© 2014 SunPower Corporation | Confidential | 1 © 2014 SunPower Corporation | Confidential Reducing Reverse Logistics Costs Andrew Katcher SunPower Global Audit Consultant / Expense Reduction Analyst |

© 2014 SunPower Corporation | Confidential | 2 Agenda My background 11 Myths of Reducing Reverse Logistics Costs Why reducing RL costs should be high on your company’s priority list (instead of absent from it) Where to start? Some great places to get going Where to get help 2

© 2014 SunPower Corporation | Confidential | 3 11 Myths of Reducing Reverse Logistics Costs 1.Returns are returns – you have no control 2.Everyone Owns Returns (or no one owns returns?) 3.Only you know how to handle your own returns 4.Your RL vendor can handle everything on their own 5.You have to change vendors to save money 6.You have to do what the competition is doing 7.Everyone really understands why returns are coming back 8.Everyone knows how they’re coming back 9.Everyone knows how much product is coming back 10.You know exactly how much to credit your customer(s) for their returns 11.If you’ve reduced costs that’s it – “one and done” 3

© 2014 SunPower Corporation | Confidential | 4 Polling Question – Issues and Priorities 4

© 2014 SunPower Corporation | Confidential | 5 Best Practice Paths Understand Process What are the gaps between your policies and your practices? How well do you and your constituents know your process? How well does your process implement (control) your policies? Are there process gaps and/or unnecessary steps? Understand Vendors Have you articulated your current needs? How well have you monitored compliance and results? How often do you communicate and hold QBRs? When was your last RFP? How well does your vendor know you? Understand Policies What are your RL objectives? What are your key metrics How do your policies affect your results? Have your policies been designed or have they evolved? What are the gaps between your policies and your objectives?

© 2014 SunPower Corporation | Confidential | 6 Policy Review Are policy goals and objectives clear (and clearly articulated)? Do existing policies support your objectives? What patterns are you seeing in your data? Does the data backup your assumptions? Objective: Minimize credit Policy: Credit at last price paid Result: Distis bought low at Q end in high volume, bought high at low volume after Qend then returned hi Vol = Distis made money on returns

© 2014 SunPower Corporation | Confidential | 7 Process Review Process Map –Activity (steps) –Policy it supports –Objective it achieves Issues / Questions Is it necessary? Is this redundant? Do you understand the controls achieved?

© 2014 SunPower Corporation | Confidential | 8 Process: Find Non-Pricing Improvements Best practices savings can be larger than negotiated savings Consult with category experts to get best practices Get guidance from suppliers/bidders on best practices Calculate value/benefit of operational improvements

© 2014 SunPower Corporation | Confidential | 9 Understanding Your Vendor How well does your vendor understand you? –How well do you understand your own needs, goals and objectives? –How well have you documented the above? –How well do you communicate? Systematically Interpersonally Company to company Are you dating or committing? What your vendor doesn’t want you to know: You aren’t serious about changing vendors Margin pricing is how they make money Your savings will be short-lived You won’t analyze the invoices carefully You will assume mid-contract means no hope

© 2014 SunPower Corporation | Confidential | 10 Analyze Past Identify Possible Solutions Decide, Implement, and Monitor Decide, Implement, and Monitor Understand current situation Define improvement intent and scope New Suppliers possible? Go To Market (RFP) Analyze the data Understand options Negotiate Supply Agreement Implement best solution/s Measure and Monitor, immediately and ongoing Best Practice Vendor Selection Process Overview

© 2014 SunPower Corporation | Confidential | 11 Process: Analyze Past Spend Review supplier contracts and agreements Obtain at least 12 months of transactional data Get a minimum of 3 months of physical invoices Compare spend to General Ledger totals Check for billing errors Observe seasonality, watch for trends Predict the future

© 2014 SunPower Corporation | Confidential | 12 Reduce Supplier Risk Know what is actually being ordered Figure out historical and forecasted volumes Understand and expose service trends Understand supplier services, understand your needs Then… match services to needs Reduced Supplier Risk = Lower Pricing

© 2014 SunPower Corporation | Confidential | 13 Process: Negotiate Well Plan the negotiation - strategize Know where the leverage is Have a different person negotiate than the prime contact Have entire team playing from same playbook Be patient

© 2014 SunPower Corporation | Confidential | 14 Vendor Selection: Analyze the Results Watch ALL the bid components Consumables: costs, shipping, branded/off-brand LTL freight: rate, class, fuel surcharge Parcel: service discount, accessorials SLAs Look for price protection

© 2014 SunPower Corporation | Confidential | 15 Process: Decide, Implement, and Monitor Implement quickly – To save money – To maintain momentum Monitor immediately and then check every invoice – Watch for Invoice Price (and discount) Variances – Validate all price increases –Monitor off-contract purchase behavior –Track credits and incentives

© 2014 SunPower Corporation | Confidential | 16 Good Request written bids Know suppliers Know your needs Understand the basket of services being purchased Great Create competitive tension Know alternative suppliers Capture savings quickly Know where to focus negotiations Reduce supplier risk Exceptional Audit to ensure savings Get benchmark pricing Gain category expertise Understand business model of each vendor / service Know service area best practices Know difference between CAN’T & WON’T How to Maximize Expense Savings $ $ $ How to Maximize Vendor Expense Savings

© 2014 SunPower Corporation | Confidential | 17 Polling Question – Highest Savings

© 2014 SunPower Corporation | Confidential | 18 © 2014 SunPower Corporation | Confidential Thank You Let’s change the way our world is powered.