SECTION 9 QUALITY STANDARDS

Transcription

1 SECTION 9 QUALITY STANDARDS

2 FABRIC INSPECTION PROCEDURE The request or decision to inspect a particular lot of fabric will be generated from the Fabric Purchasing Department. It will be based on the following criteria: First time Resource Prior history of deficient fabric quality from the supplier Anticipation of possible fabric quality problems This procedure will be used for all Destination Maternity Piece Goods received. Responsibility for the process will come from the Raw Materials area. The system that will be used is the Four-point system. 1. Amount to inspect: inspect at least ten percent of the yardage per shipment. 2. Selection of rolls: randomly select the rolls to be inspected after the initial receiving procedure has been satisfied. 3. Defect classification: The four-point system will classify as follows: Size of Defect Penalty 3 inches or less 1 point Over 3 but less than 6 inches 2 points Over 6 but less than 9 inches 3 points Over 9 inches 4 points The length of the defect is used to determine the penalty point. Only major defects are considered (a major defect would be any and all defects that, if found in a finished garment, would classify it as a second). No penalty points are recorded or assigned for minor defects. 4. Acceptance Point Count: For all Divisions except Pea in the Pod Collection and Pea in the Pod. 30 Points per hundred yards will be deemed as an acceptable defect rate. For Pea in the Pod Collection and Pea in the Pod piece goods that acceptable point level will be Acceptance Criteria: This will be established by projecting the total defects from the data found during the inspection process. This is equal to the total penalty point, divided by the number of yards inspected & multiplied by one hundred. The projected point value must be below the Acceptance Point Count for each Division if the lot of fabric is to be accepted. 6. Reject Fabric Lots: If the shipment fails the initial inspection, a second ten percent inspection will take place. The Fabric Purchasing Department must be notified of the failed inspection. They will then contact the vendor prior to this second inspection. This will allow the vendor to be present for the second inspection. Inspection Procedure: This procedure indicates the steps required for the inspector. 1. Fabric Purchasing must identify the face 2. Select the rolls 3. Place the fabric on the inspection machine 4. Cut a swatch at least 6 inches across the length of the fabric 5. Determine the amount of rolls to inspect 6. Fabric Purchasing must identify the face 7. Use this swatch during the inspection process to check for shading (either side to side or end to end) 8. Begin the inspection process of the roll at a speed slow enough that the inspector can find any and all major defects 9. Verify yardage against what is stated on the roll 10. Mark all defects on the selvage with a swift tack gun and record the data Section 9 Quality, Page 2

