For 1990-2009 cars

# PREMIUM CHARGE FOR OUT-OF-COMPLIANCE LOW STOCKING

#### SUBJECT: SERVICE CHARGE PROGRAM FOR OUT-OF-COMPLIANCE LOW STOCKING POLICIES

This bulletin supercedes bulletin 95-PA-05A, which should be discarded

#### NOTE: To add clarity for the reader, the revised information is printed in BOLD type throughout this bulletin.

OVERVIEW: Saturn and its Retailers have jointly developed a service parts inventory control process that is leading the industry in parts availability, inventory turns, and value pricing. Key strategies involved in our inventory control process include:

o Saturn suggested Retailer stocking policies

o Obsolescence protection for Retailer inventories

o No premium transportation charges

o Simplified pricing structures

Because of their interdependence, all of these strategies must be adhered to for the overall inventory control process to work. However, some facilities are not approving their recommended stocking policies. This often results in delayed repairs of customer vehicles and/or emergency orders for parts at additional expense to Saturn in the form of handling and premium transportation charges.

OBJECTIVES: To support our current inventory control process and ensure that the actions of some do not increase costs for everyone, Saturn has consulted with the SSPO Operations Task Force, Strategic Task Force, and Franchise Operations Team (FOT) and has approved a program to charge handling and premium transportation costs to Retail facilities that continue in non-compliance and misuse the emergency order system.

The program is outlined in the following sections:

PART I: Program Overview PART II: Calculation of Service Charges PART III: Sample Report & Field Definitions

PART I: PROGRAM OVERVIEW:

Saturn takes the following steps in this program:

A. Determine fair, reasonable stocking policies based on Operations Task Force direction and Retailer feedback

B. Assist Retailers in identifying out-of-compliance stocking policies.

#### Note: Stocking policies are considered to be out-of-compliance when a Retailer chooses to override Saturn's recommended stocking level for a part. Also, if a Retailer does not approve a Saturn recommended policy within 14 days, the policy defaults to an out-of-compliance status the 15th day.

- SSPO provides each facility with a report listing out-of-compliance low stocking policies. This report appears monthly, following the Daily Status Report, and is received by every Retailer.

#### Note: An out-of-compliance low condition exists when a Retiler chooses a stocking policy amount below what Saturn recommends.

- A second report is sent only to Retailers who have accumulated more than $50.00 of out-of-compliance low service charges in a one-month period. (See Part II, Section D)

C. Assess Retailers for premium transportation charges incurred by emergency or special customer orders (ESCOs or SCOs) placed on parts with stocking policies below the Saturn recommended level. This occurs only when these charges exceed a predetermined threshold. (See Part II)

PART II: CALCULATION OF SERVICE CHARGES:

Saturn uses the following procedure to track premium transportation charges and to calculate service charges when they apply.

A. Identify all out-of-compliance low transactions placed outside the Retail facility's market area.

If a Retail facility is out-of-compliance low on the day an emergency or special customer order (ESCO or SCO) is placed outside their market area, the transaction will be recorded and included in a monthly calculation of all such transactions.

#### Note: This policy includes emergency orders placed by Parts Support Analysts (PSAs) on behalf of Retailers for out-of-compliance low parts.

B. Calculate the following charges for each recorded transaction:

1. If a Retailer is out-of-compliance low on a part and places an SCO or ESCO for that part from the SSPO warehouse, charges are calculated as follows:

$6.00 special handling

+ $4.00 administrative costs

+ actual premium transportation cost

2. For out-of-compliance low transactions involving Retailer-to-Retailer locates outside the facility's market area, charges are calculated as follows:

$6.00 special handling

+ $4.00 administrative costs

+ 10% spiff paid to the shipping Retailer

- If a Retailer locates a part from within the market area, or the standard of service for an SCO order from the SSPO warehouse can be met via dedicated delivery, no charge is calculated.

C. Calculate each Retailer's total monthly out-of-compliance low service charges.

D. Send a report, which prints at the end of the Daily Status Report, only to those retail facilities with charges exceeding $50.00.

