Supplier Webinar Topic: National Supply Chain Execution

Agenda National Supply Chain Execution Components RDC Supplier Selection Process – Presented by Susan Jacobs, Sr. Manager of National Supply Chain Compliance Supply Chain Operations / Compliance Requirements – Presented by Susan Jacobs, Sr. Manager of National Supply Chain Compliance Supply Chain Inventory Management Information – Presented by Maria Ortiz, Sr. Manager of National Supply Chain Inventory Management National Supply Chain Transportation Information – Presented by Yvonne Robinson, Supplier Development Manager National Supply Chain Forward Warehouse Network – Presented by Andrew Cafcalas, Sr. Manager Forward Warehouse Network Frequently Asked Questions (FAQ’s) Welcome to the National Supply Chain Execution webinar.  The objective is to provide a high level overview of the National Supply Chain Execution teams.  We expect the duration of this session to be approximately 20 minutes.  We ask that audience members make note of their questions throughout this presentation and submit those questions through the Discussion Section in the eSourcing Tool.  To achieve maximum comprehension of this session, you should have representation from persons versed in all supply chain aspects, including warehousing and operations, inventory management and transportation.  It may also be beneficial for an associate specializing in electronic data to attend.  There are five components that will be discussed in this session - three related directly to Sysco’s redistributed network and two that encompass nationwide activities.  Susan Jacobs, Sr. Manager of National Supply Chain Compliance, will cover the RDC Supplier Selection Process and the Supply Chain Operations/Compliance Requirements; Maria Ortiz, Senior Manager of National Supply Chain Inventory Management, will cover the Supply Chain Inventory Management Information; Yvonne Robinson, Supplier Development Manger, will cover the National Supply Chain Transportation Information and Andrew Cafcalas, Senior Manager Forward Warehouse Network, will cover the National Supply Chain Forward Warehouse Network.  At this time I would like to turn the call over to Susan Jacobs.

RDC Supplier Selection Process Thanks Lisa The next few slides are meant to explain how a supplier is selected to participate in Sysco’s redistribution network. The supplier adoption process is designed to adopt and include a supplier in the Redistribution network in order to realize maximum benefit from volume aggregation across all OpCos as well as realignment of the supplier’s supply chain network with respect to the SYSCO supply chain network. The determination of the volume from which supply point will flow through an RDC is based on a comparison of the total net landed costs associated with moving all of the product volume from a given supply point thru the RDC versus the existing supply chain. Designed to Realize Maximum Benefit Determination of Volume

RDC Supplier Selection Process Major Costs Considered to determine Supply Adoption Savings Savings from Handling and Transactions Cost Transfers from Current State Freight, Unloading, Transshipment and Warehouse/Inventory Network Modeling Tools Vetting Process

RDC Supplier Selection - FAQ How much will it cost a supplier to participate? There are no fees to participate in the RDC. Sysco wants to drive costs out of the supply chain and share in that savings with the supplier. Are there any requirements for a supplier to participate? Yes. All RDC suppliers must be cooperative billed through BSCC. There are other requirements like, e-commerce and labeling requirements that are discussed at length during supplier adoption meetings. Through the adoption process, we develop a plan to match each supplier’s capabilities to the requirements for participation. Sysco has a complete Supplier Compliance program, which clearly defines the requirements, on the Sysco website. Following are frequently asked questions relating to RDC supplier selection. Read slide.

RDC Supplier Selection - FAQ How can a supplier ensure that they are included in the RDC? We expect that approximately 40% of the total case volume will flow through the RDC, so not all suppliers will participate. We believe that there are opportunities to be more efficient with every supplier, but will focus our efforts on finding the efficiencies for the RDC volume. Any supplier, who is interested in the benefits of the RDC, should be open to a discussion of changes to improve the Sysco/supplier supply chain.

National Supply Chain Operations/Compliance Central Liaison Supply Chain Operations (SCOPS) Role SCOPS Goal SCOPS team members can be reached by e- mail at suppliercompliance@corp.sysco.com The next section focuses on National Supply Chain Operations and Compliance. Sysco's Supply Chain Operations / Supplier Compliance (also known as the SCOPS) team is the central liaison between the Redistribution Center (RDC) network and the supplier community in relation to operations. SCOPS' role is to successfully transition suppliers into the RDC network and to monitor and report operational performance and issues to the suppliers as well as Sysco management. Our goal is to promote positive and open relationships with RDC suppliers while sustaining operational requirements that result in shared cost reductions.

