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EXHIBIT 10.1
CONSULTING SERVICES AGREEMENT
This AGREEMENT, dated as of June 3, 1999, is between Home Interiors &
Gifts, Inc. (herein called "Home Interiors") and Tompkins Associates
Incorporated (herein called "Tompkins"). In consideration of the mutual promises
herein contained, Home Interiors and Tompkins agree as follows:
1. SCOPE OF SERVICES. During the term of this Agreement, Tompkins shall
furnish the services set forth in the proposal provided in Schedule A,
attached hereto and made a part thereof (the "Proposal"). Such services
shall be performed by individuals as employees of Tompkins, an
independent contractor, and not as employees of Home Interiors
provided, however, that Home Interiors shall have the right to cause
Tompkins to cease using any of its employees in connection with this
Agreement and to substitute for such employees one or more other
employees who are satisfactory to Home Interiors, in its sole
discretion. Tompkins shall be obligated to perform only the services
described in the proposal for the agreed upon fee and arrangements as
stipulated. No representation is made that Tompkins is responsible, or
accepts responsibility, for the following services:
a. Certification as to the accuracy or sufficiency of any document
prepared by others and provided to Tompkins by Home Interiors or
as directed by Home Interiors.
b. Assurance of favorable or timely approval, permitting, and
licensing action by governmental agencies as a result of services
provided by Tompkins.
Home Interiors shall inform Tompkins of any special criteria or
requirements related to Tompkins' services. Home Interiors shall
willingly furnish, at no cost to Tompkins, any existing information,
drawings, specifications, and reports which will assist Tompkins in the
performance of its services.
2. CHANGE IN SCOPE OF SERVICES. Home Interiors may, by written request,
submit proposed changes in the scope of services to be performed by
Tompkins as defined in the Proposal. Tompkins shall notify Home
Interiors in writing of its response to the requested change in the
scope of services within ten (10) days of receipt of the request. If
Tompkins accepts the proposed changes and determines that such changes
cause an increase or decrease in the cost or the time required for
performance, Tompkins shall include in its response any corresponding
change in price or time required for performance. Home Interiors shall
accept or reject Tompkins' response in writing within ten (10) days of
receipt, If Home Interiors accepts Tompkins' proposed modifications to
the price or time for performance, they shall be deemed accepted and
shall become an addendum to the Proposal.
3. OPINION OF CONSTRUCTION COSTS, EQUIPMENT COSTS AND SYSTEMS COSTS. Since
Tompkins has no control over the cost of labor, materials, equipment or
services furnished by others, or over contractor(s)' or vendor(s)'
means or methods of determining prices or over competitive bidding or
market conditions, Tompkins' opinions of probable total project and/or
construction costs and/or equipment costs and/or systems costs are made
on the basis of Tompkins' experience and qualifications and represent
Tompkins' best professional judgment as an experienced and qualified
professional
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familiar with the material handling, warehousing and logistics
industry. However, Tompkins cannot and does not guarantee that
proposals, quotes, bids or actual total project or construction or
equipment or systems costs will not vary from opinions or probable
costs prepared by Tompkins. If Home Interiors wishes greater assurance
as to total project or construction or equipment or systems costs, Home
Interiors shall employ an independent cost estimator at Home Interiors'
expense or authorize Tompkins to contract for such services which will
be considered additional services.
4. TERM OF AGREEMENT. The Agreement shall commence on June 3, 1999 and,
subject to Section 11, terminate on June 3, 2000, or until all services
provided for in the Proposal have been completed if later.
5. PAYMENT TERMS. As compensation for services to be performed by Tompkins
hereunder, Home Interiors shall pay Tompkins at the rates set forth in
the Proposal. In addition, Home Interiors shall reimburse for travel
expenses incurred in the performance of services hereunder, including
coach fare air travel, lodging costs not to exceed $125 per night and
taxi fares. Tompkins shall use its best efforts to plan its air travel
in an effort to take advantage of all available discounts. Home
Interiors shall not have any liability for any other expenses or costs
or costs incurred by Tompkins hereunder.
