National, Regional & International Contracts Operations National, Regional & International Contracts AOPD 101 The Contract Models Americas Contracts Americas Contracts In Canada & the US Drop Ship Contracts Hybrids - Reporting Sales - AOPD Forms We’ve talked about selling AOPD contracts …now let’s look at AOPD Operations and how AOPD contracts are set up. First we have AOPD 101 - for our new dealers - a few slides explaining some basic information about AOPD Operations. Then we will review the AOPD contract models and how they work…and, how to build and implement AOPD contract programs… This is the nuts and bolts of AOPD - The work conducted by National Accounts Administrators, National Accounts Sales Managers and your IT staff. This is truly basic training information. More comprehensive training is available upon request and is conducted at our respective members’ locations with the personnel that want and need this information.

AOPD Contract Basics... AOPD 101 Let’s look at a few of the Basics of AOPD… AOPD 101!

AOPD 101… Basic Information Requirements… The customer- must have at least one location out of the contracting dealer’s servicing area. The contract- must name at least one other AOPD member as a servicing dealer. The servicing dealers honor pricing and service considerations set up by the contracting dealer. Potential AOPD contract customers need to have at least one location outside the contracting dealer’s servicing area. At least one other AOPD dealer must be involved in the service of your customer. AOPD servicing dealers honor the pricing and service specifications set up by the contracting dealer for the customer. Only the contracting dealer may make changes to a contract.

Secondary service area Sales & Service Areas Smith & Butterfield Independence Office Essentials A–Z Office Outfitters American Paper & Twine Primary service area The PSA will extend for 50 miles from the center of a member’s HQ city Secondary service area All areas not designated a PSA will be an SSA Any member can represent or service AOPD in a SSA The servicing areas… The Primary Servicing Area is defined by the AOPD by-laws as a 50 mile radius from the center of your home office city This means you can write contracts for any qualified customer within this area, and you are also named as the primary servicing dealer for this area. No other AOPD member can write a contract for a customer in your PSA. When there are two dealers in a market this pertains to both. The Secondary Servicing Area, SSA, is the area outside the 50 mile radius. Any dealer can write an AOPD national contract for customers in SSA’s. Customer locations in these areas are usually serviced by the closest dealer …but can be serviced by any AOPD dealer assigned.

Two Basic AOPD Contract Types There are two AOPD Contract Models…Americas and USA… AMERICAS Drop Ship

A CLOSER LOOK AT... Americas Taking a closer look at Americas...

Description...Americas Contracting Dealer Servicing Dealers The BASIC Model Contracting Dealer Handles customer service & order receipt Servicing Dealers Fulfill orders & provide back up customer service Servicing Dealers send invoices to Contracting Dealer Contracting Dealer invoices customer - pays Servicing Dealer In a proverbial NUTSHELL… With the pure Americas model the Contracting dealer handles customer service forwarding orders on to the Servicing Dealers.. Servicing Dealers fulfill orders and back up the Contracting Dealer in Customer Service. Invoices are sent to the Contracting Dealer… Contracting Dealer is paid by the customer and pays the Servicing Dealer…

Americas - The Basics Contracting Dealer Customer Servicing Dealer ORDER Priced Order Customer This schematic demonstrates the ordering & fulfillment process under the Americas model. Servicing Dealer

Americas - The Basics Contracting Dealer Customer Servicing Dealer Invoices Invoices & Reports Customer Invoices and month end reports are sent by the Servicing Dealer to the Contracting dealer…who then invoices the customer and provides the specific reporting the customer has requested. Servicing Dealer

Americas - The Basics Contracting Dealer Customer Servicing Dealer The customer pays the Contracting Dealer and the contracting dealer pay the Servicing Dealer. We prefer that Contracting Dealers pay the Servicing Dealer by a specific date, say by the 10 of the month… Even if it is before receiving payment from the customer. Servicing Dealer

Building an “Americas” Contract Get contract number - Contact AOPD HQ COMPLETE... . AOPD Contract Fact Sheet (CFS) . Locations/Call Report Sheets for Servicing Dealers Copy AOPD HQ on all contract forms Step one is easy…call or e-mail Shelley Tousignant at AOPD HQ for a new contract number. Complete the necessary forms…Contract Fact Sheet and locations/call report sheets. Always copy AOPD HQ on all contract forms.

