Prysmian Group 2015 Sustainability Report

Prysmian Group – 2015 Sustainability Report

Supply Chain

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Strategic approach by the Group

The Prysmian Group constantly strengthens relations with strategic suppliers, centralising

procurement and leveraging a global approach marked by a single organisational model, common

processes and a system for the management of commodities.

The focus on customer service continued during 2015. This policy was adopted in previous years with the

aim of improving flexibility, reliability and time to market. Implementation of the "factory reliability" concept,

introduced in 2010, has improved the quality of our planning and supply processes with regard to the control

of volumes and inventory levels.

Group suppliers source the main raw materials used by Prysmian in the production processes: copper,

aluminium, lead, various petroleum derivatives (such as PVC and polyethylene) and components for power

and Telecom cable accessories, as well as special types of glass and sheathing for optical fibre.

With reference to the strategic approach adopted to supply chain management, the Group has established

five priorities that take environmental and social objectives into account:



only use qualified suppliers;



only use materials whose technical characteristics have been authorised;



develop strategies for commodities that guarantee continuity of supply and availability of the required

volume. In particular, the financial health of the supplier is important, as is only modest dependency

on specific suppliers by Prysmian;



guarantee on-time delivery and a high level of quality over time;



ensure competitive prices.

Purchasing of metals

The majority of the Group's purchases of raw materials, about 70%, comprise metals (especially copper and

aluminium), which are a fundamental resources for our activities.

With regard to the procurement of metals, Prysmian purchases copper and aluminium wire rod, from the

world's leading manufacturers, in order to make the conductors for cables. Only in specific cases, Prysmian

produces its own copper rod from copper cathode, but the output volume is less than 10% of total

consumption.

The Group absorbs slightly more than 2% of the world's copper production and about 5% of the copper used

in the electrical and electronic sector

. Given the substantial fragmentation of the copper market, Prysmian

is one of the leading economic players in the sector.

Accordingly, considering the importance of the role that suppliers play within the Group's value chain, the

high consumption of metal and the very broad geographical distribution of Prysmian's factories, the

procurement of metals follows two strategic directions. Firstly, Prysmian uses manufacturers that are as

integrated as possible, with direct access to the raw material (mines or concentrates) and the ability to

Source: Global data Source from Natixis, Reuters and Morgan Stanley.