers:The manufacture of private label products is attractive for our suppliers:• Contractual comitments with Adeo.• Long term collaboration with Adeo.• Cooperation with our product development

staff (quality and packing managers).• Access to most international markets without

the necessary supply structure.

Exempleofgraphiccharter

The ADEO and Sustainable DevelopmentPrivate label products of ADEO, as all product lines in our stores, have to respect the regulations in terms of Sustainable Development.

Our aim is to put our private label products in a more proactive position through:• Reducing packaging.• Reducing the impact associated with the

manufacture, transport, use and recycling of our products.

We want to work exclusively with suppliers who are committed to respect our ethic, social and environmental codes, and we demand the greatest transparency on these points.

These codes must also be applied to subcontractors of our suppliers.

Rights and duties of our suppliersThe relationship between suppliers and ADEO is described in a contract signed by both parties.

Adeo wants to insist on these following points:The private Label products of ADEO are exclusively manufactured and distributed for ADEO Services or for the business units of the Group. This exclusivity concerns also all the distinctive features of our products or of our packaging (colors, logos, names . . .).

We are very careful of different level of quality of our products: each supplier must respect all the technical specifications (product, packing, packaging, delivery . . .).

In our self-service stores, the packaging is essential: the supplier undertakes to respect the graphic charter provided by ADEO Services.

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ORDER

Introduction

Supplying our Business Units is done through two main logistic chains:• Trading mode• Distributor mode

Supply manager role:the supply manager is involved in the negotiation of the logistical requirements, the order process, the packing and sub packing and the order replenishment.

Your interlocutor for negotiating prices is the Buyer.

Logistic conditions negotiated:• MOP (Minimum order production)• MOV (Minimum order value)• Unit, Inner, Outer, Pallet• Leadtime

‘EVERY STEPS MUST BE MANAGED ON TIME’

1 / ORDER GLOBAL PROCESS

1.1 The global process

BU PLACE ORDER ADEO ORDERING SUPPLIERCONFIRMS ORDER

PRODUCTIONINSPECTIONPAYMENTSHIPPING

WAREHOUSEINLANDTRANSPORT

STORE FINAL CLIENT

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ORDER

1.2 The ordering process

ADEO SUPPLY MANAGER

ADEO SUPPLY MANAGER

SUPPLIER

SUPPLIER

AND TO BU

1.2.1 Permanent ordersFor permanent ranges (all year long in the stores)Calculated with annual sales or based on quantities forecasts. Permanent leadtime - Repeated order.

1.2.2 Promotional ordersBased on permanent products or One shot products. Big quantities, For local or national promotions (eg leaflets with bargain prices . . .) Calculated from stores commitments.Highlighting massive product in store.The promotional order is identified by a comment in the order form. Cannot be late!

CREATESTHE ORDER

SENDS BACK TO ADEO

CONFIRMS ORDER, SIGNES AND STAMPS

COUNTERSIGNES THE ORGER

SENDS BACK TO SUPPLIER

SENDS TO SUPPLIER

ADEO Purchasing order status ‘CC’

ADEO Purchasing order status ‘CC’ countersigned by ADEO SERVICES + ADEO Purchasing order status ‘Gelée’

SUPPLIERORDER WAREHOUSE

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SUPPLIER

WAREHOUSE

ORDER

1.2.3 Seasonal orders• High seasonality products - Stores commitment.• Fixed order calendar.• Anticipation is key.• Cannot be late.

1.2.4 Synchronised ordersCan gather all the 3 orders types but answer to specific rules:• Fixed delivery date to all the BU’s (FOB Incoterm).• Fixed order calendar.• Fixed order frequency defined into a specific calendar.• MOP and MOV reached by all the BU’s together.• Several BU’s orders sent at the same date to reach together the MOV. • The synchronised order is identified by a comment in the order form.