Building an “Americas” Contract SET UP - customer in internal computer system . Pricing structures - contract & non- contract . Ordering methods . Customer invoicing & reporting (per contract specs.) . Local Locations Your internal set up as Contracting Dealer involves…getting the customer set up in your computer system… Set up the customer’s pricing - the net priced contract items and the non contract item discounts - List minus - cost plus or matrix… Servicing Dealers are going to be sending you invoices and you are going to be paying them so set them up in your internal system accordingly…I understand this is similar to the way you set up vendors. How is the customer placing orders? Fax, phone, Internet set this up. Set up the local locations that you are going to service & ship to.. Then you need to set up the remote locations; the locations that are receiving their orders from the assigned Servicing Dealers. Flag these locations to show where the order is to be forwarded and how it is to be forwarded…and make sure the order is treated as a pass through or kind of like a drop ship order so that it does not affect your inventory. Set up your customer’s invoicing method and timeframe…and usage reports the customer has requested.

Building an “Americas” Contract SET UP - customer in internal computer system . Servicing Dealers(similar to “vendor set up”) . Remote locations Forward the “pre-priced” orders to servicing dealers So that orders do not affect your inventory After-hours customer calls from different time zones Your internal set up as Contracting Dealer involves…getting the customer set up in your computer system… Set up the customer’s pricing - the net priced contract items and the non contract item discounts - List minus - cost plus or matrix… Servicing Dealers are going to be sending you invoices and you are going to be paying them so set them up in your internal system accordingly…I understand this is similar to the way you set up vendors. How is the customer placing orders? Fax, phone, Internet set this up. Set up the local locations that you are going to service & ship to.. Then you need to set up the remote locations; the locations that are receiving their orders from the assigned Servicing Dealers. Flag these locations to show where the order is to be forwarded and how it is to be forwarded…and make sure the order is treated as a pass through or kind of like a drop ship order so that it does not affect your inventory. Set up your customer’s invoicing method and timeframe…and usage reports the customer has requested.

Building an “Americas” Contract Send to Servicing Dealers... . Completed Contract Fact Sheet . Location/Call Report (copies to AOPD HQ) . Pricing Information . New Customer Intro Pack The specific contract information you will send to the Servicing Dealer is included in the Contract Fact Sheet. Along with this you will be sending the Servicing Dealers a location/Call Report, And a new customer Intro Pack.

Building an “Americas” Contract Create Remote Location Invoices from: Original orders (may be already in your system) Invoices from Servicing Dealers Treat Servicing Dealer sales as A/R “pass-through” - not your sales... Create Usage Reports from: Orders received & maintained on internal computer system Under the America’s model the Contracting Dealer creates the customer invoices…you build your invoices from the original orders from the customer and the invoices from the Servicing Dealers. You know when you receive the invoices that the orders have been fulfilled. As the Contracting Dealer, you forwarded original priced orders out to the Servicing Dealers, this means you have the priced orders in your system…so you can match and compare the invoices from the Servicing Dealers to the orders in your system. If the bottom lines match you know it’s right. If they don’t match then you have to see what has changed. Servicing Dealers are paid the prices from the the original order. Usage reports are also created from original orders received…you have the data in your system so as Contracting Dealer you know what was ordered. Adjustments to this usage would only come from returns and credits sent to you by the Servicing Dealers.

Servicing “Americas” Contracts Receive CFS & Location/Call Report Setup... . Ship to addresses . Bill to address (Contracting Dealer) . Contact customer (per CFS instructions) . Set up appointment - visit customer “Pre-priced” orders come from Contracting Dealer Enter orders-ship product Invoice Contracting Dealer per contract specs. As a Servicing Dealer Under the Americas Model… Set up the customer ship to addresses from the location/call report that was sent to you by the Contracting Dealer… Set up the bill to which is the Contracting Dealer address… Contact the customer per instructions on the Contract Fact Sheet (CFS). Make an appointment and sales call on the customer. You’re orders will be coming to you pre-priced from the Contracting Dealer… Process orders and ship the product to the customer. Send your invoices to the Contracting Dealer according to the specifications on the Contract Fact Sheet.

