Vendor Compliance. General Requirements

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1 General Requirements Schedule of Current Charges Kohl s compliance policy promotes the cost-effective flow of merchandise to Kohl s stores. Kohl s may at its sole discretion assess handling charges for non-conformity with any of the parameters outlined on See schedule of issues and fees below. Kohl s reserves the right to escalate fees for repeat offenders to offset incurred expenses at any time. Bill of Lading Bill of Lading No received from vendor for domestic shipment (pack slips or manual receiving were used instead) /856 was not received prior to 6:00 a.m. CST the next day after shipment release was not received prior to arrival of merchandise at Kohl's distribution center. This is an additional charge No received from vendor for domestic shipment after 1 business day and every business day thereafter until or pack slip is received or manually receiving performed Incorrect data within the transmission causing delays or rejections for any PO shipment type Shipment utilized more than one trailer and did not have an created specific to each trailer Incorrect vendor ship date within vendor's data Incorrect vendor vessel departure date within vendor s Landed data Incorrect quantities and/or duplicate transmissions on Landed orders Landed not received from vendor prior to 11:59 p.m. CST 7 days prior to PO start ship No received from vendor for landed shipment or missing, incorrect or unusable carton labels/data No received from vendor for Import shipment or missing, incorrect or unusable carton labels/data No received from vendor for direct to store shipments Failure to complete the Landed testing & on-boarding process within 90 days from EDI notice (see Landed Shipment Requirements at No Bill of Lading received at Kohl's Central Order Control for prepaid "live" unload shipments Missing or incorrect information (Examples: PO, CAN, etc.) on bill of lading (including sub bills) for each shipment $300 per PO shipment $300 per PO shipment $1,000 per PO shipment $300 per PO shipment $300 per PO shipment plus full cost of transportation to move goods to correct destination plus $150 per container shipment plus $1.00 per carton $150 per container shipment plus $1.00 per carton $150 per PO plus $1.00 per carton $500 per PO shipment $250 per PO shipment Page 1

2 Cartons packed with more than one SKU, style or size unless pack-by-store or multi-sku pre-pack shipment Carton outside of weight and dimension requirements or Team Lift label not applied on cartons over 50 pounds Cartons bound by any type of strapping plus $.40 per unit $1.20 per unit $2.00 per carton $2.00 per carton Merchandise not packed as ordered on Kohl's purchase order Failure to meet poly bag requirements for internal packaging. Requirements include, but are not limited to: material, child safety warning, size, etc. Taping, rubber banding, or tying hangers together including hangers bound to cardboard sleeves with non-approved Kohl s material Failure to comply with Kohl s external carton requirements causing additional handling Failure to use the smallest carton possible to fit product and meet Kohl s carton requirements one or more cartons filled less than 50% - No charge if a carton is less than 50% filled while using Kohl s smallest allowable carton dimensions Cartons are missing or include incorrect information plus $0.20 per unit $0.60 per unit $500 per PO shipment TMS Helpline TMS Helpline TMS Helpline Floor.Ready@kohls.com Missing Empty verbiage printed or written on empty shoe box carton when used to fill space in outer carton Requests for additional copies of violation notifications, statements, or excessive evidence requests Chargeback disputed and denied Repeated request for reversal/re-dispute Incorrect method to submit request of copies and/or dispute chargebacks Additional phone calls or s into TMS Helpline that exceeds two combined per month Kohl s initiates phone call or due to vendor incomplete or missing information on TMS routing and/or forms Repeated request for training on processes that have posted best practices on Repeated request for information that is posted on plus $1.00 per shoe box carton $25 per request $50 per request $100 per request $25 per request (effective June 15, (effective June 15, Direct Shipping Unit cancellation (After a 1% allowance) 20% of total cancelled unit cost receipts* (*Average unit cost x total units cancelled = total cancelled unit cost) $75 per occurrence (effective June 15, $75 per occurrence (effective June 15, Page 2