SUPPLIER

ORDER

ORDER WAREHOUSE

URGENT URGENT

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ORDER

synchronisationcalendar:example

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2 / ORDER FOLLOW-UP

2.1 Order follow up steps

ORDERING

• Order received from Adeoservices

• Order confirmed by supplier

PRODUCTION

• Production control

• Packaging confirmation

QUALITY CONTROL

• TCF

• PSI

• PSI report

• SR application

DELIVERY

• ETA

• Delivery to store

LC OPENING

• LC opened within 4 weeks after GELE order

• Global LC

SHIPMENT

• Shipment booking

• Green light

• Documents operation

• Documents presentation

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ORDER

3/ORDER DOCUMENTS

• We work with a specific ADEOSERVICES order form Suppliers proforma invoices are useless and not used.

• In this document you can find all the necessary information:Logistics and purchasing information, requested shipment date (See example below).

• The order is signed by both parts (client and supplier)nand will be the referent document to open the letter of credit (in case of LC payment).

• Three order status = 3 steps in order validation process:

3-1 Status CC ‘Trading confirmed status’

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ORDER

3-2 Status confirmed (gelée) & countersigned

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ORDER

3.3 Packing list and invoice3.3.1 Packing list example 3.3.2 Invoice example

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3.4 Leadtime

days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71

Order validation 12

Raw material 23

Packaging and packing preparation

Sample preparation for CC/IP/endurance

Construction check + IP + endurance

2

Production andassembling

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PSI 1

PSI report 1

SR release 3

Greenlight 1

Shipment 7

Final lead-time : 71 days

FOB delivery lead-time

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ORDER

‘Information for the different leadtimes and rules of calculation’

1. Order validation is from the Order/OC reception to Order ETD. This must be done in 10 working days. (8 days for Adeo, 2 days for the supplier). Reminder: Supplier must confirm the order within 2 working days from reception.

2. Raw material procurement corresponds to the number of days needed to receive the raw materials for starting the production. The supplier is responsible of his stock management and supplies.

3. Packaging procurement must corresponds to the number of days needed for packaging/packing ordering and reception.

4. Sample preparation for CC (construction Check), needs to be fulfilled only if needed. This corresponds to the number of days needed for supplier to prepare the sample needed to CC.

5. Construction check (before production), and additional tests need to be fulfilled only if needed.This corresponds to the average number of days needed for the validation of construction check.

6. Production and packaging/packing assembling must corresponds to the time needed by supplier to produce and to pack everything.

7. PSI must corresponds to the average man-days needed for the PSI. This should be done in 1 day usually. Reminder: PSI must be finished 12 working days before ETD.

8. PSI report Issuing corresponds to the number of days needed after PSI to have the report.Reminder: Inspection report is usually released 11 working days before ETD.

9. SR release corresponds to the number of days between Inspection report reception and SR release. This is usually done in 1 day max normally (if the PSI is not failed). Reminder: SR must be released 10 working days before ETD.

10. Greenlight corresponds to the number of days between SR release and Green light reception by forwarder. This is usually done in 1 day max normally . Reminder: Greenlight must be done by ADEO shipping deparment 9 working days before ETD.

11. Shipment must corresponds to the number of days between Greenlight recep tion and Real shipment. This is usually done in 8 working days (for both FCL and LCL). Reminder: For FCL, the container must be sent to the POL 2 working days before ETD (closingdate) and for LCL, the goods must be sent to plateform 7 working days before ETD.

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ORDER

4-1 Order Modification ‘Degel’There are 2 status of order (CC preorder) and (GELE) contractual and fixed order.

In very specific cases, we will have to revise the GELE order. (Modifications of: quantities, product description, change delivery date . . .)

In that exeptional case the order will be modified and each part will have to reconfirm by following the order process.

4 / ORDER MODIFICATIONS AND SPECIFIC CASES

4-2 Rush shipment: Air ShipmentIn specific cases, we have no other alternative to organise an air shipment:

• BU out of stock• on BU requests

or• a delay in delivery due to supplier and BU needs the product

very quickly.