Tompkins shall submit to Home Interiors invoices based on the payment
schedule as provided in the Proposal. Invoices shall be due and payable
within thirty (30) calendar days of receipt date of the invoice. If
Home Interiors takes issue or objects to all or any portion of an
invoice, Home Interiors shall notify Tompkins in writing within
fourteen (14) calendar days of the invoice date, clearly identifying
the nature of the issue or objection, and shall pay that portion of the
invoice, if any, not in dispute. If the undisputed invoice, or the
undisputed portion thereof, is not paid within sixty (60) days,
Tompkins may, without waiving any claim or right against Home
Interiors, suspend the performance of further consulting services until
all undisputed invoices more than thirty (30) days past due are fully
paid, or may terminate the services being provided. Each invoice
submitted by Tompkins will:
a. Provide complete supporting detail, including name(s) of
person(s) who performed the services, dates of services, hours or
days worked and billing rates;
b. Be accompanied by (i) an itemized listing of amounts claimed,
(ii) pertinent information relative to the expenses, and (iii)
receipts, to document the expenses.
6. NONDISCLOSURE. Neither party will disclose to any third persons any
unpublished information or knowledge it acquires about the other
party's business, products, employees or methods, unless such
disclosure is required by law. If either party is required by law to
disclose any such unpublished information or knowledge, it shall notify
the other party of such requirement immediately and cooperate with the
other party's reasonable requests in an effort to avoid or limit such
disclosure.
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7. PUBLICITY. Tompkins shall not, without the prior written consent of
Home Interiors, in any manner advertise or publish the fact that Home
Interiors has entered into this Agreement with Tompkins or that
Tompkins is providing services to Home Interiors.
8. NON-SOLICITATION OF EMPLOYEES. During the term of the engagement
contemplated hereby, and for a period of six months thereafter, Home
Interiors shall not solicit for hire or hire any employee or officer of
Tompkins who performs work or services for Home Interiors pursuant to
this Agreement. Notwithstanding the foregoing, however, this Section 8
shall not prohibit Home Interiors from hiring an employee or officer of
Tompkins who is involuntarily terminated by Tompkins or voluntarily
resigns from Tompkins, provided that, in the case of an employee or
officer who voluntarily resigns from Tompkins, Home Interiors has not
induced such employee or officer to resign his employment with Tompkins
by promising employment to such employee or officer.
9. INEXCUSABLE DELAY. No delay or failure in performance by either party
shall constitute a default hereunder or give rise to any claims if such
delay or failure is caused by circumstances beyond its control.
Tompkins shall be diligent in attempting to remove such cause and shall
promptly notify Home Interiors of the extent and probable duration of
such a delay. If Tompkins is unable to remove the cause within fourteen
(14) days, Home Interiors shall have the option of terminating this
Agreement or any portion of it affected by the delay in performance or
non-performance. If Tompkins shall terminate any portion of this
Agreement pursuant to this Section 9, Tompkins and Home Interiors shall
negotiate in good faith and agree upon an equitable reduction in the
compensation payable by Home Interiors to Tompkins hereunder.
10. INDEMNIFICATION. Each party hereby indemnifies and holds harmless the
other party, its officers, directors and employees, from any and all
claims, damages, losses and expenses (including attorneys' fees)
arising out of the performance of this Agreement by the indemnifying
party, except when such claims, damages, losses and expenses are caused
by the gross negligent acts, errors or omissions of the party to be
indemnified.
11. TERMINATION. This Agreement may be terminated by Home Interiors at any
time upon ten (10) days written notice. In the event of termination,
Tompkins shall be entitled to recover the costs and expenses incurred
in connections with its performance under the Agreement throughout the
date of termination.
12. ASSIGNMENT AND SUBCONTRACTING. Performance of this Agreement by
Tompkins may not be subcontracted in whole or in part, nor may Tompkins
assign this Agreement, without, in each case, the prior written consent
of Home Interiors.