Servicing “Americas” Contracts Important Reference original order number on your customer order, packing slip and invoices back to the Contracting Dealer Servicing Dealers must price orders as received Remember … Contracting Dealers pay Servicing Dealers from original pre-priced orders Subs allowed (unless “No Sub” specified) As a Servicing Dealer Under the Americas Model… Be sure to include the original order number on the invoice, packing list and the invoice to the Contracting Dealer…this just makes everything much easier for the Customer, Contracting Dealer and Servicing Dealer. Your pre-priced orders from the Contracting Dealer must be priced as received…Do not change prices because the Contracting Dealer is only going to pay you what was on the original orders. Your accounting department will also appreciate this consistency…having to constantly adjust prices after the fact is a lot of extra work for accounting departments. You can substitute products on orders unless the CFS indicates no sub…which rarely happens. We allow our dealers to sub to stock as long as they abide by the rule to “substitute products must be comparable in specification and be of equal or greater value”.

Americas Contracts Between Canadian & U.S. Dealers AOPD is fortunate to have a fine group of members in Canada. This group is the Basics group with eight distribution and sales locations across Canada. This allows Canadian and US AOPD dealers the opportunity to write contracts for customers with locations in both countries. Setting up a contract for a customer with locations in Canada and the US is not that much different than setting up any Americas contract…a bit more communication at the onset of building the contract, however, will make the process work much better

Contracts Between Canadian & U.S. Dealers AOPD International Contracts Pre-Contract Set Up In Contact Negotiations Determine customer’s expectations Be sure your customer understands: how the contract will work the differences in products why pricing may be different The keys to success are communication! Pre-Contract Set Up Determine your international customer’s expectations …be sure you understand what they are trying to achieve before you start putting the contract together. There may be differences in the products their end users will be ordering and there may be some product substitutions. Pricing may also be different, and not just because of the exchange rates and currency differences. Prices may have to be adjusted because they are not competitive enough or they may be too low In this and really in every contract communication is your key to success!

Contracts Between Canadian & U.S. Dealers Pre-Contract Set Up Make Contact basic contract & location info list of proposed net priced contract items Servicing Dealer cross-references the item numbers Apply competitive pricing specific to the Canadian or US market make allowances for the differences in products and prices Verify non-contract pricing structures Possibly create a sister contract for the Canadian or US locations Contract Set Up Contact the Servicing Dealer to make them aware of the new contract and the locations they will be assigned to service. When you put together a list of contract items, e-mail the priced list to the Servicing Dealer, who will then cross-reference the list to their item numbers. There may be some product substitutions. The Servicing Dealer will then apply competitive pricing specific to the their market to the item listing. You have to expect differences in product and dollar values between Canada and the US. Are your non-contract and/or exceptions pricing structures applicable to the Servicing Dealer’s market? Remember you can create a sister contract, with a different contract number. This easily makes allowance for the different products and prices.

Contracts Between Canadian & U.S. Dealers Invoicing Best to set up... Invoices created by Canadian or US member for locations they are servicing Don’t promise this… Single invoice or invoices to customer corporate - in one currency Involves currency conversion Reporting Sales Easiest for everyone... Members report in their respective currencies Kind of hard to do… Combined usage - Canada & US - in one currency Invoicing Non-centralized, dealer generated invoicing, created by the Servicing Dealers in their own currency for the locations they are servicing. This works best if the invoices are sent to the locations for payment. Actually, the 8 Canadian dealers can centrally bill their locations If, however, the customer wants these invoices in one currency for all locations, someone will have to do the conversion. This is negotiable and a subject for discussion prior to contract set up. Reporting Sales The Dealers report sales in their own currency. The reports can be totals only or detail. Customer’s choice. Doubt that you would see this but if it did happen…again someone has to do the conversion.

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AOPD Contracts Utilizing Drop Ship LET’S LOOK AT... AOPD Contracts Utilizing Drop Ship Contracts Utilizing Drop Ship Now let’s take a closer look at USA Model Contracts...

