Cummins Power Generation Kent Distributor Policy Manual Note: The terms of the contract of sale between CPGK and the Distributor are set out in the Terms and Conditions of CPGK, a copy of which is attached (the “Terms”). This Distributor Policy Manual is a supplementary policy document (see Cl. 5.4 of the Distributor Agreement) to inform and assist Distributors. It may be revised by CPG from time to time. In the case of any conflict between this Manual and either the Terms or the Distributor Agreement then the Terms or the Distributor Agreement will prevail. CPGK-QSP-04-06-05-00 Rev 11 June 2009 Page 1
Transcript
Cummins Power Generation Kent
Distributor Policy Manual
Note: The terms of the contract of sale between CPGK and the Distributor are set out in the Terms and Conditions of CPGK, a copy of which is attached (the “Terms”). This Distributor
Policy Manual is a supplementary policy document (see Cl. 5.4 of the Distributor Agreement) to inform and assist Distributors. It may be revised by CPG from time to time. In the case of any conflict between this Manual and either the Terms or the Distributor Agreement then the
CONTENTS Section 1. Credit Term and Payment Options 5
1. General statement 1.1 Cash prior to dispatch 1.2 Trade credit 1.3 Letter of credit
Section 2. Liquidated damage clauses 7 Section 3. Order Board Guide Line Policy 8
3.1. General statement 3.2. Method of placing orders 3.3. Type of orders 3.4. Order acknowledgements 3.5. Inquiry and follow-up 3.6. Specified routing 3.7. Order amendment policy 3.7.1. Allocation 3.7.2. Cancellation (Aligned with Global Cancellation Policy) 3.7.3. Order Change Request 3.7.4. Reschedules 3.7.5. Customer Order Shipment
Section 4. Non standard orders-Request for Quote (RFQ) 13 4.1. Purpose 4.2. Scope 4.3. Responsibilities 4.4. Changes to order entry for non-standard orders
Section 5. Special Sales Assistance (SSA) policy 14 5.1. Guidelines
Section 6. Cummins Power Generation product support fee policy issue 15 6.1. Purpose 6.2. Scope 6.3. After sales support 6.4. The PSF objectives 6.5. Policy administration 6.6. Examples of PSF uses 6.7. The sales subject to a PSF 6.8. The orders exempted from a PSF 6.9. Disputed PSF assessments 6.10. Exclusions
Section 7. Parts order policy 19 7.1. General statement 7.2. Method of placing enquiries and orders 7.3. Types of orders 7.4. Order acknowledgements 7.5. Inquiry & follow up 7.6. Specified routing 7.7. Parts supply transfer to Mechelen PDC
Abbreviations BDM Business Development Manager BRFQ Blanket Request For Quotation CBS Cummins Business Service CONS Customer Order Not Shipped CPGK Cummins Power Generation Kent CSD Customer Service Department EMEA Europe Middle East & Africa ESB Energy Solutions Business GDC Global Distribution Connectivity – now known as Distribution Portal L/C Letter of Credit MRA Material Return Authorization MDD Manufacturing Due Date OCR Order Change Request PSF Product Support Fee PSG Power Solutions Group RFQ Request for Quotation RGM Regional General Manager SSA Special Sales Assistance
Section 1. Credit Term and Payment Options 1. General Statement Shipment and terms for products sold to distributors are subject to the approval of the CPG Kent Credit Department. As a service to its distributors and their customers, the CPG Kent Credit Department establishes terms of sale tailored to the distributor and to a specific order. Cummins reserves the right to extend, limit or withhold credit at its sole discretion. A number of factors are considered by the Credit Department when terms are established such as trade reports, financial statements, and references provided by suppliers. CPG Kent Credit Department can also work with banks to help develop alternative financing for distributors for special or unusual opportunities that may occur. Where products are sold and invoiced directly to an end user by Cummins payment terms will also have to be agreed with the CPG Kent Credit Department. For Non Standard orders that require significant engineering CPGK may request a deposit with order in addition to any credit facilities agreed. The size of the required deposit will depend on the non-standard content of the order, normally a minimum of 10% of the order value. The following sections detail the three principal payment options:
1 Cash prior to dispatch 1. Trade credit 1.3 Letter of credit
1.1 Cash prior to dispatch Where a customer/distributor is requested to pay for the product prior to dispatch we require the following schedule of payments:- 30% placing of order 60% within one month of Order Acknowledgement 10% prior to dispatch 1.2. Trade credit Distributors who are less than 50% owned by Cummins will have a maximum line of credit established through the use of any one or combination of the following:
• Financial statement analysis • Dun & Bradstreet rating and payment record • Past Payment performance with CPG • Bank references • Trade references • Other references or measures, if necessary
Past due balances Payment arrangements for the past due balances must be made with the CBS Collections Department. If satisfactory payment arrangements are not made, the distributor will be placed on “credit hold”. Orders will not be accepted at that time.
