Supplier Logistics Handbook

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Table of revision

Title Supplier Logistics Handbook

Filename Supplier Logistics Handbook

Document status Pilot Document

Classification public

Valid from 21.11.2011

Current version 21.11.2010

Status 21.11.2011

Owner

Versions- date Author / Reviser comment

V1.1 21.11.11 Vaillant Group

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Preamble..............................................................................................................................4

1 Packaging Requirements.................................................................................................5

1.1 General Packaging Requirements ......................................................................5

1.2 Returnable or Disposable Packaging ................................................................5

1.2.1 Returnable Packaging ...................................................................................5

1.2.2 Other Returnable Packaging ........................................................................6

1.2.3 Disposable Packaging...................................................................................7

1.2.3.1 Authorised and Unauthorised Materials ........................................7

1.2.4 Special Packaging................................................................................................8

2 Packaging Process ..........................................................................................................9

2.1 Flow Chart.................................................................................................................9

2.2 Packaging Data Specifications.............................................................................9

2.3 Replacement Packaging ......................................................................................10

2.4 Maximum Quantities of Parts..............................................................................10

3 Labelling ......................................................................................................................11

3.1 VDA TAG 4902 Version 4 .....................................................................................11

3.2 Format and Implementation ................................................................................11

3.2.1 Sample VDA Label Format 210 mm X 148 mm .........................................11

3.2.2 Sample VDA Label Format 210 mm X 74 mm (KLT-Label).....................12

3.2.3 Overview Data Element VDA-KLT Labelling .............................................12

3.2.4 Goods Tag Instructions ................................................................................13

4 Shipping Documents.....................................................................................................14

5 Claim............................................................................................................................15

Abbreviations - Definition ..................................................................................................16

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Preamble Competition in national and international markets has become significantly tougher in recent years. The increased individuality of our customers places high requirements on our business, and as a result also on the logistics functions, in terms of quality and flexibility. The conventional role of handling commodity and merchandise flows has nowadays turned into a comprehensive customer-oriented management function. The quality of logistics is becoming more and more decisive to the competitiveness of our business, and is an increasingly important factor in our strategic success. However, since Vaillant Group can only attain that high quality level in conjunction with its suppliers, it needs reliable and competent business partners who work toward the same customer-oriented goals. This Supplier Logistics Handbook is intended to enhance supply relationships between suppliers and Vaillant Group and to minimise costs resulting from non-conformance. The standards set out form the generally binding framework for all business units and companies of Vaillant Group. They can be supplemented by location-specific standards in order to respond to the specific supply relationships of particular plants or regions. This document is structured as follows: Text refers to general and standard regulations and processes. Tables refer to region–specific standards from the point of view of the receiving Vaillant Group plant. Supplements may be required due to regional requirements or bilateral agreements between a Vaillant Group plant and its suppliers. The local partner at the receiving Vaillant Group plant is able to provide you with corresponding information. In the event that Vaillant Group or a company of Vaillant Group has entered into separate agreements (E.g. supply agreements or logistics agreements) with the supplier in written form that are deviating from the present Supplier Logistics Handbook, the provisions of this Supplier Logistics Handbook shall apply in addition and subordinately to said written agreements; the provisions of such written agreements shall prevail.

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1 Packaging Requirements 1.1 General Packaging Requirements The following requirements have to be taken into account in specifying the packaging for both disposable and returnable packaging:

• The application or use of adequate protective measures to prevent damage, soiling or

environmental influences which could have a negative impact on the quality of the goods

• Possible corrosion of the goods must be ruled out

• Sufficient transport safety

• Unproblematic rear unloading

• Ergonomic unloading of goods

• Compliance with EU Industrial Safety Regulations and National Labour Protection Codes

• Interpretation of stackability must be aligned with packaging criteria

• Adherence to predetermined standard dimensions

• Optimal utilisation of container and fill level

• Use of material recycling

• Identification of package units as prescribed

• Delivery of returnable handling aids is in consideration of EPAL / GPAL exchange criteria and current UIC standard

Use of disposable handling aids must be in a workable and storable condition and in accordance with the below mentioned packaging measurements. Securing of loads and cargo is to be in accordance with national and international guidelines.

