Supply Chain - LowesLink

1 Supply ChainUpdated February 2017 2014 Lowe rights , intended for internal distribution Vendor InformationLowe's Companies, Inc. | Confidential Maintained by SC Projects TeamContent Supply Chain Overview and Team Structure Impact of Vendor Data Distribution Network Sampling, Packaging and Palletization Transportation and Shipping Requirements Vendor Compliance Policy Vendor Data Options2 New Vendor OnboardingWhat is Logistics?The detailed coordination of a complex operation involving many people, facilities, and at Lowe s our logistics are very complex given that we are the: 8th largest US retailer 5th largest importer into the US 21st largest retailer in the world Ranked 50th on the Fortune 500 list3 Supply Chain Team Structure4 Supply Chain Materials5 Supply Chain Documents can be found by logging into you LowesLink account and selecting the Supply Chain Information section.

2 Supply Chain Materials6 Once you have selected the Supply Chain Information page, you will find documents split into the following sections. Additional information about each of the topics throughout the presentation can be found in the Supply Chain Information page. Content Supply Chain Overview and Team Structure Impact of Vendor Data Distribution Network Sampling, Packaging and Palletization Transportation and Shipping Requirements Vendor Compliance Policy Vendor Data Options7 New Vendor OnboardingVendor Data Information Used Includes: Dimensions Weights Quantities Minimum Order Multiple Lead Time Data Used to: Run channel analysis Cube out trucks (weight vs.)

3 Volume) Ensure accurate ordering8It is extremely important that the correct information is provided during the Item Setup Process Lowe s Replenishment System builds Truckload Volume orders in accordance with cubic volume ( cube ) and/or weight-based constraints. Lowe s Maximum Weight (Maximum per Shipment is 44,000 lbs) Cubic Volume (Lowe s goal is 3000 cube per trailer)Cube and Weight Based Constraints9 Impact of Incorrect Item Dimensions10 Incorrect sample item -33 x 33 x 33 1 inch difference per side 114 items per truckload (57 less) 2,371 cube per truckload (872 less) Assuming $1,500/TL = $ freight ($ more) Correct sample item -32 x 32 x 32 171 items per truckload (TL) 3,243 cube per truckload (TL) Assuming $1,500/TL = $ freightLowe s calculates margin based on landed cost which includes freight.

4 In this example, Lowe s is losing $ in margin per item due to invalid dimension of Incorrect Item Dimensions Inaccurate dimensional data can result in incorrectly setting up an item in the DC network. Failure to correctly communicate packaging and dimensional changes can lead to larger issues Accurate pallet data is needed to ensure efficient shipping & of Incorrect Supply Chain DataImproper Barcodes can Result in: Receiving discrepancies Imbalance of inventory levels at both DC s & stores Delayed receiving times Vendor deductionsImproper Carton Labelling &Packaging can Result in: Safety hazards Product damage12 Content Supply Chain Overview and Team Structure Impact of Vendor Data Distribution Network Sampling, Packaging and Palletization Transportation and Shipping Requirements Vendor Compliance Policy Vendor Data Options13 New Vendor OnboardingDistribution Network15 Regional Distribution Centers (RDC)15 Flatbed Distribution Centers (FDC)4 Coastal Holding Centers(CHF)3 Transload Centers (TDC)3 Millwork Facilities1 Consolidation Facility (TRAP)1 Internet Facility (907)

5 76 Flexible Fulfillment LocationsAnd 1,700 + Stores In the United StatesRegional Distribution Center (RDC) & Transload (TDC) Locations15 Distribution Center Visit Allows vendors to see operations, receiving, and handling of products Visits are capped at 8 logistics team members Vendors can visit any of 15 Distribution Centers Contact your Inventory Planner for additional information 16 Stock Product is shipped to a Lowe s RDC and stored in a location in the facility When demand exists for the product at the store, it is picked from the storage location and shipped from the RDC to a Lowe s store 17 Flow TypesStock Flow RDC On Hand Safety StockStoreThe following pages will provide information about the basic ways that products can follow through the distribution network.