13. COMPLIANCE WITH LAWS. To the extent applicable hereto, Tompkins shall
in the performance of this Agreement comply with all applicable
federal, state and local laws; and all regulations and orders issued
under any applicable law.
14. INSURANCE, INDEMNITY AND LIABILITY. Tompkins shall carry Workers
Compensation and Comprehensive General Liability Insurance in such form
as to
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protect Home Interiors, its directors, officers, agents and employees
as additional insureds from and against any claims or damages for
bodily injury, including death, and any damage to property which may
arise from acts or omissions of Tompkins under this Agreement. Tompkins
shall furnish Home Interiors with a certificate of insurance evidencing
limits of liability not less than $1 million combined single limit per
occurrence for bodily injury (including death) and property damage.
Such insurance shall be primary and non-contributing to any insurance
maintained or obtained by Home Interiors and shall not be canceled or
materially modified without thirty (30) days prior written notice to
Home Interiors. Tompkins agrees to waive any rights of subrogation
Tompkins or Tompkins's insurers may have against Home Interiors.
15. STANDARDS. All services hereunder shall be performed by employees or
agents of Tompkins who are experienced and highly skilled in their
profession and in accordance with the highest standards of workmanship
in their professions.
16. PATENT AND DATA RIGHTS. All information and data, regardless of form,
generated in the performance of or delivered under this Agreement, as
well as any information provided to Tompkins by Home Interiors, shall
be and remain the sole property of Home Interiors. Tompkins shall keep
all such information and data in confidence and not disclose or use it
for any purpose other than performing this Agreement, except with Home
Interiors' prior written approval. In the event that the copyright in
any data and information generated in the performance of this Agreement
does not vest in Home Interiors by law, Tompkins hereby agrees to
assign and assigns to Home Interiors the copyright in all such data and
information.
Tompkins assigns to Home Interiors the entire right, title, and
interest, worldwide, in any invention or patent thereunder conceived or
first actually reduced to practice in performing this Agreement.
Tompkins grants Home Interiors the royalty-free, non-exclusive,
worldwide, irrevocable license to make, use and sell any invention
which is not conceived or first actually reduced to practice in
performing this Agreement, but which is described or incorporated in
anything furnished to Home Interiors in connection with this Agreement.
In connection with actual inventions or patents conceived or first
actually reduced to practice in connection with this Agreement,
Tompkins will furnish Home Interiors with information sufficient to
file and prosecute patent applications, and will execute all documents
incident to such filing and prosecution and, in connection with the
license granted under this Agreement, Tompkins will furnish information
sufficient to enable Home Interiors to avail itself of such license.
Final payment shall not be due hereunder until after receipt by Home
Interiors of such complete invention information, or certification that
there is no such information, and receipt of all information and data
which is the property of Home Interiors. These obligations shall
survive the termination of this Agreement.
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17. CONFIDENTIALITY. Tompkins shall preserve as confidential all
information pertaining to Home Interiors' business and all technical
and proprietary information obtained from Home Interiors in the
performance of this Agreement. Tompkins further agrees that any data
and information generated or delivered in the performance of this
Agreement and any information and data furnished by Home Interiors
shall (1) be kept in confidence and not be disclosed to third parties
without the prior written approval of Home Interiors, and (2) shall not
be used in the production, manufacture or design of any article or
material, except as otherwise provided herein, without Home Interiors'
prior written consent; and this obligation, Tompkins agrees, shall
survive the termination or expiration of this Agreement. Tompkins shall
deliver all data and information to Home Interiors upon Home Interiors'
request and, in any event, upon the completion of all work hereunder or
the termination or expiration hereof, whichever shall first occur, and
shall be fully responsible for the care and protection thereof until
such delivery.
