Logistics Guidelines

Page 2 | Logistics guidelines | 17.11.
2009
KION logistics guidelines
Doc. – No.: Version: Date:

K – L01 1.8 08.10.2010
TABLE OF CONTENTS
1. GENERAL INFORMATION ................................................................................................................................5
1.1. KION LOGISTIC CONCEPT: SHARED COMMITMENTS ..........................................................................................5
1.2. THE SIX COMPONENTS OF THE LEAN SUPPLY CHAIN .........................................................................................6
1.2.1. Lean SUPPLIERS ...................................................................................................................................6
1.2.2 Lean procurement ...................................................................................................................................6
1.2.3 Lean manufacturing ................................................................................................................................6
1.2.4 Lean warehousing ...................................................................................................................................7
1.2.5 Lean transportation .................................................................................................................................7
1.2.6 Lean customers.......................................................................................................................................8
1.3 GLOBAL COMMUNICATION ..............................................................................................................................8
1.3.1 Contacts ..................................................................................................................................................8
1.3.2 Relevant KION business units ................................................................................................................8
1.3.3 Communication means and tools............................................................................................................8
1.4 METHODOLOGY .............................................................................................................................................9
2. PROCUREMENT MANAGEMENT...................................................................................................................10
2.1. LOGISTICS AND PROCUREMENT PARAMETERS TARGETS .................................................................................10
2.2. SUPPLIER PRODUCTION SCHEDULING ........................................................................................................10
2.3. ORDERING PRINCIPLES ................................................................................................................................11
2.3.1. Transmission mode ...............................................................................................................................11
2.3.2. Order types............................................................................................................................................12
2.3.3 Order confirmation ................................................................................................................................12
2.4. GOODS-IN/DELIVERIES SCHEDULING PRINCIPLES FOR DELIVERIES DUTY PAID (DDP).....................................13
2.5 SAFETY STOCK, CONSIGNMENT AND WAREHOUSING ......................................................................................13
2.5.1 Safety stock...........................................................................................................................................13
2.5.2 Consignment stock................................................................................................................................13
3. PACKAGING ....................................................................................................................................................13
3.1 PACKAGING REQUIREMENTS.........................................................................................................................13
3.2 CONTAINER SPECIFICATIONS ........................................................................................................................14
3.2.1 Characteristics.......................................................................................................................................14
3.2.2 Identification ..........................................................................................................................................14
3.2.3 Design ...................................................................................................................................................14
3.2.4 Management process............................................................................................................................14
3.2.5 Provision/Call off ...................................................................................................................................14
3.2.6 Cleaning ................................................................................................................................................15
3.2.7 Investment/Replacement/Repair...........................................................................................................15
4. DELIVERY DOCUMENTATION .......................................................................................................................16
4.1 LABELLING ..................................................................................................................................................16
4.2 DELIVERY NOTE ...........................................................................................................................................16
Page 3 | Logistics guidelines | 17.11.2009
4.3 CUSTOMS DUTIES ........................................................................................................................................16

4.4 NOTIFICATION .............................................................................................................................................16
5. SHIPMENTS .....................................................................................................................................................16
5.1 INCOTERMS .................................................................................................................................................16
5.2 SHIPMENT RULES.........................................................................................................................................17
6. SUPPLIER RELATIONSHIP MANAGEMENT .................................................................................................17
6.1 PURPOSE AND SCOPE ..................................................................................................................................17
6.2 PERFORMANCE MEASUREMENT AND TARGETS...............................................................................................17
6.2.1 Fact based issues (hard facts): 75 %....................................................................................................17
6.2.2 Soft facts: 25 % .....................................................................................................................................18
6.2.3 SUPPLIER Service Level Calculation ...................................................................................................18
6.2.4 Linestop definition .................................................................................................................................18
6.2.5 Complete quantity delivery....................................................................................................................19
6.3 LOGISTICS PRODUCT DATA SHEET ...............................................................................................................19
6.4 NEW SUPPLIER SELECTION AND CERTIFICATION: CERTIFICATION AUDIT ......................................................19
6.5 EXISTING SUPPLIER EVALUATION: MEANS AND PROCESS.............................................................................20
6.5.1 Regular SUPPLIER performance monitoring........................................................................................20
6.5.2 Yearly SUPPLIER performance evaluation ..........................................................................................20
6.5.3 SUPPLIER blacklist...............................................................................................................................20
6.5.4 Logistic audit .........................................................................................................................................21
6.5.5 Performance monitoring: SUPPLIERS Local Council...........................................................................21
6.5.6 Performance monitoring: SUPPLIERS Group Council .........................................................................21
6.6 COMPLAINT MANAGEMENT/ESCALATION PROCESS .........................................................................................21
6.7 EMERGENCY PROCEDURE/PENALTIES ...........................................................................................................22
6.7.1 Late deliveries/Shortage risk.................................................................................................................22
6.7.2 Shortages/Linestops .............................................................................................................................22
6.7.3 Request for earlier delivery ...................................................................................................................22
6.7.4 Goods-in malfunctions ..........................................................................................................................22
6.7.5 Early deliveries ......................................................................................................................................22
7. APPENDIX ........................................................................................................................................................23
7.1. SUPPLIER CONTACT SHEET ......................................................................................................................23
7.2. BEST AND WORST SUPPLIER INFORMATION SHEET......................................................................................24
7.3. PRODUCT DATA SHEET.................................................................................................................................25
7.4. PACKAGING .................................................................................................................................................26
7.5. LABELLING ..................................................................................................................................................26
7.6 SHIPMENT REQUEST FORM ..........................................................................................................................28
7.7 LINESTOP NOTICE ........................................................................................................................................29
7.8 EDI ............................................................................................................................................................30
7.9 ABBREVIATIONS...........................................................................................................................................31
7.10 LETTER OF AGREEMENT ...............................................................................................................................32
Author Checked Released