6 Flow Types100% Cross Dock (1XD) Product is not stored in a location in the facility. It is ordered based on demand at the store level. Upon arrival at the RDC, it is received and then immediately moved via conveyor, forklift, or squeeze clamp truck to the outbound trailer dock door. It is then shipped from the RDC to a Lowe s store. Vendor Prepared Cross Dock (VPXD) Individual Store Purchase Orders grouped together for shipment in Truckload volume to the Lowe s RDC that supports those stores. VPXD orders are not received at the RDC . Upon arrival at the RDC, orders are immediately processed for shipment to the Lowe s store 18 Cross Dock FlowRDC Cross Dock ONLY NO Safety StockStoreThe following pages will provide information about the basic ways that products can follow through the distribution network.

7 Flow TypesCoastal Holding Receives product mostly from import vendors. Product flows through both the Coastal Holding and RDC facilities Product is stored at Coastal Holding until demand exists at the store Holding FlowCostal Holding On Hand Cross Dock RDC Cross Dock ONLY NO Safety StockStoreThe following pages will provide information about the basic ways that products can follow through the distribution network. Flow TypesStore Direct Flow Some programs that do not flow through a Lowe s Distribution Center; instead they ship directly from the vendor to a Lowe s store based on store demand.

8 This is known as Store Direct flow. 20 Store Direct FlowStoreThe following pages will provide information about the basic ways that products can follow through the distribution network. Content Supply Chain Overview and Team Structure Impact of Vendor Data Distribution Network Sampling, Packaging and Palletization Transportation and Shipping Requirements Vendor Compliance Policy Vendor Data Options21 New Vendor OnboardingCustomer Focused Delivery (CFD) Goal: Deliver perfect product to the stores that is safe and easy to unload: Eliminate product damage found on store shelves Ensure delivery of product that is safe and easy to unload at stores Improve profit margin by eliminating inefficiencies within Supply Chain and/or Store processes Maintain and improve Lowe's brand image22 Sampling Process All new and existing items with changes must be sampled by Lowe s Sampling Room will Verify: Scanable and Correct Barcodes Packaging Dimensions Packaging Requirements Met Be sure to include the Sample Purchase Order Placard when shipped.

9 23 Example Packaging Guidelines -RDCs Carton size should be optimized for full utilization Cartons should be sealed with glue or tape Banding is not permitted on conveyable Moisture sensitive products require the use of small desiccants made of silica gel or clay Special handling icons are required on cartons with certain attributes24 Palletization Best Practices Quality Requirements for Pallets Grade A or Grade B standard GMA Hardwood pallets Maximum allowable overhang is 1 on either side of 40 side Pallet should be delivered with shrink wrap intact and wrapped to pallet Stock items MUST always be unitized together on apallet Affix the GS1-128 label to the upper right corner on the front and back of the pallet25 GS1-128 GS1-128 Palletization Best PracticesAcceptable 26 Unacceptable Content Supply Chain Overview and Team Structure Impact of Vendor Data Distribution Network Sampling, Packaging and Palletization Transportation and Shipping Requirements Vendor Compliance Policy Vendor Data Options27 Lowe s requires the following documentation to be included during each shipment.

10 Advanced Ship Notice (ASN) ASNs must be sent by vendors at time of shipment VICS Bill-of Lading The VICS Bill of Lading standard format and documentation may be found on LowesLink Packing Slip Lowe s requires a legible, machine printed packing slip for all Purchase Orders (both Store and RDC shipments). If there are multiple Purchase Orders in a shipment, each PO must have a separate packing slip. Shipping Documents Securing the Product for Shipping Vendors are responsible for properly securing product to travel via any mode and arrive without damage. Vendors are responsible for the cost and application of any load bracing devices used on TL shipments including: Load bars Air bags Load latches Drivers do not carry load bars and are not required to assist29 Transportation Truckload (TL) ShipmentsExceed 18,000 lbs.