18. DISPUTES. Any dispute arising under this Agreement which is not settled
by agreement of the parties may be settled by appropriate legal
proceedings. Pending any decision, appeal or judgment in such
proceedings or the settlement of any dispute arising under this
Agreement, Tompkins shall proceed diligently with the performance of
this Agreement in accordance with the decision of Home Interiors.
19. RECORDS. Home Interiors shall, until the expiration of three (3) years
after final payment under this Agreement, have access to and the right
to examine any directly pertinent books, documents, papers and records
of Tompkins involving transactions related to this Agreement.
20. NOTICES. Any notice provided for in this Agreement shall be considered
as having been given (i) to Home Interiors if mailed by certified mail,
postage prepaid to Home Interiors & Gifts, Inc., 4550 Spring Valley
Rd., Dallas, Texas 75244-3705, Attention: Legal Department, or (ii) to
Tompkins if mailed by certified mail, postage prepaid to Tompkins
Associates Incorporated., 2809 Millbrook Road, Raleigh, NC 27616,
Attention: John Spain.
21. RESERVATIONS OF RIGHTS. Either party's waiver of any of its remedies
afforded the Agreement or by law shall not waive any other remedies
which such party shall have available to it. Such waiver also shall not
waive such party's right to any remedies due to a future breach by the
other party, regardless of whether such future breach is of a like or a
different character.
22. SEVERABILITY. Should any portion or provision of this Agreement be
found to be unenforceable then all other provisions shall remain in
full force and effect.
23. PRECEDENCE. The terms of this Agreement shall supersede any printed
conditions in the Proposal.
24. EXCLUSIVITY. The terms of this Agreement are between the parties herein
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stated and any changes to the terms must be in writing and signed by an
authorized representative of both parties.
25. GOVERNING LAW AND VENUE. The validity and interpretation of this
Agreement shall be governed by the laws of the State of Texas, without
regard to choice of laws provisions. This Agreement shall be performed
in Dallas, Texas and any dispute arising out of this Agreement shall be
adjudicated solely in the courts of the State of Texas or in the
federal courts located in Dallas, Texas, and Tompkins hereby agrees
that service of process upon it by registered or certified mail shall
be deemed adequate and lawful. Tompkins hereby consents to personal
jurisdiction and venue being solely in the above-referenced courts and
agrees not to object to personal jurisdiction and venue in such courts,
and agrees not to seek personal jurisdiction and venue in any other
courts.
27. ATTORNEY FEES. If either party is required to bring or maintain any
action for the enforcement of any covenants, terms, or conditions of
the Agreement, the prevailing party in such action shall, in addition
to all other payments required herein, be entitled to recover
reasonable costs (including attorney's fees) incurred by the prevailing
party at and in preparation for arbitration, trial, appeal, review, and
proceedings in bankruptcy court, including, but not limited to matters
unique to bankruptcy.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Tompkins Associates, Incorporated Home Interiors & Gifts, Inc.
By /s/ JOHN C. SPAIN By /s/ JIM LIVINGSTON
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Name John C. Spain Name Jim Livingston
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Title Executive Vice President Title VP Operations
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SCHEDULE A
PROPOSAL FOR THE
DESIGN AND
IMPLEMENTATION
OF A NEW
DISTRIBUTION
CENTER
PRESENTED TO:
Jim Livingston
Home Interiors & Gifts, Inc.
DALLAS, TEXAS
[TOMPKINS ASSOCIATES INCORPORATED LOGO]
Irving, Texas
May 1999
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EXECUTIVE SUMMARY
Home Interiors & Gifts, Inc. has decided to design, construct, outfit
and implement a new centralized Distribution Center in Dallas, Texas. The plan
is to have this new facility fully operational by first quarter 2000. Tompkins
Associates, Inc. believes that the project can be completed within this time
frame as long as the potential delays between phases are kept to a minimum.
Tompkins has planned and implemented many distribution centers very
similar to the one planned for Home Interiors & Gifts, Inc. Tompkins Associates,
Inc. has considerable experience in dealing with construction, equipment,
people, systems and maintenance issues in the implementation of full-scale
Distribution Centers. With our experience in all these practice areas Tompkins
Associates, Inc. is uniquely qualified to partner with Home Interiors & Gifts,
Inc. to optimize their distribution operations and meet the future head-on.
