Seiko Epson CorporationSeiko Epson CorporationSeiko Epson CorporationSeiko Epson Corporation

Denis Doyle – Operations Director

26th September 2007

Strategy to date / Summary

• (Seiko) Epson Overview

• Logistics Infrastructure Evolution

• Direct Ship Evolution

• One aspect of flexibility in the supply chain

• Summary

Consolidated Total Sales (YE Mar 2007) ¥¥1,416.0Bn1,416.0Bn /€ 9.0Bn

Precision ProductsPrecision Products

¥¥86.9Bn [86.9Bn [€€0.55 0.55

billion] (6.1%)billion] (6.1%)

Watch,

Optical,

FA Products

InformationInformation--Related EquipmentRelated Equipment

¥¥913.4Bn [913.4Bn [€€5.8 billion5.8 billion] (64.5%)] (64.5%)Electronic Devices Electronic Devices

¥¥411.2Bn [411.2Bn [€€2.6 billion2.6 billion](29.0%)](29.0%)

Notes 1. Segment sales exclude intersegment sales2. % of sales for each product categories in each business segment include sales that occurred between the product categories, within the business segments3. Euro amounts are included solely for the convenience of readers.

The rate of ¥157.25 = €1 at March 31, 2007, has been used for the purpose of this presentation

Displays

Energy SavingEnergy Saving

Quartz

Devices

Semi-

conductors

Other ¥4.3Bn

Color ImagingColor Imaging

Imaging and

Information

Products

Visual

Instruments

PCs

Micro-Mechatronics

85.2% 11.6% 3.2% 58.9% 19.8% 21.3%

(0.3%））））

Finished product range overview

Business &

networking

Pro-graphics

Home photo

& printing

Point of sale

Displays

Scanners &

cameras

Projectors

EMEA logistics infrastructure FY02 to FY08

ESC Warehouse

Central Warehouse

Dubai

EMEA logistics infrastructure FY02 to FY08

Central Warehouse

Dubai

Outsourced

7,500m2

Hamina – FiAll products for

Russia

Insourced

12,500m2

Telford - UK Supplies &

Media

Outsourced

47,000m2

Tilburg - NLAll main units +

toner

Insourced

7500m2

Barcalona - SpAll Spare Parts

Outsourced

2,500m2

All products for ME/Af/CIS

CDC construction status July 2007

Recently voted “Best Looking” warehouse in Holland!

Impacts of these changes

5

Historic Epson EMEA Physical Structure

ESC Warehouse

Central Warehouse

EUL

EDC3

EFS

EIB

EPO

EIS

SWE

EDG

EDC2

EDC5

EMO

EMS

ESPC

DUB

7

Future Epson EMEA Physical Structure

ESC Warehouse

Central Warehouse

EDC3

CDC

EMO

ESPC

DUB

• 15 sites – approx 140,000m2 at height

• Inventory “trapped” in many locations

• Many steps in the supply chain

• Customers receiving goods from many sites

• Many “owners” of the supply chain

• Obviously an expensive solution

• 5 sites – approx 85,000m2 expected

• Inventory more flexible

• In times of shortage customers gets

goods quicker

• Customers receiving more

consolidated shipments

• One single “owner” of the supply chain

• A more economic solution

Direct shipment Evolution

EDC ESC WH Cross dock Customers

Step 1 Step 2 Step 3 Step 4

Historic Supply Chain

EDC ESC WH Cross dock Customers

Step 1 Step 2 Step 3 Step 4

EDC ESC WH Cross dock Customers

Step 1 Step 2 Step 3 Step 4

Step 1

EDC Cross dock Customers

Step 2 Step 3

Factory

Step 0

CDC Cross dock Customers

Step 1 Step 2 Step 3

Future Supply Chain

Factory

Step 0

EDC Cross dock Customers

Step 1 Step 2 Step 3

EDC Cross dock Customers

Step 1 Step 2 Step 3

Asia Direct

Factory

Step 0

Factory

Step 0

Asia Direct

Commit a certain % (eg 70%) of expected volume over a period

a minimum of 10 weeks before delivery date to customer site to

allow factory build and ship direct from factory.

Savings for both customer and Epson.

Remaining demand can be fulfilled from Euro sites.

Future Supply Chain

Will also allow for container storage of fully configured product

and shipment from container storage direct to customer without

any warehouse handling (pallet depending).

Will also allow for cross docking (receipt and consolidation) in

warehouse without storage and then direct to customer.

Direct Ship

Ocean Carriers

EMEA Supply Chain to CDC

Asian factory

to Rotterdam

seaport

Rotterdam CY

max 3 days

free storage

Per barge or rail transport

from RTM CY to BTT CY

lead-time 1 day

Storage in

BTT max 14

days free

Delivery by

truck to CDC

15 minutes

CDC WH into

racking or via

fast track

Transporter

Inbound

custom

clearance

Picking from

BTT response

time: < 10hr.

STANDARD STANDARD

FLOWFLOW

EXCEPTIONAL EXCEPTIONAL

FLOWFLOW

Delivery to CDC 2

hours

Warehouse Op

Ocean Freight Inland Freight

EPSON CDC

BTT CYRTT

Inland transport

Growth Opportunity

Flexibility on Space/Storage

A M J J A S O N D J F M

Unused Space = Wasted Cost

Stock

Level

Idea

l war

ehou

se s

ize

Traditional Warehouse Size

Flexibility on Space/Storage

A M J J A S O N D J F M

Stock

Level Minimum Committed Space

Container Yard Storage

Flexible Storage

A M J J A S O N D J F M

Stock

Level Minimum Committed Space

Container Yard Storage

Flexible Storage

Flexibility on Space/Storage

A M J J A S O N D J F M

Stock

Level Minimum Committed Space

Container Yard Storage

Flexible Storage

Flexibility on Space/Storage

Strategy to date / Summary

• Implement direct shipment

• Eliminate warehouses at local ESC (Epson Sales Company)

• Decrease space & handling activity in total

• Increase configuration at factory enabling Direct Ship from Asia to Customer

• Fully utilize resources

• Make what we have more flexible

• Design for Supply Chain

EXCEED YOUR VISION

Thank You