Wal-Mart Supply Chain Security Audit Report

Factory Details Audit Report Details Factory Name: Taizhou Yongyao Plastic Co., Ltd Factory Address: No. 13, Shangjin Road, Hongjia Plastic Industry Zone, Jiaojiang District Wal-Mart Audit ID: 1193000 Vendor/Agent: Taizhou Yongyao Plastic Co., Ltd BV Report#: 10111300382 Factory City: Taizhou City Country: China Audit Date: May 31, 2011 Factory Contact Person: Ms. Wang Min Title: Sales Manager Audit Type: Initial Announced Wal-Mart Factory ID: 36116647 Auditor Name: Seven Ni Name of Port: Ningbo Port Merchandise Type (Product Category): Plastic products Scoring Section Name Score Number of Violation Degree of Compliance 1. PERSONNEL SECURITY 100% 0 100% 2. THREAT AWARENESS 79% 2 67% 3. PHYSICAL ACCESS CONTROLS 87% 5 81% 4. PHYSICAL SECURITY 90% 3 88% 5. CONTAINER/TRAILER SECURITY 100% 0 100% 6. PROCEDURAL SECURITY 83% 3 80% 7. INFORMATION SECURITY 89% 2 83% 8. CONTRACTOR SECURITY 100% 0 100% Factory Overall Score 91% Factory Overall Rating Low Risk

Overall Comments ~Factory established: April 29, 2002 ~Main manufacturing processes: Plastic injection, Deburring ，Printing, Inspection and Packing ~Product category: Plastic products ~Factory area: 30,102.22 square meters ~Employee number: 73 ~Production capacity: 18 containers per month ~International certification: ISO 9001:2000 ~Peak season: Not apparent ~Major market: Europe(20%), USA(5%), Japan(10%), Australia(10%), Demestic(55%) ~Major customer: KOHNAN, MACVOD, JTC ~Working days: From Monday to Friday, 5 days per week ~Working time schedule: The employees working in the plastic injection workshop worked in 3 shifts as following: 1st shift 8:00 to 16:00, 2nd shift 16:00 to 24:00 and 3rd shift 00:00 to 8:00. Other employees worked in 1 shift as following: 8:00-12:00, 13:00-17:00. ~Security system: The factory had established a security manual and relevant documented procedures, 32 CCTV cameras were installed in the factory. ~Arrangement of security guards: There were 3 security guards covering 24 hours per day from Monday to Sunday. ~Product liability insurance and product recall insurance were not purchased.

1. PERSONNEL SECURITY Description of Non-Compliance Provide a comment for each Partial, No or N/A: Nil

Remark for N/A rating: 1. No more detailed background check was allowed by local law.

2. THREAT AWARENESS Description of Non-Compliance Provide a comment for each Partial, No or N/A: 1. Client Requirement: The threat awareness training program is provided during new hire orientation and as refresher training to all employees every twelve months. Description of Non-compliance: The threat awareness training program was provided during new hire orientation, but refresher training was not provided to all employees every twelve months.

2. Client Requirement: Threat awareness training participation is recorded in the employee and security guard personnel record. Description of Non-compliance: Threat awareness training participation was not recorded in the employee and security guard personnel record. 3. PHYSICAL ACCESS CONTROLS Description of Non-Compliance Provide a comment for each Partial, No or N/A: 1. Client Requirement: An employee lost ID badge is recorded in their personnel file before a replacement badge is issued. Description of Non-compliance: An employee lost ID badge was not recorded in their personnel file before a replacement badge was issued.

2. Client Requirement: A list of terminated employees is given to Security to deny access to facility. Description of Non-compliance: A list of terminated employees was maintained in the office, but it was not given to Security to deny access to facility.

3. Client Requirement: CCTV or another survellinece method is used by security to monitor activity at sensitive areas within the facility (i.e., receiving, shipping, final packing, payrolll office, lobby, systems room). Description of Non-compliance: CCTV was used by security to monitor activity at receiving, shipping and final packing areas, but no CCTV or another survellinece methord was used by security to monitor activity at payrolll office, lobby, systems room.

