LEGRAND / 2018 Registration document

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GROUP OVERVIEW

AN ORGANIZATION SERVING BOTH THE GROUP’S STRATEGY AND ITS CUSTOMERS

R LOGISTICS AND SUPPLY CHAIN Legrand’s objective in terms of supply chain is to deliver products within the timeframes demanded by clients while optimizing transport and warehousing costs and inventory levels. To that end, procurement, production and distribution cycles are studied from the new product design phase, opting for solutions that optimize the quality of service for the customer (product availability) as well as costs, while minimizing the environmental footprint of the various flows. In addition, the Group’s logistics facilities form a network of local, regional and central storage and distribution centers, enabling it to serve the market in a way suited to its product ranges and specific geographical requirements. This approach is based on dedicated tools and processes for planning and execution: W distribution sites are connected to a central Distribution Resource Planning (DRP) tool. Every night, this records the inventories and forecasts of each subsidiary, as well as local customer orders, in order to schedule procurement at the global level and thus optimize finished product inventory levels; W industrial facilities use powerful planning tools based on the Manufacturing Resource Planning concept. They define production plans – allowing client requirements to be met while ensuring that demand and capacity are matched as closely as possible – and procurement plans; W operational good practices among the functions contributing to supply-chain performance is recorded and shared through the “Legrand Way” referential: W for example, the Kanban and just-in-time systems are being progressively rolled out across the value chain, covering procurement and outsourcing, manufacturing and inter-site flows, and W end-to-end collaboration processes are also being implemented, allowing increased communication throughout a given flow. At the same time, Legrand is continuing to digitize its supply chain, for example through data analytics, to improve both inventory levels and customer service. This system has enabled Legrand to reduce the ratio of inventory value to consolidated sales, from approximately 17% on average between 1990 and 2002 to around 14% on average between 2003 and 2018, and to guarantee a high-quality service for its distributors in terms of availability and flexibility, speed and adaptability.

W implementing solutions that assist intelligent production such as AGVs (1) , Cobots (2) and augmented reality, which are already being used in some plants. These initiatives come as part of an overall industrial excellence approach. More generally, the Group permanently seeks to optimize its cost structures and reduce its impact on the environment, in particular by manufacturing products as near as possible to the areas where they are sold. This approach involving local manufacturing close to markets is mainly reflected by the fact that the revenue base and cost base are broadly balanced in the various currencies. The Group is therefore actively strengthening its presence in markets that offer long term development opportunities, such as China, India and Russia. R INNOVATION AND SYSTEMS The role of the Innovation and Systems Department is: W to promote and coordinate the innovation process within the Group; W to define the major technology roadmaps and ensure the consistency of the technologies used by the SBUs; W to contribute ensuring that Group’s offerings are compatible and organized into consistent systems. R PURCHASING For more than ten years now, Legrand has been implementing a centralized purchasing policy to optimize its purchases and reduce its consumption costs. The Group’s purchasing organization is characterized by: W a structure adapted to its suppliers’ overall organizational structure, which enables Legrand to negotiate with them on an equal footing (locally or by geographical area), thereby generating economies of scale; W managing purchases, under the responsibility of user and buyer teams, to maximize the value of the Group’s purchases by incorporating the cost factor into procurement selection criteria; and W involving buyers in the new product development process in order to make savings from the product design stage onwards, and target future suppliers, particularly in terms of innovation. This organizational structure has optimized purchasing by: W consolidating purchases for the whole Group; W optimizing purchases of rawmaterials and components depending on the geographic regions concerned and market volatility; and W continuously optimizing the specifications of raw materials and components (purchasing productivity, including redesign to cost, etc.).

(1) AGV: Automated Guided Vehicle. (2) Cobot: collaborative robot.

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LEGRAND

REGISTRATION DOCUMENT 2018