National Supply Chain Compliance All suppliers participating in the RDC Network should read and agree to comply with the requirements outlined in RDC Network Compliance Manual These requirements include, but are not limited to: CHEP Pallets are required for all shipments into the RDC All loads are shipper load, count, and seal Electronic Advance Ship Notices (ASN) including Lot Number, Expiration Date, and/or Manufacture Date must be generated for every Purchase Order Lot Number and Dating must be physically printed on the case License Plates (LPN) corresponding to the ASN must be applied to every pallet in approved locations Individual SKUs must be placed on their own pallet Shelf Life at the time of receipt must be sufficient to redistribute through the entire supply chain Data integrity All suppliers participating in the RDC Network should read and agree to comply with the requirements outlined in RDC Network Compliance Manual. A link to the RDC Compliance Manual will be provided at the end of this presentation. These requirements include, but are not limited to: Chep Pallets are required for all shipments into the RDC. All loads are shipper load, count, and seal. The supplier is responsible for load integrity into our facilities. Electronic Advance Ship Notices (ASN) including Lot Number, Expiration Date, and/or Manufacture Date must be generated for every Purchase Order. The eSupplier Solutions module can be viewed for additional information regarding electronic data processing requirements. Lot Number and Dating must be physically printed on the case. This will facilitate identifying the correct product in the event of a recall. License Plates (LPN) corresponding to the ASN must be applied to every pallet in approved locations. Please review the compliance manual to fully understand LPN placement. Individual SKUs must be placed on their own pallet. Shelf Life at the time of receipt must be sufficient to redistribute through the entire supply chain. Data integrity – Our source systems are loaded using the data you provide on your RFD. Data integrity is critical to achieve maximum supply chain efficiency for both you and Sysco.

National Supply Chain Compliance The National Supply Chain Operations / Compliance team collaborates with participating suppliers in two distinct areas: Ramp Execution Item Attribute and Supplier Document Collection Data Validation Compliance Requirement Readiness License Plate and Exception Approvals Steady State Operational, Shelf Life, and ASN Reporting Item Attribute Updates and Data Clean Up Product Quality and Shelf Life Returns Compliance Issue Arbitration The National Supply Chain Operations and Compliance team collaborates with participating suppliers in two distinct areas; ramp execution and steady state. Ramp activities occur from the time you are identified to be an RDC supplier up to the point you begin to receive RDC orders. They include item attribute and supplier document collection, data validation, compliance requirement readiness, and license plate and exception approvals. Steady state activities occur after you begin receiving orders. They include Operational, Shelf Life, and ASN Reporting; Item Attribute Updates and Data Clean Up; Product Quality and Shelf Life Returns; and Compliance Issue Arbitration.

National Supply Chain Operations/Compliance - FAQ What is acceptable shelf life if we cannot achieve 80% for all items? We expect to receive the freshest product possible from our suppliers. If you have concerns about meeting 80%, we will work with you during your transition into the RDC to reach agreeable shelf life requirements. How do I get set up on CHEP pallets? CHEP pallets are required at the RDC. If you currently are not shipping on CHEP, we suggest you contact your CHEP representative. If you do not have a CHEP representative you can dial 407-355-6609, extension 6334, to reach a CHEP Insides Sales Associate. What lot / date information should be transmitted on an electronic ASN? The lot / date information shown on the case is the information that needs to be transmitted with the exception of Julianne dates which need to be converted to an actual date. Listed here are some frequently asked questions about Supply Chain Operations and Compliance. Read the slide

National Supply Chain Operations/Compliance - FAQ If partial pallets of product are ordered, do items have to be separated by a CHEP pallet? Yes. A pallet should be placed under each unique item of one layer or greater. Does product ordered in less than full pallet quantities require a label per layer? No. One unique label is required for any quantity greater than one layer up to a full pallet.

