Microsoft Word - Key Vendor Partner Letter Dec 2005.doc

To get copies of Medline’s

Vendor Routing Guide and

Instructions:

1. Go to www.medline.com

2. Click on the Resources link at the top center of the page

3. Click on the General Documents link on the left side

4. Under Shipping Instructions and Procedures, select:

a. Vendor Routing Guide

for carrier selection and contact.

b. Vendor Routing Guide Instructions for information pertaining to packing slips,

procedures, weight guidelines

(helpful hint – to save the file to your computer, RIGHT CLICK on the link and choose option “save target

as”. These links require Microsoft Excel and Adobe Acrobat Reader)

OR:

• Use the direct link http://www.medline.com/corporatepages/documentation.html and

choose the desired form as shown above in step #4.

NOTE: this document is titled Key Vendor Program and is available on the same General

Documents page along with the Vendor Routing Guide and Instructions files.

MEDLINE INDUSTRIES, INC.

One Medline Place Mundelein, Illinois 60060-4486

1-847-949-5500 Toll Free 1-800-MEDLINE

December 31, 2005

Dear Vendor Partner:

Medline, like many companies in ours and other industries, is

beginning to standardize our approach to handling our inbound

activity. We have found that the variety of situations presenting

themselves to our people on our receiving docks is making things

more difficult and expensive than we can afford any more. Perhaps

you have experienced some of our receiving pain in the form of late or

short payments, and, if unjustified, we certainly apologize for those

problems.

We have decided to attack this problem in an attempt to make it

easier and faster to perform, and also to set the stage for better

further processing as the goods move through our distribution centers.

To that end, we have established the Medline Key Vendor

Performance Program. Our goals and expectations with this

program are to have the mutually beneficial outcome of taking costs

out of both of our supply chains. In order for both of us to remain

competitive in our market places we must plug the cost drains such as

damaged goods, late/missed deliveries, extended driver waiting time,

rework, late payments, missed deadlines and the many other issues

that make our bottom lines suffer. Enclosed with this letter you find an

outline and description of the program.

We believe that the adherence to these expectations will make the

process run more smoothly for all, and we expect all our vendors to

comply with these standards beginning January 1, 2006.

As you will see when you review the program materials this initiative

will be ongoing for Medline and we will communicate results to you on

a routine basis. We began to monitor the various categories and

criteria in the fourth quarter of 2005.

Since we have received many requests like these from our customers,

we understand the seriousness of what we are asking, and we also

understand the cost implications, particularly as they reflect

themselves in transportation. Therefore, we want to remain practical,

and if you feel that either you or Medline will bear increased

transportation cost, not warranted by whatever labor efficiencies that

may accrue, we’d like you to discuss it with us through your particular

product manager. We will work with them to make sure we arrive at

the best course of action for all of us.

Finally, as has happened to us, we will be instituting a series of

charge-backs for serious and ongoing breaches of these requirements.

You will be notified when the problem occurs, and then will

automatically be debited upon payment of your invoice. Please take

this seriously. We need and expect your cooperation. If you have any

difficulties with any of what we are requesting, please discuss it with

your product manager quickly. Please review the attached description

of our program with your distribution staff.

Thanks in advance for your cooperation.

Sincerely,

Bill Abington

President of Operations

Medline Industries, Inc.

1 Medline Place

Mundelein, IL 60060

Cc:

Andy Stolarski Steve Brody

Sr. Vice President Vice President-Logistics

Medline Operations

David Lathrop

Vice President Inventory Management

Peter Saviola Ted Stoecker

Vice President Vice President

Medline Operations-East Medline Operations-West

Warren Schelling Wes Swearingin

Vice President Vice President

Medline Operations & Receiving Medline Operations-Midwest

MEDLINE INDUSTRIES, INC.

One Medline Place Mundelein, Illinois 60060-4486

1-847-949-5500 Toll Free 1-800-MEDLINE

Medline Key Vendor Performance Program

Introduction

We believe that for our mutual success going forward we

must work together to identify opportunities to decrease

costs and improve efficiencies in our supply chain. To that

end, in our Key Vendor Performance Program, we plan to

measure and communicate those opportunities.

We recognize that building and maintaining relationships

with our key vendors is one of the most important factors to

our success. We expect our partner vendors to help Medline

by following our receiving, transportation, packaging and

labeling policies and initiatives.

Medline Key Vendor Performance Program Criteria,

Performance Goals & Reporting

Phase 1:

We have developed initial criteria and performance goals for

four major categories: Packing List, Individual Product

Packaging, Receiving/Load Presentation and Transportation.

Listed below are the categories along with the respective

criteria we will be monitoring over time.

Packing List –

a. Must reference Medline Purchase Orders accurately

b. Must indicate Quantity Ordered, Quantity shipped, and

Balance Due for each item and each PO

c. Must reference Medline Stock Keeping Numbers accurately

d. Must indicate total pieces contained in the shipment

e. Must indicate Date Shipped, Carrier, and Bill of Lading

number

Individual Product Packaging –

a. Must be strong enough to support its own weight when

stacked to 8 feet in height without buckling, crushing or

caving. Medline sends and receives many products through

UPS & FedEx and we require that the products you send us

be consistent with their guidelines.

b. Carton must be taped closed. Banding is not acceptable as

method for sealing individual cartons or packages.

c. Must be clearly labeled with Medline SKU #, Description, Lot

#, Serial #, Expiration Date and Quantity; in Medline Label

Format; on all four sides of the carton.

d. If private labeled for Medline, carton must be free of all

references to the manufacturer--

e. If products are over-packed for transport, over-pack carton

must be labeled with “MASTER CARTON: MUST BE

BROKEN DOWN BEFORE SHIPPING”.

