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Parts Department Management Operational Guidelines and Policy

Manual

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November 2015 The purpose of this Operational guide and policy manual is to clearly define RDO expectations for its Parts Management Teams and improve our process and overall management skills. This manual blends policy with expectations and should drive consistency throughout RDO Equipment. This is a tool that should be referred to as a guide for our management team to be the best in the industry. Compliance with the policy and procedures in this manual and the RDO Parts Process Document is not optional. Benchmarks......................................................................................................................... 4 Central Parts Ordering (CPO) ............................................................................................. 4 Parts Support Center (PSC) ................................................................................................ 5 Bin Locations ...................................................................................................................... 5 Negative On Hand Balances ............................................................................................... 5 Parts Adjustments ............................................................................................................... 5 Physical Inventory Cycle Counting .................................................................................... 6 Physical Inventory Full Count ............................................................................................ 6 Surplus Returns ................................................................................................................... 6 No Sales Inventory Management (Aged Inventory) ........................................................... 7 Write-Off and Disposal ....................................................................................................... 7 Inter-Store Transfers ........................................................................................................... 8 Stockorder Transfers ........................................................................................................... 8 Machine down transfers ...................................................................................................... 8 Consignment ....................................................................................................................... 9 Customer Part Return Policy ............................................................................................ 10 Sales Orders ...................................................................................................................... 11 Purchase Orders ................................................................................................................ 11 Employee Purchases ......................................................................................................... 11 International Parts Sales .................................................................................................... 12 Internet Parts Sales ............................................................................................................ 12 Marketing Parts via Internet Auctions .............................................................................. 12 Parts Special Handling Policy ........................................................................................... 12 Lost Sales .......................................................................................................................... 13 Core Transactions – .......................................................................................................... 13 Discounting ....................................................................................................................... 13 Area of Responsibility (AOR) .......................................................................................... 14 Customer Service .............................................................................................................. 14 RDO Image and Housekeeping ........................................................................................ 15 Marketing .......................................................................................................................... 16 

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Employee Development .................................................................................................... 16 Communication ................................................................................................................. 17 Reports and Required Procedure Completion ................................................................... 18 Parts Manager Expectations – Monthly 1:1 Review ......................................................... 20 Core Competencies and Standard Objectives: .................................................................. 21 

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Benchmarks First Pass Fill Rate is the percent measurement of our ability to completely fill a customer’s line item requirements from the on hand in the bin. This is an indicator of customer satisfaction. The calculation is total demands divided by demands minus special order demands and lost sale demands. The benchmark for first pass fill is 85% for AG branches and 77% for CE, and 79% for Vermeer. Inventory Turn is the number of times the parts inventory is rotated in a twelve-month period. This is an indicator for asset utilization. The benchmark is 2.75 for AG branches and 3.75 for CE, Vermeer and RDO IC branches. No Sales in Twelve Months is the percent ratio of parts inventory on hand for twelve months without activity. Benchmark for no sales is a range of 12% to 15%. No sales in (24) twenty four months should be under 2% and less than 1% in no sales (36) thirty six months. Gross Margin is the measurement of profit before expenses. The cost is subtracted from the selling price and the result is gross margin dollars, which is then divided by the selling price to measure in a percentage. The benchmark is 32% or better. Net Income is what is left over after all the sales, costs of sales, expenses, and deductions are accounted for. The benchmark is 17% and greater. Central Parts Ordering (CPO) RDO Equipment has a comprehensive stocking policy for automatically reclassifying parts that phase in or phase out for stocking. CPO utilizes DPM and JDPRISM as our John Deere manufacturing partnership to manage John Deere Inventory. All other vendor parts are managed by using CDK and order formula codes (OFC) , which are standardized to our industry are utilized to set stocking levels. Within the OFC codes sales volume, seasonality, machine application, critical code, customer expectation and history are utilized to determine stock levels. The CPO Team supports the branch to meet customer service levels.