3 RECOMMENDED GARMENT LABELING AND PACKAGING PROCEDURES All labels and price tickets should be checked as part of the incoming trim Quality Control system when they arrive into the factory. A random sampling of all SKU s of bar coded labels and tickets should be scanned. Main and care labels should be counted out and placed in a small poly bag and attached to the individual bundles as the cut pieces are sent to the line. Operators attaching labels should not have boxes of labels at their work-stations, as it is easy to mix them up resulting in the wrong label in the garment. If a size label has to be hung from the main label, it should be prepped prior to the garments being separated in bundles. Washed garments may require a temporary label to identify the garment until after washing. When the garments get to the end of line QC station, where the garments are checked 100% for open seams etc, the inspector must check the care label of every garment to the main label to make sure the sizes match. At this point, since every garment is checked, there is no reason any garment should get out of the line with the main and care labels not matching 100% correctly. DMC care labels indicate the size, style number, and the color code. In addition to maintaining style and size integrity, the color code must also match. After all manufacturing processes, including pressing and washing, the garments should be separated by size for all remaining work. When the garments get to packing, they should be separated by size and kept separated. People, who tag, fold and place the garments in poly bags should only work on one size at a time so there is not chance for the garments to get mixed up. The person adding the price ticket should check the main label for the size on every garment. No person should have more than one size garment or more than one size of price ticket available to that person. After the garment is bagged, the sizes should be kept in separate bins or baskets with the size clearly marked. The carton packer should pack from the marked bins directly to the export carton. The cartons of available units for one size should be completed before another size is started. The size does not have to be complete for the order, but that is preferable. The packer counts the units placed in each carton. Another person should check the count, spot check the sizes of a few pieces and seal the carton. This should be done promptly. Packed cartons should not be left on the floor for more than a few minutes before being sealed. The person checking the count and sealing the carton should initial the inside flap of the carton. The size and count should be noted on the carton if the carton labels are to be added later. If the labels are available, they should be added when the carton is sealed. An auditor should open randomly selected cartons according to the AQL chart. A percentage of the garments should be checked for quality and every unit should be checked for labeling. The carton count should be checked. The auditor should initial the carton on the inside flap. If any count or label errors are found, the shipment should be checked. Whenever an auditor finds an error, a record should be kept of the person sealing the carton. The auditor should not be part of the Packing Department. Auditors should report to upper management. If Destination Maternity finds a count or labeling discrepancy, DMC will process the chargeback and provide notice of issue. This will help determine if additional training is needed in the packing area. Please note an approval from the Technical Designer on the T.O.P care label, is only a VISUAL approval. We strongly suggest a corrective action as chargeback will escalate to non-compliance charge. The vendor is responsible for scanning the label and price ticket for accuracy of info. Any foreign objects found in a carton will result in a $ Charge Back, this includes but not limited to garbage or waste, rolls of tape food, cell phones, etc. In the case of a sharp or dangerous item found within the carton, the vendor will be responsible for all medical costs incurred as well as lost wages and possible disability of the DMC employee. Section 9 Quality, Page 3

4 If bugs, insects, or any other type of foreign matter is found in shipment the shipment could be cancelled at DMC discretion or sent for cleaning if deemed to be repaired. All charges will be at the responsibility of vendor. Due to our automated Distribution Center, the accuracy of the labeling and carton integrity is very important. There will be a chargeback for every incorrectly marked garment we find and a 100% inspection may be performed if errors are found. The requirement for accuracy is clearly stated. This system is being successfully utilized in factories all over the world with excellent results. Every step in this process is already being done to some degree in every factory. We have found this process to be effective. Individual circumstance may dictate slight modifications without negating the benefits. NECK SHAPER POLICY Section 9 Quality, Page 4

5 NECK SHAPERS NECK SHAPERS eliminate quality issues of misshapen and inconsistent neck shapes on our knit tee styles. They are used as a tool to control how neck shapes are pressed in production, and provide both vendors and in-house teams with a clear example of the correct neck shapes to be achieved in the production process. NOTE: Previously, neck shapers were provided by DMC to the vendors. Effective immediately, vendors will now be responsible for creating neck shapers, and submitting a hard copy of the neck shaper in size Medium, along with the TOP sample, to DMC for tech review and approval. Section 9 Quality, Page 5

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7 AVOIDING NEEDLE HOLES IN MATERNITY BELLIES Spandex quality sewing check: Upon receipt of spandex, check the quality. Cut a piece from the roll five to ten yards into it. Sew the fabric to a piece of denim on the same machine to be used in production. Remove the chain stitch and check for needle cuts. Old or poorly stored cotton spandex will become brittle and will needle cut easily. If the fabric is brittle, needle cuts will be obvious. Spandex spreading: Spread a maximum of 75 ply, fabric must be spread tension free. After spreading, cut the spread into smaller sections for relaxing. Fabric must sit for 24 hours before cutting. Check parts for spring back. Fabric can be pre-relaxed prior to spreading. Spandex cutting: Make sure all knives are sharp, if you use a dull blade it could cause pulls in the fabric. Making the Belly: Close the belly seam with a safety stitch. Use ball point needles when sewing this fabric. A chisel point needle will cut the yarn. Ball point needles should push the yarn aside and not cause cuts. Use the smallest needle size possible. You must also check and change the needle regularly to make sure they do not have any burs. Do NOT sharpen or buff the needle used in this operation. If you sharpen the needle, use it on another operation not sewing cotton spandex. SEWING MATERNITY BANDS Body Sewing: Sew the garment body and serge the seam to which the belly will be set to prevent fraying of the raw edge in the wash. The garment bodies must have size / lot identification in them before sending them out to wash. Attach the belly after wash, then attach main and care labels. Setting the belly: After wash, attach the belly to the garment body. You must use ball point needles when sewing this fabric. A chisel point needle will cut the yarn. Ball point needles should push the yarn aside and not cause cuts. Use the smallest needle size possible. You must also check and change the needle regularly to make sure they do not have any burs. Do NOT sharpen or buff the needle used in this operation. If you sharpen the needle, use it on another operation not sewing cotton spandex. The belly must be sewn separately from the garment body and not attached to it until after the wash Section 9 Quality, Page 7