3 Direct Shipping Delinquent order 20% of total delinquent order cost receipts** 5% added on top of the initial 20% for each day delinquent (**Average order cost x total orders delinquent = total delinquent order cost) Direct Shipping Failed secret shopper test Each vendor tested once per year If failed, vendor is tested again If second test passes, no charge issued If failed again, a one time $1,000 fee is charged Direct Shipping In-Stock rate (below 98%) 0.5% of monthly Direct Ship (DS) cost receipts Monthly review allows subjectivity and possible exemptions Failure to package each item in Kohl's specified poly bag (see appendix for more information) Failure to package each item in Kohl's specified poly bag with small gum retail ticket applied to each poly bag and Kohl's retail ticket attached to each product UPC barcode on small gum label attached to each poly bag does not scan Apparel shipment on separate e-commerce order arrives with hangers and/or EAS tags applied Poly bag does not have a perforation (see Shipment Packing, page 3) Product arrives with packing peanuts in the cartons (see Shipment Packing, page 3) EAS tag is missing (for product required to ship with an EAS tag - see appendices) Sewn-in UPC is missing or is incorrect (see Requirements) $1.00 per unit $0.40 per unit $0.40 per unit $1.00 per unit Improperly placed GS1-128 label No GS1-128 labels on cartons or GS1-128 labels have missing, incorrect, or illegible human readable SSCC, store number, or purchase order number GS1-128 serial ship bar code is not scannable Note: Charges will be assessed when 11 or more labels are found in error plus $3.00 per carton $3.00 per unit (effective June 15, $0.60 per unit (effective June 15, $0.60 per unit (effective June 15, $3.00 per unit (effective June 15, $3.00 per carton (effective June 15, $3.00 per carton $2.00 per carton (effective June 1, $6.00 per carton (effective June 15, Page 3

4 GS1-128 label serial ship bar code is not scannable due to damage to the label plus $3.00 per carton Note: Charges will be assessed when 50 or more labels are found in error Each serial shipping container code was not unique GS1-128 label does not match the Kohl's PO number or carton contents: incorrect-style number, total quantity, size, color, pre-pack or contents Incorrect hanger style, size, color (see separate hanger rule and description for adult black hanger conversion), hook, or incorrect crown sizer Hanging merchandise received without a hanger or crown sizer plus $0.20 per unit plus $1.25 per unit Crown sizers arrive with a poor fit on hanger $500 per PO shipment $2.00 per carton (effective June 1, $0.60 per unit Misdirected Freight New Vendor On Boarding Shipments identified with counterfeit / non- Mainetti hangers or crown sizers on Kohl s apparel, where applicable (Mainetti is the exclusive supplier for Kohl s for the following: crown sizers, private brands worldwide for adult hangers, sweater and outerwear hangers for all Kohl s vendors) Failure to ship on black adult hangers after the adult black hanger conversion end date (see black adult hanger details at Merchandise shipped to incorrect distribution center or data associated with incorrect distribution center transmitted Failure to comply with the vendor on-boarding process within 90 days (see new vendor on boarding form in the Forms section at $5,000 per occurrence $3,000 per PO shipment plus $3.00 per carton $6.00 per carton (effective June 15, $500 $500 for every 30 days that the process is not completed Shipment Non- Conformity Any non-conformity to the vendor partnership requirements that causes processing delays at Kohl s sole discretion plus additional distribution center expenses incurred Returns Ticketing Over shipments, unauthorized shipments, non-conforming or defective goods will be returned to the vendor at no risk to Kohl's Incorrect tickets, missing tickets, incorrectly placed tickets, illegible / incorrect / unreadable UPC information on tickets, including integrated size strips tickets, missing/incorrect shoe box ID or missing/incorrect retail price on tickets, including integrated size strips tickets $150 or 5% of the cost of goods, whichever is higher, not to exceed $300 on Purchase Order lines valued at $50.00 or more plus $0.20 per unit $0.60 per unit Page 4