1.2 Returnable or Disposable Packaging When developing the packaging concept, both returnable and disposable packaging should be taken into account. Returnable packaging should be favoured whenever possible. However, in case disposable packaging proves to be more economical than returnable packaging then it can be used. The disposal costs of disposable packaging should be acknowledged in the economic appraisal. The following gross weights are binding when selecting the package size: Max. weight per single packaging (box/KLT) General <= 12kg Max. weight per container / GLT General <= 1000kg Max. height of handling unit General <= 900mm with a max. area of 800*1200 (L x W) If 900 mm can not be reached, derogation has to be presented to final assembly plant before having any deliveries. In order to avoid transport and storage problems, the base area of the pallets may not be exceeded when putting together load units. In case of delivery in boxes/KLT on pallets, the top layer must be level. The content of the pallets must be protected against soiling. Straps must be used to secure load carriers on pallets. Edge protectors may have to be provided to prevent the hoop casing bands from cutting into load carriers.

1.2.1 Returnable Packaging Vaillant Group may request implementation of a specific solution in relation with some returnable packaging. In this case, suppliers to be integrated in the initiative will have to follow rules and processes set up by Vaillant Group upon notification. Specific process will be managed by a dedicated person.

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1.2.2 Other Returnable Packaging Container management is realised by both the supplier and Vaillant Group. Incoming and outgoing returnable packaging is to be registered both by Vaillant Group and the supplier. Balancing of accounts must be carried out by both parties at Vaillant Group’s request. Differences in quantities are to be actively made known by the Supplier with Vaillant Group’s support. Any loss in packaging will be settled at replacement cost according to originator principle. The account balance (reconciliation) shall be made in text and traceable form (Excel list or similar document) without delay, however, at the latest within 10 work days as of the respective request. Container management is realised on a company-related basis and in agreement with the respective plant managers. As Vaillant Group as no central monitoring for packaging, the Supplier is requested to provide packaging monitoring and balancing per individual Vaillant Group plant. Removal of returnable handling aids (DB box pallets, EURO pallets) will be carried out by Vaillant Group usually within 10 work days. Vaillant Group owned containers are not intended for Supplier’s use. The Supplier should preferably use standard load carriers. Large load carriers (GLT): Arcaboxes, skeleton containers, EUR frame pallets. The latter two are in accordance with UIC standards 435/2 / 435/3 and GPAL / EPAL exchange criteria. Small load carriers (KLT): KLT according to VDA 4500 Standard Special load carriers may only be used if their economic efficiency has been proven and agreed upon with Vaillant Group. Special containers are planned and sourced by the supplier. They are approved by Vaillant Group upon agreement with the supplier. Vaillant Group reserves the right to specify the packaging Supplier itself. Regarding investment costs for the returnable packaging the parties shall come to an amicable agreement. Upon completion of the project the packaging becomes property of Vaillant Group. The packaging must bear the words “Vaillant Group” and the Vaillant Group logo. When planning returnable packaging, the following points must be considered:

• Type and material (KLT/GLT – metal, plastic etc.) e.g. VDA-KLT according to VDA recommendation 4500

• Material recycling

• Identification

• Module compatibility (empty boxes must used less space than full boxes)

• Packaging aids (workpiece carrier, inserts, liners)

• Dimensions

• Quantities in use (circulation, buffer)

• Service life

• Change in needs due to changing demand for parts

• Replacement due to inventory shrinkage

• Check of functional reliability

• Cleaning, repair

• Return of empties, inventory management of empties

• Injected pallets

• Warehouse equipment used

• Stackablility

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1.2.3 Disposable Packaging Disposable packaging is nonrecurring and could be uneconomic and inefficient. The Supplier is responsible for the provision of disposable packaging and is to bear the related procurement cost. The general packaging requirements must be fulfilled. If boxes are delivered without pallets, the maximum weight to be taken into account is 12kg.