8 cycle. The belly can be set in one of two methods. Preset the belly using a chain stitch and close the seam with a serge stitch, or set the belly in one operation with a safety stitch machine. NEEDLE CUTS Quality control: The operator should also be checking every seventh piece for needle cuts. In-line QC personnel should be checking the operation every hour. End of line QC should be checking at least 25% of the garments as well for this operation. The Q/C check should be the point at which needle cuts are found. If the sewing operation does not cut the fabric, then the inspector pulling on the belly seam to look for needle cuts will not cause holes to appear. If the belly setting operation is cutting the yarn, then the holes will be obvious when the garment is checked. Final audit should be checking for needle cuts as well. Do not be afraid to pull the seam to look for cuts. If the yarn is not broken, checking the seam will not cause a cut to appear. ELASTIC STORAGE AND USEAGE Each lot of elastic should be tested to ensure that the elastics used are to the approved standard. In storing elastic we suggest: Maintaining low temperatures and maintaining low humidity Prevent excessive lighting Reduce contact with air Exclude exhaust fumes from the storage area Eliminate wood and particle board shelving which are a common source of phenolic compounds which cause yellowing of elastic When manufacturing with elastic we suggest: Finishing the products with the ph on the acidic side (ph ) Avoiding highly alkaline detergents Using BHT-free poly bags for packaging Using BHT-free lubricants for machines Using non-yellowing softeners and anti-yellowing softeners GARMENT QUALITY STANDARDS Measurements All quality inspections and audits must include measurements against specifications. In any case where acceptable tolerances versus specifications are not given, the maximum allowance is one half the grade, but never greater than ½. Example: If the waist grade between medium and large is 2, one half the grade is 1, but the tolerance is ½. Example: If the sleeve length grade between medium and large is ¼, one half the grade is 1/8 so the tolerance is 1/8. Measurement Sampling Inspection: DMC, reserves the right to add a measurement sampling inspection charge if a garment fails the initial measurement sampling (size M or 1X) and needs to have a full size measurement sampling performed. Section 9 Quality, Page 8