Description...AOPD Drop Ship Contract Utilizes the major wholesalers to fulfill orders via drop ship programs AOPD Servicing Dealers CAN BE USED TO... introduce contract program to locations make sales calls on locations provide emergency back up customer service handle some services and orders, such as furniture The USA model is a bit different… In the USA model the orders are fulfilled by the wholesalers through their respective drop ship programs… But…If a Servicing Dealer is present in markets where there are customer locations they are still assigned as the Servicing Dealer for the locations… Servicing Dealers introduce the AOPD program to the locations… Make periodic sales calls on the customer… The servicing dealer provides back up customer service and also handles off program sales ---like custom furniture, special items,local purchases like rubber stamps, and emergency orders… For this, the Servicing Dealer is paid a monthly commission…usually 3 percent of the sales to the location.

Drop Ship - The Basics Wholesaler Contracting Dealer Customer ORDER Customer Order This schematic demonstrates the ordering & fulfillment process under the USA model. Wholesaler

Drop Ship Invoices & Reports Contracting Dealer Invoices & Reports The Contracting Dealer sends the invoices and usage reports from their system to the customer. Customer

Using a Servicing Dealer for Local Service Contracting Dealer Customer Local Service Request Local Service Request Servicing Dealer Local Delivery This schematic shows the introduction of the AOPD program to the customer by the servicing dealer.

Using a Servicing Dealer for Local Service Contracting Dealer Customer The customer pays the Contracting Dealer… the Contracting Dealer pays the percentage commission to the Servicing Dealer… the Servicing dealer pays attention to the customer by making periodic sales calls and staying in touch with the customer location. Servicing Dealer

Building a Drop Ship Contract First Steps... Establish drop ship program with wholesaler Contact AOPD for assistance if needed NAA sends to Servicing Dealers (if using) CFS & Location/Call Report Since USA uses United and SPR drop ship programs to fulfill orders it’s obviously important that a contracting dealer has established a drop ship program with their wholesaler… Most dealers have this already set up but if you haven’t, and you need help in getting this set up, AOPD HQ has wholesaler contact information. It’s important that your National Accounts Administrator understands how the AOPD USA model works. Your NAA sends the Contract Fact Sheet and Location/Call Reports out to the servicing dealers and AOPD HQ. Your NAA is also responsible for putting together and sending out the Intro Packs to local locations you are servicing and to the Servicing Dealers for demo to remote locations. What is an Intro Pack???

Building a Drop Ship Contract Setup... . Pricing structure . Billing & reporting . Customer Service & ordering methods . Local locations (Contracting Dealer is servicing) . Remote locations in drop ship program You will need to set up The customer’s contract pricing structure in your system... Set up your billing and reporting to the customer’s requested specifications. Customer service for the contract…and how you will be receiving orders… Set up the local locations you will be servicing and shipping orders to from your own warehouse... Flag the remote locations so that orders placed for these locations go into the drop ship program and are forwarded to the wholesaler for distribution. You will need to set up the commission program for the servicing dealers so that someone is responsible for calculating commissions from the locations sales and sending commission checks out to the servicing dealers.

Hybrid Contracts What we have seen so far is an explanation of the two pure AOPD contract models. Obviously there are cases when it may be necessary to build what we call a hybrid contract… A combination of Americas and USA and sometimes unique features outside of both of these contract models.

Mixed Contract Construction USA Americas Why use a mix of USA & Americas? Customer has locations requiring more service (Americas) & locations that do not (Drop Ship) The customer has some locations in areas not covered by AOPD members (Drop Ship) Customer has locations in Canada (Americas) (Wholesaler drop ship programs are not used by AOPD dealers in Canada) Here are a few example reasons why you may have to build a hybrid contract… The first and most often seen would be that the customer has various size locations…some requiring a rep to call and some that don’t require or maybe don’t want a rep calling. Then we have customers that may have some locations in areas where there are no dealers close enough to provide service…like Great Falls, Montana or Amarillo,Texas… Or your USA customer may have locations in Canada…and in Canada wholesaler drop ship programs are not used.