Eric Latil Dirk Sadler
Aurélien Badet
Mark Seidel
Julia Schad
Damien Normand
Chris Dee
Klaus Müller
Michele Clarkson
Date: 04.06.2010 Date: 04.06.2010 Date:
Signature: Signature: Signature:
1. GENERAL INFORMATION
“Our values leadership, innovation and performance make us what we are”. With more than
21,000 employees, and with branches around the world, the KION Group is the European market leader
in material handling solutions and is one of the sector’s two largest internationally active companies.
The KION Group is at the forefront of its industry when it comes to quality, innovative power and profit
success.
The KION logistic concepts shown below are fundamental to the future participation of KION
SUPPLIERS in the KION lean supply chain.
The SUPPLIERS commit themselves to work in accordance with these Guidelines and to implement the
required organisation to meet the requirements listed below. These Guidelines are common to all plants
and all Group SUPPLIERS. Logistic Guidelines will be sent to all existing KION SUPPLIERS, and
potential new SUPPLIERS. Any change will be communicated to the SUPPLIERS.
1.1. KION logistic concept: shared commitments
KION commitments:
• to aim at Excellence together with its SUPPLIERS

• to follow-up its SUPPLIERS and enable them to progress
• to Institute a real partnership with its SUPPLIERS
• to make its SUPPLIERS an active and integral part of KION Group activity
SUPPLIER commitments:
• to meet the express and implied needs of KION Group

• to be responsible for their whole performance
• to be reactive, alert and efficient
• to have a complete transparency towards KION Group
• to strive to make new proposals
• to be fully involved in KION Group continuous search for improvement
1.2. The six components of the lean supply chain
KION Group is focused on lean philosophy as a major driving force for improvement, and intends to
apply this principle to the whole Supply Chain.
1.2.1. Lean SUPPLIERS

Lean SUPPLIERS are able to respond to changes. Their prices are generally lower due to the
efficiencies of lean processes, and their quality has improved to the point that incoming inspection at the
next link is not needed. Lean SUPPLIERS deliver on time and their culture is one of continuous
improvement.
To develop lean SUPPLIERS, KION organisation will

• include SUPPLIERS in its value stream
• encourage SUPPLIERS to make the lean transformation
• involve them in lean activities
This will help to fix problems and share savings
1.2.2 Lean procurement

Some lean procurement processes are e-procurement and automated procurement. KION uses these
processes and is willing to develop them.
The key to lean procurement is visibility. SUPPLIERS must be able to "see" into their customers'
operations and customers must be able to "see" into their SUPPLIERS' operations. KION organisation
might map the current value stream, and together with SUPPLIERS create a future value stream in the
procurement process.
1.2.3 Lean manufacturing

Lean manufacturing systems produce what the customer wants, in the quantity the customer wants,
when the customer wants it, and with minimum resources. Lean efforts typically start in manufacturing
because they free up resources for continuous improvement in other areas, and create synergy.
Applying lean concepts to manufacturing typically presents the greatest opportunity for cost reduction
and quality improvement.
KION Group worldwide is deeply engaged in such a process.
1.2.4 Lean warehousing

Lean warehousing means eliminating non-value added steps and waste in product storage processes.
Typical warehousing functions are:

• receiving ▪ picking
• put-away/storing ▪ packing
• replenishment ▪ shipping
Warehousing waste can be found throughout the storage process including:

• defective products which create returns
• overproduction or over-deliveries
• excess inventories which require additional space and reduce warehousing efficiency
• excess motion and handling
• inefficiencies and unnecessary processing steps
• transportation steps and distances
• waiting for parts, materials and information
• information processes
Each step in the warehousing process should be examined critically to see where unnecessary,
repetitive, and non-value-added activities might be so that they may be eliminated.
1.2.5 Lean transportation

Lean concepts in transportation include:
• core carrier programs
• improved transportation administrative processes and automated functions
• optimised mode selection and pooling orders
• combined multi-stop truckloads
• cross-docking
• right sizing equipment
• import/export transportation processes
• inbound transportation and backhauls
The keys to accomplishing the concepts above include:

• mapping the value stream
• creating flow
• reducing waste in processes
• eliminating non-value-added activities
• creating synergy
1.2.6 Lean customers

Lean customers understand their business needs and therefore can specify meaningful requirements.
KION Group values speed and flexibility and expects high levels of delivery performance and quality.
As a Lean customer, KION Group is interested in:

• establishing effective partnerships
• always seeking methods of continuous improvement in the total supply chain to reduce costs
KION Group expects value from the products it purchases and provides value to the consumers with
whom KION Group interacts.
1.3 Global communication
1.3.1 Contacts
The establishment of central and local contacts between a SUPPLIER and the KION GROUP is crucial
to the durability of the business relationship, central and local contacts must be known (see appendix):
KION Group Logistics:

• KION Group logistics contact
• SUPPLIER person in charge of KION Group Business must be known
Logistics Local Plant:

• KION Group local Plant Logistics contact person must be made known to the SUPPLIER
• SUPPLIER person in charge of day to day business with KION plant must be known
SUPPLIER:
KION expects its SUPPLIERS to provide information about
• a daily contact
• a backup contact
• the logistics and plant manager contact (for escalation purposes)
At any time, the "who is doing what" (Daily contact, Packaging, Logistics planning, Engineering Change
Request) must be known within the KION local logistics organisation and within the SUPPLIER’s
organisation.
1.3.2 Relevant KION business units

• Basingstoke : United Kingdom
• Chatellerault : France
• Montataire : France
• Aschaffenburg : Germany
• Hamburg : Germany
• Reutlingen : Germany
• Merthyr Tydfil : United Kingdom
1.3.3 Communication means and tools

KION expects its SUPPLIERS to
• Use English in all written and spoken communication
• Present information factually and in writing
The SUPPLIER will receive the following information regularly:
Orders
Daily /
backlog
Weekly
Rolling forecasts
Quaterly Logistical performance.
Yearly Yearly evaluation
Specific announcements
(Holidays, large changes in forecast
requirements, phase in/out, ….)
As required
Supplier Relationship Improvement Meetings
and related action plan
Audit results
For his part, the SUPPLIER will commit himself to inform KION of any major change in his business
which could have an impact in satisfying KION Group’s needs. In any case, transparency must be a
common agreed rule.
NB:
the inability to speak and write English might bring limitations in working with the SUPPLIER
such SUPPLIERS will remain on a local basis, with no global contract
1.4 Methodology
In principle, Logistics guidelines must be agreed with new and existing SUPPLIERS at KION Group
level.
Any special, specific arrangements will have to be managed and signed directly with KION local Plants.
All relevant parameters will be summarised within the “Product Data Sheet” (see appendix). The agreed
“Product Data Sheet” will always be the one at the latest update.
2. PROCUREMENT MANAGEMENT
2.1. Logistics and procurement parameters targets
For all components purchased in Europe, and in accordance with the local ABC categories as
determined by KION Group, the logistic parameters are as follows:
All figures are maximum Lean Targets

A B C
Maximum - flexibility and
Leadtime delivery reactivity 14 21 35 calendar days
or Fixed period improvement
Delivery frequency
Minimum Order Qty 3 (*) 14 84 days of consumption
- inventory
Fixed sized lot
improvement
Maximum container
(one piece flow)
coverage in days ≤ 1 (**) 10 ≥ 21 days of consumption
of consumption
NB : - 1 week = 7 calendar days.

