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A global S&OP dedicated to the Essilor End to End Supply Chain

CONTENTS

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ESSILOR GROUP Presentation

01 02 03 04

END TO END Supply Chain

Strategy

ESSILOR S&OP Process

CONCLUSIONS

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ESSILOR

Presentation

01

Net profit

€813m**

€209m invested in consumer marketing

in 2016

250+ new products / year

64,000 employees

in the world

Products distributed

in 100+ countries

540m* lenses

produced in 2016

€214m allocated

in research and innovation

every year

Revenue

€7.1 billion

Essilor, a World Leader

4

Flagship brands

**Profit attributable to equity holders

*508m prescription lenses and 32m prescription sun lenses

Our ambition: Provide Solutions for Every Consumer Need

Everywhere in the World

5

Raise awareness about the importance of good vision

and make better vision accessible to all

EQUIPMENT

& INSTRUMENTS SUN & READERS CORRECTIVE LENSES ONLINE

A Mission driven by a clear Strategy and Strong Teams

6

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)

Innovation A dynamic portfolio with 250+ new

products every year (Correction, Protection, Prevention)

An extended supply chain

& servicing capabilities 350,000+ customers in 100+ countries, 33 plants and 16 distribution centers

Consumer

& customer proximity

Values & sustainable

development

02

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02

END TO END Supply Chain

Strategy

33 Plants

ESSILOR Supply chain

350,000+ customers > 100,000,000 Make to Order

Decoupling

point

Master Production schedule

6 months – Weekly update

Make to order – 24hrs to 5 days LT

High flexibility: Nominal +- 30%

Finished products

Prescription flows

Supply chain characteristics:

Speed, Service

PULLED PUSHED PULLED

Supply chain characteristics:

Cost efficiency

Robustness

Finished

products

Semi Finished products

490 Prescription

Laboratories

16 Distribution

Centers

20 Partner Plants

350,000+

eye care professionals

E-tailers Frames

13 Base Plants

CONSUMERS’ PRESCRIPTIONS AND NEEDS 8

S&OP VISION

a monthly cycle, a quaterly S&OP executive review

WW

Supply Chain

Continental

Supply Chain

Demand

Consolidation review

by Region,

Network, Channel

(deals, NPI,ads…)

Validate demand with Business /

Marketing

A

Supply Balance and Planning

(WW & Continent)

Balance Demand Stock and Supply

capacities

B

Supply planning

Meeting

(Sourcing)

S&OP Executive Meeting

(Quarterly)

Review Hot spots and make decisions

C

Monthly Loop

Implement decisions

D

OPERATIONNAL LEVEL

Adjust Capacity,

Flow change / Transfer

Extra Capacity -Stock:

SHAPE DEMAND

9

Capa. shortage

ADJUST SRC /

INVEST.

Re Forecast for Budget (Sales, Production, Inventory) WW

Executive Board

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

5- Customer Service level Assess the risks and

prepare recovery plans

4- Stocks : Make sure Eoy at target defined Assess

cost impact for Cash Flow optimization

6- Production Capacities : Variance analysis vs. Budget Prod transfer & investment mgmt (where/when)

7- Hot Spots

Sales Variance

2014 vs. 2013

Projected Sales 2014

Inventory Variances

from

beginning

2014 Proj. End Inventory

Variance 2014 vs. 2013

Volumes

2014

19

367

80

+4.2%

+3.1%

7

188

26

-4.1%

-3.3%

19

374

0

+15

+9 90

-0.3

- 6.4

DEMAND INVENTORY SUPPLY*

-4.1% -1.1

BTF

SV

PAL

2014 Needs (Demand, Scr., TRS)

19

380

89

460 +5,5% 221 -3.5% 480-81213S&OP 488+24 +2,2%+16

+2%+6

+0,5%+1

+10%+9

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Our S&OP

Process

03

Route-To-Market:

Sourcing , Transformation, LT & Transport mode management

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Europe Mkt

EOLP

VASC Bkk

Trs Phil.

Columbus

Mexico

Trp. Mode & LT

1 day

1 week

1 week

1,5 Month

Route Cost

Carbon Foot Print

Next improvement

Inventory management : a virtous circle

2/ SS Calculation

3/ Threshold

monthly S&OP target

4/ Proj. Inv.

Challenge the EoY inv. Vs. Threshold

5/ New Target

Executive new roadmap

1/ Op. Inputs

(SLA,Accuracy, Deviation, LT, Strategic )

Constrain Capacity plans

From Safety to target SS is a

resultant

Based on year results

Action Plans

for inv. optimization

SALES FORECAST

SHIP.REQ.

REC.REQ.: by supplier

SHIP.REQ.

PROD.REQ.

SHIP.PLAN

REC.PLAN

SHIP.PLAN

REC.PLAN

Distribution Requirement Planning

(DRP)

Inventory

Deployment

DRP, Production Planning and Deployment

Net Requirement

Prod. Planning

JIT / Fill Up

PROD.PLAN

Ideal

Inventory

Projected

Inventory

SHIP.REQ.

REC.REQ.: by supplier REC.PLAN

SHIP.PLAN

Net Requirement Ideal

Inventory

Projected

Inventory

US DC

SEOCL DC

SEOCL PLANT

US Markets

S&OP monthly process

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6000

products 16 DC 35 Suppliers

(plants, partners & ext.)

2300 RTM

x 100 Cust. Groups x 600 S&OP fam.

Demand Supply

Week 1 W. 2&3 W. 4

Inventory

15 20

De

ma

nd

Mg

mt

24

mth

fo

rec

ast

REPO

RTI

NG

/ M

EETI

NG

Zo

ne

/ W

W /

Fin

an

ce

30+

Resource management

Capacity constrain

500

Mpcs

S&OP Vision : Fundamentals for change

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6000

products 16 DC 35 Suppliers

(plants, partners & ext.)

2300 RTM in Library

x 100 Cust. Groups x 600 S&OP fam.

Demand Supply

Week 1 W. 2&3 W. 4

Inventory

15 20

De

ma

nd

Mg

mt

R E

P O

R T

I N

G

Zo

ne

/ W

W /

Fin

an

ce

30+

Resource management

Capacity constrain

Sales driven approach (not only supply driven)

Collaborative Demand Planning

A unique WW DATABASE (sales, forecasts, stoks, production),

with shared RTM (from Mkt to Mass prod)

« What if » analysis capabilities

Promote common reporting and KPI’s (in BI tool)

Business Involvement in process & Meetings

S&OP Process reactivity and simplification

(Monthly cycle, Unique process, less families, Simulation tool)

Ownership of Business at continental level

Develop key values (Openness,

transparency, Commitment and Team Working)

MIN

DSE

T

BR

ICK

S TO

OLS

Conclusions

04

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S&OP : A key process for Essilor to Support Growth and

Increase Profitability

• 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

18 Worldwide Flow Management Department

the SOP process is a major stake for essilor

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

Next Steps

19 Worldwide Flow Management Department

• 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