Fill RateIn order to optimize inventory levels and maintain smooth production schedules, Amway expects to receive the quantity specified on the purchase order. Fill Rate measures the quantity received against the actual quantity ordered.

Amway’s Requirement for Fill Rate is +/- 5%.• Perfect Fill Rate: Percent fill rate where Quantity Ordered equals Quantity Received (+/- 5%).

Perfect Fill Rate (1 Perfect/2 Orders) = 50%

Invoice AccuracyInvoice Accuracy measures errors that appear on an supplier’s invoice. A score is derived based on the number of invoices received with an error versus the total number of invoices. Purchase Order, Receipts, and Accounts

Payable data is used to derive the score. The key invoice elements that will be evaluated include: piece price, quantity received, sku #, PO #, unit of measure, and payment terms.

SegmentationThe Segmentation report shows, by category, how Amway Sourcing Strategy Teams (SST’s) have classified the Amway/supplier strategic relationship. Suppliers are expected to take a proactive approach in partnering with Amway on innovation, continuous improvement, and lowest total cost.

Alliance Partner• Supplier relationship is critical to Amway’s long-term success (< 1% of supply base)• Integrated involvement in each parties’ activities

Global Preferred & Preferred Suppliers (regional, local)• Supplier relationship is important to Amway’s success, and difficult to replace

• Collaborative involvement in each parties’ activities• A ‘global preferred’ supplier can supply more than one market

Approved Supplier• Supplier relationship is considered ‘standard’• Activities are coordinated on a limited basis

Mandated Supplier• Sourcing decision is made by a Contract Customer, not Amway• Activities are coordinated on a limited basis

Probationary Supplier• Supplier is either new to Amway (probationary evaluation period), or supplier

is performing sub-par (probationary period for improvement)• Supplier can provide existing items, but no new items without strong justification

Recover• Supplier offering, performance and/or behavior is deemed a risk to Amway• Amway to commit significant resources to short-term performance improvement, risk

mitigation, and/or supplier replacement activities

To better understand our approach to supplier segmentation, please access the ‘Supplier Segmentation Model’ link on the Amway supplier portal.

Spend HistorySpend History shows (by item) Amway total receipts in dollar terms, calendar-year-to-date.

Supplier Technology RatingThe Qualitative Technology Rating measures suppliers in key technology-related areas based on feedback from R&D and cross functional Sourcing Strategy Teams (SST’s).

The following categories are evaluated:

• Manufacturing Capability • Access to Innovation • Technical Experience

• Amway Product Development Support • Development Capability

Supplier Service RatingThe Qualitative Service Rating allows Amway to monitor performance of select suppliers in areas that fall outside of the quantitative measurements. Cross functional Sourcing Strategy Teams (SST’s) evaluate suppliers in key service related areas.

The following categories are evaluated:• Customer Service Support • Continuous Improvement

• Sales Representation • Lowest Total Cost

• Ordering / Scheduling Flexibility

Supplier Quality RatingThe Qualitative Quality Rating measures suppliers in key quality related areas based on feedback from Quality Assurance and cross functional Sourcing Strategy Teams (SST’s).

The following categories are evaluated:• Accurate Information

• Continuous Quality Improvement

• Supplier Quality Development–Strategic Activities

• Quality of CAPA Responses (Corrective/Preventive Actions)

Supplier InformationSupplier Information lists the most current item information that Amway has on file for:

• Freight and Payment Terms • Lead Time • Units of Measure

• Minimum and Multiple Order Quantities • Specification Dates and Shelf Life

PO VolumePO Volume shows the number of purchase orders issued and the number of purchase order lines (calendar-year-to-date).

Lead TimeAmway expects all suppliers to meet the planned lead-time 100% of the time. In addition, all suppliers are expected to continually work toward reducing the planned lead-time. Lead-time is evaluated using the following metrics, as based on the planned Supplier lead-time recorded in the Amway item master database.

• Planned Lead-time–average of all planned items received in the current reporting period

• Actual Lead-time–average of the actual measured time from order placement to receipt of goods on-site at Amway

• Lead-time Variance–difference between the planned and actual lead-times.