This report explains the calculated charge, providing dollar value, order number, date, and part number detail. (See Part III for sample report.)

#### Note: If your accumulated charges are less than $50, you will NOT receive this report.

E. Contact Retailers whose out-of-compliance low service charges are above the total monthly charge threshold.

1. If the total monthly charge exceeds $50.00, a First Notification letter will be sent to the Retailer. If the total monthly charge for a subsequent month also exceeds $50.00, a Final Notification letter will be sent. If the Retailer has a third total monthly charge that is greater than $50.00, the Retailer's account will be automatically debited the amount of that month's total monthly charge.

2. If a Retailer whose account has been assessed a total monthly charge for out-of-compliance low transactions exceeds the $50.00 threshold again within a 12-month period, the Retailer will be charged again without prior written notification.

3. If a Retailer goes 12 months without an incident of over $50.00 in out-of-compliance low service charges, the process will start over. Thus, after a 12-month period, the next occurrence of a total monthly charge exceeding $50.00 would generate a First Notification letter. (This plan is effective as of October 1996 for charges accrued during September 1996.)

The purpose of this program is not to generate revenue for Saturn. Rather, its purpose is to recover avoidable expenses and to ultimately assure the continuance of world class service for our customers.

PART III: SAMPLE REPORT & FIELD DEFINITIONS

OUT-OF-COMPLIANCE SERVICE CHARGES

Retail Code #00000 Saturn of Anytown

PART PART ORDER ORDER ORDER ORDER SUGGESTED CURRENT NUMBER DESCRIPTION QTY NUMBER DATE TYPE MAX* MAX* --------------------------------------------------------------------------- 21044396 WHEEL-STRG 1 123456 1995-06-13 ESCO 1 0 21077572 GLASS-O/S RR VW 1 123457 1995-06-27 ESCO 2 0 21097071 W/STRIP-RR S/D 1 123458 1995-06-21 SCO 1 0 21097250 W/STRIP-R/CMPT 1 123459 1995-06-02 ESCO 2 0

OUT OF COMPLIANCE TOTAL DATE CARRIER CHARGE ------------------------------------------- 1995-05-24 FED-EX OVER 12.70 1995-05-24 FED-EX OVER 14.36 1995-05-24 FED-EX 2DAY 10.20 1995-05-24 FED-EX OVER 14.50 ----- THE TOTAL POSSIBLE SERVICE CHARGE IS $51.76

THE TOTAL CHARGES FOR THE MONTH EXCEED $50.00

*AT TIME OF ORDER

#### FIELD DEFINITIONS:

A. PART NMBR:

Identifies an out-of-compliance low part number which resulted in premium charges.

B. PART DESC:

Provides the part description.

C. ORDER QTY:

Identifies the amount of the part that was ordered.

D. ORDER NMBR:

Provides the order number referencing the transaction.

E. ORDER DATE:

Identifies the date the order was placed.

F. ORDER TYPE:

Identifies which type of order was placed: ESCO, SCO, or LOC (Retailer-to-Retailer locate order).

G. SUGGESTED MAX:

Reflects Saturn's recommended stocking level for this part at the time the order was placed.

H. CURRENT MAX:

Reflects the Retailer's stocking level for this part at the time the order was placed.

I. OUT-OF-COMPLIANCE DATE:

Identifies the date the stocking policy went into effect.

J. TOTAL CHARGE:

Summarizes the total cost associated with the transaction for which the Retailer may be assessed.

K. TOTAL:

Provides the total amount which may be assessed to the Retailer's account.

General Motors bulletins are intended for use by professional technicians, not a "do-it-yourselfer". They are written to inform those technicians of conditions that may occur on some vehicles, or to provide information that could assist in the proper service of a vehicle. Properly trained technicians have the equipment, tools, safety instructions and know-how to do a job properly and safely. If a condition is described, do not assume that the bulletin applies to your vehicle, or that your vehicle will have that condition. See a General Motors dealer servicing your brand of General Motors vehicle for information on whether your vehicle may benefit from the information.