Tompkins Associates, Inc. is the turnkey consultant that is best positioned to
assist in the successful implementation of the new distribution center.
This proposal presents a path forward for Home Interiors & Gifts, Inc.
to follow in order to implement the new facility. This proposal also indicates
the deliverables Tompkins Associates, Inc. will provide in each phase of the
project. The fees for Phase I and II are $520,000 plus expenses.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY................................................................................... i
1.0 DESIGN AND IMPLEMENTATION OF A DISTRIBUTION CENTER STRATEGIC MASTER PLAN........................ 2
PHASE IA: OPERATIONS PLANNING................................................................... 2
PHASE IB: WMS SELECTION......................................................................... 5
PHASE II: DETAIL PLANNING....................................................................... 6
PHASE III: IMPLEMENTATION........................................................................ 7
2.0 PROJECT SCHEDULE............................................................................... 8
3.0 PROJECT LOGISTICS.............................................................................. 8
3.1 STAFFING..................................................................................... 8
3.2 PRICING...................................................................................... 9
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1.0 DESIGN AND IMPLEMENTATION OF A DISTRIBUTION CENTER STRATEGIC MASTER PLAN
A Distribution Center Strategic Master Plan (SMP) must be undertaken at
Home Interiors & Gifts, Inc. in order to ensure the successful implementation,
by first quarter 2000, of an efficient and effective Distribution Center that
provides for maximum return on investment and customer service. Tompkins
Associates, Inc. (Tompkins) recommends the following approach to implementing
such a distribution center.
PHASE I: DISTRIBUTION CENTER REQUIREMENTS
Ia: Operations Planning
Ib: WMS Definition & Selection
PHASE II: DETAIL PLANNING
IIa: Equipment and Facility
IIb: WMS
PHASE III: IMPLEMENTATION
Phase III staffing, duration and deliverables will be further defined
during Phase II.
This proposal presents the scope, objectives, deliverables, approach,
and fees for Phase I and II. It also outlines some of the deliverables for Phase
III that Tompkins can provide Home Interiors.
PHASE Ia: OPERATIONS PLANNING
Typically Tompkins recommends that companies define the design and
functionality needs of the distribution center first and then move forward with
the selection of a Warehouse Management System (WMS). This is typically done
because the WMS is not the longest lead-time item when implementing a new
facility and all the system requirements are known before the selection.
However, based on the concerns about the length of time to install the WMS,
Tompkins recommends that the effort focusing on the WMS run in parallel to the
Distribution Center Design. The final selection of the WMS should be
accomplished upon completion of the operations design.
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The design will focus on optimizing the operations, layouts, methods,
storage and picking technologies, and information flow. The design will address
not only today's requirements, but also future requirements based on business
plans and growth projections. Likewise, the WMS "Rapid Selection" should take
these same factors into consideration and will utilize information from the
design process as it becomes available. It is anticipated that 70% of the WMS
requirements will be known within the first few weeks of the project. This
should be sufficient to get the WMS process started.
APPROACH PHASE Ia: OPERATIONS PLANNING
Step 1: ESTABLISH HOME INTERIORS' OBJECTIVES AND PRIORITIES. Interact
with key staff to establish the objectives and priorities for
the development of the plan. Quantify these objectives and
priorities for use as a guide in alternative generation and to
apply as the criteria for the qualitative analysis.
Step 2: ANALYZE OPERATIONS. Tour and observe the current distribution
operations in detail. Interview key staff and management on
current operations, problems, performance, etc. Obtain
performance metrics and other information to allow analysis of
shortcomings and improvement opportunities in the existing
design.
Step 3: ESTABLISH DATABASE. Obtain information on product group
requirements, storage requirements, throughput requirements,
receiving and shipping requirements, labor and equipment
requirements, facility requirements, operating cost and
miscellaneous information.
