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PRESS KIT

November 4, 2010

THE SUPPLY CHAIN, A VITAL COMPONENT IN RENAULT


PERFORMANCE

The purpose of the supply chain is to deliver vehicles to each customer, respecting Renault
quality standards, on time and at the best price. It sequences the movement of parts from
suppliers to plants and the movement of vehicles from plants to dealerships. It also serves to
program production levels at plants while optimizing inventory levels in line with sales
demand.

The Global Supply Chain Department, DSCM (Direction de la Supply Chain Monde), was set up
in 2008, replacing the Logistics Department, with a view to optimizing Group performance.
The DSCM has decreased late deliveries by 30% in the last two years.
Damage caused by transport operations has fallen considerably, with observed defects
decreasing 40% between 2008 and 2010.
The DSCM has also generated major reductions in costs. The global cost of the supply chain
fell 9% between 2006 and 2009. In 2010, Alliance synergies are expected to save €130 million
for Renault and Nissan.

During the crisis, the DSCM drastically reduced stock levels, through continued
reprogramming of production at sites. In addition, logistics – concerning physical shipments –
was pooled with Nissan through the Alliance in order to identify, produce and share synergies.

The supply chain continues to prepare for the future by developing its working relationship
with Nissan through the Alliance.

1. The remit of the supply chain at Renault: a cross-cutting, global function


2. Significant progress in the last two years
3. An essential role during the crisis
4. The Alliance as a source of economies of scale and synergies

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1. The remit of the supply chain at Renault: a cross-cutting, global function

The Global Supply Chain Department, DSCM, was created on a request from Carlos Ghosn in 2008,
replacing the Logistics Department. The numerous tasks carried out by the department are vital to the
Group’s overall performance.

The DSCM is responsible for meeting commitments on lead times and contributing to customer
satisfaction, against a backdrop of increasingly international trade. While logistics previously was
treated as something of an afterthought at the end of decision-making processes, today it is factored
in right from the start of vehicle design.

Following the “Design to Logistics” principle, the supply chain works with engineering to design parts
that are easy to transport.

The DSCM also works with the Purchasing Department to optimize sourcing, i.e. the origin and
transport of components bought from suppliers, the choice of which can have considerable impact on
transport costs and logistics solutions.

It draws up production forecasts together with the Sales and Marketing and Manufacturing
departments. These forecasts are refined weekly at production sites in order to deliver cars to
customers on time while keeping stock levels to a minimum.

The DSCM works with Sales and Marketing to establish reasonable and reliable lead times for end
customers.

Lastly, with the Quality Department, it ensures that components and vehicles are delivered on time
and in compliance with Renault quality standards.

Given the importance of these tasks, the DSCM plays a major role in Group performance. Significant
progress has been made over the last two years.

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2. Significant progress in the last two years

The DSCM has achieved considerable progress since it was created in 2008. At management level, it
has become a major player at the company. The department’s recommendations are taken into
account by the functions it works with and it has implemented standardized processes ensuring
effectiveness and efficiency. Renault Logistics Way (SLR or Système de Logistique Renault) – a
cousin of Renault Production Way (SPR), the standard management system used at Renault plants –
applies to all the players in the Group’s supply chain.

For example, the work the DSCM carries out upstream with engineering leads to gains of up to 40%
in volume for certain components, such as shock absorbers, with no detriment to safety or equipment
levels.

Working with Purchasing, it has secured supply and reduced transport costs. Sea freight costs, for
example, were a full 12% lower in 2010.

Through its close ties with manufacturing, especially via site production programming, the DSCM has
made 15 successful start-ups in two years, a record in Renault history, while respecting lead times
and quality requirements.

By forging a stronger relationship with the Sales and Marketing department, it can now propose
dealerships stock levels corresponding to specific customer expectations, all in the shortest of times.

The DSCM has boosted its performance indicators by rolling out “quick win” improvement measures
and by reorganizing.

It reduced its operating costs by more than 9% between 2006 and 2009 while increasing reliability of
delivery times (late deliveries have been cut by 30%) and cutting transport-linked quality defects, with
40% fewer vehicles damaged in transport.

The DSCM has not only improved its performance; it also played an essential role during the crisis.

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3. An essential role during the crisis

The DSCM played a crucial role during the crisis that shook the global economy in 2008 and 2009. It
reduced its operating costs like all the other functions. But most importantly it contributed to
reprogramming at plants and to reducing stocks.