If an airshipment is confirmed, the payment terms is modified to ‘D/A payment’, moreover, the order is revised.

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ORDER

‘Our aim is to get a strong and long term partnership between SUPPLIER and BU. This partnership will be real thanks to a good and strong reliability and trust. Moreover, both sides (SUPLIER and ADEO) have to respect some rules to keep this partnership fruitful!

Aiming for low inventory pressures (storage capacities of stores and warehouses are limited), Minimum of Quantities (MOQ) must an as possible to our BU’S needs or/and capacities.

Our global Leadtime from order until the final customer must be the shortest possible allowing our BU’s to to follow market developments as closely as possible. These elements must be shared together regularly, with the goal to improve day after day our business and results.Obviously we work as partners and each part has a strong view of the constraints and capacities of the other.’

MUTUAL RESPECT AND COMITMENTSSupplier:respects the order terms validated with ADEO:• price, quantity, quality, leadtime, MOP (Minimum of Production),

logistics datas, calendar in case of synchronisation or seasonal programs.

Shares as much information as possible with ADEO:Global view of supplier:• global data of the factory: production & storage capacity, number of

employees, technology evolution . . .Good daily communication:• order handling: accurate answers,• order follow-up, production status,• anticipation in case of troubles: delay, quality problems, problems in

the factory, raw materials shortage,• Information on the vacation & peak season periods,• anticipation in case of changes: changes of factory, production

capacity, leadtime, manpower shortage.

ADEO:respects the rules given by the supplier:• agreed information from ADEO official document (log form),• respect of the order terms: tolerance to the forecasted quantities,

payment terms, MOP, MOV,• share as much information as possible such as: selected products,

forecasts, involved BU, supplier’s performance indicators,• validation of an order planning in advance with supplier in case of

synchronization and seasonal programs.

5 / MUTUALS COMITMENTS AND KPI’S

ADEO STOCK MANAGER KPI:OurmainKPIsare:Service Rate: quantities delivered on time, it is calculated by product family, supplier, and BU. It is really a key point for our cooperation.

Lead Time evolution: our aim is to get the best LT possible without affecting the result of our service rate. This will be possible thanks to a good cooperation and help both parts.

Validation period: Leadtime between creation and confirmation order.

SR (shipment Release) on time rate: Calculated by quantity, the SR on time rate is the percentage of quantities wich passed SR, 10 days before delivery date compared to the global quantities to ship.

Shipment on time rate: Calculated by quantity, the shipment on time rate is the percentage of quantities which shipment date is at the latest the order shipment date. (FOB Incoterms).

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ORDER

6 / AND TOMOROW . . .

In order to strengthen our partnership with our suppliers we work together on new supplies solutions like VMI (vendor management inventory) or CPFR (collaborative planning forecasting and replenishment) . . .

VMI and CPFR bound the supplier and Adeo in the inventory levels determination.

By sharing internal information we build together a smooth flow of goods.Some of VMI and CPFR benefits:

Partner Relationship:• Facilitate deeper collaboration through interdependencies.

Inventory:• Decrease inventory levels and safety stocks.

Revenue:• Reduction in stock-outs . . .

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PAYMENT

‘ADEO Services has dedicated a team to insure you a smooth payment, in the strict respect of the agreed terms, and normal counterpart of the fulfillment of your obligations.’

1 / PAYMENT APPLIED BY ADEO SERVICES

1.1 Accepted payment method:The following payment method can be proposed to each ADEO Services supplier referenced in our database:• Letter of Credit* (mostly used)• Bank Transfers* Please note that in some cases that will

be described hereunder, the letter of credit method could be replaced by Cash against document.

1.2 Letter of CreditADEO Services uses Irrevocable Letters of Credit, guarantying of a secured payment against the deliverance of the documentation evidencing the fulfillment of your delivery obligation. All our letters of credit are respecting the Uniform Customs and Practice for documentary credit published by ICC (latest publication N° 600).