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Parts Support Center (PSC) RDO Equipment has a centralized parts support team that takes overflow calls for parts customers. Cisco phone call flow will allow for parts calls to be transferred from the branch receptionist to the local parts department as a whole. When parts call is not answered within three rings, the fourth ring will be at the Parts Support Center (PSC). The PSC team will communicate directly with the customers in the same manner as the location Parts Specialist. Hold tickets for parts in stock will be printed and local Parts Team members will quickly fill orders. Parts requests for order will be staged in group orders by PSC Team members to be processed locally. Profits and sales are retained at the location level. The PSC team supports the branch to meet customer needs directly. Bin Locations All parts will be assigned a bin location that clearly defines where the part is located. All bin locations will be clearly identified within the warehouse. Bins will have a number sequence that complements the cycle count process. Negative On Hand Balances Negative on hand balance reports must be run daily and reconciled only after research has been conducted. Forced issuing parts at the point of sale should be done as an exception and not the rule. If force issue transactions are required due to inventory discrepancies, discrepancy must be reconciled immediately. Parts Adjustments Inventory must be kept accurate at all times. Research must be conducted before making any adjustments. Authorized parts personnel will do adjustments when deemed necessary. No parts adjustments should be made using the receipting function.

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Physical Inventory Cycle Counting Cycle Counting All parts will be cycle counted two times annually. Each month 100% of the month’s cycle assignment will be counted. All adjustments for cycle counting will be made through the cycle counting process. Counting process will be a “blind count”. Error ratio should not exceed 5% line item errors. (Error ratio must be manually calculated by taking line items in error and divided by total lines counted) Physical Inventory Full Count If a sample test count is performed in a branch and error ratio is higher than five percent (5%) a full count may be requested by the Management Team or the Audit Team. When a full count is performed all parts will be counted using the “Full Count Process”. Surplus Returns Surplus returns will be prepared by CPO and submitted to the vendor as frequently as the vendor allows. RDO’s policy is to return parts that have no sales in 12 months. When branch receives the return cards or the Return Goods Authorization the parts are to be picked within 15 days or before return deadline. No more than 20% of the items submitted should be kept for stock. Any parts that are kept to meet customer requirements should be communicated to the CPO Team and parts will be marked appropriately by the CPO Team.

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No Sales Inventory Management (Aged Inventory) No sales inventory benchmark is 12-15% with less than 2% in no sales (24) twenty-four months (Aged Inventory) classification with less than 1% in no sales (36) thirty-six months. Parts Managers are responsible to market aged inventory and must be willing to transfer to other RDO branches upon request. Once a non-returnable part is deemed obsolete and non-saleable it should be considered for write off. Below is a checklist of ways to eliminate no sales inventory. Find out what the part is and what it fits Find a machine in you AOR and call the customer Sell at a reduced price Put on the display floor marked “Clearance” Break down kits and sell or inventory individual parts Break down kits and return pieces to vendor Package items such as hardware and sell as a lump sum Use for Open House door prizes and donations On-line auction such as EBAY Contact CPO or the location parts manager if you see another store has sales Return parts to the vendor

Write-Off and Disposal The CPO Liquidation Specialist will oversee all parts write-offs and will coordinate with the Branch Management Team. When it is agreed that a part is deemed obsolete and non-saleable through marketing or liquidation, it is now eligible to be written off and scrapped. Authorization from the CPO Manager is required. Parts that are written off must be either destroyed (defaced) and scrapped, or sent to an obsolete inventory clearinghouse such as “The Depot” or “Worthington Ag”. IRS laws prohibit keeping parts that have been written off. (See the RDO Portal for details on “The Depot”) If you write off the parts and are reluctant to destroy or send them to an obsolete clearing house, then DO NOT WRITE THEM OFF, but justify why it’s important to keep them in your inventory. Written off Parts should NOT be given to employees, friends or relatives, they should be disposed of by deface and scrapping or parts clearing house as listed above.