- ABC classes : according to local Plant purchasing volume.
- (*) ie : A class components should be delivered every 3 days. (2 deliveries / week)
- (*) ie : Minimum Order Quantity for A class components should not exceed 3 days of consumption.
- (**) ie : Stock coverage for any single A class components containers should not exceed 1 day of consumption.
For all other countries, i.e. Turkey, and elsewhere in the world, logistic parameters will have to be
discussed and agreed with the departments concerned (Purchasing, Logistics) and will be governed by
consideration of Total Cost.
2.2. SUPPLIER production scheduling
The SUPPLIER must guarantee permanent transparency regarding his production capacity. The
SUPPLIER is requested to commit himself to meeting any short-notice increase in requirement by KION
Group.
The SUPPLIER must guarantee that at any time of its production, it can identify its components (batch,
series, etc…).
The SUPPLIER will always apply FIFO principle to deliver KION Group.
Funnel principle / frozen zone
NB:
for holidays, whether or not the SUPPLIER closes, it is his responsibility to adapt his capacity in
the early months before the closure period, to meet KION Plant needs
2.3. Ordering principles
To reach our lean targets, the pull system will be implemented wherever possible.
2.3.1. Transmission mode

Orders can be sent to SUPPLIER by:
email
letter (post)
fax
or EDI
For EDI, the SUPPLIER will be requested to adapt his IT system in order to enable an efficient
exchange of data with the KION IT system.
The SUPPLIER must advise the KION Group of any inability to meet this request.
2.3.2. Order types

Generally, goods are ordered under the terms of an outline agreement. Nevertheless, several types of
orders might be used:
loose orders
delivery schedules (showing firm call-offs and forecast call-offs outside the firm period)
kanban call offs
daily sequence order
Each KION local plant will normally produce and transmit its delivery schedules weekly.
Individual KION plants will issue rolling forecasts valid for 12 months. These forecasts remain forecasts
until they become firm orders in accordance with the lead-times agreed.
Ordering profile: example confirmed orders forecasts
order frozen
quantities
The forecasts have to be considered by the supplier in order to control

period the production and procurement of raw material in sufficient time.
200
+/- +/- +/- +/- >> +/- 20 %
0% 5% 15% 20% (pure indication)
150
100
50
0
W W+2 W+4 W+6 M+2 M+4 M+6 M+8 M+10
weeks/months
2.3.3 Order confirmation

Order confirmation is required for specified parts only. Otherwise, order confirmation is not required.
Each local plant will specify its own specific parts which require an order confirmation.
NB:
delivery schedules showing cumulative receipts, backlogs and forecasts are the preferred
method
SUPPLIERS are responsible for ordering their own components from their own SUPPLIERS
KION Group plants are not to become involved in this process
2.4. Goods-In/Deliveries scheduling principles for Deliveries Duty Paid (DDP)
The delivery date on the order is the date for the goods to be delivered to the plant or to the KION local
off-site store whatever the Incoterm is (same process for DDP, EXW, and other Incoterms).
For DDP Deliveries:

opening hours for KION plant will be locally communicated to the SUPPLIER;
reception time windows with precise time slot must be agreed with KION local Plant;
out of the agreed opening hours and time slot, and without KION Plant written agreement,
delivery can be rejected;
there may be several different off-loading points for a shipment of goods from one single
SUPPLIER;
methods of unloading (rear or side) for KION plant will be locally communicated to the
SUPPLIER;
goods intended for a specific individual or department must be clearly stated as such on the bill
of lading and on the labels attached to the goods. The associated delivery note(s) and invoice
(s) should also show this information.
For EXW Deliveries, SUPPLIER will take into account KION carrier requirements.
2.5 Safety stock, consignment and warehousing
2.5.1 Safety stock

Depending on the criticality of the component and the ability of the SUPPLIER to meet KION Group
requirements (in time delivery, lead-time…), the SUPPLIER will be asked to hold a safety stock at his
own facility or at another location. The quantity of components for this stock will be specified by the local
KION plant.
This stock is SUPPLIER owned.
2.5.2 Consignment stock

According to the ability of the SUPPLIER to deliver in Just in Sequence or Just in Time, he may be
asked to provide a consignment stock either in the KION local Plant or in a nearby off-site store.
This stock is SUPPLIER owned, and in that case deliveries will not be EXW.
Consignment stock management rules will be specified by the KION Local Plant in agreement with the
SUPPLIER with reference to the KION Consignment Contract. The main principle will be min/max
ordering.
Changes in requirement due to KION engineering changes will be notified by the KION local plant to the
SUPPLIER at least three months in advance, in order to avoid having to scrap material.
3. PACKAGING
3.1 Packaging requirements
KION Group requirements are:

avoidance of “one way” packaging
avoidance of any waste of packaging such as wood, plastic, paperboard
components should be directly “deliverable” to the production line
focus on the use of recyclable packaging as environmentally-friendly behaviour