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Distributor Policy Manual CPGK-QSP-04-06-05-00 Rev 11 Invoice Adjustment In order to keep customer accounting and CBS accounting records synchronized, all invoices should be paid as shown on the billing statement. A pending adjustment should not be deducted from a remittance until CBS has issued a credit accepting the claim appearing on the monthly statement. 1.3. Letter of Credit CPG may accept an L/C opened by a distributor or a distributor’s customer with a value greater than USD 200,000. However, if the L/C is opened by the distributor’s customer, the distributor will need to discuss with the CPG Kent Credit Department whether the opening bank has a correspondent relationship with a first class bank in London prior to opening the L/C. All letters of credit must be opened in accordance with the L/C instructions detailed in Appendix ‘A’ If the L/C is to be opened by the distributor’s customer direct on CPG, then the distributor must pass their customer a copy of Appendix ‘A’ (L/C Instructions). It is the distributor’s responsibility to ensure the correctness of their customer’s Letters of Credit. Where a distributor’s customer places an order directly on CPG utilising a Letter of Credit, the Letter of Credit must be established prior to CPGK accepting the order into production. Letters of credit of less than a $150,000 USD for one off customer transactions will not be accepted and will be returned to the distributor for processing as part of the direct distributor’s business.
Section 2. Liquidated Damages Clauses CPGK rejects and will not accept penalty clauses. CPGK rejects and will not accept liquidated damages clauses without prior (before the entry of the order) express, written, finance department approval of the clause including its wording. CPGK will deal with such clauses (example: discount off the invoice for the failure of CPG to ship by the “scheduled ship date”) according to the following guidelines: 2.1 Liquidated damages must be expressly stated on the face of the request for quotation (RFQ). No such clause in a quotation or order, written or verbal, will be binding unless it is clearly made known to CPGK and unless approved by the Sales Director and finance department as stated above. For the purpose of liquidated damages calculations, CPGK’s delivery period will start only after receipt of full and final specification details. It is the responsibility of the distributor to secure full and final specification agreement with the customer and acknowledgement by CPG. No changes to specification or reduction in delivery time will be accepted after release of full and final information to our system, unless specifically agreed to by the Plant Manager and Sales Director. 2.3 CPGK shall be allowed a two week grace period from the scheduled ship date before any liquidated damages are applied. Liquidated damages will never be agreed by CPGK at a rate greater than 0.5% of the net ex-works price per week of delay following the two week grace period, up to a total maximum penalty of 5% of the net ex-works price of the equipment provided by CPGK. 2.4 Failure to provide an irrevocable and confirmed Letter of Credit (or other such commercial delay) 30 days prior to promise date will void a liquidated damages clause 2.5 Delay’s due to witness test requirements will void a liquidated damages clause 2.6 Each claim must be accompanied by proof of customer’s actual damages and proof that CPGK’s delay was the direct and sole cause of those damages. 2.7 To be eligible for payment, the distributor and customer must exercise their best efforts to minimize their damages. 2.8 CPGK reserves the right to reject any order that specifies a penalty or liquidated clause, regardless of whether or not the liquidated damages clause falls within the above guidelines.
Section 3. Order Board Guide Line Policy Definitions
Blanket Order – multiple unit orders placed against scheduled delivery to match distributors’ annual forecast. Cancellation – request to terminate part or all of an order. Order Change Request (OCR) – request to change to any part of an order, both commercial and specification. Order Acknowledgement - a formal route for the communication of specifications, pricing and original delivery dates (ex-works). It is your responsibility to check the order acknowledgment is correct. Failure to highlight any discrepancies between the order and the order acknowledgment will be rectified at the Distributor’s cost. Lead Time Bulletin – a formal communication source for any changes in the below guidelines. The regular CPGK lead time bulletin is posted on GDC. Time lines within order board guide line policy refers to Manufacturing Due Date as the starting point 3.1. General Statement CPG generating set orders are placed through the Customer Service Account Manager. They are responsible for the processing and management of all orders. CPG may decline to quote or accept orders if the specification is outside the standard price list offering and/or the delivery requirement is shorter than the manufacturing lead time. 3.2. Method of Placing Orders All orders come into CPG by one of two different means: FAX - The distributor manually fills out the standard CPG Order Form and faxes it to CPG, where it is entered into the system. E mail/Lotus Notes - The distributor fills out the standard CPG order form and sends it electronically to the CSD Account Manager. Note that from 5th November 2007, all Cummins Genset/ GTEC orders for CPGK shall be ordered using a single point email address listed below [email protected] 3.3. Types of Orders • Ship from Stock Orders – An order is placed for products that physically exist in CPGK’s finished goods
inventory. Purchase orders must clearly indicate (on the order form) the specific model and spec details requested from finished goods.
• Reservations for up to 72 hours are available for stock sets. No changes to the build of the set will be
allowed. Stock orders can be submitted using any of the methods described in “Methods of Placing Orders”. • “In build” or “To be built” refers to purchase orders for products which are in the production schedule but not
yet built These products will be built by the factory at pre-defined product configurations, which are intended to support short lead time opportunity sales.
• Some minor changes or deviations to the model/spec may be allowed depending where in the build cycle the specific set is. Refer to Section 5.