Material Identification Disposable packaging must bear a distinct and visible identification using standard symbols (pictograms and abbreviations according to DIN 6120) and must include the waste management industry symbol. The identification may not restrict the recyclability of the carrier material. The supplier should check the economic efficiency of using disposable packaging and make all appropriate agreements with Vaillant Group. When using disposable packaging, the following points must be considered:

• -Type and material

• -Material recycling

• -Identification

• -Module compatibility (empty boxes must used less space than full boxes)

• -Stackability

• -Packing aids (workpiece carrier, inserts, liners)

• -Disposable

• -Design (printing, construction - clips, closing)

• -Optimised filling weight

• -Multiple use (more than one reference )

• -Easy handling

• -Goods tag / labels 1.2.3.1 Authorised and Unauthorised Materials

Steel strips upon agreement

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1.2.4 Special Packaging Packaging of Electronic Devices Sensitive to Electrostatic Discharge In order to protect electrostatic discharge sensitive devices (ESDS) from electrostatic discharge (ESD), the use of shielding, conductive or dissipative packaging material is obligatory to create a surrounding faraday cage. Low charging and shielding packaging can protect the device (e.g. metalized, plastic bags) by enveloping it. This shielding function can also be created by a surrounding outer packaging which is low charging and conductive (or shielding). In this case, the inner packaging has to be low charging and conductive.

In case of packaging with surface resistance exceeding 1010 O, the decay time of 1000V must be quicker than 2 seconds. Electrostatic discharge regulations DIN EN 61340-5-xx / IEC 61340-5-xx apply

Labelling of ESD Packaging (Electrostatic Discharge)

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Electrostatic discharge sensitive devices (ESDS) must be packed and guarded against electrostatic discharge (ESD) as described in 1.2.4. The packaging has to be marked with ESD Warning Label according to DIN EN 61340-5-1.

2 Packaging Process The selection of the correct packaging results in protected parts. The flow chart supports delivery of

flawless parts. 2.1 Flow Chart

2.2 Packaging Data Specifications The packaging data specification sheet contains data on specific parts for determining the packaging. The packaging data specification sheet can be used in both directions (Supplier’s suggestion – Vaillant Group’s suggestion). There may be several different suggestions. The approved packaging is binding for delivery of the goods. The goal of the packaging data specification sheet is to standardise data exchange between the Supplier and Vaillant Group. The standardised packaging data sheet facilitates processing for the Supplier and Vaillant Group and prevents misinterpretation and minimises the error rate. This packaging data sheet has to be used for all new parts and if possible for running parts.

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2.3 Replacement Packaging Vaillant Group must be notified of an equivalent replacement packaging including packaging instructions at the latest 48 hours prior to delivery. Costs for extra logistics and removal (if existing) will be charged to supplier.

2.4 Maximum Quantities of Parts In the case of returnable packaging the required number of containers must be determined by the Supplier and agreed with Vaillant Group. The calculation is based on the average usage per day. It is formulated by taking the average annual quantity divided by the annual working time (about 250 days).

Average daily use = number of pieces per year X parts per part Annual working time (250)

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3 Labelling 3.1 VDA TAG 4902 Version 4 The tag supplements the delivery note and transportation data. The Supplier is to use tag VDA 4902

Version 4 for all deliveries. 3.2 Format and Implementation The Supplier is expected to see to that all packaging ensures clear identification and is barcode compatible (Code 39) in accordance with VDA Recommendation 4902 (Version 4). There are two formats for packaging.

• Format 210 mm X 148mm

• Format 210mm X 74mm (VDA-KLT Label) The format 210mm X 148mm is used with GLT (skeleton containers, closed plastic boxes) for loading units. 210 X 74mm is used for labelling KLT boxes. The formal and structural composition is in accordance with VDA Recommendation. The VDA recommendation guidelines for format, labelling and barcode are to be followed. The data content and data field of the goods tag are assessed provided these do not comply with the data required by the supplier. The goods tag information has to be in accordance with the delivery note.

3.2.1 Sample VDA Label Format 210 mm X 148 mm

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3.2.2 Sample VDA Label Format 210 mm X 74 mm (KLT-Label)

3.2.3 Overview Data Element VDA-KLT Labelling

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3.2.4 Goods Tag Instructions VDA goods tag must be affixed to every container and single packaging. As a matter of principle, only one goods tag VDA 4902 is allowed per box / container. Due to automatic material flow, all external objects, e.g. labels, cables, cords, covers etc., which are on the outer packaging, must be removed by Supplier before shipment to Vaillant Group. The goods tag must be read easily. The VDA document must be affixed in a proper way and placed in the bag. It is not permitted to directly affix the goods tag to the box / container without bag and on top edges. For loading and unloading it must be sure that the label is not damaged or removed. Vaillant Group shall be entitled to charge the Supplier with additional costs if goods tag / labels are incorrectly and / or incompletely filled-in or unreadable.