ADEO services uses 2 types of letter of Credit: ‘Standard’ and ‘Global’ ones. The differentiation between both is explained hereunder.

1.2.2 ‘Global’ Letter of CreditAdeo Services proposes this second type of Letter of Credit to suppliers meeting the following conditions:• Suppliers having more than 2 years relationship with ADEO.• Important and consistent order flow.• Good conformity rate in LC document presentation.

The letter of credit amount is then based on forecasted purchased amounts covering a period from 3 to 6 months or 1 year for seasonal products. Among the documents required in the LC, you will have to present a copy of corresponding validated order bearing status ‘gelée’.

If required the LC amount will be revised upward or downward depending on the actual purchased value.

1.2.1 ‘Standard’ Letters of Credit‘Standard’ letters of Credit are systematically applied with each new supplier.This type of Letter of Credit is open by Adeo Service payment department when the orders are validated, bearing status ‘gelée’.When possible, we group different orders on the same LC to reduce bank charges from both side.

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PAYMENT

1.2.3 ADEO penalty systemHaving the goods on time, is one of ADEO Services priority. That is the reason why we have introduced in our contracts some penalty clauses. These clauses are reflected in all our Letters of Credit.Late delivery is sanctioned by a penalty of 0.3% per day up to a maximum of 6%.We nevertheless want to underline that penalty applied are fairly considering the responsibilities of each party, and always according to agreed terms.Please find hereafter the explanation of penalty calculation for Late shipment (FOB conditions):Penalty calculation for all shipments directly to loading port (without consolidation platform.In case of late shipment, we calculate the number of days late between the actual shipment release and the expected date (SR expected 10 days before the latest date of shipment date). The number of days used for penalty calculation is always the lesser one resulting from SR delay and Shipment delay.

Forinstance:

Penalty calculation for containers loaded via a platform.

The rule: Calculation is made on the same basis; the shipment release date is then replaced by the Cargo receiving date in the calculation. The ‘cargo receiving date being expected a least 8 days before the latest shipment date’.

Penalty for Late presentation of documents:Our LC clauses also foresee a penalty of late presentation of documents is 100 USD or 100 EUR maximum per container and per day.

05/06

SR date

15/06

ETD date

10 days

Real SR date

Delay at the ETDReason : Late SRResponsibility : SupplierAction : Penalty

Penalty calculation :SR : [10/06 -- 5/06]= 5 daysETD : [23/06 -- 15/06]= 8 days

Global delay = 8 days.Supplier’s responsibility = 5 daysApplication on 5 days for supplier

10/06

Real ETD date

23/06

}

ORDER

REAL

34

PAYMENT

1 / PAYMENT APPLIED BY ADEO SERVICES

1.2.4 Cash against documentsThis mean of payment also called D/A, can be proposed to suppliers for who the contractual payment method is LC and only in the following cases:• When the total amount of the order is less than 10000 USD or 8000

EUR, to avoid additional costs.• When the order shipment will be effected by air instead of sea, to

avoid extra costs and/or extra delays.• For urgent orders with really close shipment dates, to avoid delays.

Once agreed, Adeo’s payment department will address you a document with all required documents to be presented to the bank, the maturity date calculation and the instructions concerning the bank to which documents need to be remitted.

1.2.5 Bank TransferWith this method of payment the first step to be paid is the invoice sending.

Invoicerequirement:The invoice can only be issued when your obligations have been fulfilled (If FOB = when goods have been shipped).The invoice has to bear all legal mention and Adeo data (Unique Invoice number, invoice date . . .). See appendix with draft of invoice. We want one invoice per container and per order.

Asetofinvoicesshouldbesentto:

Adeo Services - DPASFAO International payment department Rue Sadi Carnot

RonchinFRANCE

This set of invoices can be posted or directly to the attention mentioned hereover, or be sent along with the set of documents addressed to the transport department BUT always within a separate parcel labeled to International payment department.

