Dear Supplier,

In an effort to continually improve our supply chain, it is the objective of Frank Murken Products, Inc. to work with our suppliers to help them maintain a preferred supplier status. Two of the metrics used to determine supplier status are Delivery and Quality: Conformance of supplier to Purchase Order requirements.

The delivery metric is arrived at by comparing our required delivery date to the actual receipt date. We do not allow any tolerance on the late metric but do allow a 10-day tolerance on the early metric. It is our intent to always measure you based on your commitments. With this in mind, should we request a date adjustment and you acknowledge, we will measure you to that new date. We recognize that the onus is on us to ensure the integrity of the dates within our system. In these early stages of this program, we suspect that we will recognize the need for improvement in this area. We encourage you to critique the data attached and advise of any concerns you may have.

The quality metric is arrived at by the number of NCMR's (Non-Conformance Material Reports) that have been issued. A rating of 1 (zero non-conformance), a rating of 2 (4 or less non-conformance), a rating of 3 (6 non-conformance) in a 12 month period to a rating of 4 (6 non-conformance) in a 6 month period.

In order to determine an overall rating, the On-Time delivery score are weighted evenly and an average of the two determine the Supplier-Performance rating.

We look forward to the utilization of this report card to help drive continuous improvement that will benefit both of our organizations. As we refine the metrics we will implement corrective actions based on performance levels.

Sincerely,

Frank Murken Products, Inc.