• Purchase orders for products that are not pre-built and are manufactured to meet specific customer
requirements can be submitted by any of the methods described in “Methods of Placing Orders”. • RFQ (Request for Quote) Orders – Refer to Section 4. 3.4. Order Acknowledgments An order acknowledgement is a formal route for the communication of specifications, pricing and original delivery dates (ex-works). All orders are acknowledged in writing. The acknowledgement confirms that the order has been received and is in process (the factory is verifying its capability to meet the customer’s requested ship date) or has been fully processed (i.e. a scheduled ship date has been assigned and pricing and configuration have been verified). All changes (maintenances) to an existing order will be formally acknowledged reflecting the changes to the distributor. It is the distributor’s responsibility to review the order acknowledgement and ensure it reflects the order requirements. Failure to highlight any discrepancies between the order and the order acknowledgement will be rectified at the distributor’s cost. From 2008, the confirmation period for order acknowledgement are separated into 3 time zones in order to focus on more critical delivery dates
For order promised within 8 weeks of the manufacturing due date (MDD), order acknowledgement will be confirmed to the day
For order promised between 8 and 16 weeks from the manufacturing due date (MDD), order acknowledgement will be confirmed to a particular week
For order promised greater than 16 weeks, order acknowledgement will be confirmed to a particular 4 week period
Wherever possible order acknowledgments for standard product will be sent within 2 days of receipt of a complete and accurate order. The CPGK order acknowledgment process is the formal route for the communication of specifications, pricing and original delivery dates (ex-works). It is your responsibility to check the order acknowledgement is correct. Failure to highlight any discrepancies between the order and the order acknowledgement will be rectified at the Distributor’s cost. 3.5. Inquiry and Follow-up The distributor’s first source of information regarding all orders should be the “Order Status Report”. The distributor is also encouraged to contact the assigned CSD Account Manager with any specific questions on the order. 3.6. Specified Routing CPG will ship products via its selected line of carriers. If a distributor wants to use carriers other than those selected by CPG, the distributor will be responsible for any additional cost involved in using the distributor’s desired carrier. The distributor must specify the carrier on incoming orders. (For more information, see Freight & Shipping Policy.)
3.7.1. Allocations All QST30, K38, K50, QSK60 & QSK78 generator build slots are allocated regionally for consumption in 2008. The regional allocation can be viewed via the stock list on the CPGK Gensets Database. We strongly recommend distributors to place blanket orders across CPG product ranges in advance to allow all regions a reasonable opportunity to consume their allocation and secure delivery against requested manufacturing due dates in 2008. If no blanket orders are received for allocated products then products will be consumed on a first come first served basis. All QST30, K38, K50, QSK60 & QSK78 generator build slots will be consumed from the regional allocations. Consumption will be made from the stock list, using the first available stock generator available for your region. Consumption of generators outside of your region will only be carried out by agreement with your Regional General Manager (RGM). All QST30 & K38 generators not consumed by orders from the allocated region 13 weeks prior to scheduled delivery will be made available to all regions. For example, a generator build slot allocated to West Europe, scheduled for completion in week 14, will become available for all regions in week 1 should a firm order not be received for this unit from West Europe by week 1. All K50, QSK60 & QSK78 generators not consumed by orders from the allocated region 20 weeks prior to scheduled delivery will be made available to all regions. For example, a generator build slot allocated to West Europe, scheduled for completion in week 21, will become available for all regions in week 1 should a firm order not be received for this unit from West Europe by week 1.
2008 allocations are currently being loaded onto the stock database and will be available for regional consumption from the start of Q4 2006. 3.7.2. Cancellation – Aligned with Global Cancellation Policy (MB084) CPG Kent may from time to time agree in writing to cancel orders. The agreement to cancel an order may include a cancellation charge; the size of this cancellation charge will be determined by CPG Kent on a case by case basis but will typically be a minimum of 5% of the net order value. Additional charges will be assessed for cancellation of any CAG/special engineering and/or non-standard equipment on the order, up to the full value of the engineering costs and the cost of the non standard equipment. Cancellation of acknowledged orders will be accepted where an order comprises standard price list options and the cancellation request is received before the following cancellation periods. All QST30, K50, K38, QSK60 & QSK78 powered Gensets (DFHC to DQLB) - 20 Weeks before promise date All K19, QSK23 & V28 powered Gensets (DFGB to C900) - 20 Weeks before promise date All QSL9, NT855 & QSX15 powered Gensets (C275 to C550) - 8 Weeks before promise date All D1703, X Series, B3.3, 4B, 6B, 6C, QSB5 & QSB7 powered Gensets (C11 to C250) - 4 Weeks before promise date All CAG gensets / line items – no cancellations will be accepted. All High Voltage genset – no cancellations will be accepted.