1.2.6 Payment AdviceWhen a payment is validated, a payment advice mentioning the detail of paid Invoices, the payment date and the payment reference is automatically generated and sent to the mail address registered in our IT system.

The payment reference will be communicated through banking network and then mentioned in the payment notice received from your bank.

As payment details are only sent via mail, we kindly ask you for informing us in case of any modification of your email data.

ContactsWith all these recommendation and infor-mation, your payments should be smoothly processed but if you have any further question, please contact:

Intl_payments@adeoservices.com

. . . and we will be please to help you!

35

TRANSPORT

1 / TRANSPORT ORGANIZATION AND WORKFLOW

ADEO Services Transport team:There is a specific transport team located in both France and China who is handling all shipment activities.

The France team is mainly working on global imported shipments and documents; working with different BU for providing logistics services and maintain a competitive carrier negotiation price every year.

The China team is working all China exported shipments; monitoring the shipment perfor-mance and coordinate the relationship between forwarders and suppliers.

1.1 Transport workflow:

Productrequire SR ?

Book withshipping company

Release container

Full load container Platform

Pick up containerand load carg0

in factory

Customdeclaration

Send SR

Pre Shipmentinspection Send booking

SendGreen Light

Deliver cargo toplatform 8Dbefore ETD

Deliver cargot port 2D

before ETD

SHIPPING DEPT.

FORWARDER

SUPPLIER

CHINA OFFICE /LABORATORY

BEFORE SHIPMENT SHIPMENT

YES NO SR management Volume < 50 cbmand weight < 18 tons

Cargo deliveredto the port

36

TRANSPORT

2 / SHIPMENT RELEASE

Definition shipment release (SR).It is the document which certifies your cargo passed PSI and ready to be shipped.This document is compulsory in order to book the containers.Issuance: It is issued by laboratory or by the merchandiser under buyer’s authorization.

Role: To make sure all our shipped cargo is qualified and controlled,The SR needs to be issued at least 10 days before the PO ETD (estimated time of departure)SR examples:

37

TRANSPORT

3 / FORWARDER 4 / BOOKING 5 / INCOTERM

Introduction:Forwarder is the logistics partner to handle booking, shipping line space allocation, and documentation management for ADEO Services.

Responsible ports:

E-booking - forwarder website:DAMCO:https://portal.damco.com

KUENHE & NAGEL:https://www.kuehne-nagel.com/portal/login.do?requestedUrl=%2Findex.do

Booking rules - 14& 21 days.

Full load container (FCL) - Booking must be submitted to forwarders at least 14 days before PO ETD.

Consolidation (CFS) - Booking must be submitted to forwarders at least 21 days before PO ETD.

Booking guidance in annex.

FOB:FREE ON BOARD (FOB ICC INCOTERM 2000) is our basic trading incoterm.

DAMCO (former name MARESK logistics) is the forwarder who handles: SHANGHAI,NINGBO,DALIAN,TIANJIN,QINGDAO,WUHAN,CHONGQING ports.

KUENHE & NAGEL is the forwarder who handles:YANTIAN, SHEKOU,CHIWAN,XIAMEN,FUZHOU,GUANGZHOU,TAIWAN,HONGKONG ports.

DAMCO booking manual

KN booking manual

38

TRANSPORT

6 / LEADTIME

leadtimestepbystepETD: Estimated time of departure. (Also called expected time of departure).Projected leaving time and date for a ship at port or a flight at an airport. Typically for a specific city. Known also as expected time of departure. It is indicated on an order and on L/C (letter of credit),Supplier must respect the PO ETD and make sure the cargo can be finished producing, pass the PSI (pre-shipment inspection), and ship the order before or on PO ETD.

CRD: Cargo Ready Date.The Cargo Readiness Date is the date the seller (Supplier) has the goods ready for handover at their premises, and is defined by three characteristics:1. The shipment is available and complete in an agreed location.2. The shipment is packaged so it can be shipped by the agreed

mode of transportation.3. The documents for international shipping are prepared and available.

