[4] AMWAY Case Study

Kotra, Los Angeles March 15, 2012

ABG North Asia Busan Hub Center (BHC) ANA Operations

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Jul. 2011

Contents 1. Location 2. Organization 3. Facilities 4. Inventory Flow 5. Responsibilities Responsibility 6. Postponement

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1. Location

Why Busan?

Eastern Gateway to Russia

FTZ ZONE BENEFIT

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3rd BIGGEST PORT IN THE WORLD

1. Location II AKL ABG

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OFFICE

1. Asia Network Ada Warehouse North Asia Markets Korea Japan Thailand Malaysia Taiwan Hong Kong Singapore Indonesia Philippines

Nutrilite Warehouse

Busan Warehouse

South Asia Markets Australia New Zealand

Legend Mutual use, Postponement, and Brite Stock SKUS shipped through Busan Market Specific SKUs shipped direct to North Asia markets

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SKUs shipped direct to South Asia Markets

2. Organization Manager Distribution Analyst

T&O

DPS Coordinator

Planning Coordinator

H.D Coordinator

Allocation Planner

OS&D Cleck

Allocation Planner

WHSE Coordinator

IMS / All. Planner

Rework Coordinator

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RDC planning

F. Management

F.M Assistant

ABG Operations

ABG Coordinator

NTBU Coordinator / ERDC

2. Org. Man Power ANA-WHSE Operations : 21 Staff

BIDC

202 Staff

: 171 Staff

. In/Out bound . DPS . Postponement . Kit Assembly

NTBU (ERDC) : 10 Staff

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3. Facilities 6 Level High Racking System - VNA Truck

RF (Radio Frequency) System

Pick to Light (Digital Picking) System for AKL Home Delivery

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3. Facilities - Area Area

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Portion

Desc.

BIDC

ANA

%

Land

103,680 ㎡

28,919 ㎡

28%

Warehouse

49,488 ㎡

21,673 ㎡

44%

3. Facilities – Rack Capacity Desc.

Pallet Rack (Aerosol : 790) Reefer Container

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Capacity 13,681 pallets 2 containers

3. Facilities – Order Fulfillment Desc.

Pick to Light (DPS)

Postponement

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Capacity

Remark

85,000 Each / Day

2 lines 12,000 Box / Day

H.C Product (90,000/week) N&W Product (34,000/week) Durables (8,000/week)

1 line 1 line 1 line

3. Busan Nutrition GMP Labeling

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3. BUSAN QA LABS & OFFICES

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4. Inventory Flow - ABG Postponement

ABG

Busan Hub Center

Rackas safety stock

Amway Korea

Other Affiliates

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4. Inventory Flow: Amway Korea ABG

Local

Home delivery

BHC

DPS Line

VMI Stores VDS 15

IBO

4. Inventory Reduction Calculation 

Risk pooling is the concept that demand variability reduces as we aggr egate demand  Across Customers  Across Products  Across Time Periods



Example is (3) SKU’s with similar demand patterns with 99% instock service level Expected Value = 100 Std Dev = 30

99% In-stock = 456 units 99% In-stoc k = 190

Expected Value = 100 Std Dev = 30

Customer 1

Avg dem and = 10 0

Customer 2

Avg dem and = 30 0

Expected Value = 300 Std Dev = 51.9

Expected Value = 100 Std Dev = 30

Combined Distribution

Customer 3

3 SKU’s X 190 units per SKU = 570 units of Inventory

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= 456 units of Inventory 16

5. Responsibilities

Warehousing

DPS & AP Replenishment

BHC

ABG In & Outbound Rework & Postponement Inventory Management

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5. Rework & Postponement Unit : ea

Hand Ass’y Kitting (Giftset) Over Labeling (Tamper seal included)

Month

Daily

150,048

13,240

359,694

30,831

Unit: ea (Capacity)

ABG-Postponement

Month

Daily

457,691 (378,000)

21,795 (18,000)

Durables

37,821 (37,800)

1,801 (1,800)

N & W Product

57,338 (136,000)

2,730 (6,800)

Home Care

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5. Inbound 4. Inbound

Unit : Pallet

Desc.

Monthly Avg.

Daily Avg.

Container

5,448

259

AIR

149

7

ABG

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5. Outbound Unit : pallet

Dept.

ABG

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Category Container AIR AKL

Monthly Avg.

Daily Avg.

4,111 54 2,312

196 2.5 110