Step 4: ANALYZE DATABASE. Manipulate and analyze the database to
determine profiles for growth, orders, SKUs, customers,
inventory, etc. Develop baseline (1999) profiles and the
future profiles based on assumptions, trends, customer demands
and business requirements.
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Step 5: IDENTIFY AND DOCUMENT ALTERNATIVE OPERATIONAL STRATEGIC MASTER
PLANS. Given the analysis performed in Steps 2 and 4,
alternative material handling, storage, and operational
systems will be considered. The methods of receiving,
crossdocking, checking, putaway, storing, inventory control,
replenishing, picking, packaging, and shipping will all be
questioned. The utmost use of best practices along with
creativity, innovation, and practicality will be pursued.
Step 6: EVALUATE ALTERNATIVE STRATEGIC MASTER PLANS. Define the
investment, installation, and operating costs for each
alternative plan. Perform an after-tax economic analysis of
each alternative plan. Select the best plan based on the
overall economic and qualitative evaluations. Qualitative
factors considered will be items such as flexibility,
expandability, safety, security, integration, quality,
accuracy, order cycle speed, ease of implementation, and
others. The project team will determine these factors.
Step 7: SPECIFY THE PLAN. The selected plan must clearly illustrate
the building layout, material handling systems, storage
systems, and material control systems. The result of this step
is a briefing report and an oral presentation. This step,
along with weekly team meetings will allow Home Interiors &
Gifts, Inc. to totally understand the plan.
DELIVERABLES PHASE Ia: OPERATIONS PLANNING
1. Update meetings during which the Home Interiors/Tompkins team will
discuss the following:
a. The data collected and an analysis of the data
b. Any assumptions being made
c. All alternatives under consideration
d. The economic and qualitative evaluation of alternatives
e. Alternative layouts
2. Recommended order-picking methods that optimize space utilization and
maximize labor productivity, minimize order cycles, and optimize
customer service issues such as accuracy, fill rate, etc.
3. An economic and qualitative analysis of all viable material handling,
storage, and order fulfillment alternatives and documentation of why
the recommended strategy should be pursued.
4. An analysis of the material flow to determine a strategy for the most
efficient
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and cost-effective operation and layout. This plan will document the
space, equipment and labor needed to implement the plan.
5. Recommendation of product slotting by generic product group and by
classifications such as product line, popularity, similarity, size,
characteristics, and space utilization.
6. A description of operations for all operations such as receiving,
crossdocking, putaway, storing, picking, packing, and shipping.
7. Employee staffing plan required to support the recommendations along
with a list of job classifications needed to run the facility.
8. AutoCAD drawings of the recommended layout, showing all main
operational areas and support areas such as dock areas, forklift
charging, and offices.
9. The dollar amounts and timing of all the capital requirements for the
plan (equipment, systems, building, land, etc.)
10. A briefing report and oral presentation of the above deliverables.
PHASE Ib: WMS SELECTION
APPROACH PHASE Ib:
1. IDENTIFY MISSION-CRITICAL FUNCTIONALITY: Through detailed reviews of
existing operations, the design process and system requirements the project
team will identify all current functionality and future mission critical
functionality that are a requirements for Home Interiors & Gifts, Inc.
2. DEVELOP A RFP: Create a document that puts the mission critical
functionality into a bid solicitation document. Include terms, conditions,
bid directions, etc. In order to allow an "apples to apples" evaluation of
vendor responses.
3. CREATE A SCRIPTED DEMO: Using Home Interiors information and
mission-critical functionality, a scripted demo will be created. This demo
will be used to allow the WMS vendors to demonstrate that their systems are
capable of meeting Home Interiors' requirements.
4. DEVELOP WMS EVALUATION CRITERIA: The evaluation criteria will be developed
by the cross-functional team. The evaluation criteria will be weighed by
area of importance.
