Lectra Manufacturing Expertise Optimize the use of material

We all face similar challenges Import growth Stronger and more competition High labor cost Social responsibility Sustainability Increased raw material costs Need to differentiate Drop of consumer trust and loyalty Reduce time to market Design value Brand value New sale channels Innovation Eco-friendly materials Customization

Key drivers to Control Raw material consumption 1 Product & material specifications 2 Scheduling & marker- making methodology 3 Production Practices & accuracy 4 Hide management

Key drivers to Control Raw material consumption 1 Product & material specifications 2 Scheduling & marker- making methodology 3 Production practices & accuracy 4 Hide management

How much change decision impacts the R&D costs How much change decision impacts end- product cost Sketches Wood structure FoamsUpholsteryCosting Physical prototyping assembly Industrializ ation DECISION-MAKING 70 to 80% OF THE END-PRODUCT COSTS ARE DECIDED AT THE DESIGN STAGE Management method for innovation and product development Product modifications Production Design to Cost

1 Model 10 Models 100 Models 71.1 % 72.8 % 72.7 % 71.7 % 73.6 % 73.2 % 70.4 % 71.6 % 73.2 % 75.5 % Option 1 Option 2 Option 3 Option 4 Marker Efficiencies For each design option PRELIMINARY DESIGN & INTERACTIVE COSTING FABRIC & LEATHER CONSUMPTION, LABOR COSTS

Key drivers to Control Raw material consumption 1 Product & material specifications 2 Scheduling & marker- making methodology 3 Production practices & accuracy 4 Hide management

Trade off between fabric cost and inventory Cutting Driven by process optimization Sewing Driven by demand Decoupling point Longer marker Mix big and small pieces Lot size Cost optimization One piece flow Adapt to change in demand Speed

Context Furniture in Scandinavia Lectra was asked to optimize the cutting room process Methodology Review the fabric ordering process Reorganization of costing and fabric ordering Combine orders to reduce fabric consumption Raw material use - Customer case 2 Validated fabric savings 8.6% / 49k€

Key drivers to Control Raw material consumption 1 Product & material specifications 2 Scheduling & marker- making methodology 3 Production practices & accuracy 4 Hide management

ACCURACY Cutting tool Machine condition SkillsAlignmentTransportation Length control Fabric Consumption Production practices & accuracy Spreading and cutting practices

WidthEfficiency Marker length %6.5m %6.46m % +1.2%6.33m % +4.2% 6.08m Use maximum of roll width Fabric Consumption Production practices & accuracy

“ New settings can reduce gaps between pieces (from 5mm to 2mm or even zero buffer) ” “ Spread length doesn’t match the expected value, variation from 0.5% up to 3%, estimated impact 400k€. ” “ Optimized roll handling to use material to the full. There is a 1.5% fabric width variation. ” Fabric Consumption Production practices & accuracy

Key drivers to Control Raw material consumption 1 Product & material specifications 2 Scheduling & marker- making methodology 3 Production practices & accuracy 4 Hide management

Quality zone definition Development Production reality GAP Cushions Quality AArm rest Quality A and B Back/side Quality A/BSeam: not always defined Correct separation visible/hidden not clearCushions Quality A Hidden B seam CArm rest Quality A and B hidden B Seam C Back/side Quality B hidden and Seam c Seam: defined and accurate Always measure visible/ non visible Material Consumption Hide management

Transport Packaging Reception Sorting conditions SortingEnvironment Allocate hides Distribution Small/Big Crates Put quickly onto horses to flatten the hide Lighting: mark hidden defects Quality control and A and B hides Temperature and humidity Have ratio for A/B hides Ergonomy in using the hides Hide reception and handling Material Consumption Hide management

To reach operational excellence Our approach

LECTRA’S CONSULTING EXPERTISE Product development efficiency Raw material optimization Cutting room performance BASED ON 40 YEARS OF EXPERIENCE IN YOUR INDUSTRY

FLOW and LAYOUT DESIGN FOR MANUFACTURING FABRIC/HIDE CONSUMPTION OPERATIONAL AVAILABILITY PERFORMANCE CUTTING QUALITY Our Expertise in Manufacturing Reduce lead time Reduce non value added activities Optimize space and motion Reduce material costs Improve efficiency Improve performance Reduce non quality costs Reduce industrialization costs and lead time D ESIGN /S TYLE P ROTOTYPES D EVELOPMENT P RODUCTION

FLOW and LAYOUT DESIGN FOR MANUFACTURING FABRIC/HIDE CONSUMPTION OPERATIONAL AVAILABILITY PERFORMANCE CUTTING QUALITY … by improving processes, skills and organization Reduce lead time Reduce non value added activities Optimize space and motion Reduce material costs Improve availability Improve capacity Reduce non quality costs Reduce industrialization costs D ESIGN /S TYLE P ROTOTYPES D EVELOPMENT P RODUCTION People skills Process efficiency Monitoring system Working procedures and data quality Productivity Organization maturity Time Quality Cost

Our team BUSINESS CONSULTANTS 1 SOLUTIONS EXPERTS 2 CUSTOMER CARE 3 Help our customers analyze and redesign processes and organization, referring back to your business best practices Design and implement solutions per a customer’s unique requirements, in line with projected timetable & operational objectives Help develop the skills to use the proposed solutions Provide operational assistance to our customers to ensure maximum efficiency and level of service

OUR MISSION Respond to the constant need to combine quality, creativity & flexibility, streamline processes, and safeguard margins & competitiveness through operational excellence

“ “ BY CHANGING NOTHING, NOTHING CHANGES