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If several packing units (boxes / KLTs) are compiled into one load unit, a “master” label will have to be

affixed to the load unit. This shall provide precise information regarding the content of the load unit. Different materials, batches or change status may not be compiled in one load unit.

4 Shipping Documents The supplier provides the necessary accompanying documents for transport according to agreed terms of delivery. A delivery note that contains the following information and complies with DIN 4991 / 4994 must be included in every delivery.

• Purchase order number

• Delivery note number

• SUPPLIER number

• Part number including description, MR index, scheduling agreement

• Batch number

• Quantity per container

• Quantity of packaging units / containers

• Material number of packaging (for returnable packaging)

• Gross weight, net weight

• Delivery address Delivery notes without the data listed above cannot be processed by Vaillant Group and result in extra work for incoming goods. Vaillant Group will charge the Supplier with the costs incurred for extra processing. Furthermore, a bill of lading must accompany any transport of goods. The bill of lading must include all required information, in particular: (1) Place and date of issue (2) Name and address of the sender (3) Name and address of the carrier (4) Place and date of goods received and the Designated place of delivery (5) Name and address of recipient and any Registration address (6) Usual name of the type of goods and method of packaging. However, dangerous goods must

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comply with Dangerous Goods Regulations, with correct description In case further information is required under the law applicable in the country where the receiving Vaillant Group plant is located, such further information must also be included. Deliveries from non-EU countries must include a customs clearance form and stamp from a European customs officer. If this is not in the language of the country where the receiving Vaillant Group plant is located then English is required. National deliveries: no original invoices with delivery documents. Original invoices must always be sent to the Accounting Department at Vaillant Group. International deliveries (no free trade in goods): the original commercial invoice and certificate of origin must be included with the delivery documents. If necessary, the export declaration must be completed in advance by the pertinent customs office at the place of residence. (Goods value >6.000€) If there are any transport damages or insufficient packaging, the shipping documents of the transport provider will be marked as “conditional acceptance” and a claim will be sent to the transport provider and material supplier.

5 Claim A logistics query is triggered by the Supplier which ultimately disrupts Vaillant Group processes. All logistics queries are recorded (see Appendix 2), the expenses and evaluation are incorporated in future logistics assessments. In case of failure to comply with the requirements laid down in this Supplier Logistics Handbook listed and/or with site-specific rules, Vaillant Group has the right to refuse the shipment and / or claim any additional costs incurred thereby (e.g. storage, repackaging, disposal, packaging material reduction, increased handling costs, cost of tape down, etc.). Furthermore, Vaillant Group is entitled to claim a lump sum reimbursement of expenses of 100.00 € per each justified logistics claim. The Supplier is entitled to prove that no expenses have incurred or that the incurred expenses are substantially lower than said lump sum. Further claims of Vaillant Group shall remain unaffected. In the case of a query, the logistics Supplier will be informed promptly and asked to analyse the type of failure and to take action. This is in accordance with Vaillant Group’s 8D report. The document can be requested from Vaillant Group. A logistics supplier self-audit is required. Vaillant Group reserves the right to carry out a logistics audit (*) at the supplier.

* Logistics Audit is about packaging standard implementation within the Supplier

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Abbreviations – Definition- Links

Appendix 2 categories / subcategories of Logistics Queries Quantitative differences (MD): - Deviation of delivery note regarding delivered quantity: over delivery - Deviation of delivery note regarding delivered quantity: under delivery Shipping documents (LP): - LuT data (EDI) is not transmitted - Incorrect / Missing delivery note information - Papers incomplete / missing - Differences in LuT and shipping paper information Packaging (VP): - Barcode /Pack unit errors - Incorrect labelling on packing unit - Wrong, missing goods tag - Damaged products - Damaged and soiled transport containers / packaging - Wrong packaging / transport Wrong delivery (SO): - Wrong customer unloading point - Delivery intended for other customers - Mixed delivery - Delivered wrong product Rescheduling (change of line / equipment) (UP) Downtime of line / equipment with RB (SB) Downtime of customer (SK)

Attached links to the VDA 4902 tag.

http://www.vda.de/en/publikationen/publikationen_downloads/detail.php?id=189

General information

http://www.vda.de/de/publikationen/publikationen_downloads/detail.php?id=69