Value Sourcing. Henk Scheepers Senior Vice President Goodsflow Analyst s Day - Veldhoven The Netherlands November 13, 2003.

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1 Value Sourcing Henk Scheepers Senior Vice President Goodsflow Analyst s Day - Veldhoven The Netherlands November 13, 2003 / Slide 1

2 Safe Harbor Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: the matters discussed during this presentation include forward-looking statements that are subject to risks and uncertainties including, but not limited to, economic conditions, product and pricing, manufacturing efficiencies, new products development, ability to enforce patents, availability of raw materials and critical manufacturing equipment, trade environment, and other risks indicated in filings with the U.S. Securities and Exchange Commission. / Slide 2

3 Goodsflow plays a key role in achieving ASML s goal of market share leadership Market share leadership is based on 3 pillars Customer Focus Technological Leadership Operational Excellence In order to achieve this, we must be able to: Serve a worldwide customer base Maintain a supply base that is World Class Globally Competitive Globally Present The essence of VALUE SOURCING / Slide 3

4 Agenda Goodsflow Strategy Value Sourcing Status Report Quality Logistics Technology total Cost Questions & Answers / Slide 4

5 Goodsflow Strategy & Business Plan Focus Points Quality Value of Ownership Fulfilled Customer Requirements Operational Excellence Logistics Technology Total Cost World Class Mfg. & Installation Value Sourcing Right on Time Zero Defects Q Reliability L Flexibility L Installs by GF L CT reduction L Release 4 Volume T CoG reduction C / Slide 5

6 Supply Chain Structure New Products Right on Time World Class Manufacturing & Installation Value Sourcing 90% of CoG from Supply Base 600 Suppliers 60 partners (80% value) Global Supply / Slide 6

7 Supply Chain - Behaviour Customer Demand Systems Terms & Conditions Output Plan Actual Output Supply Chain Inertia Flexibility FORRESTER EFFECTS Time / Slide 7

8 Value Sourcing Competitive Performance in the Supply Chain through QLTC Quality Zero defects Logistics Delivery Reliability Flexibility structural: +1 MR per 6 months burst: +1 MR for max. 30% per year, +2 MR for max. 15% per year Short lead times, lowest inventory levels Parts availability > 15 years Technology Timely technology roadmap fulfillment Effective Engineering Change Management total Cost Competitive pricing meeting customers Value of Ownership open costing Order push-out and cancellations at shared cost / Slide 8

9 Supplier Account Team plays a key role Establishing strategic focus Supplier Strategical Account Team Tactical Define Plan Follow up up Operational Execute / Slide 9

10 Ensure competitive performance Today and in future Competitive Performance Quality Logistics Technology total Cost Continuous Improvement Pro-actively managed by cross-functional Supplier Account Teams / Slide 10

11 / Slide 11

12 Shared market commitment Forecast planning for max 18 months Firm zone Trade-off zone Price Annual performance targets secure competitiveness T-O % Lead Time Reduction ADD ODD 0-4 wks Max. 12 wks time / Slide 12

13 Sourcing Strategy Optics Wafers High Lenses Handlers/stages Lasers Multiple sourcing LEVERAGE ITEMS STRATEGIC ITEMS LTA Multiple sourcing per competence Single/Dual sourcing per product Joint development / partnership Single, dual, and multi-sourcing NON CRITICAL ITEMS BOTTLENECK ITEMS Dual sourcing Joint Development / partnership Nuts & bolts Low No Many Risk Supply Market Technology. Ownership Number of Suppliers High Full Few Frame Assemblies Reticles / Slide 13

14 Status Report Overall Strategic Principles Long term relationships Shared risk & reward Less than 25% dependent Global sourcing Dual sourcing of knowledge Single / dual / multiple sourcing of products Supplier Account Teams 53 active (47 VHN, 6 WTN) 167 representatives from our suppliers 145 representatives from ASML 339 active improvement programs Q: 114 / L: 130 / T: 43 / C: 52 Long Term Agreements 18 signed 5 to go in to go in 2004 / Slide 14

15 Status Quality 100% Overall Vendor Rating 80% 60% 40% 20% # A or B 61% 61% 62% 68% 77% 83% 81% 83% 79% 79% 77% 80% 100% Delivery Performance 80% 60% 40% 20% Target 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% 98% Avg Clip2 85% 87% 85% 89% 91% 92% 93% 94% 93% 92% 94% 94% / Slide 15

16 Logistics Flexibility Measures Assy / Fasy Test shift operations Current model Engineering & Support New model Engineering & Support automated testing operator call-out / remote testing flex shift operations Pos / Neg work hours Manufacturing Manufacturing Flex Hire Outsourcing WHS Intro New Flex Model Flexibility through over-capacity in factory Flexibility through knowledge retention in Engineering & Support / Slide 16

17 Status Logistics Internal Cycle Time Roadmap TwinScan Cycle Times Install Cycle Time Receipt & Issue Assy Fasy Weeks Test CSRs, FAT Att. Delivery Year / Slide 17

18 Cycle Time Reduction Examples Installs by Goodsflow elimination of double testing hand-overs safety margins first hand knowledge of machine specifics in the field Flex Queue automated, context driven (re)scheduling of test jobs Plug & Play upstream resolution of technical problems and defects found during test phase maximizing upstream qualification of modules / Slide 18

19 500 Status Logistics Order leadtime 100% Cumulative CoG Value per Order Moment category AT850C 80% 60% 40% 20% 0% SAP Order moment in Calendar Days August 2002 January 2003 April 2003 August 2003 September 2003 Outlook end 2003 / Slide 19 Contract Price (PP1) in Euro

20 Status Logistics Relative Order Leadtime Relative Order Leadtime Development 100% 80% 60% 40% 20% 0% 26% 28% 29% 18% 13% 22% 33% 32% Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct % 80% 60% 40% 20% 0% 0-4 weeks 5-8 weeks 9-12 weeks More than 13 weeks / Slide 20

21 Status Technology Improvement Proposals & Engineering Changes % suppliers with 2 submitted IP's 100% 80% 60% 40% 20% 0% Target 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% IP's 2 60% 69% 85% 85% 87% 87% 87% 87% 87% 87% 88% EC s implemented ECR load for in CCB Goodsflow Number in 4 per. Mov. Avg. (Number in) Dec Jan Mar May Jun Aug Oct Nov-03 Date / Slide 21

22 Status total Cost Total Net Inventories % 105% 100% mln Eur % % of % % YE 2003 Q Q Q Oct Net Total Overplanned on Order % Total 80% / Slide 22

Process itself: demand week, supply week and mgmt buy-in Critical supplier

23 Key customer observation June 2003 Observations Excellent supply chain management Goodsflow implementation Overall approach bottom up and top down Process itself: demand week, supply week and mgmt buy-in Critical supplier management is world class (rating, selection, LTA process, CIP s, KPI s etc) 5 / Slide 23

24 / Slide 24

Disciplined in execution and operation. Henk Scheepers Senior Vice President Supply Chain Management Analyst Day, September 20, 2005

Disciplined in execution and operation Henk Scheepers Senior Vice President Supply Chain Management Analyst Day, September 20, 2005 Safe Harbor Safe Harbor Statement under the U.S. Private Securities Litigation