9 Defects These quality standards are to evaluate finished garments during the audit process. Any other defect that the auditors find that would affect the sale or hinder the use of the product is considered a major defect. Labels, Hangtags, Emblems & Embroidery 1. Hangtags omitted 2. Hangtags insecurely attached or misplaced 3. Hangtags insecurely attached or misplaced, requiring re-handling 4. Wrong hangtag used (style number, group and size) 5. Wrong Label attached (size) 6. Label attached more than ¼ beyond specified location 7. Label sewn with mono filament yarn 8. Label sewing thread does not match color 9. Label sewing seam uneven, puckered and 1/8 or more away from label edge 10. Harsh and stiff label compared to approved sample 11. Labels omitted or insecurely attached 12. Emblems attached to wrong place 13. Emblems attached with a cam, not following the contour of emblem 14. Emblems attached crooked 15. Label sewing not reinforced or sewn beyond label edge 16. Bobbin & needle thread color not matching fabric and label or emblem color respectively. 17. Labels that do not meet legal requirements. Note: legal requirements will be issued as a separate requirement. 18. Defective zipper stops on open front jackets 19. Tight clearance between the slider and the seam edge causing slider to operate with difficulty. 20. Rivets not properly fastened 21. Rivets with rough edges 22. Buttons cracked or damaged affecting function or appearance. Cleanliness 1. Oil spots, stains and soils 1/8 or larger in diameter 2. Fly (foreign yarn) 3. Multiple thread ends not trimmed flush with garment or trim 4. Excessive contamination in the garment Material Defects and Damages 1. Rips, holes or cuts on any part of the product 2. Drops and tuck stitches 3. Snags, pulls and knots 4. Slubs more than 1/8 (Use judgment based on location on garment) 5. Slubs less than 1/8 in any obvious location 6. Needle Lines 7. Permanent creases on the fabric 8. Bowing/Torque on fabrics & stripes more than 1 9. Bowing/Torque on fabrics & stripes less than Barre marks due to fabric manufacturing (thick and thin yarn) 11. Nap and/or pile deformation 12. Undesirable odor Necklines 1. No puckering on neckline seams 2. Balanced from right to left sides 3. Center neck miters and seams should be balanced 4. Neck curves on knit should follow approved sloper shape Section 9 Quality, Page 9

10 5. Neck Shapers if advised by tech designer Collars and Cuffs 1. Fullness or puckers at collar attachment 2. Collar points not uniform and balanced, shapers must be used to sew out collars 3. Serious puckers on collar joining 4. Misaligned, crooked collar setting more than 3/16 5. Misaligned, crooked collar setting less than 3/16 6. Puckered and/or crooked top stitching 7. Fullness or twist of cuff affecting appearance 8. Misaligned cuffs at bottom Seams and Stitching 1. Open seam 2. Double stitching gap from 1/16 up to 1/8 3. Double stitching gap 1/8 or over 4. Needle holes or cuts 5. Part of garment caught in unrelated seam or operation, distorting fit/appearance 6. Seams twisted, puckered or pleated, affecting appearance 7. Improper stitch tension (too loose or tight) that affects appearance or stitch breaking 8. Ends of stitching not backstitched, tied in, or securely caught in other seams or stitching 9. Raw edges (other than specified) 10. Gauge of edge stitching irregular, i.e., unevenly gauged affecting appearance 11. Repairs where original seam still shows 12. Piecing/joining of binding and/or trims on critical zone of garments 13. Mono filament yarn being used as a sewing thread in any type of stitching 14. Seam irritation when in contact with bare skin 15. Wrong color sewing thread 16. Stitches per inch not as specified. Pearl edge stitching with gaps or poor density. 17. Top stitching tie-in that is sloppy, overlaps more than 3 stitches or that has thread ends visible from the right side of garment INSPECTION FOR WORKMANSHIP The most important part of statistical sampling is a thorough visual inspection on every garment in the sample. Do not assume that after inspecting a few units that the lot is good as it could be a rejected lot. The reverse is also true. If the first few garments are defective, do not assume that the lot is bad. The following procedure will ensure that the auditor will inspect the garment thoroughly. Lay the garment on the inspection table in good light (150 candle is the standard). Inspect the front side for soil and fabric defects. Then inspect every operation on the garment individually. Inspect all seams by grasping the fabric on each side of the seam and apply slight pressure to see into the seam. This method enables the auditor to see needle cuts, open seams and skip stitches. Below is an example of inspecting a tee shirt. The inspection process starts at the top of the garment and works its way down to the hem. Inspect the main label, care label and hangtag Inspect the collar operation Inspect the right shoulder seam Inspect the right armhole Inspect the right sleeve under arm seam Inspect the right sleeve hem Inspect the left shoulder seam Section 9 Quality, Page 10

