FNW Gaskets And all other Proprietary Brand products!

1. Product Integrity FNW Gaskets And all other Proprietary Brand products!

2. As part of our Product Integrity process, the following changes related to non-asbestos gasket and nut, bolt and non-asbestos gasket kits (“NA NBG Kits”) will be effective May 1, 2012.

3. We implemented a comprehensive testing regime for all non-asbestos gaskets purchased through the distribution centers.  In order to maintain the integrity of our testing procedures, we are implementing strict new protocols in connection with the purchase and return of non-asbestos gaskets.

4. Please read, understand and address each of the five changes to our current procedures.  You must thoroughly communicate these requirements to the appropriate branch staff and ensure full compliance by May 1, 2012.

5. 1) Branches may not return non-asbestos gaskets or NA NBG Kits to Ferguson DCs.

6. 2) Branches may not accept returns of non-asbestos gaskets or NA NBG Kits from customers.  At branch management discretion, branches may issue customers full credit as a price adjustment and thereafter discard the gaskets.  Under no circumstance may non-asbestos gaskets or NA NBG Kits be returned to stock or otherwise resold or redistributed. Note: Just use the DAM code on your RFC.

7. 3) Branches may only stock FNW non-asbestos gaskets and NA NBG Kits.  • All non-asbestos gasket and NA NBG Kits must be purchased from our distribution network. • The purchase of non-asbestos gaskets from local gaskets suppliers is not permitted, except to fill an emergency order that must be filled on the same day the order is received. • Emergency orders may be purchased locally, but must be purchased using a “SP-code”

8. 3) Branches may only stock FNW non-asbestos gaskets and NA NBG Kits.  (cont’d) • Branches that have customer requirements for specific brands or Approved Manufacturers, may purchase gaskets for their inventory but they MUST be purchased under their own specific codes and not intermingled with FNW gasket inventory. • Note: we’ll discuss this more later

9. 4) Branches may not use FNW product codes for any non-FNW products. • FNW codes are intended for use only with FNW products from the DCs. • As noted above, branches may not use FNW codes generically for emergency purchases of non-asbestos gaskets and NA NBG Kits outside our DCs. • There are no exceptions to the policy and any violation will result in disciplinary actions. • Each DM and GM will receive a monthly report of branch non-asbestos gasket purchases from local suppliers.

10. In order to ensure that all branch inventory meets Ferguson’s Product Integrity expectations, all non-asbestos gaskets and all NA NBG Kits identified in the attached product codes that are not clearly stamped with the “Teadit” brand name are to be removed from inventory and discarded (and may not be otherwise resold or redistributed). • Note: Just use DG as the Inventory Adjustment reason code

11. It is critical that these procedures are implemented as stated above and that there are no exceptions to this policy. 

12. So, what CAN you do?

13. Q – Do these rules apply when I ship products via Direct Shipments? • A - Using the proper product code is always mandatory. Buying from approved vendors, whenever possible, is always desired. Just remember that a branch can no longer accept any non-asbestos RETURNS from the customer.

14. Q – Do I really need to inspect all of the FNW product? • A – Yes, you need to ensure the gasket in the NBG box and loose gaskets are an approved product.

15. Q – Does the NA mean all rubber types too? • A – No. Red rubber, and other types of gaskets beyond the fiber-type compressed non-asbestos gaskets do not need to be inspected as part of this effort.

16. Q - Do I now need approval to purchase stock gaskets from vendors like AR Thomson, Dan-Loc B & G, Flexitallic, Garlock, Lamons, and Teadit? If so whose approval? A - You can purchase gaskets from Teadit, what FNW does not offer! We are currently working with those vendors on the WIG AML to certify them as approved vendors.

17. Q - Do we have to submit vendor specific codes to product file for each vendor where we purchase a Garlock or Flexitallic gasket? A - No.  These can be purchased using SP-Codes. However, if this is an ongoing stocking situation to satisfy customer/market requirements, contact Mike Cowden.

18. Q - When reviewing my current FNW inventory, how do I positively identify the “Teadit” brand gasket material? A - All FNW gaskets are supplied using Teadit sheet material and are marked with their name on the product.  All products that do NOT have the name Teadit printed on the gasket are to be disposed of.

19. Q - Do we remove any non-asbestos gasket and kits and replace them in consignment crib at a customer’s facility? A - If these are FNW products, the guidelines as previously noted for branch stocks should be followed.  If they are NON-FNW gaskets, they need to be reviewed to determine whether they meet the guidelines of the WIG AML.

20. Q - If I currently have gasket SKUs as part of non-consignment crib, do I have an obligation to audit the non-asbestos gasket and kits and replace them for our customer? A - Since we are responsible for filling these items, we should audit the inventories to make sure that they are in line with our current policy.

21. Q - Where do I go to source non-asbestos gaskets and NA NBG Kits, specified by my customer which are not available in the FNW proprietary brand offering? • A – Contact Mike Cowden to discuss. You perhaps can source gaskets which are included on the WIG AML, but only through using SP or specific manufacturer codes.

22. Q - Can I purchase and stock gaskets from the vendors listed on the “WIG Approved Manufacturers List”? A - Contact Mike Cowden to discuss. WIG AML listed vendors are not fully vetted beyond Teadit. But, we will update the information as we progress.

23. Q - Do I request credit from the DC? A –No, the inventory reduction will be felt by the individual stocking branches.

24. Other ideas: • Monitor your cash sale refunds to ensure something doesn’t sneak in. • Show your returns person exactly which gaskets are affected. Don’t just send an email. • Review IHC from time to time to monitor returns / purchases.

25. Take- Aways: • ONLY use Proprietary codes for Proprietary products. • NEVER use Proprietary codes for non-Proprietary products. • Use vendor-specific codes when possible. • Do NOT accept returns of NA gaskets • We are working the WIG AML vendors to gain compliance • Drive this and ensure compliance! • This presentation will be available on Pipeline / BizGrps / PropBrands / FindItFast • A listing of FNW gaskets & NBG kits that must be inspected will be on Pipeline too.

26. Take- Aways: • Any loose gaskets that are NOT Teadit brand, should be discarded. • NBG kits w/ “Cain Bolt & Gasket” and with lot number starting with “L” are o.k. to keep in stock. See next slide. • NBG kits w/ Teadit-brand gaskets are o.k. • NBG kits w/ any other brand gasket, the gasket should be discarded and replaced with a FNW/Teadit brand.

27. Take- Aways: • Any loose gaskets that are NOT Teadit brand, should be discarded. • NBG kits w/ “Cain Bolt & Gasket”