SUPPLY CHAIN PROFILE

A quality product is the result of shared standards, cooperation, joint efforts and stable relationships based on trust with all supply chain partners. The Group believes in the importance of developing ever closer and more profitable synergies and partnerships with those who not only guarantee reliability in production performance, but also share the company’s values and expectations in terms of ethical, environmental and social standards.

In 2023, 634 suppliers were involved in the production of Moncler and Stone Island products¹, a slight decrease compared to the previous year due to increasing synergies and the gradual internalisation of some production processes. Suppliers are divided into four general categories: raw materials, façon manufacturers, finished products and services.

• Raw material suppliers mainly provide fabrics, yarns, down, leather and production accessories (buttons, zippers, ribbons, elastics, etc.). Fabrics are mainly sourced from Italy, Japan, Korea, China and France. Suppliers of yarn and production accessories are mainly Italian, while the down suppliers are European, North American and Asian.

• Façon manufacturers are suppliers with strong technical expertise to which the Group entrusts the production of finished products or intermediate phases of processing (dying, embroidery, etc.), while providing them with all the raw materials needed. In particular, this category includes dye houses that perform garment-dyeing, to which Stone Island directly entrusts this process in Italy. The entire manufacturing process is carefully monitored by Group technicians who verify its compliance with the required standards through rigorous, ongoing field audits. In particular,

through this process outerwear, trousers, skirts, dresses, all tricot knitwear and some cut-and-sewn knitwear are produced. Façon manufacturers are mainly located in Italy and Eastern Europe, areas where long manufacturing tradition guarantees very strong technical expertise and adequate production capacity. In particular, Italy is characterised by a strong expertise in very complex and unusual processes.

• Finished products suppliers are those who, having received the technical design of the products, are responsible for the realisation of the garment, including the raw materials sourcing phase, according to the Group standards; in addition, Moncler directly provides its finished products suppliers with some strategic raw materials such as down, nylon and, of course, logoed materials. During garment production there is constant interaction between the supplier and the Group experts, who make on-site visits and scrupulously supervise the process, to ensure that the final product meets the expected high level of quality. Some cut-and-sewn knitwear (mainly t-shirts and polo shirts), some soft accessories (such as hats and gloves), shoes and bags, and small leather goods are mainly produced in this way. In particular, suppliers of cut-and-sewn knitwear are based in Europe and Türkiye, while suppliers of soft accessories are mainly Turkish and Italian with a high degree of specific skills; shoes, bags and small leather goods are realised by European suppliers, most of them Italian.
• Service providers support the Moncler Group in its pattern making, prototyping and quality control processes and are mainly based near its corporate offices.
Where possible, the Group employs local suppliers located near its main sites to benefit from logistical

advantages, reduce their related greenhouse gas (GHG) emissions, generate income and create employment opportunities in the communities where the Group operates.
Most suppliers (approximately 90%) are based² in the EMEA Region, primarily in Italy.
The Group distributes its purchasing expenditure, in order to avoid situations of dependence on its suppliers that could represent a risk for the business. With regard to concentration, the top 40 suppliers account for more than 50% of the value of orders. The Group is careful to promptly identify critical situations that could cause potential supply disruptions and mitigate the related risk.
The Group periodically identifies its critical suppliers to involve them in targeted actions and initiatives. This identification process is based on a risk-based approach that takes into account the economic value of the orders commissioned, quality, delivery times, financial dependence of the supplier, and the Group’s ability to ensure the supply of goods and services if it has to replace a supplier quickly. In addition, specific sustainability parameters are assessed, such as: the potential risk relating to human rights in the reference country, the sourcing of key raw materials with potential social and environmental impacts and the supply of strategic processes for the Group, with a particular focus on raw materials of animal origin and on the relevance to the business. Finally, since 2022, a screening is conducted by qualified, experienced third parties to identify possible cases or signs of conflict of interest on all Group suppliers, including critical suppliers.
At present, the majority of workers at the Group’s critical suppliers are women (approximately 68%), and the percentage of migrant workers is approximately 5%.

Moncler has been implementing its Supply Chain Excellence programme for years. It aims to bring the supply chain to a level of excellence by developing the operational and industrial area according to an advanced model, functional to coping with a constantly changing market.
People and their contributions are the cornerstones of the entire programme. All company departments are involved in working groups. Today’s critical factors of success were analysed, along with those needed for the future, and specific projects were therefore launched, all with the aim of achieving operational excellence in terms of quality, time to market, sustainability, reliability, flexibility and efficiency.

The main initiatives in 2023 included:

• Collection Excellence: the Product Lifecycle Management – PLM platform was extended to all product lines and categories. All information relating to the development of the collections is now in a single environment shared by all the functions involved in the process, fostering its sharing and efficiency. In 2023, the platform’s operational functions were further refined, with particular advantages above all in monitoring and managing workflows.

• Data-based scientific approach: in order to constantly improve supply chain management processes, each quarter the management team meets to monitor operating performance based on a set of indicators that analyse the performances of the various operating areas of Supply Chain & Operation processes. The quarterly monitoring and analysis cycle allows for a proactive approach to continuous improvement. Through this process, the company can constantly optimise processes, improve the quality of services offered and reduce operating costs.