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Invoice Accuracy Example

Number of Purchase Order Invoices Received 10

Number of Perfect Invoices (no errors) 9

Invoice Accuracy Percent = 90%

To meet and exceed customer demands for new technologies and faster time to market, ABG evaluates suppliers in service, technology, and lead-time. Continuous improvement in these key areas will not only help meet customer requirements, but will also help ABG understand the total value our suppliers are providing.

Helping people live better lives

Access Business Group, LLC7575 Fulton Street EastAda, MI 49355 U.S.A.

PH: 616-787-6000FX: 616-787-0368

www.supplier.amway.comEqual Opportunity EmployerRevision Date: 05.29.2009

PO #2 Quantity Ordered 100,000 units

PO #2 Quantity Received 104,000

PO #2 Fill Rate Variance = +4,000

PO #2 Perfect Fill Rate 100%

Fill Rate Example 1 Fill Rate Example 2

PO #1 Quantity Ordered 100,000 units

PO #1 Quantity Received 90,000

PO #1 Fill Rate Variance = -10,000

PO #1 Perfect Fill Rate 0%

Excellence inExcellence in

SupplySupplyManagementManagement

Supplier Scorecard HandbookSupplier Scorecard Handbook

Supplier Performance MetricsAmway holds suppliers accountable to maintain or exceed performance requirements that have significant impact on our supply chain operations. We work with our suppliers to identify opportunities for improved efficiency and are focused on partnering with those who are aligned with our business goals. This handbook contains definitions and examples of these metrics.

All suppliers are measured on the following quantitative metrics: • On-Time Delivery (prepaid terms) • Quality Rating • Fill Rate

• On-Time Shipping (collect terms) • Invoice Accuracy

Additional qualitative evaluations are provided to select suppliers, including: • Technology • Service • Quality

Other supplier statistics provided: • Spend History • PO Volume • Supplier Item Information • Segmentation • Lead Times

Dashboard Indicator Gauges:For various reports within the dashboard you will see these indicator gauges:

Supplier On-Time ProgramIn response to supplier and employee input, Amway adjusted its Supplier On-Time metrics to be specific to the point of shipment/title transfer.

DefinitionsOn-Time Delivery: Evaluation of the date of Amway facility receipt versus the requested Delivery Date (PO Request Date) on the Purchase Order. For suppliers with Prepaid shipping terms.

On-Time Shipping: Evaluation of the supplier-confirmed shipment availability date (not scheduled pickup date) versus the requested Ship Available Date on the Purchase Order. For suppliers with Collect shipping terms.

On-Time Confirmation: Evaluation of Amway’s requirement for 48 hour notification (7 days for international shipments) prior to shipment availability date (not scheduled pickup date). For suppliers with Collect shipping terms .

General NotesAcknowledgements: At a PO’s origin, the PO Promised Delivery Date reflects Amway’s needs (our due date). Once a supplier acknowledges a PO, the Promised Delivery Date becomes that supplier’s commitment.

Date Changes: Purchase Order Promised Delivery Dates that are moved ‘outwards’ (by suppliers) will likely lead to a mark against their On-Time score. Supplier-Amway ‘due date’ negotiations are managed between the Supplier and their Amway Planner.

Exclusions: Supplier item/sku’s that are coded by Amway as Vendor-Managed, JIT or Consignment are excluded from OTD/OTS metric calculations.

Prepaid suppliers manage their orders to the acknowledged Promised Delivery Date.

Collect suppliers manage their orders to the Ship Available Date.

6daysearly

5daysearly

4daysearly

3daysearly

2daysearly

1daysearly

Due Date

1daylate

Early On-Time Window Late

On-Time Delivery (OTD)–Domestic Suppliers with Prepaid TermsPurchase Order MathPromised Delivery Date = Amway Purchase Order Date + Supplier Mfg/Transit Lead Time.

Amway Request/Due Date is set to equal the supplier PO’s Promised Delivery Date (at PO release).

OTD ScorecardPrepaid Suppliers manage entire shipment (including transportation to Amway and appointment scheduling).

OTD Scoring: Each shipment (not PO) is scored individually according to the On-Time Window.

OTD Calculation: OTD is calculated by comparing the actual Amway Arrival Date, vs. the PO/PO Line’s Request Date (supplier sees as original Promised Delivery Date).

On-Time Delivery Window is +0 days late/-5 days early.

Delivery Appointments: Supplier difficulties in obtaining timely Delivery Appointments (within the OTD window) should be taken up with the appropriate Amway Supply Chain Planner (for PO date changes).