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Parts Reserve Dollars Each quarter the appointed Controller will review the dollars in the parts reserve relative to the inventory in no sales twenty-four (24) months (aged inventory). The Parts Reserve will be adjusted to cover a minimum of 75% of the value of aged inventory. If Parts Reserve is over reserved, a credit will be given to the store under “Inventory Valuation”. Discounting No Sales Inventory Discounting an aged part to make it desirable to a customer may be necessary at times. Be aware that this will have a negative effect on your parts margin. When the controllers review the parts reserve at the end of the quarter, if the adjustment to the reserve is a credit, this will give you margin back. Tactical Opportunity Parts (T.O.P) There is a classification of parts that are considered necessary operational parts, and are isolated to hardware, Parker Hannifin products, undercarriage and GET for rental units. These parts are generally slow moving and have a longer life cycle, consequently they are removed from the basic no sales 12,24 and 36 measurement. These items should never be scrapped unless directed by CPO Management. Inter-Store Transfers Stockorder Transfers It is RDO’s policy to utilize our inventory before ordering from the vendor. Stockorders will be run through an excess inventory calculation and purchase orders will be generated to move the inventory. These transfers must be picked, packed and shipped within one (1) business day. If the part is not in its original package or new condition your must contact the receiving branch to obtain approval to transfer. The shipping store will pay standard ground delivery charges. All transfers are done at average cost. Inventory Balancing Transfers Parts asset management is essential to the long term health of RDO Equipment. Inventory balancing is conducted to strategically move parts inventory from a location that is in a no sale12 months, or excess of 12 months’ supply. Parts are sent to a location that has sales history to support having the part in stock and immediately available to the customer. Machine down transfers Request to fulfill immediate orders for customers will be generated by the parts personnel. If part is not in original package or new condition you must contact the receiving store for approval to ship. These transfers will be shipped the same day and the requesting store will pay all freight costs. All transfers are done at average cost.

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Freight cost between Branches When freight charges occur on “machine down” transfer, the requesting store is liable for those incurred costs. These should be billed to the requesting store at the true cost and no handling charges or margins should be recognized between branches. When CPO facilitates an internal stock transfer or excess transfer all freight charges are absorbed by the shipping branch. Consignment RDO Representative will complete a “Consignment Justification” prior to entering into any consignment agreement. Once justification has been established, complete the “Consignment Agreement form”. All forms are found on the Employee Portal, under the CPO tab. Scan all completed documents to sblatter@rdoequipment.com. Customers who enter into a consignment agreement with RDO Equipment must be called upon every 30 days, (or more frequently if deemed necessary) by a RDO Representative, in which inventory is visually inspected and reconciled. Parts are to be billed to the customer at the point of usage as per the consignment agreement. See the Consignment Agreement published on the RDO Portal and for more process details see the RDO Parts Process document. Service Truck Consignment Parts on consignment to RDO owned service trucks will be physically counted 4 times annually. Counting and reconciling must be completed prior to the quarter ending of April, July, October, and January. Follow process in RDO Parts Process Document. Updated 10-2014

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Customer Part Return Policy All customer returns should be dealt with immediately upon the return of the parts by the customer. The return policy stated on sales orders should be enforced when possible but exceptions may occur in which management may deviate when necessary. Parts Counter Return Policy

o Stocked parts can be returned within 30 days with copy of invoice. o Special order parts $20.00 and up may be returned within 30 days with copy of

invoice. o 20% restock charge will apply to all special order parts however; there will be a

limit of $300.00 maximum of any single line item for John Deere parts. o All sales are final on special order non-returnable parts. o All parts must be new, uninstalled and in original package o No returns on electrical components o No refunds on parts special handling charges

Note- This policy is stated on the sales order however, Department Managers may waive the policy based on their discretion. Service Department Parts Return Guidelines

o When parts are special ordered for a service call in which it is questionable what parts are needed, customers must be informed that restock charges may apply

o Parts ordered in error by a service technician may receive a 15% restock charge based on net price however; John Deere restock charges customarily should not exceed $300.00 for any given line item. Confirm Deere restock charges on JDPOINT by accessing the Returns tab.

o Parts Department will pay all freight costs to return parts ordered in error by the Service Department if there was a restock charge applied to the Service Department.

o Short line vendors may have both a restock and return shipping charge applied. If these charges are applied, they will be at the Parts Department cost.

o Installed parts are non-returnable and should be billed to the customer or the Service Department whichever is appropriate

Note- Policies stated above are guidelines and should be used at the discretion of the Department Managers Customer Refund Policy- Refunds made in cash cannot exceed $10.00. No exceptions. A check request must be made for refunds over $10.00. See CDK Process Document for more details. Updated 10-2014