5. SOLICIT BIDS FROM WMS PROVIDERS: Invite WMS vendors to participate in the
solicitation. During the bidding process the vendors will tour the
facilities, understand the mission-critical functionality, perform the
scripted demo and provide a proposal.
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6. INTERACT WITH WMS VENDORS DURING BID PROCESS: Answer vendor questions and
provide information to vendors during bid process to assure complete
understanding of the WMS requirements. Field vendor suggestions and
evaluate the merits of the vendor suggestions. Conduct scripted demo review
with WMS vendors and qualify vendors' capabilities to meet mission-critical
functionality.
7. ARRANGE WMS SITE VISITS: Make arrangements and attend vendor site visits
(if the project team determines this beneficial to helping them make a
decision). During this process a series of questions will be asked to
gather evaluation information.
8. EVALUATE WMS BIDS AND SELECT VENDOR: Based on the Economic and Qualitative
criteria, evaluate vendor proposals and recommend a vendor.
DELIVERABLES PHASE Ib:
1. A detailed description of the current and future operational
requirements of the facility.
2. Description of Mission-Critical Functionality based on existing
methods and the facility design project requirements.
3. A review of the selection process performed to date and determination
of changes that should be made to the vendors on the short list.
4. A RFP containing the functional requirements and the terms and
conditions for contracting the vendor.
5. WMS site visits for each supplier to a similar install if desired by
the team.
6. Develop and conduct a Scripted Demo to determine the ease with which
the short listed system suppliers execute the mission critical
functionality.
7. Economic and Qualitative evaluation of vendors' proposals.
8. A written report and oral presentation of the above seven
deliverables.
PHASE II: DETAIL PLANNING
The detail planning process is made up of two sub-phases: Phase IIa:
Equipment and Facility, Phase IIb: WMS. The approach for this Phase follows the
Phase II methodology. The deliverables of each sub-phase is as follows:
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DELIVERABLES PHASE IIa: EQUIPMENT AND FACILITY
1. Functional bid specifications for all material handling and storage
equipment.
2. Conduct in-depth interviews of references supplied by vendors.
3. Organize vendor presentations and site visits if applicable to similar
operations for vendors on short list.
4. Approve and conduct on-site equipment demonstrations where
appropriate.
5. A qualitative and quantitative evaluation of vendor bids.
6. Selection of vendors for all required equipment.
7. A detailed layout of the new facility.
8. Slot the products that require storage and picking slots in the new
facility.
9. A Phase III implementation schedule.
DELIVERABLES PHASE IIb: WMS
1. Negotiate final contract with WMS vendor.
2. Work with selected WMS vendor to perform a detailed Conference Room
Pilot (CRP). The CRP will demonstrate the ability of the WMS to "go
live".
PHASE III: IMPLEMENTATION
The following are some the deliverables for Phase III. Tompkins will further
define these deliverables during Phase II.
1. Establish Operating Procedures for the new facility.
2. Oversee Installation of equipment, systems and facility.
3. Plan for move from current facilities to new facility.
4. Train Personnel on new equipment and systems procedures.
5. Verify Installation of equipment, systems and facility design.
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6. Conduct Acceptance Test for equipment and systems.
7. Start-up, Debug and Audit systems and equipment.
2.0 PROJECT SCHEDULE
The project schedule for Phases Ia and Ib is as follows:
WK
TASK 1 2 3 4 5 6 7 8 9 10
--- --- --- --- --- --- --- --- --- ----
Review Operation and Collect Data X X
Analyze Data X X X
Define Alternatives X X
Analyze Alternatives X X X X
Layout Distribution Center X X
Specify Strategic Plan X X
Develop Functional Specs X X
Establish Bidders List X X
Release Functional Specs X
Develop and Release Scripted Demo X X
Interact With Vendors X X X X
Evaluate and Select vendor X X
The Phase II schedule will be detailed during Phase I.
3.0 PROJECT LOGISTICS
Tompkins is very comfortable pursuing the project as presented in this document.