Supply Chain Inventory Management After go-live your SCIM Replenishment Analyst is your primary point of contact for day-to-day changes RDC Order Fill Rates of 99.7% or better Supplier shortages may be required to be delivered at supplier expense Communicate PO quantity changes to your RDC Replenishment Analyst at a minimum of 48 hours before shipment Item substitution is not allowed without prior discussion and approval from the Replenishment Analyst Supply Chain Inventory Management collaborates with multiple teams to provide optimal levels of redistributed product while continuously enhancing the overall supply chain for both Sysco and the supplier community. Sysco’s redistribution centers currently process approximately 40% of an Operating Company’s total inventory. Procurement for all current and future RDC’s is based in Houston, TX. The procurement team is structured with the Replenishment Analyst assigned by category with all analysts purchasing the same supplier for both the NE and SE RDC’s; lending continuity between facilities. When servicing a RDC it is imperative to fill orders 100% due to the aggregation of demand from multiple Opco’s. Shortages to replenishment orders should be communicated to the replenishment analyst with a minimum of 48 hours before shipment. This will ensure the next replenishment order reflects the shortage and also provides the opportunity to fill the load with replacement product. Extended shortages due to raw materials procurement, packaging, or other supply chain deficits should be submitted to the analyst with details noted on vendor letterhead along with a suggested substitution item, if available.

Supply Chain Inventory Management Provide four weeks advance notice for changes of any type such as packaging, changes in pickup locations, discontinuing items and/or new items Opportunity to reach an agreement of sharing forecast to assist in production and inventory planning through Collaborative Planning Forecast and Replenishment (CPFR) Opportunities to align ship dates with supplier production from plant facilities may be possible In relation to other changes regarding the current supply chain, four weeks notice is necessary for any supply point move, item discontinuation, or item addition. This communication provides us with the ability to resourcefully distribute the aggregated demand and publicize with corresponding OpCo’s. Additional tools such as the Collaborative Planning Report may be available after further discussions with your assigned Replenishment Analyst. The Collaborative Planning report shows estimated future need for the next 26 weeks based on the forecast and quantity on hand/on order for each line item. Alignment of RDC ship date in conjunction with supplier’s production timeline is also possible in order to streamline supply chain output.

National Supply Chain Inventory Management - FAQ What will the orders look like from the RDC? The RDC orders in full truckload, container or railcar increments in almost every instance. SKU level order increments are based on the industry average within Sysco’s supply chain. A supply chain model with plant direct locations may include a commitment to procure key items in vendor pallet increments. Most volume is procured in quantities that enable vendor pallet shipments. What does Replenishment Analyst mean? Replenishment Analyst is the team member within Supply Chain Inventory Management who is responsible for managing the procurement activity for the RDC network. Do orders from the RDC change after placement? Our goal is to reduce and minimize cost. Orders will rarely change after placement. We will now review frequently asked questions regarding Supply Chain Inventory Management.

National Supply Chain Inventory Management - FAQ Will the orders be consistent? The order placement day of week and pick up day of week will be the same. The Replenishment Analyst will work to balance the demand to best meet the needs for all areas. Is there a way of knowing in advance what will be ordered? Through Collaborative Planning, Forecast and Replenishment a supplier can gain insight of future demand at a SKU level. Each week an updated file is provided which shows future demand by day out into the future. Contact your Replenishment Analyst for more information about this tool.

