LEGRAND_REGISTRATION_DOCUMENT_2017

GROUP OVERVIEW

A structure serving the Group’s strategy and customers

by incorporating the price 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. This organizational structure has optimized purchasing by: W consolidating purchases for the whole Group; W purchasing raw materials and components in countries where costs are lower; and W continuous optimization of the specifications of raw materials and components (purchasing productivity, including redesign to cost, etc.). R LOGISTICS AND SUPPLY CHAIN Legrand’s objective in terms of logistics and supply chain is to deliver products on time while optimizing transport and storage costs and inventory, and minimizing the environmental footprint of the various flows. To that end, cycle times (supply, production and distribution) are factored in and anticipated from the new product design phase, opting for solutions that optimize the quality of service for the customer (product availability) as well as costs. In addition, the Group’s logistics facilities form a network of local, regional and central storage and distribution centers, enabling to appropriately serve the market according to the product ranges and specific geographical requirements. This approach is based on dedicated tools and processes: 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. This means organizing workload schedules and procurement plans to better balance requirements and resources; W 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. 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 2017, and to guarantee a high-quality service for its distributors in terms of availability and flexibility, speed and adaptability.

W deploying industry best practices at production facilities, aimed at overall operational excellence (productivity, capital employed, quality, customer service, etc.). At the same time, the Group is carrying out targeted investments in the digitalization of its production tool by: W gradually deploying data gathering and analysis applications that help control production processes in real time throughout the economic chain, and to accelerate the cycles of this chain; and by W implementing solutions that assist intelligent production such as AGVs (1) , Cobots (2) , or augmented reality, which are already being used in some plants. These initiatives come as part of a global approach of industrial excellence. 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 local manufacturing close to markets is mainly reflected by the approximate balance between revenue base and cost base in the various currencies). The Group is therefore actively strengthening its presence in markets that offer long term development opportunities, such as Russia where Legrand is investing in the construction of a site aimed at localizing the production of ranges of energy distribution devices and user interface sold on the Russian market. 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 to the compatibility and the organization into consistent systems of all the Group’s offerings. R PURCHASING For more than ten years now, Legrand has been implementing a centralized purchasing policy to optimize its purchases and to reduce its consumption costs. The organization of the Group’s purchases 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

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

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REGISTRATION DOCUMENT 2017 - LEGRAND