11 Inspect the left armhole Inspect the left sleeve under arm seam Inspect the left sleeve hem Inspect the bottom hem Turn the garment over and check the back side in the same manner SEWING NEEDLE CONTROL SYSTEM Sewing needles are very fragile and can be broken easily. They are also very sharp and jagged needle parts can be very dangerous. All sewing lines producing DMC product must have a needle control system. No needle should ever be issued to an operator without surrendering an intact needle. Any broken needle needing replacement must be recorded in a needle log. The format of the log can be left to the factory or buying representative, but must include the following information at minimum: o Date o Operator o Bundle / piece # of garment under the needle o The recovered pieces of the needle (taped to the sheet) o Signature of QA or responsible party *See below for format log example. All parts of all broken needles must be found and reconstructed. If the broken needle cannot be totally reconstructed, the entire bundle at the operator s station should be placed through a needle detector. If a needle detector is not available, the bundle should not be shipped. ALL NURSING TOPS MUST BE PASSED A NEEDLE DETECTOR. ALL DMC FACTORIES PRODUCING NURSING TOPS MUST BE EQUIPPED WITH A NEEDLE DETECTOR. Failure to comply with this system or failure to administer to it completely will result in termination of production for DMC. The costs and losses in any claim or litigation arising out of or resulting from injury caused by needle parts found in a DMC garment will be passed entirely to the factory and/or buying representative involved. Factory Name date operator bundle / piece # needle reconstruction supervisor Section 9 Quality, Page 11

12 PRODUCT QUALITY AND PACKAGING QUALITY All incoming shipments undergo a random inspection. From the electronic packing list, the computer selects a cross section of cartons representing all SKU s for audit. These cartons are inspected for: AQL audit for measurements and defects Zero defect inspection for adherence to packing requirements Failure of either of these criteria will trigger a 100% inspection of the entire shipment. This inspection charge will be billed to the vendor at $25.00 US$ per hour to cover the cost of inspection. The charges will be based on an average garment-processing rate of 45 units per hour or 60 units per hour based on a re-sort. An notice is sent to the vendor or buying representative with digital photos and an explanation of the problem found. DMC will provide samples of defective merchandise as needed. The LDP cost and freight charges for returning defect samples will be charged to the vendor. Packing errors cannot be demonstrated, these will be rectified at the time of receiving. Packing error cannot be rectified on the receiving line, the vendors may be given the opportunity to rectify at their own expense. All repairs undertaken by the vendor will be considered as late and a penalty equal to the late to in-warehouse date will be applied for every day the merchandise is unshipped. The following zero defect violations will automatically trigger a 100% inspection and an automatic charge-back for inspection and rework costs to rectify: packing list error mixed sizes in one carton mixed colors in one carton incorrect or missing price ticket (price ticket error and/or price ticket not matching garment) bar code on price ticket incorrect, mutilated or unable to be scanned incorrect information on care label: size, style, number, color code or care instructions (do not whiteout or correct care label) invalid, missing or mutilated bar code on the care label multiple piece sets with mismatched components (small top with medium bottom) Inaccurate, missing or non-active carton license plates In the event that DMC has an account payable to a vendor for whom a chargeback or discount is pending collection, DMC will use the payable to offset the amount owed. REPAIRS AND REWORKS DMC reserves the right to decide whether repairs should be undertaken immediately. DMC will not hold merchandise un-repaired and un-shipped. DMC reserves the right to repair the goods ourselves if we feel that time to do otherwise will reduce the value of the merchandise. This decision will be made based on the requirement to prevent loss of sales and to mitigate our damages. Where time allows, repair costs will be estimated and advised to the vendor or vendor s agent and a course of action determined. Repair or rework may require use of outside party, or return to vendor, depending upon the nature of the problem. DMC also reserves the right to charge back vendor for loss sales due to time lost during inspection and/or repairing. REJECTED PRODUCT If DMC rejects non-conforming product, the merchandise may be returned to the vendor and all costs associated with the delivery of the product will be recovered from the vendor. No additional chargebacks Section 9 Quality, Page 12