In case you have to deliver the cargo to one of our 3 platforms, please note that the goods (correct quantities and well packaged)and have to be delivered 8 days before PO ETD.

SRD: Shipment release date. Please note that in our rules, supplier must have the SR issued at least 10 days before a PO ETD.

ADEOSUPPLIERADEO CARRIERFORWARDER

10

6

4

4 2 8

10

30 10

10Production

Consolidated container

Full container

Validation Manufacturing and Shipment Transport Delivery

BU Orderto ADEO

ADEO Orderto Supplier

BookingConrmation

OKShipment

«SR»

Qualityinspection

start

VesselDeparture

FOB

VesselArrival

CIF

Pre Booking PlatformDelivery

Custom clearance

DC DeliveryDDP

39

TRANSPORT

7 / CONSOLIDATION AND FCL

8 / SHIPPING DOCUMENTATION

7.1 ConsolidatiomWe have 3 existing platform in China: Shanghai, Ningbo and Yantian We use platforms in order to:• deliver to the small BUs for small volume• optimize the container utilization• Minimize the whole transport cost• Reduce BU warehouses stock

A platform can consolidate and deconsolidate cargo; provide pick&pack, labeling, bar-code scanning and domestic transportation services.20% of ADEO Services purchasing volume are using platform for consolidation and exportation.

Please respect this rule:If order volume is smaller than 50 CBM or gross weight is smaller than 18 tons:the order must go to platform!

7.2 FCLFCL: Full Container Load, The FCL means the load reaches its allowable maximum (or full) weight or measurement . In ta case the cargo is not delivered to platform.

Delivery notice:Deliver notice is a document given by a forwarder to deliver the cargo to the platform with detailed PO informations, warehouse address and warehouse reception period.

DeliverynoticefromDAMCo DeliverynoticefromK&n

40

TRANSPORT

unloADIng&loADIng:

unloADIng:the platform staff unloads cargo from truck into pallets, checks if cargo shipping mark is consistent with delivery notice and package quality, records pallet bar codes into WMS (warehouse management system) for stocking.

loADIng:according to the loading plan which is confirmed by forwarder, platform staff picks up the container, loads relevant PO with sequences and delivers the container to port.

At least 4-6 photos will be made by staff during the loading process and the records is kept 6 months.

loADIngPlAnEXEMPlE

41

TRANSPORT

loadingphotos

Here are some examples of differentThey are issued by supplier.

Example

42

TRANSPORT

This is the document to certify the cargo is on board and departure. It is issued by forwarder.It is required to be presented to bank for L/C negotiation.

Only required by RUSSIA and UKRAINE BU.It is issued by custom or the China Council for the Promotion of International Trade (CCPIT).

FoRWARDERCARgoRECEIPT(FCR) CERTIFICATEoFoRIgInOnly required by RUSSIA BU.

1st version: (also called JG02) must be stamped by exporter: ETD + 10 days.

2nd version: (also called JG07 or JG09) must be stamped by customs: from ETD + 21 days.

EXPoRTCusToMDElCARATRIon(ECD):

Jg02aftershipment Jg07or09,atleast3weeksaftershipment

43

TRANSPORT

The forwarder certifi-cation is issued by forwarder to certify supplier has well provided the correct packing list and rest necessary shipping documents.

sTATEMEnT:It is issued by supplier that the shipping documents copy is sent to France by air courier.

FoRWARDERCERTIFICATIon:

44

TRANSPORT

Declaration of conformit is only required by SPAIN BU for electrical products.

DMF form is only required for ITALY BU to testify that the product or container are free from this prohibited substance.

DDC:Declaration de conformidad (in Spanish) DMF(DIMEThylFuMARATE)FoRM:

45

TRANSPORT

It is issued by ADEO to BU for certifying the cargo has been inspected by 3rd party. It is only required for UKRAINE BU.

