A global S&OP dedicated to the Essilor End to End Supply Chain. CONFIDENTIEL ESSILOR 2017 Tous droits réservés Divulgation reproduction interdite

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1 A global S&OP dedicated to the Essilor End to End Supply Chain CONFIDENTIEL ESSILOR 2017 Tous droits réservés Divulgation reproduction interdite

2 CONTENTS ESSILOR GROUP Presentation END TO END Supply Chain Strategy ESSILOR S&OP Process CONCLUSIONS 2 ESSILOR 2016 Tous droits réservés Divulgation reproduction interdite

3 01 ESSILOR Presentation 3 ESSILOR 2016 Tous droits réservés Divulgation reproduction interdite

4 Essilor, a World Leader Revenue 7.1 billion 214m allocated in research and innovation every year 64,000 employees in the world Products distributed in 100+ countries Net profit 813m ** **Profit attributable to equity holders 540m* lenses produced in 2016 *508m prescription lenses and 32m prescription sun lenses 209m invested in consumer marketing in new products / year Flagship brands 4

5 Our ambition: Provide Solutions for Every Consumer Need Everywhere in the World CORRECTIVE LENSES SUN & READERS EQUIPMENT & INSTRUMENTS ONLINE Raise awareness about the importance of good vision and make better vision accessible to all 5

6 A Mission driven by a clear Strategy and Strong Teams Innovation A dynamic portfolio with 250+ new products every year (Correction, Protection, Prevention) Values & sustainable development An extended supply chain & servicing capabilities 350,000+ customers in 100+ countries, 33 plants and 16 distribution centers A Unique Combination Driving Success and 5 Key Competitive Advantages to Widen our Leadership Unique partnership & acquisition formula A fast growing supply chain (130 new partnership around the world in the last 5 years) Consumer & customer proximity 6

7 02 02 END TO END Supply Chain Strategy 7 ESSILOR 2016 Tous droits réservés Divulgation reproduction interdite

8 ESSILOR Supply chain 350,000+ customers > 100,000,000 Make to Order Master Production schedule 6 months Weekly update Decoupling point Make to order 24hrs to 5 days LT High flexibility: Nominal +- 30% PUSHED Supply chain characteristics: Cost efficiency Robustness PULLED PULLED Supply chain characteristics: Speed, Service 33 Plants 13 Base Plants Finished products 16 Distribution Centers Finished products 350,000+ eye care professionals 20 Partner Plants Semi Finished products Frames 490 Prescription Laboratories Prescription flows E-tailers 8 CONSUMERS PRESCRIPTIONS AND NEEDS

9 S&OP VISION a monthly cycle, a quaterly S&OP executive review A Validate demand with Business / Marketing B Balance Demand Stock and Supply capacities C Review Hot spots and make decisions D Implement decisions WW Executive Board Re Forecast for Budget (Sales, Production, Inventory) S&OP Executive Meeting (Quarterly) Capa. shortage ADJUST SRC / INVEST. Extra Capacity - Stock: SHAPE DEMAND WW Supply Chain Continental Supply Chain Supply Balance and Planning (WW & Continent) Demand Consolidation review by Region, Network, Channel (deals, NPI,ads ) Monthly Loop Supply planning Meeting (Sourcing) OPERATIONNAL LEVEL Adjust Capacity, Flow change / Transfer 9

10 S&OP output communicate trends, decisions and opportunities 1- S&OP executive scorecard 2- Sales Forecasts / New Products / Deal : Analyzing performance and build collaborative forecast with region business, finance and marketing Turn Over & Margin improvement 3- S&OP Balance SV Projected Sales DEMAND INVENTORY SUPPLY* Sales Variance 2014 vs % 2014 Needs (Demand, Scr., TRS) 2014 Proj. End Inventory 188 Inventory Variances from beginning -3.3% Volumes Variance 2014 vs S&OP ,5 % % ,2 % % BTF % ,5 % 4- Stocks : Make sure Eoy at target defined Assess cost impact for Cash Flow optimization PAL % % % 5- Customer Service level Assess the risks and prepare recovery plans 6- Production Capacities : Variance analysis vs. Budget Prod transfer & investment mgmt (where/when) 7- Hot Spots

