HERMÈS - 2019 Universal Registration Document

OVERVIEW OF THE GROUP RISK FACTORS

INDUSTRIAL RISKS

1.11.2

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MANAGEMENT OF SUPPLIES ●

1.11.2.1

DESCRIPTION OF THE RISK s

RISK MANAGEMENT s

The Hermès Group makes most of its products in-house, primarily in France. It is not therefore seeking suppliers established in countries at risk. Hermès has long been committed to a responsible long-term partnership approach with its suppliers. It enters into special partnerships with suppliers and producers based on ethics and trust, by promoting long-term relationships with them. These stable relations pave the way for close collaboration on numerous topics. The Group’s approach is based upon knowledge of the supply channels. Supplier risk is addressed cross-functionally by the Direct Purchasing Manager on the one hand, and the Indirect Purchasing Manager on the other hand. Their roles notably involve managing the community of purchasers and supporting them on a day-to-day basis in managing supplier risk using a range of complementary tools, as described on pages 150 to 161. Hermès has developed long-term relationships with its partners and suppliers, thereby better protecting its supplies and critical know-how. Hermès is committed to providing long-term support for all its partners, and maintaining balanced relationships characterised by goodwill and high standards, and it ensure that its partners share and respect our social, environmental and ethical ambitions. Supplier audits, conducted using internal resources as well as independent external firms, serve notably to ensure that their operations meet the Group’s expectations. Drawing up Métier risk mapping enables action plans to be identified, assessed and prepared in response to the risks identified wherever necessary. Significant work has also been carried out to optimise and secure the supply chain. The Group is strengthening supply protection, implementing a policy of diversification and limitation of supplier dependence, and building up strategic inventories. In some cases, it will buy into carefully selected companies to ensure the stability of these relationships.

Most of Hermès’ production is integrated, in line with its strategy of preserving unique savoir-faire and securing supplies. However, the ability of the Hermès Group to grow is also linked to the development of its suppliers, whose exceptional savoir-faire and future successes will contribute to those of the Group. POTENTIAL IMPACTS ON THE GROUP s A supply shortage, in terms of volume or quality, of certain materials that are essential for the Group could lead to disruptions in production and eventually a loss of business.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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