Bose | 2007 Proprietary CONFIDENTIAL

Intercompany Sales Returns

February 26th, 2009

2 Meeting Objectives

Background

Finish Goods Returns Process

Parts Returns Process

Exception Process

Next Steps

Agenda

Meeting Objectives

Review discussion points from meeting held on 02/09

Agree on process to manage Finish Goods returns and Spare Parts Returns

Review Exception Process

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Background

The scope is limited to Intercompany Returns from non-SAP subsidiaries to US or other SAP plant.

The SAP document used for the shipment is ZIS and is currently created by the Mfg Planning group.

With the delay of D2 there is a need to define and document the intercompany returns process from non-SAP subs.

China is currently awaiting instructions to returns a few thousands parts to the US.

During initial discussion it was decided FG returns as well as parts returns should be able to be sent to any plant (DC or Manufacturing). ASD returns will continue using existing process using QN.

There is currently no exception process in place for over or under shipments.

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6FG Returns Process

Create RA in US

RA #

Shipment created

in Sub with RA #Product shipped to DRET Product received at DRET

Return Order Processed

Credit Issued to Sub

HED Returns Process

HED Products returns from any non-SAP subsidiary will be sent to DRET only.

An RA will be generated from the US by the (SAP doc type ZOR) and the RA# will be used with the shipment.

Upon receiving of shipment in Plant, the Credit Specialist will create Return Order (SAP doc type ZO) with reference to the RA.

Inbound delivery will be processed and credit issued to the Sub for the non-defective products.

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8Parts Returns Process

Create RA in US

RA #

Shipment created

in Sub with RA #Parts shipped to

Destination

PlantProduct received at Plant

Return Order Processed

Credit Issued to Sub

Spare Parts Returns Process

Spare Parts returns from any non-SAP subsidiary will be sent to any SAP plant (DC or M plant)

An RA will be generated from the US by the (SAP doc type ZOR) and the RA# will be used with the shipment.

Upon receiving of shipment in DRET, the Credit Specialist will create Return Order (SAP doc type ZO) with reference to the RA.

Inbound delivery will be processed and credit issued to the Sub for the non-defective products.

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Exception Process

The Exception Process will be used when an over shipment or under shipment is identified in the receiving Sub.

The process outlines the SAP transactions to reconcile physical product quantity with quantity recorded in the system.

In addition the process describes the steps for scrapping product that was received defective or damaged.

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Exception Process Over Shipment

Sub receives

physical quantity

RA #

Contact shipping plant

for reconciliation

Contact customs to

report additional qty.

Increase Sales Order

qty for the additional

amount

Process ghost delivery and PGI

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Exception Process Under Shipment

Sub receives

physical quantity

RA #

Contact shipping plant

for reconciliation

Contact customs to

report additional qty.

Create ghost return sales Order

Process ghost inbound delivery

back into stock

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Exception Process Scrap

Sub receives total

quantity

Inventory is inspected

for defective or

damaged units

Warehouse person

records scrapped units

in SAP and charges

Sub Internal Order

Scrap internal order

settles to I/C cross-

charge account

Sub is notified and a

payable is recorded

in the Subs books.

Next Steps

Get approval on proposed process

Decide who will be responsible for creating RA in SAP (Mfg Planning, other?)

Request SAP change to enable parts returns to any plant (new order type?)

Roll out process to Subs and plants, training, documentation.

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