only one reference/handling unit. (no mix at all except with KION local plant written agreement)
3.2 Container specifications
3.2.1 Characteristics
Standard containers must:
be based on the use of KION Plant standard containers
ensure suitable protection of the goods
be stackable
avoid the use of wooden pallets, unless of the European type with a maximum load of one tonne
avoid any repacking on site (see container coverage targets)
Stillages (mesh crates, europallets) must:

have a base of 1200 mm x 800 mm max
be no more than 1000 mm high
Handling boxes must:

have a maximum weight of 15 Kg
have a maximum base of 600 x 400 and 280mm height
3.2.2 Identification
Recyclable and specific containers must be visually identified: “Plant name” and/or “SUPPLIER”.
Pool containers (standard: for example KLT, mesh crates, etc….) do not require any identification.
3.2.3 Design
Design for any specific container will have to be validated by each KION Plant.
It is the SUPPLIER’s responsibility to propose the most suitable container to prevent the goods from
being damaged at any stage during shipment, handling, and putting into store.
3.2.4 Management process

For any new part, any container will be defined in close link with the SUPPLIER. Then, it will be tested
and agreed by KION Local Plant.
A packaging sheet per component will summarise and explain how to put components in the container
(see appendix for example).
Parts and quantities must be suitable for the container type

Non-conforming containers may be sent back to the SUPPLIER at his own charge
Any unapproved repacking by KION Plant staff may be charged to the SUPPLIER
Local Packaging Guidelines might apply to further detailed plant requirements
Recyclable containers must be managed through the KION web tool (BoxLog). The SUPPLIER
will be trained on that tool by the KION local plant
3.2.5 Provision/Call off

The calculation for container provision will be done by the SUPPLIER and the KION Group Plant by
means of the KION standard calculation tool.
In the case of a shortfall in container provision in the course of regular business, the SUPPLIER must
notify the KION Plant. In case of container shortage, the SUPPLIER may be allowed to use other types
of container and packaging ONLY with the written agreement of the KION local Plant.
3.2.6 Cleaning
The KION local Plant is responsible for cleaning containers before each shipment (elimination of scrap
and swarf).
The SUPPLIER is responsible for keeping the containers clean.
3.2.7 Investment/Replacement/Repair
Responsibility must be agreed between the SUPPLIER and the KION Plant.
4. DELIVERY DOCUMENTATION
4.1 Labelling
Label’s standards will be either Odette or VDA according to countries.
BASIC REQUIREMENTS
Norm UCC EAN 128 or 39
Length 210 mm (see appendix)
Height 74 or 148 mm (see appendix)
Support White paper or plastified paper
Readable
Directly readable by the operator and its barcode reader
Characteristics without removing strips and packaging
Readable by the operator and by barcode reader up to one metre away.
Barcode and relevant information on a plain surface
4.2 Delivery note
According to KION Plants and procedure, delivery notes shall be sent either by paper or by EDI (see
matrix above for the required fields).
4.3 Customs duties
SUPPLIER will provide any documentation required for customs issues.
4.4 Notification
Standards to be used for the delivery note and the invoicing: EDIFACT, VDA 4913, 4906.... (see
appendix)
5. SHIPMENTS
5.1 Incoterms
The preferred Incoterm within the KION Group is Ex Works (EXW).
If the Incoterm is EXW, the SUPPLIER must contact the KION Group carrier (URBAN) using the
relevant notification form to arrange collection of the goods (see appendix).
If the Incoterm is EXW, and in the case of any problem with the KION Group carrier, the SUPPLIER will
inform the KION plant in writing. The KION local Plant will feed this information into the SUPPLIER
Service Level calculation in order not to affect the SUPPLIER if the KION carrier is directly responsible.
Some other Incoterms might be used. For instance FOB (Free On Board) for Asia.
NB:
the type of Incoterms does not interfere with the calculation of the SUPPLIER Service Level
a KION Plant may have several delivery addresses
5.2 Shipment rules
For DDP Incoterm:

As required by KION local Plant, the lorry must always be contactable by telephone if needed.
When requested the telephone number is to be communicated to KION local Plant.
KION Plant Opening hours have to be respected.
For DDP deliveries the SUPPLIER will inform KION Plant Goods-In of the time window delivery
for any delivery. KION Plant might ask SUPPLIER to adjust this time.
Costs of returns due to problems in quality or uncoordinated early shipment are debited to the
SUPPLIER unless carrier responsibility is demonstrated.
Costs of returns due to transportation troubles are debited to the SUPPLIER for DDP shipments.
In case of back-shipping-address deviating from order address, it has to be communicated to
KION during the conclusion of a contract in writing.
For EXW Incoterm:

The SUPPLIER will have to use KION Group carrier (exceptions have to be agreed with KION).
Pick up time windows must be communicated to KION carrier using agreed form.
The SUPPLIER must make sure that he is well aware of the delivery lead-time and of the rules
for delivery.
Any problem must to be reported in writing to the KION Plant.
The name of the KION Group Logistic provider must be known to the SUPPLIER.
6. SUPPLIER RELATIONSHIP MANAGEMENT

6.1 Purpose and scope
The KION Group Target is to establish transparency, mutual trust, openness, fact based and 2-way
communication for business performance.
KION Group is keen on sharing data between SUPPLIERS and all KION Group local plants.
The common and shared goals of SUPPLIERS and KION GROUP should, therefore, be to:
achieve business process excellence
increase productivity and cash flow
improve operational efficiency and quality
increase SUPPLIER visibility
respond faster to change and opportunity
enable innovation
profit from a strong, flexible, lean supply chain
arrange discussions, formal feedback, performance management and recognition
6.2 Performance measurement and targets
The SUPPLIER is expected to deliver the right quantity, at the right time at the right quality. From the
logistics point of view, SUPPLIER performance will be evaluated on the points listed below.
6.2.1 Fact based issues (hard facts): 75 %

SUPPLIER Service Level : 70 %
LINESTOP : 30 %
6.2.2 Soft facts: 25 %

1 : Cooperation and improvement willingness : 20 %
2 : Communication : 20 %
o Transparency
o Openness
o Warning system
3 : Reliability : 30 %
4 : Reactivity and flexibility : 30 %
6.2.3 SUPPLIER Service Level Calculation

The SUPPLIER Service Level is calculated as follows:
• Whatever Incoterm is used, the SUPPLIER must deliver goods in time so that they arrive at the
KION plant at the receipt date stated in the delivery schedule. In case of shipment difficulties, it
is the SUPPLIER’s responsibility to inform the KION plant in writing, without delay.
• KION Plants only accept deliveries on the scheduled delivery day (D)
The delivery must be done on the right date, with the right quantity and with the correct
packaging to achieve full service level. Any partial delivery will be considered as not delivered for
the missing quantity and measured as not delivered.
Deliveries before or after D (D+1 or D-1) will be considered as not “on time”.
Target: SUPPLIER Service Level ≥ 95%
NB:
early deliveries are prohibited unless previously agreed in writing
for Just In Time deliveries, any delivery has to be delivered maximum 2 hours after the
requested “date + hour” to be “in time”
6.2.4 Linestop definition

The quantity of Linestops is calculated as the quantity of ordered lines missing due to proven late
deliveries by the SUPPLIER. A LINESTOP means that trucks are blocked on the production line (not
produced according to the initial schedule) regardless of quantity.
Any LINESTOP will be officially notified to the SUPPLIER, by mailing a request for a corrective action
plan through Linestop Notice (see appendix).
Target: NO linestop
6.2.5 Complete quantity delivery

The SUPPLIER is expected to deliver the full ordered quantity.
Target: FULL quantity deliveries
6.3 Logistics Product Data Sheet
For all new components, a Product Data Sheet will be agreed between the SUPPLIER and KION Group
local Logistics in order to summarise all logistic parameters (see appendix for example):
Part N°
Designation
Delivery leadtime (to plant)
Minimum order quantity
Delivery frequency
Delivery address
SUPPLIER container type
Qty/container
Qty of container in the potential loop
Safety stock by SUPPLIER
Should any parameters change, the Product Data Sheet will be updated accordingly.
6.4 New SUPPLIER Selection and certification: Certification Audit
Any potential new SUPPLIER will be audited by a KION Team. The SUPPLIER Logistic Audit form is a
KION Standard.
All audit forms will be filled in and communicated in English.
KION SUPPLIER audit main topics:

general questions
quality
logistics
R&D
data exchange
The Logistics quotation is made from the following criteria:

management and logistics organisation
logistics strategy
logistics planning
logistics process : Sourcing
logistics process : Production
logistics process : Despatch
Audit Notation is done out of 100 points.
The acceptance of a SUPPLIER as an official SUPPLIER to the KION Group as a whole depends upon
the results of the audit.
6.5 Existing SUPPLIER evaluation: means and process
6.5.1 Regular SUPPLIER performance monitoring