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Sales Orders All Parts transactions must be put on a sales order. No parts will leave an RDO Facility without having invoiced the part. All purchase order transactions for customers must start at the Sales Order and the link between the sales order and purchase order created. Managing Aging Sales Orders All aging sales orders must be reviewed weekly. All sales orders over 30 days should be validated to the reason of the age. Sales orders that are being held for customer pickup must be reconciled weekly and customer notified. If customer does not pickup parts within 30 days, parts should be shelved and made available for sale to other customers or returned to the manufacturer. Purchase Orders All parts ordered must have a purchase order generated in the CDK Business System. Purchase orders are created from the group order, sales order or work order requisition when the parts are not in stock and the customer is requesting us to order them. These parts are to be receipted at the point of checking in the order, in which a picking ticket (picpak) will print designating the appropriate order to be filled. Special orders that arrive at the branch must be checked in and dispersed immediately and customers and/or Service Department notified that parts have arrived. Stockorder purchase orders are generated from the FI orders and CPO generated orders. When orders arrive in dealership they are to be receipted and bin located or dispersed as quickly as possible. For Deere Dealers, DTF must be used for all Deere receipting. The DTF packing slips should be up to date at all times. See RDO Parts Process Document for more information. Employee Purchases All employee purchases should follow the “RDO Employee Purchase Program” that is published in the RDO Policy Manual. Employees must be invoiced for parts when they received them. See the RDO My Portal for more details

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International Parts Sales Before placing any parts on order for an international sale, a non-refundable down payment of 50% is required. Order must be paid in full before leaving the RDO Facility. Contact Barry Wegner, Purchasing Director regarding export guidelines There may be exceptions for American Military orders. Internet Parts Sales RDO will honor all prices published on the Manufactures Web Sites. Customer orders will be acknowledge via e-mail or phone upon receipt of the order. All parts must be paid in full and invoiced when leaving the RDO facility. Marketing Parts via Internet Auctions All Internet EBAY or other auctions will be conducted using RDO Equipment Company’s Auction account. Funds will be sent to PAYPAL and/or deposited directly to the RDO Trust Account. RDO Accounting Staff will disperse funds back to the appropriate branch Parts Special Handling Policy All stores must have a parts special handling recovery policy and are expected to be at a minimum of break-even. If a part is a current stocked part, no charges should apply to the customer; however, if customer requests airfreight, charge can be applied. Customers must be informed with an estimation of the shipping charges. Persons checking in the freight are to be held accountable to verify that parts special handling/shipping charges has been applied to the sales order or work order requisition however; there are locations that may have exceptions. Some locations may have “non-recoverable” freight expense or customers who demand not to see freight charges. If this is the situation, then meeting and exceeding the margin goals is still required and a loss in Parts Special handling may be posted. Freight charges should not be receipted with the cost of the parts unless they add significant value to the part such as truckload situations.

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Lost Sales Lost sales must be recorded in an accurate manner. A lost sale is any part that a customer wants to purchase that is not in our inventory and they must go elsewhere to get it. If the customer requests to order the part, it is not a lost sale. Lost sales demands are tracked and can drive a part to order for stock. See the RDO Parts Process Document for more details. Core Transactions – Any new or rebuilt part that is in stock will have the cost of the core included in the value. All cores credits will be issued using CR as the prefix to the original part number and be inventoried until it is returned to the appropriate vendor for credit. Customers will receive core credit based upon the core evaluation process. Core evaluation forms are found on the RDO Employee Portal under the CPO tab. Customers must receive the core credit on the original work order in which the component was replaced. See RDO Parts Process Document for more details Returning cores for credit All cores should be removed from inventory via the Parts Return Procedure as stated in the RDO Parts Process Document. Cores should be returned as quickly as possible to the vendor and removed from inventory using the procedure spelled out in the RDO Parts Process Document. Component cores from warranty workorders should be returned based upon SAM warranty manual. Note: Effective Oct 6, 2014 (Deere Bulletin PSM14-27), it is imperative that all fluids be drained from components prior to shipping. This includes engine oil, hydraulic oil, transmission fluids, fuel, coolant, DEF, and any other liquid considered hazardous. The process of draining fluids will apply to all cores returned to any vendor. Discounting All discounts made at the point of transaction must be approved by the Parts Manager. Any discount agreements with aftermarket manufacturers and independent repair shops must be approved by the Branch Manager and the Vice President for your region, as well as any “deep discount” agreements with customers. Aggressive discounting outside your AOR to attract customers is prohibited. Customers who have pre-determined discounts such as CBD customers or negotiated contracts should be reviewed each quarter by the Branch Manager and the Parts Manager to insure accuracy. See RDO Parts Process Document for more details.