Consequences of Cancellation If orders are cancelled within these cancellation periods the following charges will apply: For cancelled product which comprises only standard price list options or stock build options, a 5% cancellation fee will be charged. For all other product types, cancellation shall be the full order value. All genset cancellations require sign-off by the Sales & Marketing Director, irrespective of the status of the order. 3.7.3. Order Change Request (OCR) Requests for changes to an acknowledged order must be submitted on a CPGK Order Change Request (OCR) form, contained within the PowerQuote pricing tool. OCRs, will be limited to a total of 3 standard option changes per order. Above this limit a new order will be required. Note 1 – Please refer to the lead-time bulletin on the CPGK Gensets Database which outlines the allowable changes per option. Commercial Change Request Commercial Change Request includes information, shipping marks, shipping address changes, new customer names etc. Changes are allowed at least 4 weeks prior to the scheduled manufacturing due date without fee. CPGK can not be held responsible for inaccurate deliveries arising from instructions given less than 4 weeks from the scheduled manufacturing due date. Product Change Request Any changes to an existing order that would result in delaying the manufacturing due date (because of material availability) will be considered a cancellation and are subject to cancellation guidelines (please refer to 3.7.1). The new order will be re-entered and will be subject to new pricing and available manufacturing lead time. Minor Change Request Any minor changes to an existing order that will not delay the manufacturing due date will be allowed prior to 5-week time line without fee. Order Change Requests affecting Engine and Alternator All gensets requiring high voltage alternators will have a 26 week firm order and cancellation period. From Jan 2007, high voltage alternators will be limited and supplied on an allocation basis. It is critical you work with your BDM to secure build slots in line with your customer requirements. Any changes that affect the engine part number will be considered cancellations and are subject to the cancellation guidelines. 3.7.4. Reschedules Requests to reschedule product will be limited to one request per order, outside the cancellation period. No cancellations will be accepted after the first customer reschedule. 3.7.5. Customer Order Shipment
Orders that do not meet the agreed financial and order fulfillment criteria 21 days in advance of the scheduled launch date, will be taken off the build schedule and delayed by one week. Orders will be rescheduled for the following week. All orders are subject to a maximum of three (3) policy reschedules.. After three (3) occurrences, if you have not acted on the notifications of delay, your order will be entered as a new order in accordance with the current lead time or your order will be subject to full cancellation in accordance with the Distributor Manual Policy- Section 3. Order Board guide line Policy- Cancellation 3.7.2.
Criteria:
1. Financial: You are required to ensure all financial arrangements are in place and in accordance with your agreed terms 30 days prior built as per Distributor Policy Manual Rev7 Section 1 – Credit terms and payment options including Appendix A.
2. Customer Information
You are required to provide shipping profile to the OMCS team to ensure the following information is up to date and accurate.
• Transportation / Forwarder information: Name, address, telephone and fax number of your preferred transport
company. • Witness Test Requirement • IDF / Pre-shipment inspection / Special Documentary requirements • Shipping date restrictions ( Incl. shutdowns and holidays)
Section 4. Non Standard Orders – Requests for Quote (RFQ) 4.1. Purpose To communicate potential non-standard product orders to Power Solutions Group so as to ensure they are adequately prepared to receive and process them.
4.2. Scope This work instruction applies to all Requests For Quotes received by CPGK for non-standard product. 4.3. Responsibilities The Distributor or BDM responsible for generating the RFQ must ensure the following: 4.3.1. RFQ has passed through the tender appraisal process; 4.3.2. Any revisions to specification of the RFQ have been properly communicated to the PSG group and an updated
Quote obtained 4.3.3. PSG Order Entry Manager, relevant Master Scheduler and Finance Credit Manager is kept informed of
progress during the negotiation of a prospective order and no commitment to a delivery date is made to a customer without authorisation from these departments.
4.3.4. Requests for delivery commitment are based on confidence in excess of 85% and relate to valid up to date quotations supplied by PSG.
4.4. Changes to order entry for non-standard orders Orders for Non-Standard products and the issue of their Order Acknowledgements are administered by the Power Solutions Group (PSG). All Orders containing Non-Standard items (see definition below) should be sent to [email protected] with a copy to Russell Heatley ([email protected]) and your Business Development Manager. Definitions:
• A Non-Standard Order is one where a specific quotation has been provided by the Power Solutions Group,
or one containing both Power quote and BRFQ items other than Gtec transfer switches as detailed below.
• A Standard Order is one containing only items from the Power quote price list, (which may include a Gtec transfer switch from the BRFQ price list). These orders should continue to be sent to your Customer Services Representative.
Order Acknowledgements for Non-Standard orders will be issued by the Power Solutions Group and this department will be your point of contact for all matters relating to these orders. This change in process will allow us to acknowledge all non-standard orders within 10 working days.
Section 5. Special Sales Assistance (SSA) Policy 5.1. Guidelines CPGK’s policy is to provide Special Sales Assistance where:
There is a genuine business case for discounting the deal. The action is reciprocated in the channel (ie. by the distributor). The action is viable from a financial perspective.
All requests for SSA must be submitted to the distributor BDM who will then obtain the appropriate approval before providing the distributor with a SSA approval number. Approval or rejection of any SSAs will be notified to you by email. This approval number must be entered onto the order submitted to the factory otherwise the order will be refused.
Section 6. Cummins Power Generation Product Support Fee Policy
6.1. Purpose Cummins Power Generation’s (CPG) preference is to channel international sales of commercial products (defined as commercial and consumer generator sets,, automatic transfer switches, paralleling switchgear and associated parts and accessories) through the in-country distributor whenever possible. However, in some instances, an international sale may not be made through the in-country distributor. Situations can arise where the purchase is made in one country and products are shipped to another country
The CPG Product Support Fee (PSF) has two purposes: (1) to compensate the in-country distributor for all or a portion of sales support and service to the end-user that is normally not charged to a customer, or (2) to cover the costs that may be incurred by CPG in instances where there is no local Cummins Distributor, or the selling local distributor’s support is inadequate or unsatisfactory.