A SUPPLIERS Logistic Performance is monitored on a quarterly basis, and can be done on a monthly
basis. This information is available at any time for the SUPPLIER and can be sent to him by Logistics
departments.
NB:
Best and Worst SUPPLIERS of the month (from the Logistic point of view) are indicated at the
entrance of any KION Plant (see appendix).
6.5.2 Yearly SUPPLIER performance evaluation

Once a year, a SUPPLIER is evaluated by all the Departments concerned.
The SUPPLIER is then quoted on a Quality Cost Leadtime (QCL) basis for series parts only.
Logistics Performance is notified by means of the SUPPLIER performance sheet.
Weight in yearly
evaluation (%)
Quality 40%
Logistics 40%
Purchasing and R&D 20%
The SUPPLIER is then graded in accordance with the table below:

A: satisfactory
B: acceptable
C: improvement required through an official action plan
D: suspension of any new business, and if no improvement, suspension for current business (=
blacklisted SUPPLIER)
This yearly evaluation for logistics is based on:

hard facts 75 %: service rate, Linestops, respect of packaging, full quantity deliveries
soft facts 25 %: quality of service
As a result of this yearly evaluation, some SUPPLIERS might be asked for drastic improvements to
avoid suspension. Some others might be blacklisted.
6.5.3 SUPPLIER blacklist

A SUPPLIER can be blacklisted either locally or centrally.
Local blacklist:
action plan to be managed locally (SUPPLIER local Council)
awareness and support of SUPPLIER central Council
Central blacklist:
central decision about continuing or not with the SUPPLIER and potential consequences.
full support of SUPPLIER Group Council
action plan to be managed locally (SUPPLIER local Council)
full transparency for all KION factories
NB:
any blacklisted SUPPLIER is liable to receive no further requests for any quotation from any
plant within the whole KION GROUP
any SUPPLIER well ranked in one KION Plant and badly ranked in another will be asked to
match his performance to the best level whatever the volume is
6.5.4 Logistic audit

According to the level of SUPPLIER performance, SUPPLIER audits might be done during the year.
Audits lead and conducted by one factory are relevant for all factories.
6.5.5 Performance monitoring: SUPPLIERS Local Council

According to the local level of SUPPLIER performance, a SUPPLIER may be requested to implement
actions to improve his Key Performance Indicators.
A meeting will then be organised in order to remove procedural errors and to improve working
processes. Such an action plan will be monitored by the KION SUPPLIERS local Council. (All action
plans will be based on PDCA principle “Plan Do Check Act”)
6.5.6 Performance monitoring: SUPPLIERS Group Council

On a regular basis, KION Purchasing, KION R&D, KION Quality and KION Logistic will hold meetings in
order to evaluate SUPPLIER relationships. Any major issues in a KION local plant will be reported to
this KION SUPPLIERS Council.
This Council will focus specifically on poor SUPPLIERS in order to improve their performance drastically
so that they may provide efficient support to KION Local Plants.
An action plan will then be implemented and driven forward by the KION SUPPLIER Council with 100%
transparency for all KION local Plants and departments concerned.
6.6 Complaint management/escalation process

6.7 Emergency procedure/penalties
6.7.1 Late deliveries/Shortage risk

Late deliveries will be notified to the SUPPLIER. A written answer will be expected. It is assumed that
the SUPPLIER will do his best to meet the KION Plant requirements.
Any shipment for overdue delivery and required by plant to avoid a linestop, will be charged and paid by
the SUPPLIER (whatever the Incoterm).
6.7.2 Shortages/Linestops
In case of shortage (production blocked because of late deliveries due to the SUPPLIER), an official
Shortage Notice is sent to the SUPPLIER (see appendix).
The SUPPLIER must reply:

in writing, stating his ability to make good any shortfall
stating his best delivery
stating his action plan through 8D report to avoid any other such trouble
Any shortage attributable to the SUPPLIER may be invoiced at EUR 1250 per blocked truck
Linestops are counted as a MINUS for SUPPLIER Logistic Performance.
6.7.3 Request for earlier delivery

A SUPPLIER may be requested formally for earlier deliveries in the case of increasing requirements.
A SUPPLIER’s ability to meet this request will count as a PLUS for SUPPLIER Performance.
6.7.4 Goods-in malfunctions

This deals among other things with:
wrong quantity per container
partial delivery
wrong delivery address
wrong or missing label
wrong container
Any attributable malfunction could be invoiced to the SUPPLIER depending on the time wasted in the
KION plant for counting, sorting, etc…
Goods-in malfunctions are counted as a MINUS for SUPPLIER Logistic Performance.
6.7.5 Early deliveries

