Mauricio Andres Salinas Cisco WWRL Surplus Program Manager Aug 15, 2007

1. Worldwide Reverse Logistic Supply-Chain Study: Dynamic Disposition process to enable revenue from excess and obsolete material Mauricio Andres SalinasCisco WWRL Surplus Program ManagerAug 15, 2007

2. Cisco at a Glance Changing the way we work, live, play and learn • 10 consecutive years on Fortune Magazine’s “Best Companies to Work For” list • 110+ acquisitions • 86% of Cisco Systems products are distributed via channels • Headquartered in San Jose, CA • Business Week valued Cisco’s brand at US$17.5 billion and ranked #18 WW • Worldwide leader in networking for the Internet • Founded in 1984 • More than 52,000 employees • $17.8B cash and investments • More than $4 billion/year in R&D • Operating in more than 75 countries

3. Excess and obsolete material background Reverse Logistics is evolving into a competitive advantage to recover value and protect the environment. The Supply Chain to handle excess has become a vital element to maximize revenue from leftover excess and obsolete "E&O" material. • Situation analysis of excess and obsolete • Historical situation • Leftover material • Brand protection and Intelectual property • Sarbanes-Oxley • Individuals teams disposing excess • Assessing the situation • Source of excess and obsolete leftover material • Potential internal re-use and virtual P&L • Open market revenue of non-Cisco material • Volume of recycled and landfill material

4. Excess and Obsolete “E&O” opportunity Assessing the opportunity • Cisco WWRL mandate • Unlock value of returned and excess material worldwide • Create a world-class business model • Maximize net revenue • Promote corporate citizenship and environment protection • Value Recovery Surplus • Revenue challenge • Value recovery via re-use and re-sale • Determine which activities return highest value • Diverse supply chain to redistribute internally • Outsource the open market re-sale • Test the “revenue” with Pilots based on penetration opportunity and value capture

5. E&O Value Recovery • Excess and Obsolete Sources worldwide • CM and OEM • Repair and refurbish centers • Prototype houses • Facilities and Lab’s • Cisco Affiliates and Divisions • Material type • FGI products, Open Boxes, DGI units • Assemblies, parts, and components • Equipment and 3rd party material • Tooling • Supply-Chain to capture and redistribute material • Internal Cisco re-use with a Virtual P&L revenue • Revenue Share approach to open market sale • World’s landfills volume reduction

6. Propose Change Align Processes Drive for Revenue Value recovery strategy • Demonstrate and Quantify value • Focus on “core” processes • Align programs around highest-value activities • Identify contacts who can help, or who may have concerns to be addressed • Enhance existing processes • Switch to a sales / revenue culture • Leverage early wins • Keep abreast of market prices

7. E&O from Cost Center to Profit Center Tactical Changes • Focus to capture revenue • Communicate the opportunity to drive change • Show benefits—for the organization, employees, customers and the community • Clarify the opportunity and then take action • Pursue opportunities aggressively while maintaining disciplined change management 7

8. E&O Surplus Supply-Chain • Designing the supply-chain solution • Capture Cisco excess and obsolete material • Communicate WWRL-VR Cisco mandate • Socialize leftover identification: proprietary vs. non • Map supply chain for material movement • Identify value • Identify partners with a worldwide presence • Quantify material condition • Segregate for value based on a net-revenue approach • Maximize value • VR Regulation: re-use or re-sale guidelines • Set revenue share goals and promote partnership • Identify partners that can generate market value • Piloting the programs • CM excess and obsolete non-proprietary auction • 3rd party material (Trade-in and facilities) for broker re-sale • CM excess and obsolete Proprietary material for re-use • Pilot results • Non-proprietary Auctions worldwide • 3rd party resale un US and EU • Re-use worldwide

9. Identification Source Re-Use, Resale, Scrap WWRL Recycler Worldwide Metal Refining Internal Re-Use Cisco affiliates Auction Resale Worldwide $ IdentifyCisco E&O material, valuable new, open box, good vs. damage scrap Inspect Sort Remarket Retrieve Transport Supply-Chain steps Design an end-to-end process focused on core Value Recovery activities Identify Excess and Obsolete Pick Up Material Sort and Valuate Condition Asset Valuation Transport Receive and Audit Recover Value Recycle Dynamic Disposition outsourced Cisco Cisco