5 Failure to have Landed containers for nonsets $300 per PO shipment released and available for pickup by purchase order start ship date for any reason (Examples not limited to: containers not available, not released from port, missing D.O. or relevant paperwork, custom hold delays, vessel delays, etc.) Failure to have Landed containers for $500 per PO shipment T&T/seasonal/launch sets released and available for pickup by purchase order start ship date for any reason (Examples not limited to: containers not available, not released from port, missing D.O. or relevant paperwork, custom hold delays, vessel delays, etc.) Failure to pack and load any shipment to Kohl s by purchase order and destination sequence $300 per PO shipment $500 per PO shipment plus $3.00 per carton Truckload shipments tendered to Kohl's on pallets rather than floor loaded $150 per shipment plus $50 per pallet Failure to use carrier specified by Kohl's TMS Failure to consolidate same/consecutive day shipments per distribution center for LTL transportation for both loads (Extended cancel date does not exempt freight movements plus from Failure to consolidate same day shipments to a consolidator for multiple Kohl's distribution centers on a single Master Bill of Lading. (Utilizing only one carrier PRO number for entire freight movement.) (Extended cancel date does not exempt from Failure to ship collect when directed to by Kohl s routing guide / TMS instructions Disruption of a shipment for any reason. (Examples: inaccuracy of shipment information, late readiness, over-shipping, poor loading techniques, failure to load any cartons of a CAN to the assigned load, trucks ordered not used, etc.) cost of moving other vendor's freight if a multi-stop is disrupted plus applicable fees Commercial zone program pickup All accessorial charges incurred from the pick-up or loading of merchandise for any shipment. (Examples: wait time, load & count, cancelled loads, etc.) Accessorial charge by carrier plus applicable fees Landed loose freight consolidation pick-up Full pickup, consolidation, and Failure to provide Chassis for landed shipments Full rental, consolidation, and Page 5

6 Actual ship date is past original cancel date (Shipments routed on-time are exempt from this charge; extended cancel date does not exempt from this charge; prepaid shipments required to arrive by original cancel date) 10% of PO shipment cost plus TMS -TMS -TMS -TMS Back order freight (Extended cancel date does not exempt from Additional insurance for parcel shipments as requested by vendor partners Merchandise shipped to wrong DC (includes pre-paid and collect shipments) Failure to submit new or additional ship point locations for TMS system fifteen (15) business days prior to purchase order start ship date Failure to confirm routing by 11:59 p.m. CST the day prior to the PO start ship date Failure to have product available to ship as entered in TMS for multi-stop shipment Failure to have product available to ship as entered in TMS for full truckload shipment Inaccurate weight, cube or cartons entered into TMS causing trailer fill loss greater than 10% Failure to schedule shipment pick-up via the Kohl's TMS Web site / shipping product without requesting routing / failing to ship routed product ( Faxing of routing or additional routing request due to user error or other user issues. (Examples: overflow, no units, etc.) Failure to enter routing requests on the Kohl's TMS website by the Wednesday prior to the PO start ship date for Table & Tower sets Failure to include routing request in one confirmation per week (except for POs released to vendors five calendars days or less to the PO start ship date, POs that have incurred late routing charges, POs part of Logistics deemed Table & Tower sets) transportation after the first movement plus the additional insurance $300 per PO shipment $500 per PO shipment $250 per PO shipment Freight cost based on trailer fill loss percentage plus $300 per PO shipment Vendor Accuracy Units checked due to vendor accuracy issues (Examples: overages, shortages, substitutions, etc.) plus $0.20 per unit $0.60 per unit Page 6

7 TRANSPORTATION COMPLIANCE NOTIFICATIONS Notification of Compliance Charges: Vendors may receive charge notifications through Kohl s normal compliance process that were previously sent via post-audit notifications. The charge notifications are related to the violations listed below: o Late shipments o Failure to consolidate o Consecutive day shipments o Back order freight Kohl s intent is to minimize, but not completely eliminate post-audit detections through this process. Typical notifications will be transmitted between 60 and 90 days of violation event. Vendors will continue to see postaudit notifications / detections COMPLIANCE COMMUNICATION INFORMATION Disputes must be submitted within 60 days of the detection date Request for Statement, Notification, and Evidence should be submitted within 10 days of detection date The compliance forms below are found at under Logistics & Routing: Forms Kohl s Charge Dispute form Kohl s Request for: Statement, Notification, or Evidence form Electronic Communication Method Instructions: Please send any of the forms listed above as an attachment by following the below directions: 1. Right click on Download 2. Click on Save Target As 3. Save to your desktop 4. Click on the save button 5. Click on open 6. Enter all the necessary information in the form and save it again, then close the form 7. Create an message addressed to: Vendor.Compliance@kohls.com 8. Include your company name and violation number in subject field 9. Attach the completed form to the and send Page 7