Receiving/Load Presentation –

a. Product must be delivered on standard 40 x 48 GMA wooden

pallet, #2 grade or higher. Height should be 75” or less

(including pallet) for LTL delivery. Upon prior agreement

pallets in full truck loads may be taller to maximize trailer

utilization.

b. All pallets must be shrink wrapped for stability.

c. Stacking pattern must provide for no overhang beyond the

edges of the pallet.

d. Like SKU’s must be consolidated.

e. Packing List must be clearly displayed in a prominent position

in the load.

f. Load bars or airbags must be used to stabilize any load likely

to shift in transit

g. Inbound ASN’s (Inbound 856 Electronic Transmission) must

be initiated when shipment is in route.

Transportation –

a. If Medline is responsible for the cost of freight, the product

must move as directed on the Medline Routing Guide.

b. A delivery appointment must be requested for all non-parcel

deliveries. It is expected that all delivery appointments will

be kept and on time. We deem deliveries not to the receiving

dock within one hour of the scheduled appointment time late.

c. All full truckloads must be sealed and the seal number must

be noted on the bill of lading and transferred to the delivery

receipt

For Phase 1 of our initial monitoring program we have

chosen only

eight of these criteria in three categories;

Receiving, Packaging and Transportation. These categories

are:

1. Accuracy of Shipment – does it match the packing list?

2. Delivery Appointments Made and Kept

3. Packing list accompanying shipment

4. Product delivered on Medline sized pallet

5. Product in good condition

6. Product cartons sealed correctly

7. Product correctly labeled

8. Medline Routing Guide followed

Phase 1 monitoring will begin January 1, 2006; reports will

be issued by April 30

Medline’s intention is to initiate and maintain dialogue so we

can achieve our goals.

Phase 2:

Upon receipt and review of the Performance Report all non-

compliant vendors will be asked to improve their

performance to meet Medline’s expectations. Non-

compliance could result in the following penalties:

Packing List – If the packing list is missing or omits of

any information described earlier – The penalty will be

$50 per Occurrence

Individual Product Packaging – If we judge product to

be unworthy of resale, the penalty will be the Cost of

any Lost Product & Repackaging costs for any

damaged product.

Receiving/Load Presentation – If the product is

delivered without pallets and it has not been approved

in advance, the penalty will be $5.00/Pallet Medline

provides plus the cost of the labor to stack that

product. If the load is stacked poorly, the penalty will

be the cost of Labor Associated with Restacking

@$5.00/Pallet or $150.00/ Full Truck Load

Transportation –If delivery appointments are missed

or late $50 per Occurrence. If our Routing Guide is

not followed and we are billed additional freight, we

will recover that additional freight plus $50.

The penalties indicated above will be CHARGED BACK TO

YOU directly in Medline’s account payable process.

Any disputes on charge backs must be resolved within six

months of the charge back date. Any charge back not

questioned within six months will stand as filed with no

further review.

Summary:

Medline values our relationship with your company and our

goal is to remove costs from both of our organizations’

supply chains. As we work together we can save in areas

such as reduced trailer unload times, reduced delivery driver

waiting time, decreased paper work and reduced errors.

Those are just a few examples that can benefit both our

organizations.

It is imperative that we communicate to you we are

initiating this program to change behavior and improve

operations; not to be vindictive or petty. Our goal is the

same as yours, to get the correct product, to the correct

customer, at the correct time in the condition expected

when the order was placed.

We look forward to working with you.

All information concerning this program and any updates can

be found on our Website in the Resources – General

Documents section, along with the Medline Routing Guide:

www.medline.com/corporatepages/documentation.html

For further information please feel free to contact your

Medline Product Manager. You may also e-mail comments &

questions to:

[email protected]

MEDLINE INDUSTRIES, INC.

One Medline Place 1-847-949-5500

Mundelein, Illinois 60060-4486 Toll Free 1-800-MEDLINE

Propriatary & Confidential

Key Vendor Performance Report

Review Period: January thru March 2006

Vendor: XXXXXXXX

Number of Shipments:

Problem Tickets:

Category: Receiving Phase 1

Standard: Result: Definitions:

Criteria: Delivery Appointment Kept 100%

Load at Receiving Dock Within 1 Hour of Appointment

Packing List Included 100%

Packing List w/Delivery & Prominently Displayed

Piece Count Matches Packing

List

100%

Order Complete.

Freight Product Delivered on

Medline Specified Pallet

100%

GMA 40 x 48 Wooden Pallet #2 Or Higher

Category: Packaging

Product Delivered in Saleable

Condition

100% Product Not Damaged.

Carton Properly Sealed 100% Carton Must be Taped Closed.

Package Clearly & Correctly Labeled 100%

Clearly Labeled w/Medline SKU #, Description, Lot #, Serial #,

Expiration Date.

Category: Transportation

Medline Routing Guide Used 100% Routing Guide on Medline.com

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