Yves Kerstens, Vice President Logistics & Supply Chain Management

1. Yves Kerstens, Vice President Logistics & Supply Chain Management Supply-Chain Council European Conference, 11 October 2007

2. Global Organisation Bridgestone Bridgestone Corporation Head Office: Tokyo, Japan Bridgestone America Holding Regional HQ in Nashville, USA Bridgestone Europe NV/SA Regional HQ in Brussels • 2006 Key Data: • Employees, worldwide123,000 • Consolidated subs440 companies • Financial results25,1 billion US$ • Net earnings714 million US$ • 4 technical centresTokyo, Japan (2), Rome, Italy & Akron, USA • 57 tyre factories worldwide • 98 plants for other products • Sales network in more than 150 nations and territories around the world

3. Activities and Products Tyres (80 % of our total activity) • Passenger cars and recreational vehicles • Trucks and buses, heavy and light • Commercial vans • Agriculture • Off-the-road vehicles • Motorcycles and scooters • Aircraft • Subways and monorails • Racing, go-karts, motorcycles and scooters

4. Tyre Market Sales - Evolution 1986 – 2005 Millions of US dollars - Source: Tire Business, August 28, 2006

5. Passenger Car Tyres: Original Equipment Market Bridgestone basically supplies tyres to all mass market manufacturers in the world Bridgestone evolution in the European OE market

6. Passenger Car Tyres: Replacement Market • For the replacement market, Bridgestone Europe produces tyres for small city cars up to exclusive super cars.Tyres are sold through retail channels such as: tyre dealers, auto centres, gas stations, hyper markets and car dealers. • Bridgestone Europe has a market share of around 13% in Europe with a target to reach 15% by 2008. • Bridgestone Europe sells mainly following brands: Bridgestone, Firestone and Dayton, following the multibrand strategy: good-better-best.

7. A Network structure in line with market requirements, competitors and new European environment European Borders are fading, supporting cross border business flows Central control of Finished Goods inventory to improve customer service Provide a consistent 24 hours service to almost 95 % of the customers in Europe Implementation of Pan-European strategies in the area of warehousing and distribution resulting in a lower cost base Consistent measurement of our integrated performance to be able to benchmark and define improvements A European LSCM organization with people acting on a central, regional and local base Produces Integrates supply chain & delivers Sells & defines customer needs SALES CUSTOMERS MANUFACTURING PLANTS BSEU LSCM PLANT WHS DISTRIBUTION WHS Economies of Scale Customer Service Cost to serve Differentiation Customer Focus The Supply Chain Management Policy Gain Competitive Advantage Business plan objectives • Customer Service improvements • Reduction of Cost To Serve (-10 %) • Functional Excellence and Organisational Synergies • Reduced Asset Base and Working Capital Minimise costs

8. Our Supply Chain Vision • The supply chain division writes the music, directs the orchestra, but has some musicians being employed by third parties • One of the major drivers: the increasing affordable accessibility of information and communication technology (ICT) that enables the execution of the supply chain Bridgestone

9. The How ? • Working Smarter: Process optimalisation • Operational excellence • Continuous Improvements • Standardization • Working Cheaper: Cost optimalisation • Creation of Center of Excellences • Outsourcing to create synergies • Virtual organization • Working Bigger: Scale optimalisation • Organic growth • Shared operations

10. The How? • Drivers for outsourcing operations and business processes • Create visibility and control over service levels and costs • Support a flexible network structure to adapt changes in the markets -Variable cost base • Cost reduction via more efficient operations (use 3PL experience/buying power) • Lack of local experience • Focus on core activities • Standardization • Outsourcing components • Transport (FTL) • Distribution (Milk runs) • Warehousing operations • Real estate • Warehouse & Transportation Systems • Planning – Control tower (Track & trace) • Invoice control • Contract management • Inventory management Strategy is to outsource operations but keep limited number in-sourced to keep operational experience and internal benchmarking possibilities