6.2. Scope
This Policy and the PSF do not apply to certain sales, particularly certain European sales (see section J).
6.3. After Sales Support
Cummins always recommends that its Distributors interact with each other prior to a sale to ensure that the end user of the product receives the best possible support during the product’s life cycle. Distributors are encouraged to communicate freely with each other regarding the critical issue of after sale support before the sale is completed, well in advance of the product shipment. This should be the case whether the PSF applies or not.
Where the PSF applies, it is always the responsibility of the selling distributor to determine where the equipment it has sold will ultimately be installed and to inform the receiving distributor of the sale as soon as the order has been placed. This includes situations where a distributor’s dealer is exporting the product. It is also the responsibility of the selling distributor to see that the customer receives the necessary after sale support regardless of the final destination of the equipment. The payment of a PSF does not abrogate the selling distributor’s responsibility in that regard.
In cases where CPG deems that the selling distributor has not fulfilled its obligation to the customer, and CPG has incurred expense to satisfy customer issues, additional costs above the PSF may be charged to the selling distributor.
Examples include but are not limited to: site visits, product operation training, miscellaneous product information, etc. (See section F for additional examples.) To cover expenses for this support, Cummins Power Generation shall collect the PSF on qualified transactions.
The receiving distributor is required to cooperate with the selling distributor and with Cummins in preparing and executing the plans for how the customer will be supported. This includes determining any training and tooling needs, implementing the support plan and providing standard services such as warranty support for the customer.
Maximize the sales of both the distributor network and Cummins Power Generation.
Develop a world-class distribution body able to provide both a strong pre-sale presence and the ability to provide after-sale support.
Promote Cummins worldwide support as a key comparative advantage.
6.5. Policy Administration
The PSF fee is 3.5% of the net price to the selling distributor of the complete genset system, including power electronics equipment and accessories. For ESB projects the fee will be determined on a case by case basis up to a maximum of 10% of the net price to the selling distributor.
In order to properly administer this policy export orders of Power Generation products by CPG distributors should have the ultimate destination identified when the order is placed and list the 3.5% PSF. If the final destination is not known when the order is placed, (for example, a unit is initially ordered for distributor’s stock inventory but is later shipped internationally into a foreign distributor’s territory), and CPG products are subsequently identified by a distributor applying for PSF reimbursement, Cummins Power Generation will charge the selling distributor’s account for the PSF. The distributor will be notified through a debit memo. An administrative charge of 2.5% of the net order value will be added to the 3.5% assessment in the case where the selling distributors did not notify CPG of the export sale and CPG deems that the distributor did not perform adequate due diligence to determine the destination of the equipment. We recommend that the distributor always accrue the 3.5% fee and the administrative charge if there is uncertainty as to whether the product will be installed outside of the distributor territory.
In the case of ESB projects, the ESB project companies in the selling distributor’s territory and in the receiving distributor’s territory must have agreed to the sale, the support plan and the PSF amount to be charged prior to placing the order on the factory.
The PSF funds are controlled by the Regional Director who works with the distributor into whose territory the product is sold. Payment of PSF funds is made after the distributor applies for reimbursement through the regional director using the PSF Claims Form. Any request for payment must include the model and serial number of each unit, along with accessories that are installed. Payment of the PSF in part or in total is at the discretion of CPG and will be based on an assessment of the actual expenses incurred by the local distributor in support of the product, evidenced by receipts for these expenses. Note that the PSF payment to the receiving distributor may be more or less than the fee paid by the selling distributor. If no extraordinary expenses were incurred or if these were covered by the customer no payment will be made to the receiving distributor. It is also possible that the payment to the receiving distributor exceeds the PSF payments made by the selling distributor, based on the expenses incurred in support of the product.
If the qualifying products are shipped to a country with more than one distributor, the PSF may be split among all distributors in the country, depending upon the support provided by each distributor. If no authorized distributor is in the territory in which the equipment is installed or support from the local distributor is deemed to be unsatisfactory, Cummins Power Generation may use the assessment (3.5%) to provide required support/service from the factory or Regional Office.
6.6. Examples of PSF uses: Incidental start-up costs of products such as, operator training, extra product service manuals,
customer requested site visits, expenses associated with cancelled start-ups, etc. may be
applied to the PSF fee. Note: The PSF is not to be used to cover standard start-up costs. It is the responsibility of the selling distributor to arrange and fund equipment start-up in the receiving territory. Start-ups should be arranged with the Cummins distributor in the receiving territory whenever possible.
Investment in tools, training and supplies to augment sales and after-market support. However the PSF are not intended to replace distributor’s contractual obligation to fund these activities.
6.7. The following sales are subject to a PSF: A sale by a distributor to any exporter for shipment to a foreign country, including Puerto Rico.
A sale by a distributor directly to an entity located in a foreign country, for shipment to a foreign country, including Puerto Rico.
