DNFP_2018_English

2018 DECLARATION OF NON-FINANCIAL PERFORMANCE OF THE DESCOURS & CABAUD GROUP 32 Concentration of logistics flows The concentration of flows accentuates risks and weaknesses in the event of total or partial failure of the QUOFI (hardware - tools - industrial supplies) logistics platforms to supply our subsidiaries and customers. Operating losses and interruption of the supply chain are therefore the main risk. For the implemented lines, the challenge is to assess the connections between their vulnerabilities and their performance, and to implement our responses in such a way as to mitigate their impact. The risk factors, their consequences and their means of control The DESCOURS & CABAUD Group is intensifying its logistics strategy to offer the broadest possible range of products and to guarantee their availability, while managing operating costs. Our logistics flows, historically based on our outlets being supplied directly by our suppliers, are gradually being directed towards platform solutions. Henceforth these platforms will be delivering a growing proportion of our offering directly to our customers and stores. This strategy goes hand in hand with expansion of the logistics platforms, which increases the potential risks incurred. These risks have multiple causes: damage to facilities, to information systems, social, climatic or environmental damage. A variety of consequences can have a significant impact on the company's earnings and image. The main impact is on the quality of service rendered to our customers. Some of them are qualified as “critical customers” due to the nature of their business, which cannot be interrupted. In addition to the financial consequences, this risk can tarnish the distributor's image and constitute a breach of contract clauses. Loss of sales results in smaller margins and consequently lower profits. The impact can also have repercussions on our suppliers (output rate, labour relations, logistics, etc.) and our service providers (transport companies), and lead to a loss of year-end bonuses. Lastly, depending on the nature of our stocks, this concentration of logistics requires us to comply with regulations governing facilities classified for environmental protection. > The means of control: They consist in working on potentially weak links in the supply chain, both through prevention measures specific to each platform and on the interaction between platforms. Several means and action principles are implemented: At the level of each of the platforms: Continuity of operations in these facilities depends in the first instance on their maintenance and upkeep. Therefore contracts with emergency supply clauses are systematically concluded for priority facilities. An uninterrupted supply of energy, essential to the operations and self-sufficiency of the platforms, is ensured by the mandatory presence of an electricity generator in our facilities. The volume of stocks in facilities classified for environmental protection is monitored every week. In organisational terms, our main or lower tier suppliers are able to deliver directly to DESCOURS & CABAUD sites or our customers, which ensures a fall-back position for sourcing. A Business Continuity Plan (BCP) is being put in place to assess and anticipate preventive actions to mitigate the impacts in the event of damage in transit.

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