13 will apply. If the merchandise can be sold at a reduced price, DMC will offer the vendor a price reflective of a discount. If the vendor does not agree to the discount offered, the product will be returned with the vendor responsible for absorbing all incoming and outbound charges associated with moving the product, as well as any other damages that DMC may have incurred. DMC may choose to remove all trademarked material and bill vendor for cost. If returned to vendor without removal, the vendor must remove any trademarked material prior to disposal. In the event that any material is distributed with DMC trademarks, DMC will pursue all available remedies to protect its rights. Please refer to the Resale Requirements for more information. Once it is determined that goods will be returned, vendor will be allowed 5 business days to advise a RA# (return authorization). If vendor does not advise and RA# within 5 business days then DMC reserves the right to arrange for the return at the vendors expense. Once an RA# is given, the vendor is allowed 5 business days to arrange for goods to be picked up, after the 5th business day DMC reserves the right to arrange for return at the vendors expense. RTV PROCESS In the event of Quality Hold, some vendors prefer for DMC to return the damages found to their establishment. This is known as RTV. 1. A final count is ed to the vendor 2. The vendor will reply with an RTV or RA (Return authorization) number. If the vendor does not agree to a forced RTV (which DMC can decide to return the defects without permission from the vendor), DMC can use any combination of numbers and letters. This RTV or RA number is used to keep record in our systems 3. Once an RTV or RA number has been issued, the damages are then taken out of our inventory using the RTV code. When removing items from inventory, DMC has different codes to use so that we can keep record of why the item has been removed 4. The damages are moved onto the loading dock and then returned to the vendor AGENCY RESPONSIBILITIES REGARDING CHARGEBACKS Buying Representatives have the obligation to fully explain the failure to perform chargeback policies of DMC to their vendors prior to the placement of any orders. The Buying Representative, through the execution of its duties as a buyer s representative, must monitor all factors that lead to performance against the Purchase Order and violation of DMC failure to perform chargeback policies. Buying Representatives have the obligation to communicate to all vendors any chargebacks issued by DMC IMMEDIATELY. It is the Buying Representative s responsibility to have chargeback documents signed by the factory to acknowledge receipt and the Buying Representative must keep these records for a minimum period of 3 years. The Buying Representative should discuss with the vendor any justification the vendor may request and/or any options they have in regards to opportunities to reduce any charges. Section 9 Quality, Page 13