National Supply Chain Transportation Freight cost should be reflective of actual transportation cost which includes all delivery components such as line haul, fuel surcharges, unloading, detention, etc. Transportation requirements - apply to ALL products that are distributed from each ship point, whether sourced, non-sourced Pallets Shipper Load & Count Complete the Supply Chain Profile with your freight program along with freight rates or pick up allowances. This document consist of three tabs: Questionnaire TAB2 Contact information National supply chain Transportation strategy is to control our inbound freight with the objective to better manage our supply chain and enhance our efficiencies. Freight cost should be reflective of actual transportation cost which includes all delivery components such as line haul, fuel, unloading, detention, stop charges, etc…… No freight cost should be embedded in your quoted product cost. <stop> Transportations requirements apply to ALL products that are distributed whether sourced or non-sourced. Chep pallets is the preferred choice for pallets. An alternative would be one-way grade A white wood, Sysco will not exchange pallets on delivered or CPU orders. All non-CHEP pallets are considered one-way. **PLEASE NOTE PALLET REQUIREMENTS FOR RDC SUPPLIERS are CHEP ONLY ** You can reference Supply Chain compliance previously discussed in this session ** SL&C or Shipper Load & Count –National transportation requirement. Truckload shipments or last-stop consolidated loads will be SL&C. The shipper will apply seal to the trailer and write seal# on the Bill of Lading. If the seal is intact at the Sysco destination, the supplier will be liable for any case count discrepancy. SL&C requirement will apply on live-loads as well as drop-trailer loads. A < supply Chain profile> form will be provided in the next phase of sourcing – This will allow a supplier to quickly provide current state freight program along with freight rates or pick up allowances. This document consist of three tabs – Tab 1 is a questionnaire that can be easily completed by clicking your responses on the green boxes Tab 2 is pre populated with each opco information this can be used to provide current freight rates or pick allowances – along with details components of your freight. The third tab provides you with a contract name and number you can call if you have questions during the process of completing the form.

National Supply Chain Transportation - FAQ If I am a FOB supplier will I need to complete the supply chain profile form? Yes. Please complete the questionnaire tab only on the supply chain profile form. This provides more than just rates but gives the Transportation Department current locations, warehouse information or rail capabilities, etc. Now I will review the FAQ….. At this time I would turn this over Andrew Cafcalas Sr. Manager Forward Warehouse Network.

Sysco Forward Warehouse Network Suppliers in the network have access to all Sysco Operating Companies The Sysco Forward Warehouse Network (F.W.N.) offers suppliers a network of facilities to store products Network is available for new supplier additions Includes specialty programs – Imports Supplier can utilize network for non-Sysco business-Retail for private account sales Supplier has the ability to have private, consigned or owned products in F.W.N. Sysco site managers measure service level, metrics and facility audits monthly

Sysco Forward Warehouse Network Frozen-Chill-Dry capability This slide is an illustration of the locations of the 14 Facilities. West Coast, Southwest, Mid-West and Northeast Frozen Chill 19 19

Sysco Forward Warehouse Network – FAQ How do I get a warehouse rate? Contact the Sysco Site Manager who will help facilitate the rate with the appropriate warehouse. Menu of program options Private account Owned account Consigned account Cross dock What is the difference between private, consigned and cross dock accounts? Private – Supplier account orders flow thru the supplier; Sysco has no visibility to the inventory. Consigned – Supplier account orders flow thru Sysco to the warehouse; Sysco has visibility to orders and inventory. Cross Dock - Supplier pays a pallet fee and delivers to the warehouse. I would now like to review some of the Frequently Asked Questions.

Sysco Forward Warehouse Network - FAQ Can you provide pictures of an inbound damage claim? The Sysco Site Manager, as part of our Standard Operating Procedures (SOP), has all warehouses take pictures of inbound damage and provide them to Sysco, the supplier and the Site Manager. At this time I would like to turn the communication over to Lisa Rainey.

Addendum The RDC Supplier Selection Process and the National Supply Chain Operations/Compliance sections; Susan Jacobs responsibilities have been transferred to Angela Fay, Supply Chain Operations Manager The National Supply Chain Transportation section, Yvonne Robinson’s responsibilities have been transferred to Danny Nguyen, Supplier Development Manager Please note that after the webinar was recorded, there have been some staff changes. For the RDC Supplier Selection Process and the National Supply Chain Operations/Compliance sections, Susan Jacobs’s responsibilities have been transferred to Angela Fay, Supply Chain Operations Manager and for the National Supply Chain Transportation section, Yvonne Robinson’s responsibilities have been transferred to Danny Nguyen, Supplier Development Manager.

Wrap-up Download Links http://sysco.com/supplier/supplier_compliance.html Supplier questions can be directed through Discussion Section in the eSourcing Tool As referenced in the National Supply Chain compliance section of this session, above is a link to access the RDC Supplier Compliance Manual. As a reminder, supplier questions should be submitted through the Discussion Section in the eSourcing Tool. Thank you for your participation. This concludes the National Supply Chain Execution session.