ATTEsTATIon:

46

SUPPLIER SCORECARD

7 / MEASURING AND IMPROVING PERFORMANCE

1.1 Supplier Scorecard

In other words if we are able to measure our performance together, we will be able to enhance our partnership.

Adeoservices has implemented a performance scorecard. The aim is to increase product availibility, reduce costs for the Supply Chain and maintain an optimum level of store service. There are 14 main metrics.

At the minimum the scorecard results will be reviewed with suppliers on a quaterly basis.

Thanks for your cooperation!

1.1.1 ‘you can’t manage what you don’t measure’

‘Continually developing collaborative relationships with suppliers based on shared goals and successes will ultimately lead to a jointly favorable business relationship between YOU and ADEO.’

SUPPLIER’SPERFORMANCE

METRICSQUALITY SOCIAL/

ETHICS PRODUCTION QUALITY LOGISTIC PAYMENT LOGISTIC LOGISTIC LOGISTIC PURCHASE QUALITY PAYMENT PURCHASE PURCHASE

METRIC QA audit result Social Audit results Production leadtime

PSI rate (over 12 sliding months)

FCL container utilization rate

LCconformity rate SR on time rate

On-timeshipment

Delivery claims Price evolution%Return rate

(over 12 sliding months)%

Payment term Period of cooperation

Merchandiser evaluation score

DESCRIPTIONAst QA audit result for the scored period

Last social audit result for the scored period

Leadtime fromdate of gelee to SR

Nb of inspection with PSI result = Pass/total nb of

inspections

% of container volume filled with

products

Measure conformity of

documents

An SR is considered on

time when issued 10 days minimum

before ETD on BU’s order.

% on quantities shipped before

shipement date validated on order gelee

(ETD+0)

Lines of orders in anomaly received

(claims)/Total lines of orders

received

FOB price evolution for

same products from a year to

another

Return rate of products in stores (final customer)

Delay of payment

Period from 1st order placed

between supplier and ADEO until

today

Last merchandiser

evaluation result for the scored period

CALCULATIONMETHOD

(scoreinpoints)QA audit

result/100Social auditresult/100

For all suppliers of a same category

supplier with highest leadtime:

0 points

supplier with lowest lead time: maximum score

<88%: 0 points 100% = maximum

score

<64%: 0 points

>85%: maximum score

Takes into account the

limitation linked to weight

Percentage of document

set remittance conform as per

LC requirements & RUU/Total of document set remittance.

SR on time rate is the quantity of references with

SR 10 days before ETD/the quantity

of references shipped

<80%: 0 points

100%: maximum score

0% maximum score

2% average score

> 4%: 0 points

Supplier with highest price

evolution: 0 points

supplier with highest price

evolution: 0 points

supplier with lowest price evolution:

maximum score

>2%: 0 points

0%: maximum score

<89 days: 0 points

>121 days: maximum

<1 year: 0 points,

>5 years: maximum score

Merchandiser evaluation result/100

47

GLOSSARY

BU: Business UnitCAPA: Corrective and Preventive ActionCC: Order at the first statusCIF: Cost Insurance and FreightCPFR: Collaborative Planning Forecasting and ReplenishmentCRD: Cargo Ready DateD/A: Documents against AcceptanceDDP: Delivered Duty PaidECD: Export Custom DeclarationETA: Estimated time of arrivalETD: Estimated time of departureFCL: Full Container LoadFCR: Forwarder Cargo ReceiptFOB: Free on BoardGelée: Order validated (last status)LC: Letter of CreditLCL: Less than container loadMOP: Minimum of production (in pcs)

MOV: Minimum order value (in USD)PL: Packing listPOD: Port of destinationPOL: Port of LoadingPSI: Pre Shipment inspectionQDB Quality Data BaseSR: Shipment releaseSRD: Shipment Release DateT/T: Transit TimeTC: Container typeTCF: Technical Construction FileUVC: Unité de venteVMI: Vendor Management Inventory