10. The VR Surplus program • Where we stand today • Opportunities • Increase awareness to Cisco community • Increase debranded program (turn semi-custom into non-proprietary) • Enhance “one point solution” to service our E&O customers • Challenges • Diversity of Cisco products, technology, and locations • Disperse Pickup location • Customer service –from retrieving and supply to optimize re-use • Goals and objectives • Secure Cisco commitment to use WWRL VR Surplus processes • Accelerate Surplus through a supply chain that adjust and move wisely to maximize revenue • Coordinate the re-distribution work to capture worldwide opportunities • Solidify our outsourced supply chain to enhance work under way

11. Worldwide E&O Auction Debrand, tear down for parts E&O Surplus solution status Driving a profitable growth for Cisco and its supply-chain partners Source inventory Revenue and profit growth for Cisco and Partners • Owner (e.g., educate how to classify material) 3rd Party broker re-sale Operational cost Increased E&O worldwide collection and decreased landfill material • COGS (e.g., Duties, VAT, administrative) • Partner (e.g., handling, warehousing, freight) Internal re-use Partner with BP and IP to prevent leakages Revenue Share • Sale price based • Payables (e.g., terms) • Inventory (e.g., TAT)

12. Revenue from excess and obsolete material • Moving forward • Enable a balance between internal control and outsourced activities • Maintain focus • Continue capturing E&O material to maximize revenue and minimize landfill material • Dynamic Disposition • To continue maximizing your revenue you must adjust to the changes to follow our current success and momentum • Demonstrate and quantifying value • Aligned Supply Chain • Find the true value of each excess stream and drive a plan to re-use, re-sales, and recycle with partners aligned to move wisely and rapidly • Continue to focus on “core” processes and highest-value recovery activities

13. Mauricio Andres SalinasCisco WWRL Surplus Program Managermasalina@cisco.com408-525-2676Thank you ! Excess and obsolete revenue contribute to our company bottom-line results!

14. Abstract Dynamic Disposition process to enable revenue Surplus recovery via an aligned supply chain Reverse Logistics is evolving into a competitive advantage to recover value and protect the environment. The Supply Chain to handle excess has become a vital element to maximize revenue from leftover excess and obsolete "E&O" materials. The Cisco WWRL presentation will cover the transformation of how our E&O material is handled, the adjustments, and the outsourced activities that transform this worldwide activity. E&O material condition, quality, location, and market price are vital information to resale As-Is equipment, assemblies, parts or components. We use a Dynamic Disposition process and a flexible Supply Chain to re-use or re-sale. This Cisco example will help you build a case on why it is critical to take definitive action on returns and implement a Dynamic Disposition process to enable revenue.

15. Quantifying the E&O opportunity Value — Costs = Net Contribution Calculating costs: • Logistics costs—customs, duties, transportation • Sorting, Testing and tear-down costs • Debranding costs • Extended supply chain costs, including partner extra fees, POS incentives, etc. • Revenue share percentage • Marketing and business development costs—identifying and reaching internal and external customers and integrating into their processes Determining value: • Market spot price and valuation when re-sale • $ benefits created when re-using? Hard costs avoided through reuse of material—i.e., $ of spend avoided? Margin $ captured through resale? Tax credits from philanthropic donation? • What other non-monetary benefits can be created? Community benefits? Public Relation news… Field / partner capability enabled through learning and development? The definition of value varies by channel, by condition, and spot market prices

16. Mauricio Salinas professional biography Mauricio Salinas is chartered with maximizing Cisco’s recovery efforts for excess, obsolete, and Cisco’s 3rd Party worldwide material. Mauricio joined the Value Recovery team to help with Cisco’s reverse logistics transformation into a profit-driving function by implementing world-class product reuse and excess resale. Previously, Mauricio served as a program manager in Hewlett-Packard Consumer returns for North America. During twelve years of experience Mauricio led outsourcing qualification efforts for Intel-based HP PCs, oversees the R&D memory qualification in APAC and EU, participated in Operations, Manufacturing, R&D; and Remarketing pre/post Sales. Upon arrival to the US, Mauricio worked as an Engineer developing linear motion controllers and robotics actuators. In Chile, he worked in a Start-up Mining Company working in all phases of the Hydroelectric Power plant construction and was quickly promoted to Power Plant Manager. Mauricio hold a technology based, Industrial Maintenance degree, from the University of Santiago de Chile. His Thesis was in Information Systems for Industrial Preventive Maintenance. Mauricio has spoken to various entrepreneurial organizations and events in Latin America. He is an avid global traveler, an endurance sports enthusiast, and enjoys cultural exchanges.