A “walk-in” sale to a foreign person, including a business entity, with no bona-fide office in the distributor’s territory.
A sale by a distributor to a customer with a bona fide purchasing office in the distributor’s territory, which would include the export of that product to the customer’s building or site in another country, including Puerto Rico.
The PSF applies to sales by European Distributors to customers located outside Europe (unless the equipment is coming back into Europe). See Section J below for the definition of Europe.
6.8. The following orders are exempt from the 3.5% PSF fee: G.S.A. sales.
Sales between U.S. and Canada.
Sales by European distributors to customers within Europe, whether the customer is located within the distributor’s territory or elsewhere in Europe, and regardless of the end destination of the equipment, and also sales by European distributors to customers outside Europe where the equipment is coming back into Europe . See Section J below for the definition of Europe.
Sales to OEMs and DOEMs, including value-added packagers, which provide a unique product for the application at a foreign site. Such OEMs and DOEMs of the distributor must be approved annually by Cummins Power Generation for exemption from the PSF.
Rental sales.
Portable gensets.
6.9. Disputed PSF assessments The regional CPG Commercial General Manager for the specific line of business has the final authority to
assess or waive disputed fees.
6.10. Exclusions The Policy and the PSF do not apply to (1) sales by European distributors to customers within
Europe, whether the customer is located within the distributor’s territory or elsewhere in Europe, and regardless of the end destination of the equipment, and (2) sales by European distributors to customers located outside Europe where the equipment is coming back into Europe.
'Europe' means the EU member states, currently Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Romania, Portugal, the Slovak Republic,
Section 7. Parts Ordering Policy 7.1. General Statement CPG parts orders are placed through Mechelen PDC. Orders and quotations will normally only be accepted from Cummins Power Generation Distributors, unless other agreements are in place. Enquires for quotations should have details part number. Quotations received from Mechelen PDC are valid for 30 days from date of Quote. If part number is not available contact CPGK parts department “[email protected] “with details of the genset such as Model, Serial number and if possible a description of the part. 7.2. Method of Placing Enquiries and Orders All enquires and order for spare parts should be sent to your appointed CSR at Mechelen PDC Order must be on an official purchase order form with an order number. Or if this is not available use the CPGK standard form. See Appendix C. Orders should contain the relevant information such as parts number, parts description, quantity, genset model, serial number and quotation number if CPG Parts Department has quoted for this item. All parts technical enquiries is to be addressed to Parts Department at Cummins Power Generation Kent by e-mail [email protected] or fax: 0044-1843-255913. 7.3. Types of Orders Standard or Stock Orders – An order is placed on the Parts Department and will be processed on a first come first served basis. Emergency orders (VOR): An order is placed on the Parts Department and should clearly indicate that this is an Emergency order. This type of order will get priority and be processed through the systems as quickly as possible. It will be made available for shipping within 24 hours if all items are in stock. There is a 15% charge for Emergency orders. Shipping will be by express courier. Please note Emergency orders (VOR) should only be used to order parts for gensets that have failed while in service and shall not be used as a quick route to get parts for up-fits. CPGK reserves the right to change an Emergency order to Standard order if we feel this is not a genuine emergency. 7.4. Order Acknowledgments All Parts Purchase orders are acknowledged on order entry at Mechelen PDC The acknowledgement confirms that the order has been received and is in process. It is the distributor’s responsibility to review the order acknowledgement and ensure it reflects the order requirements Order acknowledgments for all EMEA CPGK parts purchase orders will be sent on order entry within 24 hours of receipt of a complete and accurate order. In the large majority of cases this will be emailed directly to the Distributor contact placing the order by their dedicated CSR in Mechelen PDC. The acknowledgement may also be faxed or sent via the EDI system on order input.. 7.5. Inquiry & follow up
The distributor should contact his appointed CSR at Mechelen PDC for any specific questions on the order.
Once the order is placed in the system, stock items will be allocated to the order. If all items are in stock an acknowledgment will be sent detailing shipping date. If items are not in stock, delivery times will be checked and advised on the order acknowledgment. The order will be held until all items have been received before being packed and shipped.
7.6. Specified Routing Mechelen PDC will ship products via its selected line of carriers. If a distributor wants to use carriers other than those selected by Mechelen PDC, the distributor will be responsible for any additional cost involved in using the distributor’s desired carrier. The distributor must specify the carrier on incoming orders. On notification by Mechelen PDC that the parts are ready to ship, it shall be the distributor’s responsibility to inform the specified carrier that parts are ready for collection. For more information, see Freight & Shipping Policy. 7.7. Parts Supply Transfer to Mechelen PDC As of June 4, 2007 EMEA distributors can order from Mechelen PDC all CPGK parts that were previously purchased for CPGK Parts Department. CPGK parts department will not accept orders for parts from distributors in the EMEA region after 4th June 2007. All orders for the aforementioned parts should be placed on Mechelen PDC after that date.