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Area of Responsibility (AOR) Branches must function within the manufactures guidelines for their AOR (Area of Responsibility) and must be familiar with any restrictions for selling and shipping outside of the assigned AOR. RDO does not support discounting to draw business from outside the dealers AOR. Any major agreement reached with a customer outside your AOR must be approved by the Branch Manager and the Vice President for your region and must be within the manufactures guideline. Customer Service Parts managers will monitor their Department to ensure that customers are being served in a “superior” fashion. All customers will be genuinely thanked for their business. All customers will be acknowledged as quickly as possible and served in the order that they arrived in. This includes walk-in as well as phone calls. All phone calls will be answered courteously within three rings. If the line rings directly into the Parts Department the customer should be greeted, then identify the company and your first name. If calls are transferred from a receptionist, the customer should be greeted and then identify yourself using your first name. If you receive a call while serving another customer at the parts counter, ask the customer if you can return their call. Call them IMMEDIATELY upon completion of the other customer. Sample greeting for incoming dealership calls:

o Thank you for calling RDO Equipment. This is John, how may I help you? Sample greeting for calls transferred to the Parts Department from a receptionist:

o Good morning. This is John, how may I help you? Service Technicians are representing customers and should be served in the order that they are received. Service Technicians will not pick their own parts but all parts will be dispersed by Parts Department Team and will be picked in a timely manner. Store hours must be posted where customers can see them. Each Branch must have emergency parts phone numbers or after hours process available to customers and posted where it is visible. See RDO Employee policy for more information.

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Customer Engagement Initiative (CEI) The Parts Manager will be actively involved with the management team to drive the Customer Engagement Initiative (CEI) forward within the branch and region. Parts Managers must also visit customers whose purchases are declining to have a clear understanding of any declining market trends. Customer Complaints All customer complaints will be dealt with immediately by the Parts Manager. Branch Manager will be notified of complaint and resolution reached. Branch Manager must be included in resolution when deemed necessary. Follow-up contact with customer will be performed by the Parts Manager to insure customer satisfaction is being met. If a complaint is received from a customer that is directed towards another RDO location, you are obligated to notify that Branch Manager of the situation with the customer. Customer Surveys Follow-up and resolution response to customer survey results must be conducted within the time frame set by RDO Equipment and 70% of the customers surveyed must indicate that they will recommend your dealership to others. RDO Image and Housekeeping Parts personnel will be well groomed and wear a RDO Equipment designated uniform that is clean and well kept. Parts delivery vehicles will be clean and be kept in a manner that reflects a professional image. Parts storage area will be kept tidy and safety should be practiced when stocking shelves. Parts Counter workstations will be organized and presentable to customers at all times. Merchandising and Showroom Housekeeping Showroom Merchandise should be dust-free and shelves should be fully stocked. Prices should be on the shelf in the front of the product and large items should be tagged with price. All advertising literature should be current and replaced immediately upon showing wear. All signage should be up to date and displayed professionally. Counter mats should be replaced regularly. Showroom floors should be swept daily and windows cleaned on regular basis to present a professional image.