14 CHARGEBACK SCEHDULE Inspection Labor rate: If an initial audit reveals packing, labeling or quality issues, a 100% inspection is done. The 100% audit rate is calculated at 45 units per hour X $25 per hour. Replacing hangers: If hanger is required and the hanger is not the specified DMC hanger, it will be replaced. The replacement cost is calculated at $0.25 each plus the cost of the hanger. Incorrect bag or missing bags: Calculated at $0.10 each. Additional labor cost may apply if cartons need to be replaced. Missing or bad price tickets: Replacement cost is $0.25 each. Labor and/or inspection fees are also associated with this type of debit. Foreign Object in Cartons: Any foreign object found in a carton other than what DMC as ordered will result in a $ Charge Back. Invoice/Packing List Quantity: If there is a discrepancy in quantity, a debit is issued for the value of each garment not included in the shipment. DMC Administrative Fee: $100 is added to each purchase order for internal processing and handling costs for handling shipments defects. Incorrect packing slip: Mixed sizes in cartons generate a debit for $ % inspection debit is associated with this. Sewing Repairs in-house: Charged at a rate of $25 per hour. There may be additional cost added depending on the nature of the repair; i.e. materials. Outside Labor/Repairs: If an outside contractor is needed, chargeback will be the rate negotiated with the contractor. Additional freight and handling costs will apply. Damaged items: Garments that cannot be repaired but can be sold in DMC Outlets are "seconds". Chargeback is 50% of the LDP cost and follows a 100% inspection debit and additional material costs such as but not limited to poly bags, price tickets, cartons, labels, documentation, etc. Damaged items (100% LDP): Garments that cannot be repaired or sold in our outlets are defective garments and vendor is charged the full LDP value. Accompanies a 100% inspection debit. Freight Charge: When garments are sent for a repair, freight is assessed at actual rate garment shipped. Handling Fee: Additional $100 charge is added whenever garments are sent back to vendor. This fee is in addition to the 100% inspection fee and the FOB/LDP value of the garment. Substandard Sewing Deduction: This is a discount taken that both the vendor and buyer agree on a percentage when the garments are not at acceptable quality levels. Defective Samples: When defective samples are sent to vendor, the full LDP price is charged, 100% inspection debit is also applied. Quality Defect on a Shipment Level: When a shipment is deemed not saleable, all units will be charged at 100% of the LDP value (FOB + Duty + Transportation Cost). Duty and Freight cost will not be refunded to the agent/vendor. Sample freight charge: The courier cost for returning defective samples to supplier. Defective sample charge is associated with this. Cost includes duty and shipping supplies. Offsite Inspection fees: Orders inspected or processed by a third party are charged as the actual cost of the service. Handling and freight fees may also apply and additional costs such as but not limited to poly bags, price tickets, cartons, labels, documentation, etc. Travel Reimbursement: When it is determined that DMC QA needs to assist factory with quality issues, a chargeback for transportation and incidentals may occur. License Plate Sticker/File Non Compliance: Carton File transmitted incorrectly or not at all generates a $ chargeback per purchase order. If the shipment is more than 500 cartons a chargeback for $ will be generated. This chargeback includes electronic packing list that do not have the correct information or quantity transmitted prior to receipt of Section 9 Quality, Page 14

15 goods in DMC s Distribution Center. Additional material costs could apply such as but not limited to poly bags, price tickets, cartons, labels, documentation, etc. Incorrect WAG: incorrect Wearing Apparel Guide $ SIL fee: supplemental information letter needed to change a U.S. Customs entry against vendor information provided $100 Carton Labeling Non Compliance: Missing or incorrect carton license plate label generates a $ charge. Invoice Pricing Variance: Generated if there is a difference between the billed price and the price paid. A chargeback is issued for the actual cost difference. Non Compliance FTC Regulation: Garments missing Country of Origin labels generate a $ debit. Accompanies inspection, handling and return fees. Material costs are extra such as but not limited to poly bags, price tickets, cartons, labels, documentation, etc. Additional Labor Charge: Extra processing/labor is used when preparing and counting garments to an outside repair source. This debit is issued at $0.25 each garment. Demurrage Charges: Actual amount incurred for storage is charged to factory. These accrue when freight is waiting to be released. Prepaid Freight: Actual amount charged if there is a freight variance. DMC Admin Fee: $100 added to each chargeback issued. Late Document fee: $1000 per day for delay of freight arriving late in house. Bad Document fee: $1000 per day for delay of freight arriving in house due to a wrong or incorrect document. Fee may be applied in addition to late document fee. Storage Charges: Actual fee assessed for storing freight for an unspecified period of time due to an error. Brokerage Fee Charges: Actual brokerage fee when shipment is returned to vendor. Also used when a separate customs entry is made due to incorrect documents. Pre Paid Embargo Stock: Fee issued if a shipment should embargo. This fee is in addition to other fees that are assessed as a result of the embargo. Freight Forwarder Charge: If an incorrect freight forwarder/service provider is used, a $500 fee will be assessed. Offsite Inspection Fees: Actual charges when a shipment moves off site due to suspicious cargo or activity. If DMC dispatches an inspection team, a $500 fee will be assessed. Cartage: Actual amount charged for moving freight from one location to another. Fuel Surcharge: Charge is the actual fuel surcharged from moving freight from one location to another location. Warehouse Fee: Actual amount charged for any warehousing that needs to take place because of vendor problems or delay to shipment. Warehouse Storage: Actual amount charged for warehouse storage that is needed due to vendor problems or delay to shipment. Outlay Fee: Actual amount charged. If Destination Maternity or a service provider has to outlay money in order to facilitate a shipment, then the vendor is charged actual amount. Missing, incorrect or late ACI (automated Commercial Invoice): If a vendor is late or has not supplied an ACI, a $500 fee is assessed per invoice. Other late fees may apply. Vendor Management Violation: If document procedures are not as required by the DMC vendor manual, $500 is charged for each purchase order. This includes but is not limited to country of origin changes, Resale/Global Labor/Security Violations, etc. Factory Re-Audit Fee: DMC reserves the right to audit any factory in which are goods are made. The initial audit fee will be covered by DMC. Any subsequent re-audit fees and fees associated with the re-audit(s) will be charged to the factory. Document Discrepancy: $1000 fee for remitting reduced invoice to DMC with no corresponding reduction in bank draft request. Section 9 Quality, Page 15