11. Outsourcing of Freight Invoice verification Context Solution • Outsource this process to a third party with automatic control of pricing and posting of invoices into ERP • Avoid invoice duplication • Reduce overbilling (2-3%) • 100 % Rate check • 100 % Execution check • Correct accrual setting • Outsource because of • Dedicated and experienced team • LSCM Focus on service • Timely & Accurate reporting • Quality / Control / Audit • Cost Reductions • Visibility improved management capabilities • Carriers consolidation in Europe (2004-2007) • Central negotiations and standard contracts in place • Ownership of all transportation contracts shifted to BSEU • Compliance follow-up needed (Maverick spend) Organisation of invoice verification, booking and payment needed to be improved and aligned

12. Business issues

13. Partner selection

14. ControlPay Process overview (1) Bridgestone LSCM (2) (2) 3 PL 3 PL Execution (1) (2) FSE Consolidation oforders Reporting Pre - invoice Final Invoice ETOF Order details (3) Pre - calculation & account coding ISD Match (5) No Statement Issue What 3 PL OK resolution Should invoice Yes (4) ISDR (6) (7) Payment Approved final Bridgestone Finance invoice with coding details Integrated process of planning, execution, audit and settlement

15. Expected Benefits • Operational benefits • Central rate database management : Carriers cannot be used without approved rates • 100%  invoice line check including special costs like waiting times, gas oil surcharge,… • Communication platform with carriers (replacing phone, fax,…) • One Point of contact for our European suppliers with full traceability of issue resolution • Visibility and Increased compliance • Dedicated and experienced team • Timely & correct accruals for month end closing • Compliance • Sarbanes-Oxley (SOX) Compliance : Segregation of duties • VAT will be invoiced as per agreed VAT rules as opposed to being accepted as billed by carriers • Costs Reductions • Elimination of over billing errors (double invoices, 100% rate check, execution check) • Administrative tasks no longer required (no extra resources required for growth in business) • Visibility and reporting • Single location providing visibility to all parties (Carriers, BSEU, Claims, …) • Improved cost allocation capabilities • Share operational status visibility through Transportation Cycle

16. Initial Business Case (*) Adapted figures Project is self funding after implementation cost

17. Initial Implementation Planning – 2 sessions • Prepare • Implementation • Collect Master Data • Develop interfaces • Setup new processes • Carrier Communication • Implementation in • 3 Pilot Sites • ELC North: Zeebrugge • MDC: Poznan • RDC: France Roll out solution to all other sites Site Go live

18. Findings after 1 year operations (1) • Full Truck Load business is 100% operational and process is stable • For “secondary business (17 countries) ” situation is diversified • Some markets are 100% operational • Still some countries are not live • Carriers refusing to participate • Facing technical issues with some carriers • Some countries we encountered serious problems • We ended up in paying invoices twice • We had to make pre-payments to carriers • Local people initially opposed, because they lost part of their power • Learning curve takes time (Table to be updated with YTD figures)

19. Findings after 1 year of operations (2) • Involvement of multiple stakeholders requires strong project management • Carriers • Central SCM & Local SCM • Finance • Invoice verification company • The local organisation needs to be prepared well • Clear rules need to be established upfront and communicated • Training upfront and afterwards is key • The local people are not finance people • Realise and foresee at startup, this is not first priority for the people involved • Exception handling is under estimated ( returns, extra costs, …)

20. Findings after 1 year of operations (3) • The process and system prove to be very effective • systematic and full controlon the invoices • full visibility on the accruals for freight • After having the process effective, our current priority is to become even further efficient by becoming • more pro-active • follow the progress via KPI: • Current focus areas • Reviewing all new contracts from carriers by the Central Contract Team • Reviewing weekly the status by country and carrier (tracking report ). • Challenging all issues more than 5 days and ensuring that all issues more than 25 days are closed (CP system used to monitor the issues).

21. Findings after 1 year of operations (4) • Business case realisation • Over billing reduction is clearly achieved but difficult to measure • Headcount Finance is realised, but does not result in headcount reduction • Headcount LSCM is not realized. More focus is still required. • Carrier Selection Compliance : 100% • Data and accrual accuracy has improved significantly Would we do it again ? YES, but lessons learned : You never communicate enough both external and internal

22. Thank you for your attention