11 11 / ESSILOR 2016 Tous droits réservés Divulgation reproduction interdite 03 Our S&OP Process

12 Route-To-Market: Sourcing, Transformation, LT & Transport mode management Europe Mkt Trp. Mode & LT Next improvement EOLP 1 day Route Cost Carbon Foot Print VASC Bkk 1 week Trs Phil. 1 week Columbus Mexico 1,5 Month 12 CONFIDENTIEL ESSILOR 2015 Tous droits réservés Divulgation reproduction interdite

13 Inventory management : a virtous circle SS is a resultant 2/ SS Calculation From Safety to target 1/ Op. Inputs (SLA,Accuracy, Deviation, LT, Strategic ) 3/ Threshold monthly S&OP target Action Plans for inv. optimization 5/ New Target Executive new roadmap 4/ Proj. Inv. Challenge the EoY inv. Vs. Threshold Constrain Capacity plans Based on year results

14 DRP, Production Planning and Deployment Distribution Requirement Planning (DRP) Prod. Planning JIT / Fill Up Inventory Deployment PROD.REQ. PROD.PLAN SHIP.REQ. SEOCL PLANT SHIP.PLAN REC.REQ.: by supplier Net Requirement SHIP.REQ. Ideal Inventory SEOCL DC Projected Inventory REC.PLAN SHIP.PLAN REC.REQ.: by supplier Net Requirement SHIP.REQ. Ideal Inventory US DC Projected Inventory REC.PLAN SHIP.PLAN US Markets SALES FORECAST REC.PLAN

15 Demand Mgmt 24mth forecast REPORTING / MEETING Zone / WW / Finance S&OP monthly process 500 Mpcs 2300 RTM Resource management Capacity constrain Inventory Demand Supply 6000 products x 100 Cust. Groups 16 DC 35 Suppliers x 600 S&OP fam. (plants, partners & ext.) Week 1 W. 2&3 W CONFIDENTIEL ESSILOR 2015 Tous droits réservés Divulgation reproduction interdite

16 TOOLS BRICKS MINDSET Demand Mgmt R E P O R T I N G Zone / WW / Finance S&OP Vision : Fundamentals for change Sales driven approach (not only supply driven) 2300 RTM in Library Ownership of Business at continental level Develop key values (Openness, Resource transparency, management Commitment and Team Working) Capacity constrain Business Involvement in process & Meetings Collaborative Demand Planning Demand Inventory S&OP Process reactivity and simplification Supply (Monthly cycle, Unique process, less families, Simulation tool) 6000 products 16 A unique WW DATABASE (sales, forecasts, stoks, production), x 100 Cust. Groups 16 DC 35 Suppliers x 600 S&OP fam. (plants, capabilities partners & ext.) KPI s (in BI tool) with shared RTM (from Mkt to Mass prod) «What if» analysis Week 1 W. 2&3 W CONFIDENTIEL ESSILOR 2015 Tous droits réservés Divulgation reproduction interdite Promote common reporting and

17 04 Conclusions 17 ESSILOR 2016 Tous droits réservés Divulgation reproduction interdite

18 S&OP : A key process for Essilor to Support Growth and Increase Profitability the SOP process is a major stake for essilor Secure service to customers Support business and marketing and secure new products and deals launches Sourcing at the best possible cost Production and Inventory cost control Define at the best time when/where to invest The ESSILOR Supply Chain is accountable for the S&OP process and its performance End to End Supply Chain / Full perimeter including Partners Involve Business / Marketing / Finance Align all Decision making process at the highest level Monthly cycle for more reactivity Collaborative tool 18 Worldwide Flow Management Department

19 Next Steps Increase Reactivity Simplify & develop a common language A single set of numbers for all the organization Manage Value Develop Simulation capabilities Full integration with MTP and Budget process 19 Worldwide Flow Management Department

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