• Supply Chain Collaboration: the project aims to create a platform for collaboration to enable Moncler to increase visibility and control of all phases of production, with advantages in terms of responsiveness and operational flexibility. Through devices and applications provided to the affected suppliers, the platform facilitates efficient, timely communication between Moncler and its façon manufacturers, significantly improving integrated supply chain management and thus the efficiency of raw material warehouses, production planning and logistics. Launched in a pilot phase in 2023, the project already covers around 30% of suppliers’ production volumes. The project will be further expanded in 2024, extending in terms of operating scope to cover more than 90% of suppliers’ production volumes.

• Continuous improvement of garment quality: the process of honing internal technical skills continued to ensure constant oversight of the design, industrialisation, pre-production and production phases, whether performed internally or by suppliers. This approach entails a constantly increasing focus on the quality of upstream process

execution that will help reduce possible non-conformities of finished products. Over time, an approach based on the monitoring and analysis of performance has been consolidated: detailed study of production data makes it possible to quickly identify areas for improvement and always pursue the finest quality. To this end, a pre-testing process has been set up directly at suppliers’ premises. This allows the language and quality standards to be brought directly into the production phase and enables swift repairs and greater quality control throughout the production process.

• Shipment tracking: the project involves accurate tracking of shipments, from raw materials to distribution of the finished product, to obtain timely information on the progress of the various phases, including through an ad hoc report. In 2023, the project sought to optimise shipments of raw materials to façon manufacturers, reducing the variability of delivery times. In 2024, it will be extended to the transport of finished products to the logistics hub.

• 3D Project: In 2018 Moncler started to integrate 3D technology into its product development process. Digital design minimises the need for physical samples, reducing waste, development times and prototype production costs. This makes it possible to digitally adjust the fit, find the right proportion for each size and check the rendering of different fabrics, colours and patterns.

• Zero Waste Project: all obsolete materials (fabrics, components, etc.) in the Moncler brand’s main warehouse began to be classified and verified starting in 2021. This activity allowed to have a timely view of inventories, making them available for the production of new collections, thus reducing the generation of waste.

• Early Product Engineering Programme: companies with a strong propensity for innovative design, such as Moncler, tend to experience issues of various kinds close to the launch of the sample collection into production, with a consequent significant negative impact at the level of economic performance, time, cost and waste. The Early Product Engineering Programme enables any critical issues to be identified and addressed in advance with all development teams so that the problem can be solved quickly: the so-called, design for manufacturing.

In addition, to promote the inclusion of specialised technical personnel in the Company, Moncler continued the MATE (Moncler Academy for Technical Excellence) programme to create a school of craftsmanship aimed at training technical personnel such as prototypers, pattern-makers and quality experts. In 2023, the third edition of the programme was launched, involving 14 participants for a total of more than 20,500 hours of professional training.
During the year, the training course was enriched

and revised according to a more structured approach, becoming a full-fledged academy with qualified, highly specialised internal teachers.

The Pattern Making School training programme at the production site in Romania also continued, with the aim of increasing skills among Moncler’s personnel and thus strengthening certain departments such as modelling, CAD, development and placements through the training and recruitment of local students.

To ensure supply chain excellence, Moncler has implemented a vendor rating system that assigns an overall supplier rating also considering sustainability aspects. Each indicator is weighted and helps to assess a supplier based on the results achieved in each area. The vendor rating areas are:
• sustainability and compliance (working conditions and respect for human rights, observance of chemical substance standards, indicators relating to the results of compliance tests carried out on products, environmental practices, animal welfare, etc.)
• quality (rate of production defects, quality complaints reported to client service, etc.)
• delivery service level (flexibility, delivery punctuality, etc.)
• cost (price competitiveness, logistics costs, etc.)
• innovation (technological capacity, aptitude for innovation, etc.)
• financial sustainability (degree of economic resilience of the supplier).

With regard to indirect suppliers, i.e. suppliers of goods and services not related to products, since 2018 the mapping of suppliers’ quality, social, environmental and health and safety certifications is continuously updated. Of the Group’s approximately 800 main indirect suppliers mapped, most have at least one certification, and around half already have ISO 45001 health and safety certification and/or ISO 14001 environmental certification. The Group also continued its awareness-raising activities to promote improvement objectives with suppliers relating to the importance of certification processes. Finally, since 2021 Moncler has verified the reliability of its partners, with the addition of information on the management of sustainability issues. Approximately 120 suppliers have been involved in this activity. These indirect suppliers, mainly manufacturers and maintenance and service providers, have been evaluated according to 28 criteria, divided into four categories: environmental, work and human rights, health and safety, and ethics. This tool – based on international principles, standards and guidelines such as the Global Compact, Global Reporting Initiative, ISO 26000 and the OECD Guidelines – provided a series of parameters making it possible to assess and compare the social and environmental performance of indirect suppliers.