On-Time Shipping (OTS)–Domestic Suppliers with Collect TermsPurchase Order MathPromised Delivery Date = Amway Purchase Order Date + Supplier Mfg Lead Time + Amway Transit Time factor.

Ship Available Date = Promised Delivery Date–Amway Transit Time factor. A PO’s Ship Available Date is therefore a calculated field, and affixed to the Promised Delivery Date (separated by Amway transit time).

Acknowledgements: Suppliers acknowledge a PO’s Promised Delivery Date.

Date Changes: Purchase Order changes to the supplier-acknowledged Promised Delivery Date will change the PO’s Ship Available Date, as they are linked.

OTS ScorecardAmway Pick-Up: Shipments are called in to Amway Transportation for pick-up at 1.888.765.9572 (24 hrs, M-F)

48-Hour Requirement: To allow Amway Transportation adequate time to schedule a pick-up, and consolidate a shipment route, suppliers are required to call-in their Shipment’s Availability/Dock Date at least 48 hours before the PO’s/PO Line’s listed Ship Available Date.

Call-In Dates are recorded by Amway Transportation to evaluate compliance to the 48 hour requirement.

Late Amway Pick-Ups: As the OTS metric is based upon the supplier’s commitment to when goods are available for Amway pick-up, the actual arrival date of Amway Transportation (or its contracted carriers) does not affect the supplier’s OTS score.

Shipment Weight: Amway Transportation handles all shipments greater than 150 pounds.

OTS Scoring: Each shipment is scored individually. Title transfer occurs at supplier’s dock.

OTS Calculation is achieved by comparing the supplier-reported Shipment Availability/Dock Date vs. the PO/PO Line’s Ship Available Date.

On-Time Shipping (OTS)–International Suppliers with Collect TermsPurchase Order Dates, definitions and date math are the same as with Domestic Collect (above).

Ocean is our standard international transit mode.

Air freight shipments are not recorded within Amway’s international OTS metric.

Expeditors International handles shipments inbound to Amway-US.

SEACON handles Intra-European Union shipments.

IFF: Both Expeditors Int’l and SEACON are referred to here as International Freight Forwarders (IFF).

IFF Delivery or Pick-Up: Purchase Order shipments are called in to the local IFF affiliate for pick-up (or to schedule drop-off), depending on the local agreement. Title Transfer occurs at the hand-off point.

7-day Requirement: Our IFF’s require a minimum of 7 days notice.

Call-In Dates are recorded by our IFF to evaluate compliance to the 7-day requirement.

OTS Int’l Calculation is achieved by comparing the FRD date vs. the PO/PO Line’s Ship Available Date.

FRD stands for Freight & Documents. To achieve an FRD date, freight must be received by the IFF with appropriate Customs Clearance documents in order.

Delays in receipt of Customs Clearance documents will delay the FRD date & affect the OTS score.

OTS Scoring: Each shipment is scored individually.

RFT QualityThe RFT Quality Metric measures a supplier’s ability to meet agreed upon specifications and requirements.

• All lot rejections of product/material that does not conform with the agreed upon specifications are assigned a DMDO (Defective Material Disposition Order)

• All non-conforming shipments are assigned and ADR (Arrival Defect Report). ADR examples include missing or inaccurate paperwork, bad pallets, and inaccurate labeling.

Each incoming Purchase Order Line is assigned a score of 100% or 0%. Any Purchase Order line that is assigned either a Supplier-related DMDO or ADR will be assigned a score of 0%. (Severity Factors are not assigned)

RFT Quality Metric Formula

On-Time Delivery <75% 75 - 90% >90%

On-Time Shipping <75% 75 - 90% >90%

Fill Rate <85% 85 - 95% >95%

Invoice Accuracy <96% 96 - 98% >98%

RFT Quality <97% 97 - 99% >99%

Ship Available Date (for collect orders); Request Date Delivery Date (for prepaid orders)

Right First Time Quality Metric Example

Total Number of Purchase Lines Received 10

Total Number of Purchase Lines with a Supplier 2Related Quality Defect (1 ADR, 1 DMDO)

RFT Percent = 80%

Total PO lines with at least one Supplier Related DMDO or ADRTotal PO lines received

RFT Score ( )= 1-