As inventory is an important lean issue, the SUPPLIER is asked not to deliver earlier unless previously
agreed in writing, but to deliver just in time.
Early deliveries may be rejected by KION local Plant Goods-in and sent back at the expenses of the
supplier.
7. APPENDIX
7.1. SUPPLIER Contact Sheet
KION Logistics Contacts : ………………………………………….
KION Local Logistics Contacts : …………………………………………. (daily business)
KION Local Logistics Manager : ………………………………………….
SUPPLIER Logistics Contact: :…………………………………………. (daily business)
SUPPLIER Sales Manager : ………………………………………….
URBAN Logistics Contact : …………………………………………. (daily business)
URBAN Manager : ………………………………………….
URBAN = KION Group Logistical Provider and Carrier

7.2. Best and worst SUPPLIER information sheet

SAMPLE
7.3. Product data sheet

SAMPLE
7.4. Packaging
Loading unit label Loading unit label
Cover Packaging label
Packaging label
Pallet
Pallet
Multiple-way packaging One-way packaging
7.5. Labelling
Odette Label OTL1/Galia ETI1

Big size - 210 x 148mm
SAMPLE
SEATING SUPPLIER
VDA Label 4902/4

Big size - 210 x 148mm
SAMPLE
URBAN
D-22000 HAMBURG
VDA Label 4902/4

Small size - 210 x 74mm
SAMPLE
PROFILE AG
7.6 Shipment Request Form

SAMPLE
7.7 Linestop notice
SAMPLE
7.8 EDI
7.9 Abbreviations
ERP = Enterprise Resource Planning system

EXW = Ex Works Incoterm
DDP = Duty Delivery Paid Incoterm
7.10 Letter of agreement
LETTER OF AGREEMENT
Supplier name:
Name of the signatory:
On behalf of the above mentioned company, I hereby acknowledge the receipt of the KION Logistics
Guidelines (version 1.8) and commit to work in accordance with these Guidelines.
______________________
Place, Date
Supplier company stamp
______________________
Signature supplier

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Page 2 | Logistics guidelines | 17.11.

KION logistics guidelines

Doc. – No.: Version: Date:

4.3 CUSTOMS DUTIES ........................................................................................................................................16

Author Checked Released

1.1. KION logistic concept: shared commitments

• to aim at Excellence together with its SUPPLIERS

• to meet the express and implied needs of KION Group

1.2. The six components of the lean supply chain

1.2.1. Lean SUPPLIERS

To develop lean SUPPLIERS, KION organisation will

1.2.2 Lean procurement

1.2.3 Lean manufacturing

KION Group worldwide is deeply engaged in such a process.

1.2.4 Lean warehousing

Typical warehousing functions are:

Warehousing waste can be found throughout the storage process including:

1.2.5 Lean transportation

The keys to accomplishing the concepts above include:

1.2.6 Lean customers

As a Lean customer, KION Group is interested in:

1.3 Global communication

KION Group Logistics:

Logistics Local Plant:

1.3.2 Relevant KION business units

1.3.3 Communication means and tools

The SUPPLIER will receive the following information regularly:

All figures are maximum Lean Targets

NB : - 1 week = 7 calendar days.

2.2. SUPPLIER production scheduling

Funnel principle / frozen zone

2.3. Ordering principles

2.3.1. Transmission mode

2.3.2. Order types

Ordering profile: example confirmed orders forecasts

The forecasts have to be considered by the supplier in order to control

2.3.3 Order confirmation

2.4. Goods-In/Deliveries scheduling principles for Deliveries Duty Paid (DDP)

For DDP Deliveries:

2.5 Safety stock, consignment and warehousing

2.5.1 Safety stock

2.5.2 Consignment stock

KION Group requirements are:

focus on the use of recyclable packaging as environmentally-friendly behaviour

3.2 Container specifications

Stillages (mesh crates, europallets) must:

Handling boxes must:

3.2.4 Management process

Parts and quantities must be suitable for the container type

3.2.5 Provision/Call off

Label’s standards will be either Odette or VDA according to countries.

4.2 Delivery note

4.3 Customs duties

SUPPLIER will provide any documentation required for customs issues.

The preferred Incoterm within the KION Group is Ex Works (EXW).

5.2 Shipment rules

For DDP Incoterm:

For EXW Incoterm:

6. SUPPLIER RELATIONSHIP MANAGEMENT

6.2 Performance measurement and targets

6.2.1 Fact based issues (hard facts): 75 %

6.2.2 Soft facts: 25 %

6.2.3 SUPPLIER Service Level Calculation

Target: SUPPLIER Service Level ≥ 95%