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Marketing We will participate in manufactures promotions when appropriate. Stores should have a featured item on display and rotate those items weekly and can be used as a “lost leader”. Target marketing of competitive products is a must along with up selling, related selling and suggestive selling. Participate in trade shows when appropriate and provide customer clinics. Keep all store personnel informed on your current promotions and specials. Provide copies of specials to your CSA, CSR and Wholegoods Sales Professionals. Ask for their help in promoting your products. Messages that automatically print on invoices should be current and content should reflect marketing campaigns, open house announcement, or upcoming events. Link to update your invoice messages can be found on the RDO Employee Portal under the Marketing tab. Contact the RDO Marketing Department for printed materials and advertising needs. Employee Development Parts Managers must be aware of available training and determine with the General Managers assistance, what training is appropriate for employees. Employees who attend training will also accept the responsibility to bring knowledge back to the dealership and present to others. Utilize experts within the dealership to mentor others. Parts Managers are responsible to coach and encourage their team and develop a positive and fun working environment. Parts Manager will be directly responsible to administer RDO Equipment approved Career Path coaching conversations and ensure that employee is engaged in the learning process. Parts Managers will review the JDU Summary report quarterly to monitor John Deere on line training progress. All Parts Managers and Parts Department employees will complete an annual performance evaluation using The Source which is found on the RDO Employee Portal. Parts Manager will respond immediately to employee issues and concerns. If you have employee developmental issues contact the General Manager (Branch Manager) and the Human Resources Department.

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Communication Communication is a large factor in the Part’s Manager’s role. Parts Team should hold monthly meetings to resolve issues and strategize along with team members participating in a monthly formal open book meeting. Parts Team should “huddle” daily, or as often as necessary to provide direction among the team and share information. Service Department Communication Parts Managers must proactively inquire on Service Department needs on a consistent basis. Parts Managers and Service Managers should meet a minimum of twice daily, once in the AM and then early afternoon or more frequent if required. Parts Manager should participate in the Service Department Team meetings to resolve parts issues or strategize with Service Team. Sales Team Communication Parts Managers must participate in Sales Team meetings to stay informed on new and used machines that are being sold or put out on long term rentals. This gives the Parts Department an opportunity to contact customers and understand their needs and meet expectations.

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Reports and Required Procedure Completion As part of the management of the Parts Department there are reports which must be processed and reviewed and procedures that must be completed within time lines allowed. A checklist of these reports is contained in the RDO Parts Process Document. Reports

o Parts Dashboard Report o Area Sales Report o Negative Transactions o Negative Balances Report o No Bin Location Report o Open Sales Orders Report o Parts Not Ordered Report o Purchase Orders 30 Days Aging Report o No Sales Parts Report o 45 Day return review o Customers with Discounts o Monthly Controls Report ( MMR )

Procedures

o Parts Availability printed (or form of electronic parts pad) o Cycle Counting is current o Consignment Cycle Counting current o Surplus Returns are completed o DTF Pack slips current (John Deere Dealers only) o Subledger’ s current- Parts Return, Parts Accrual , Warranty Receivables and

Parts Deposits

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Safety and Hazardous Materials The Parts Department should be kept safe at all times and meet OSHA regulations. Battery filling stations should be equipped with regulation safety glasses, showers, gloves and emergency eye flushing equipment. All equipment should be kept in safe operating order and any deviation from this should be reported to the Safety Coordinator and the General Manager at your branch. Storage of Hazardous Materials Battery cores will be stored in a leak proof, EPA regulation approved container. Highly flammable items such as starting fluids etc should be stored to meet Federal, State and City regulations for your branch. Disposal of Containers with Hazardous Content Federal EPA, State and City regulations must be followed when disposing of any containers that contain (contained) hazardous contents of oil, antifreeze, electrolyte etc. This includes all sizes of containers (quarts, gallons, 30-55 gallons, and totes). Sale of Hazardous Items If an item is toxic if ingested by humans or animals it must be sold in its original manufactured labeled product container. Filling unmarked containers with oil, antifreeze, etc. is prohibited by RDO Equipment. For OSHA regulation and hazardous information, contact Scott Williams. Hydraulic Hose and Fittings For Customers safety and liability reasons, RDO prohibits installation of a hose fitting on any used hoses. New hoses will be assembled using new hose and its properly matched fittings. All hose crimpers should be the same manufacturer of the hose and fittings that you market. Example- if you stock Parker Hannifin fittings you must use Parker Hannifin hose and Parker Hannifin Crimper. Dyes should be inspected annually to insure that crimping specs are being met.