In fact, Tompkins has completed many similar projects. We look forward to
working with Home Interiors & Gifts, Inc. on this project as outlined.
3.1 STAFFING
The Tompkins Project Team will have the following structure:
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QUALITY ASSURANCE Responsible for assuring the quality of the project and providing
10% OF WORKING TIME input to project direction.
MIKE FUTCH
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PROJECT DIRECTOR Responsible for establishing project direction and monitoring
30% OF WORKING TIME project progress.
JIMMY BENEFIELD
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PROJECT MANAGER Responsible for on-site project management and the primary point
100% OF WORKING TIME of contact with Home Interiors & Gifts, Inc..
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PROJECT CONSULTANT(S) Two Tompkins' project consultant(s) will be assigned full time to
100% OF WORKING TIME this project and are responsible for the work designated by the
Project Manager.
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ASSOCIATE CONSULTANT Responsible for CAD, data analysis and project schedule
100% OF WORKING TIME coordination to support the consultants.
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CUSTOMER RELATIONS Responsible for ensuring a productive relationship between Home
COORDINATOR Interiors & Gifts, Inc. and Tompkins throughout the project and
beyond.
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3.2 PRICING
The duration of the total Tompkins effort is estimated at 19 weeks. The
cost for Tompkins to perform all of the Phase I and II activities outlined in
this report is $520,000 plus expenses.
o Phase I - Duration is estimated at 9-11 weeks
o Phase II - Duration is estimated at 8-10 weeks
o Phase III - Proposal and cost will be presented at the end of
phase II.
Table 1.0 below summarizes the cost (excluding expenses) by phase with
the corresponding duration in weeks, which will be paid in accordance with Table
2.0 below.. Travel expenses will be invoiced to Home Interiors & Gifts, Inc. at
cost.
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Distribution Center Design & Implementation - Page 10
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TABLE 1.0 - PHASE I DURATION AND COST
PROJECT PHASE DURATION PROJECT COST
-------------------------------- ------------ ------------
PHASE I:
DISTRIBUTION CENTER REQUIREMENTS 9 - 11 weeks $274,000
------------ --------
PHASE II:
DETAIL PLANNING 8 - 10 weeks $246,000
------------ --------
TABLE 2.0 PAYMENT SCHEDULE
WEEKS AFTER INITIATION AMOUNT
---------------------- ------
0 $100,000
2 $ 46,000
4 $ 46,000
6 $ 46,000
8 $ 46,000
10 $ 46,000
12 $ 46,000
14 $ 46,000
16 $ 46,000
Upon Completion $ 52,000
--------
TOTAL $520,000
The cost of this project is based on the following assumptions:
1. Home Interiors & Gifts, Inc. provides Tompkins personnel with
office space and business telephone services while on site.
2. Home Interiors & Gifts, Inc. concurs with the payment schedule
presented in Table 2.0. Home Interiors & Gifts, Inc. agrees to
pay all charges not in dispute within 30 days of receipt of
Tompkins' invoice. Any charges held to be in dispute shall be
called to Tompkins' attention within 10 days of receipt of
Tompkins' invoice and Home Interiors & Gifts, Inc. and Tompkins
shall work together in good faith to resolve their differences.
3. Home Interiors & Gifts, Inc. provides input data for planning
database no later than two weeks after project start date.
4. The total fixed-cost and project schedule are applicable for the
project scope, steps, and deliverables presented herein. If Home
Interiors & Gifts, Inc. directs or causes a change in the project
scope, steps, deliverables, or schedule, Tompkins shall present a
written change order. Within one week of Tompkins submitting a
change order, Home Interiors & Gifts, Inc. shall either approve
or disapprove the change order. If Home Interiors & Gifts, Inc.
approves the change order or if no response is received within
one week, Tompkins shall
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submit and adhere to a revised invoice schedule. If Home Interiors
& Gifts, Inc. disapproves the change order, all work shall cease
until an agreement on the change order is reached.