Unique Contract Considerations AOPD contracts DON’T have to be exactly alike… For instance… Customer wants to place orders and deal directly with a Servicing Dealer Servicing Dealer could be invoicing the customer directly and handling payables Contracting Dealer will have to contact Servicing Dealer for sales reports Contracts do not have to be alike… Certainly we do have basic models and guidelines for building contracts, however, just like people, contracts are individuals with differences. The good thing is that with AOPD contracts can be different and can be put together to suit your customer. Here is an example of one of the more common differences that we see from the basic Americas or USA contract models.

Unique Contracts…an AOPD strength! Cooperation Communication Service Being able to create a custom contract for any customer is a strength AOPD has over the big box dealers. No cookie cutter contracts here. Every dealer can customize a contract to the customer’s requirements. AOPD dealers are able to provide customized local service and are able to react with authority to most contract requirements The big key to success with AOPD contracts is communication and understanding. Dealers working together to produce contracts that work for their customers. There’s not much that cannot be worked out dealer to dealer an

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Reporting AOPD Sales What about reporting sales? Let’s take a look at how this works...

Reporting Sales Who: Contracting Dealer To: AOPD HQ What: Servicing sales $$ totals When: Monthly How: Using Excel template reporting spreadsheet sent via e-mail by AOPD HQ at the first of the month. Dealer completes and returns to AOPD. How do you report sales? As Contracting Dealer you have to report your sales to AOPD HQ… In most cases you just need to send sales dollar totals - monthly. Most sales are reported via fax or e-mail. AOPD HQ will send you a report listing the contracts you need to report on.

AOPD FORMS & CHECKLISTS We have given you printed samples of completed AOPD contract forms. Let’s look at these forms.

USED IN CONTRACT SET UP Contract Fact Sheet AOPD Locations/Call Report Contract Fact Sheet Worksheet AOPD Locations/Call Report Contracting Dealer Checklist Servicing Dealer Checklist New Customer Intro Pack Checklist You have an AOPD Contract Fact Sheet...and a Contract Fact Sheet worksheet that explains the Contract Fact Sheet fields and what information goes in them. You also have an AOPD Location/ Call Report. This gives you pertinent information about the location you will be servicing and is also serves as a call report that is completed and sent back to the Contracting Dealer. In addition you have a Contracting Dealer checklist and Servicing Dealer checklist that will help you in setting up your contracts. Our last form is a New Customer Intro Pack checklist that lists what a Contracting Dealer should include in the Intro Pack for the customer.

Customer Endorsement & Support A letter or memo from Corporate HQ Announcing New Program Identifying AOPD Servicing Dealers Giving a Contact Name at HQ An endorsement from the corporate office goes a long way to help insure the success of a contract. A letter or memo from the Home Office on company letterhead announcing and introducing the AOPD contract to their locations. This may also tell them when they will be contacted and by whom. It doesn’t hurt to show a list of the servicing dealers with contact names and phone numbers. In fact it’s a very good idea. Send a copy of this to the servicing dealers as well. In case the location says “I never got the memo.” Make sure the Servicing Dealers gets a Home Office contact name that they can reference in discussing the program with their location.

After the Contract is Implemented…. Follow Up! Review Call Reports WATCH Your Contract location & customer info keep contract items & pricing current service issues participation KEEP IN CONTACT WITH YOUR CUSTOMER As a Contracting Dealer it is important to review your Call Report. This lets you know just how your contract is doing and points out any problems or areas of concern. You may involve your customer by giving the information to the corporate contract contact. Let them know how their contract is working... Watch your contract Keep location information current. New addresses phone fax numbers etc. and be sure to add new locations as they are given to you. Keep your contract items current…if something is deleted by the manufacturer replace it or delete it from your AOPD contract. If you add an item to the customer’s contract in your system, add it to the national contract. And keep your pricing current! Handle all service issues dealer to dealer first. AOPD HQ can be involved in ongoing problems that are not being resolved to the customer’s satisfaction. How do you address locations that are not participating? Call the servicing dealer; find out why they are not getting business from the location. Enlist help from customer corporate. If this is a mandatory contract and you have locations not participating, definitely involve corporate. Keep in contact with the corporate location…Just because you think everything is okay doesn’t mean it is. A quiet customer is not always a happy customer.

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Thank You!