HERMÈS - 2020 Universal registration document

RISKS AND CONTROL RISK FACTORS

INDUSTRIAL RISKS

4.1.2

MANAGEMENT OF SUPPLIES ●

4.1.2.1

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 its suppliers and producers, based on ethics and trust, by fostering long-term relationships with them. This stable relationship allows for close collaboration on many subjects over time. The Group’s approach is based upon knowledge of the supply channels. The supplier risk is handled in a transverse manner by the Purchasing Manager. Their role is to manage the community of buyers by supporting them on a daily basis in managing supplier risk through various tools, as described in section 2.6. Hermès has developed long-term relationships with its partners and suppliers, thereby better protecting its supplies and critical savoir-faire . Hermès is committed to providing long-term support for all its partners, and maintaining balanced relationships characterised by goodwill and high standards, and it ensures that its partners share and respect its social, environmental and ethics ambitions. Supplier audits, conducted using internal resources as well as independent external firms, serve notably to check that their operations meet the Group’s expectations. Drawing up supplier 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 security inventories. In some cases, it will buy into carefully selected companies to ensure the stability of these relationships. In line with the current health crisis, the Group has set up close monitoring of its suppliers in order to best support them and anticipate any difficulties, in a constant spirit of partnership.

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 exceptional materials for the Group could lead to disruptions in production and eventually a loss of business.

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