Parts related questions such as specific orders, availability, pricing and lead time should be directed to Mechelen PDC. Johan Koninkx can advise on whom your current Mechelen Customer Service Representative is, who will be supporting your needs related to CPG Parts. The customer service contact numbers are Tel: 0032-15-289266 Fax: 0032-15-289292 Email address: [email protected] Parts information is available on the Distribution Portal website: http://distribution.cummins.com All technical support questions regarding CPG parts should be directed to CPG Kent Parts Department via e-mail: [email protected]
Section 8. Customer Witness Test 8.1. General Statement This test specification details the test requirements to be performed on completed open generator sets offered for customer-witnessed inspection and test. Certain items that form part of the final installation may not be offered for test/inspection and this shall be agreed with the customer prior to the test/inspection. Any additional test requirements shall be subject to prior written agreement with CPGK and shall form part of the contractual requirement. All customers visiting the plant to attend a witness test must be accompanied by the Distributor responsible for their area.
8.2. Scope This specification details the test requirements to complete a ‘Standard’ witnessed test, as defined by feature code ‘L130’. Reference shall be made to CPGK-FCD 03-0189 which details the optional tests which may be selected to compliment the basic witnessed test specification. Where additional or extended tests are required, the corresponding sales feature codes must be selected from the price list at the time of ordering and additional cost will be charged accordingly. This test specification is applicable only to open design, diesel powered generating plant that are subject to customer or third party witnessed test at CPGK’s facility. The information contained in this specification is not a guarantee or representation of actual performance. The Cummins Power Generation Specification Data Sheets and those specific to individual components should be referenced for performance information for the product concerned. For enclosed or gas powered generator sets, a separate specification is to be offered and agreed with the customer prior to order acceptance. Reference shall be made to the CSD representative, Engineering Manager and Applications Engineering. All test equipment, including data capture devices (ADAPT) where applicable shall be calibrated to NAMAS traceable standards and calibration certificates will be available on request from the Quality department. 8.3. Safety and Environmental Information
All visitors to the test area must be accompanied by a CSD representative at all times and be briefed in respect of general visitor procedures, fire and evacuation procedures (refer to CPGK’s visitor card). In accordance with CPGK's health and safety policies, the following rules will apply:
Safety glasses must be worn at all times in the manufacturing area. Safety footwear must be worn at all times on the factory floor and it is the responsibility of the escorting
CSD representative to restrict access to designated areas. Visitors must keep within the gangways demarcated by yellow floor markings and must not enter work
areas under any circumstances. Access to the test cells shall be strictly limited and at the sole discretion and responsibility of the Test
Technician. Authority to enter the test cell shall be granted by only the Test Technician conducting the test.
Visitors shall not be permitted to enter the test cells at any time when machines are running. Test engineers do not have authority to vary this instruction. All observations of running machinery shall be made by CCTV from the witness test lounge adjacent to the test area.
Visitors may enter the test cell prior to and after running at the sole discretion of the test engineer. No more than three visitors shall be permitted in the test area at any one time. The test engineer may deny access to any or all of the cell for health and safety reasons. Where discussions regarding the equipment are required, these shall take place outside of the test area.
Section 9. Sales Policy Disputes All other disputes not covered by other specific policies will be considered sales policy disputes. These disputes are to be formalised in writing and must be accompanied by the necessary documentation. All sales policy disputes are to be forwarded to the relevant account manager(s) within 90 days of invoice date. Upon receipt at the factory, the dispute will be reviewed promptly and the resolution will be communicated to the distributor within thirty working days. 9.1. Incorrect/Short Shipments CPG makes every attempt to ship the correct quantities of the correct material each time a shipment is made. There are times when incorrect product is shipped or when product is inadvertently omitted from a shipment. When this occurs, the distributor must notify CPG within 30 days of receipt of the shipment and the Sales Administrator will work with the distributor to rectify the situation. 9.2. Nameplates CPG will only provide nameplates to distributors or customers for these four situations: Damaged, missing or incorrect nameplate – replacement nameplate must contain the same or corrected information as original nameplate. Need to move existing nameplate - New nameplate must contain the same information as original nameplate. (For two preceding situations, requester must supply original unit model and serial number.) Conversions (only conversions resulting kW changes) for the following situations: 50/60 Hz Conversions Fuel Change (example: diesel to dual fuel) Voltage is changed on an automatic transfer switch. A nameplate will only be provided for a voltage change and for no other modifications. Nameplates will not be provided for an amperage rating change due to UL restrictions.