16 Shipment Transmission Charge (ASN): $1000 fee will be incurred for failure to transmit shipment information prior to the receipt of goods to DMC s distribution center. Re-Pack, Re-Sort, Re-Configure Charge: If a quality defect is detected in a pre-pack order, shipment will have an additional charge above the inspection charge to re-pack the purchase order back to the correct pre-pack formation prior to shipping. Cost will be charged at actual cost. Documentation Filing: If Destination Maternity receives a financial penalty as a result of freight being delivered late, not delivered as specified, or wrong freight delivered, or quantity/data discrepancy, DMC reserves the right to pass through the fines and penalties received as a result of the delay, lateness or erroneous information. Example, if we incorrect information is provided for a Importer Security Filing (ISF) and as a result the filing is not transmitted or transmitted incorrectly, Customs and Border Protection reserves the right to impose an $8,000 fine. DMC reserves the right to pass this fine through to the vendor. If a shipment has a significant violation that causes a delay in being processed and could or does require a correction, DMC reserves the right to assess a non-compliance fee of $ over and above any specified charges listed above. ANY DISPUTES REGARDING CHARGEBACKS SHOULD BE ADDRESSED TO chargebacks@destinationmaternity.com EXAMPLES OF DEFECTS Needle Hole Section 9 Quality, Page 16

17 Embroidery / Decoration coming off Untrimmed Threads Mismatched Care label and Price tickets Section 9 Quality, Page 17

18 Open Seams Shading Bug Contamination Section 9 Quality, Page 18

19 Destination Maternity Corporation has a ZERO TOLERANCE on Tag to Ticket Accuracy. Inspection Levels & AQL Updated 7/24/2009 A PEA IN THE POD COLLECTION GENERAL INSPECTION LEVEL II 2.5 AQL NORMAL Lot Size Units to Inspect Accept Reject NOTE: All Defects Considered Major Defects. Minor Defects Are Not Permitted. PEA IN THE POD GENERAL INSPECTION LEVEL II AQL 2.5 NORMAL Lot Size Units to Inspect Accept Reject Section 9 Quality, Page 19

20 MOTHERHOOD & OH BABY GENERAL INSPECTION LEVEL II AQL 4.0 NORMAL Lot Size Units to Inspect Accept Reject WAREHOUSE QUALITY ASSURANCE DEPARTMENT When a debit memo is issued for Quality Assurance issues, samples are sent to the agent within a week. If there are any concerns regarding the debit memo and samples, should be sent to discuss concerns. DMC must quickly issue debits and process out defects. We do not save or have extra samples in our facility to send. If you have any questions or concerns with any debit memo that is issued, please contact us within 10 days of the debit being issued. After the 10 days, we will consider the issue closed. Section 9 Quality, Page 20