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Parts Manager Expectations – Monthly 1:1 Review

This document is intended to summarize general expectations that are in place for the RDO Equipment Parts Managers and are written in detail in the “RDO Parts Department Operational Guidelines and Policy Manual”. These expectations are summarized in the job description, bonus plan, stakeholder scorecard, and performance review in TheSource. This document will act as a review process during monthly 1:1 meetings. There may be other expectations that are added to this summary. All relevant categories will be documented in TheSource and the expectations will be that the Parts Manager document personal progress as appropriate. The Parts Manager will be expected to regularly follow up and be accountable for action items and progress in each category as appropriate. Personal Objectives:

Monthly departmental meetings – these meetings must be scheduled as regular events.

Daily Team huddles – these huddles will enhance communication between the

Parts Specialist and the Parts Manager and allow for more effective work flow.

Daily huddle with Service Manager – these huddles will help ensure that the Parts Manager and/or Lead Parts Specialist are aware of Service Department hot jobs; along with communicating any parts availability issues.

Department performance reviews – The expectations is that 100% of reviews are

completed by the designated deadline. All performance categories must be commented on by Parts management.

Inventory Control- inventory will be controlled through utilization of appropriate

processes for receipting, dispensing inventory, and warehousing parts.

Physical Inventory- cycle counts will be conducted throughout the month and variances will be recounted by another team member. Parts managers will sign off on all cycle count adjustments and will control all adjustments made outside of the cycle count process. Average line item error ratio should not exceed 5%.

Customer Returns- will be processed immediately and monitored for both

Counter and Service Department. Parts will be review by Parts Managers for package condition and returnable capability. All short line vendor parts, both

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returnable and non-returnable must be reviewed and 30 day returns option utilized. Vermeer and Deere items listed as non-returnable must be reviewed for 30/45 day vendor return option.

Customer visits – Top15 customers visited quarterly. Active involvement in customer deliveries and customer issue resolution.

Surplus Return- Surplus returns will be picked within 15 days after RGA is received

or sooner if designated by the manufacturer. Parts must be relieved from inventory and put to the parts return account pending credit.

No Sales Inventory Management- Parts Managers are directly responsible to monitor and market aged inventory. Utilization of RDO Equipment best practices must be instilled to avoid no sales inventory accumulation of non-returnable inventory, open packages and broken package quantity. Parts that are deemed obsolete within the company will be written off and disposed of using the RDOE Write-off authorization process.

Parts Marketing- Showrooms are merchandised in a clean, professional and

appealing manner. Regular in-store parts promotions must be utilized along with marketing of competitive products.

Professional image – this includes properly and professionally maintained facilities

and vehicles, as well as team members presenting themselves in a neat and professional manner.

Safety & environmental issues management – a diligent approach to ensure we

are providing a safe work environment for all employees.

Survey Results and Net Promoter Index - Minimum expectation of 70% favorable with 95% of issues closed with 10 day

Internal Audit – Goal is a Green audit with the minimum expectation being

yellow.

MMR - is completed by the 10th of each month with corrective action being taken and followed up on consistently.

Active store management participant – the expectation is that you offer your

expertise and intuition in teamwork and decision making processes/meetings and that you offer your services where needed, regardless of traditional “department” boundaries.

Company financial goals are achieved-

Parts Department profitability greater 17% Freight Recovery of 100% (breakeven) No Sales inventory less than 2%

Core Competencies and Standard Objectives:

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Communication Competency Expectation: Regular 1:1 meetings with Direct Reports. Expect that 1:1’s with Parts Department employees will cover CPL progress. Learning and Development Competency You should develop a documented training plan for each of your direct reports and ensure that you are meeting your own training goals. Accountability Competency Based on issues that may arise, a strict adherence to company policy is expected. You are expected to utilize a proactive approach in addressing personnel issues and holding people accountable to perform. Gallup Employee Survey Results Competency

From the Gallup survey results, create and update the Impact Plans for your department at a minimum, quarterly.

Summary and RDO Core Values This document summarizes all the information needed to meet RDO Parts Management Operational recommendations and assist all RDO Management Staff with a clear vision and understanding of parts management, policy and procedures. By design, it supports the RDO Core Values: Partner with employees Build customers for life Create opportunities We do what we say Play to win!