By matching supply and demand, the DSCM helped to reduce stock levels.

Dealerships suffered from a sharp drop in orders in 2008 and 2009 owing to the economic crisis. The
DSCM reacted fast to recalculate the optimal production level required to satisfy demand. This
change affected plants, which reduced output and implemented short-time work.

The production slowdown also called for a review of supply. The DSCM worked on the crisis-induced
reduction in trade between Renault and its suppliers, with the Purchasing Department endeavoring to
reduce the negative impact of these measures on equipment suppliers.

When demand began to increase, notably a result of government scrappage bonuses, the DSCM
accompanied the rise in output.

While it has considerably improved performance, Renault’s supply chain can still make even more
progress. It is more difficult today to implement “quick wins” or further reduce stock levels, but other
avenues for improvement exist.

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4. The Alliance as a source of economies of scale and synergies

The Renault-Nissan Alliance will be an important source of progress in the coming years. Since the
Alliance was formed in 1999, logistics has been a source of synergies for Renault and Nissan. The
yearly sum of these synergies has averaged €25 million over the past decade. In 2009 alone, the
amount of synergies more than doubled to reach €56 million. This figure is expected to more than
double once again in 2010 to top the €130 million mark.

In 2009 the Alliance set up the Global Logistics Alliance. The Managing Director of this structure,
Christian Mardrus, manages trade-offs between the supply chains of Renault and Nissan and
coordinates global logistics for the Alliance. The objective is for Renault and Nissan to identify
resources to be pooled and implement and take full advantage of them. One of the main tasks of the
Global Logistics Alliance is to accelerate convergence for the logistics function, including all the
processes and IT systems, wherever this can benefit the Alliance. Thus Renault and Nissan share
flows and resources, reduce non valued added, and generate economies of scale with suppliers.

The Alliance’s logistics teams are made up of people from Renault and Nissan tasked with bringing
the best service levels to the brands of the Alliance.

Alliance Logistics Europe was created in November 2009 to round out this system. Headed by Colin
McDonald, it now covers Western and Eastern Europe, the Mediterranean Basin and the CIS and
contributes €50 million in synergies.

Reporting to Alliance Logistics Europe, Alliance Logistics Russia was set up in 2010. It groups
inbound and outbound logistics for Renault and Nissan and also coordinates logistics for the plants in
Moscow (Avtoframos, i.e. Renault) and Saint Petersburg (Nissan) and inbound logistics for Togliatti
(AvtoVAZ).
Alliance Logistics Russia works with local suppliers to meet new Alliance objectives in Russia and
align with Alliance standards on quality, costs and lead times. It is also taking part in the deployment
of the Alliance Production Way standard at the Togliatti plant.

All supply chain purchasing naturally goes through RNPO, which has generated considerable gains
on quality, costs and lead times. A shared call for tender from Renault and Nissan on sea freight in
2009 led to a 12% saving compared with previous expenditure.

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Annexes:

Biography of Yves Caracatzanis


Biography of Christian Mardrus

Biography of Yves Caracatzanis, Director of Renault Global Supply Chain


Yves Caracatzanis was born in Marseille on April 13, 1964. He graduated from Ecole Centrale Paris.
He started his career at Conseil Bossard Consultants, before joining Hewlett-Packard. He joined
Renault in 1992 as Logistics Organization Project Manager. He moved on to the Flins plant in 1995
where he worked as Head of the Manufacturing Assembly Workshop, Head of the Paintshop (1999)
and Head of Quality (2002) for the start-up of Clio 3. He was appointed Director of Vehicle Prototype
Engineering in 2005 and as Director of Logistics Project Planning in June 2008. He has been Director
of Renault Global Supply Chain since September 1, 2010.

Biography of Christian Mardrus, Managing Director of Alliance Global Logistics


Christian Mardrus, born on March 18, 1959, is a graduate engineer of Ecole Polytechnique et du
Corps Interministériel des Télécommunications. He began his career in 1985 at the French
Telecommunications Authority then worked for Peat Marwick Consultants from 1986 to 1991. He held
a number of positions at Otis from 1991 to 1999. He joined Renault in November 1999 as Director of
Sales and Marketing IT, before being named Head of Department at Sales and Marketing in February
2002 and Sales Network Director, France in July 2004. He has been Director of IT Systems for the
Renault group since July 1, 2006. On September 1, 2008 he joined the Renault Management
Committee. He was appointed Managing Director of Alliance Global Logistics in 2009.

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