Section 10. Freight and Shipping Policy 10.1. General Statement Please see the Terms and Conditions for our delivery terms. Shipments of products and accessories normally are shipped from CPG ex works by contract or common carriers under Incoterms definitions. Distributors may also nominate their preferred carrier provided the carrier meets with CPG approval. All chosen carriers must service the Kent region and UK Shipping routes and must have appropriate operating authority and cargo insurance coverage. 10.2. Freight Terms and Conditions The following section highlights some of CPG’s requirements for freight movements. Below is a list of frequently used terms with some notes on their features. For a full definition, see Incoterms. 10.2.1 Ex (Ex-works). . . (named place) Seller - means the seller fulfils the obligation to deliver when the seller has made the goods Available at the seller’s premises (works, factory, warehouse, etc.) Buyer - buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. 10.2.2. The term F.O.B. (Free On Board) means the following: F.O.B. - means the seller fulfils the obligation to deliver when goods have been loaded on the transport. This means the buyer has to bear all cost and risks of loss of or damage to the goods from that point. F.O.B. Shipping Point (origin) - a method of shipping product in which the distributor takes title and assumes the risk of loss as the goods are loaded at the shipping point. “Shipping point” refers to the place from which the product is to be shipped. 10.2.3 CFR (Cost and Freight). . . (named destination)- means the following: Seller must pay the costs and freight necessary to bring the goods to the named destination; but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the transport, is transferred from the seller to the buyer when the goods have been loaded on the transport. 10.2.4. C.I.F. (Cost, Insurance, Freight). . . (named destination) - means the following: Seller has the same obligations as under CFR, but with the addition that the seller must procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. 10.2.5 Payment of freight charges It is the distributor’s responsibility to insure that the correct shipping instructions are presented on all orders. The following terminology will be used to provide the shipping instructions. For shipments within the UK one of the following will apply: FOB Freight prepaid - CPG pays the freight charges upon shipment. However, the charges will be included on the invoice for the items shipped and the distributor will then reimburse CPG.
FOB Freight Collect - CPG will honour customer outing or arrange freight but will not pay any freight charges. The receiving party will pay these charges upon receipt of the goods. 10.2.6 Insurance Please check – standard carrier’s insurance is usually less than the value of the goods unless a specific value is identified in the contract of carriage. Contract or common carriers are obligated to assume responsibility for the goods they carry. The dollar limit varies by the carrier. F.O.B. CPGK (Contract or common carrier) – The common carrier assumes responsibility for the goods transported and the distributor must recover damages from the carrier. 10.2.7 Lost Shipments CPG’s responsibility on all surface and air freight shipments extends to the actual shipping of the order. Tracing or follow-up is the responsibility of the distributor and the carrier. Nevertheless, CPG will cooperate in helping to locate lost material. After allowing a reasonable amount of time for delivery, contact a Sales Administrator for tracing assistance. Truck Shipments - CPG will provide the distributor with the “pro-number” and details for the distributor to trace the shipments through the carrier at the destination. Air Freight & Air Express - CPG will provide the “airbill number” and details for the distributor to trace through the carrier at the destination. 10.2.8 Storage Charges Orders at status 55 (finished products) that do not have a confirmed load/booking reference will be subject to Storage Charges. These charges will be assessed at 1% (of value of goods). This policy will be enforced on all products completed on time to the promised week and that have been in storage over 10 days. After 30 days, we will continue to charge 1% per month, or part thereof until products are shipped. Failure to collect products will also affect new orders and existing orders in the current build schedule. After 30 days, CPGK reserves the right to apply cancellation charges and release products for sale to other customers. 10.2.9 Chamber of Commerce and Legalisation Costs All Chamber of Commerce and Legalisation costs incurred as a result of orders placed on CPG directly by the Distributor, or the Distributor’s Customers will be invoiced at cost to the Distributor’s account. It will be the responsibility of the Distributor to pay both the Distributor’s and its Customers Chamber of Commerce and Legalisation charges on a net 30 day basis. Invoices for these charges will be raised at the beginning of each financial month by CPG. CPG will not collect Chamber of Commerce and legalisation costs from the Distributor’s Customers on their behalf. Copies of the Invoices from the Chamber of Commerce for Chamber of Commerce and Legalisation charges will be available on request. Refer to Appendix B for applicable charges. Revisions to charges will be communicated via a marketing bulletin update to Appendix B
Section 11. Parts and Accessories Return Policy For parts bought from Mechelen PDC please contact you CSR at Mechelen PDC. For parts bought from CPGK parts department before July 2007 the following is applicable. CPGK reserves the right to refuse the return of any part or accessory but will consider the return of parts on the following basis.
The Individual part is less than 1 year old. The value is more than $500 and less than $2,000, unless otherwise agreed in writing with CPG. Where there is a warrantee issue with the part (parts being warranted for 180 days).
CPGK will only accept returns of parts or accessories when a Material Return Authorization has been processed and the following conditions are met:
The distributor has contacted CPGK Parts Department to request approval. The CPGK Parts Department reviews cost/price guidelines used by CPGK to determine the amount due
the customer. (You will be asked for proof of purchase of this part.) A minimum restocking fee of 15% of the invoiced amount will be charged for returns, but will be waived if the return is CPGK’s fault (example: no fee would be charged for an item shipped to a customer by mistake). If the MRA is approved, the distributor will ship at the distributor's expense (unless the item was shipped by mistake. In this case, the freight will be paid by CPGK on the product to be returned). The Receiving Department at CPGK will accept the return provided the MRA matches the return. The receiver will inspect the parts and accessories returned and verify the receipt of the returned parts and accessories. Any material not authorized for return will be sent back to the distributor a distributor expense. Any damage will be noted and an estimate of the cost to repair. That estimate will become an additional charge beyond the restocking fee. A credit memo will be created and will be sent to the distributor. Take-off-parts (parts which are removed from units) are not returnable. Once any approval of returns has been agreed, any parts returned must be addressed to: Cummins Power Generation Part stores Continental Approach Westwood Industrial Estate Margate Kent CT 9 4JL United Kingdom