4. Client Requirement: Gate Security guards maintain a Visitor Log to record all visitors: date/time arrival and departure, visitor's name, purpose of visit, escort name. Description of Non-compliance: The Visitor Log maintained by Gate Security guards recorded all visitors' date/time arrival and departure, visitor's name, purpose of visit, but not recorded all visitors' escort name.

5. Client Requirement: Employees are not permitted to bring personal items into the shipping area (lunch box, purse, backpack, etc.). Description of Non-compliance: No measure was adopted to ensure that employees did not bring personal items into the shipping area.

4. PHYSICAL SECURITY Description of Non-Compliance Provide a comment for each Partial, No or N/A: 1. Client Requirement: New hire employee orientation includes a responsibility to report a security issue such as a broken lock, broken door or window, damage to the facility structure. Description of Non-compliance: New hire employee orientation did not include a responsibility to report a security issue such as a broken lock, broken door or window, damage to the facility structure.

2. Client Requirement: Security guards assign a visual identification tag to vehicles in visitor parking - such as a temporary color-coded parking decal. Description of Non-compliance: Security guards did not assign a visual identification tag to vehicles in visitor parking - such as a temporary color-coded parking decal.

5. CONTAINER/TRAILER SECURITY Description of Non-Compliance Provide a comment for each Partial, No or N/A: Nil

6. PROCEDURAL SECURITY Description of Non-Compliance Provide a comment for each Partial, No or N/A: 1. Client Requirement: Every six months the facility conducts a review of shipment information and documentation controls to verify accuracy and security. Description of Non-compliance: No record was provided to prove that every six months the facility conducted a review of shipment information and documentation controls to verify accuracy and security.

2. Client Requirement: The transport company participates in supply chain security program when available - such as C-TPAT, AEO, PIP. Description of Non-compliance: No record was provided to prove that the transport company participated in supply chain security program when available - such as C- TPAT, AEO, PIP.

3. Client Requirement: The transport company contract indicates the perferred transit route(s) used by the driver, the allowable transit time limit, and designated rest/meal stop locations. Description of Non-compliance: The transport company contract did not indicate the perferred transit route(s) used by the driver, the allowable transit time limit, and designated rest/meal stop locations.

7. INFORMATION SECURITY Description of Non-Compliance Provide a comment for each Partial, No or N/A: 1. Client Requirement: The system administrator receives and reviews a daily report of invalid password attempts and file access. Description of Non-compliance: The system administrator received and reviewed a monthly report instead of a daily report of invalid password attempts and file access.

2. Client Requirement: The system administrator has implemented a network-wide intrusion warning system. 2. Client Requirement: The system administrator has implemented a network-wide intrusion warning system. Description of Non-compliance: The system administrator had not implemented a network-wide intrusion warning system.

8. CONTRACTOR SECURITY Description of Non-Compliance Provide a comment for each Partial, No or N/A: Nil

Digital Photo Form

Client: Wal-Mart Date of Audit: May 31, 2011 No. of Pages: 4 Agent: Taizhou Yongyao Plastic Co., Ltd Wal-Mart Audit ID: 1193000 No. of photos: 36 BV Report No: 10111300382 Factory Name: Taizhou Yongyao Plastic Co., Ltd Location of Audit Site: No. 13, Shangjin Road, Hongjia Plastic Industry Zone, Jiaojiang District, Taizhou City, Zhejiang Province, China

Factory name Main gate Factory address

Security room Notice board was set at entrance Fencing wall with electronic burglar alarm system installed

Exterior of office building Exterior of packing and Exterior of packing and warehouse building for warehouse building for domestic international goods goods

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Exterior of plastic injection Patrol tools Logbook for visitor with no escort workshop building name recorded

Logbook for vehicles ID badge for warehouse ID badge for office personnel employee

Visitor’s ID badge Logbooks for the sending and receiving records of mail and Security patrol record package

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Phone communication tool CCTV monitoring the fencing wall CCTV monitoring the main gate

CCTV monitoring the main Private parking area Visitor parking area route

Light installed on the fencing CCTV displayer CCTV monitoring the loading wall area

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Authorized employee list Packing area CCTV monitoring the packing area

Finished product warehouse CCTV monitoring the finished Raw material warehouse product warehouse

CCTV monitoring the raw Unapproved product storage Plastic injection workshop material warehouse warehouse

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