Chapter without image International Supply Chains Challenges Opportunities

Chapter without image International Supply Chains: Challenges, Opportunities and Partnerships 28 March 2012 Andrew Lister Head of Procurement & Materials Page 1 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Contents • Siemens Overview • The Siemens UK Rolling Stock Maintenance Portfolio • Challenges • Opportunities • Partnerships • Summary Page 2 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Siemens – global Sectors Industry Automation Drive Technologies Customer Services Metal Technologies Infrastructure & Cities Energy Building Technologies Low and Medium Voltage Fossil Power Generation Renewable Energy Smart Grid Oil & Gas Mobility and Logistics Workflow & Solutions Service Diagnostics Healthcare Cross-sector activities Imaging & IT Siemens Financial Services Clinical Products Rail Systems Osram Page 3 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Siemens – Rail Systems High Speed and Commuter Rail High speed and intercity trains Commuter and regional trains Components Refurbishment Page 4 Metro, Coaches and Light Rail March 2012 Metro rail cars Passenger coaches Tramcars and light rail cars AGT rail cars Components Refurbishment Locomotives and Components Customer Services and Transportation Solutions Electric and diesel-electric locomotives Propulsion and control components Bogies for metros, tramcars, high speed trains, and locomotives Electrical equipment and traction systems for rail cars Refurbishment Maintenance of rolling stock and infrastructure Spare parts service Test and validation center Repair center Consulting and system design System engineering, project and interface management © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Twelve Fleets, Eight Operators • • 67 x 4 car Desiro EMU (AC) Maintenance – Northampton/Crewe Staffing – 70 Contract – Full Service, 20 years • • • 14 x 4/5 car Class 332 EMU (AC) 5 x 5 car Class 360 Desiro EMU (AC) Maintenance – Old Oak Common Staffing – 42 Contract – Full Service, 19 (2) years • • • 127 x 4 car Class 450 Desiro EMU DC 45 x 5 car Class 444 Desiro EMU (DC) Maintenance – Northam / S'Hill Staffing – 200 Contract – Full Service, 20 years • Metronet Central Line Contract • 1420 Bogies to modify 51 x 3 car Class 185 Desiro DMU Maintenance – Manchester/York Staffing – 130 Contract – Full Service, 8 years 16 x 4 car Class 333 EMU (AC) Maintenance – Leeds Staffing – 22 Contract – Maintenance, 35 years • • Maintenance Facilities • • 16 x 4 car Class 380 EMU (AC) 22 x 3 car Class 380 EMU (AC) Maintenance – Shields, Glasgow Contract – TSSSA, 10 years 21 x 4 car Class 360 Desiro EMU AC Maintenance – Ilford Staffing – 25 Contract – Maintenance, 7 years • Eurostar Trains and Service • 10 x e 320 Velaro High Speed • TSSSA – 10 Years and Depot Modifications

Scope of supply Full service Contracts Safety and Integrity Planned and Corrective Maintenance Overhauls (at train or component level) Obsolescence Development and Innovations Major Repairs Cleaning Page 6 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Rail Systems has a commuter fleet of some of the most reliable trains in the UK 350 trains in service travelling over 50 million miles per annum Over Page 7 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

“New EMU” Re. Focus Reliability Figures Page 8 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

“New DMU” Re. Focus Reliability Figures Page 9 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Challenges - Scale 1508 vehicles in service 50 million miles of operation annually 650 staff 10 depots (six built by Siemens) 1 million materials transactions annually Every major owner and operator has Siemens trains Page 10 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Challenges Manufacturing locations – Our trains are made in Germany and Austria Technical (design) expertise is often in Germany Language – Siemens business language is English Often technical spec’s and contracts are in German Suppliers – Relatively small pool of potential suppliers Technically complex and safety critical Often (historically) selected to suit requirements of train build not the aftermarket Page 11 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Challenges Supplier (558) locations – Fiscal year 2012 (P's 1 -5) Country of Supplier EUR Australia 9, 930. 30 Austria 16, 298. 43 Bahrain 16, 369. 63 Belgium 5, 760. 75 Czech Republic 279. 33 Denmark 150, 493. 56 Finland 15, 135. 62 France 242, 750. 12 Germany 916, 546. 32 Hungary 2, 385. 17 Ireland 25, 257. 18 Italy 20, 993. 56 Netherlands 565. 99 Spain 48, 909. 57 Switzerland 3, 365, 632. 52 United Kingdom 37, 030, 834. 34 Total Page 12 March 2012 41, 868, 142. 39 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Challenges Demanding customers and penalties for non–performance - Our trains run 364 days/year We commit to making trains available to meet the timetables Maintenance activity is carried outside of peak hours Massive variation in terms of the fleets One DMU fleet – all rest EMU’s Different suppliers and technologies on our trains Page 13 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Opportunities Size of our installed base gives us a critical mass 1508 vehicles and growing Long term contracts Our maintenance contracts last for between 2 years and 35 years! Over £ 1 bn in order backlog based on existing fleets alone Real growth prospects – opportunity to double in size Eurostar vehicles in manufacture (160 off) Additional Cl 350 vehicles for TPE/London Midland (80 vehicles) Preferred bidder on Thameslink (1140 vehicles) Cross. Rail ITT recently issued (Siemens one of pre-qualified suppliers) Page 14 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

“Partnerships” We tend to avoid using the term “Partnerships” We focus on working together with our customers, suppliers and employees to delivery mutually beneficial long term benefits…… Two key elements of collaboration First aspect is internal collaboration Second aspect is how we collaborate with our suppliers Communication is key to both……. Page 15 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Internal collaboration Act together for growth Procurement Update United Kingdom Procurement Update Germany & Global Procurement collaboration in Rail Systems Procurement for maintenance and services Page 17 March 2012 Best suppliers for Siemens © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Procurement collaboration in Siemens Rail Systems International procurement network Organize communities of knowledge & experience exchange on specific procurement topics Foster (cross-)regional pooling activities Utilize transparency on global preferred supplier base & contract content HQ REG Page 18 >500 Mio € PVO is managed in RL’s procurement regions March 2012 Collaboration between UK and Germany Example: Eurostar 2 Project Procurement Managers for maintenance installed on both sides of the channel Exchange of maintenance related procurement issues (e. g. life cycle cost, contracts, overhaul) Joint interface to procurement activities during build phase Overlook all material issues of the vehicle since vehicle is in plant (contracts, Annex SA, …) Same approach would apply for all future projects © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Procurement for maintenance and services Major focus within Rail Systems Overview Key aspects Maintenance and services for Rail Systems / Integration of build and maintenance projects Maintenance and service aspects are key elements for sourcing decisions, e. g. More of a focus on the aftermarket in sourcing decisions LCC Warranty and repair & overhaul support Engineering / production capacity To. Co installed UK and Germany are in close communication on key sourcing decision for both Eurostar and Thameslink From an aftermarket perspective, we want to encourage the use of suppliers with a UK support network Page 19 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

International collaboration Supplier day n RL UK holds an annual supplier days for it’s key strategic suppliers n Approx. 40 suppliers in attendance n Involves a cross-functional approach n Focus is on sharing information and improving collaboration and communication Page 20 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

“A Better Way of Working” Welcome……………. Page 21 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Consistent approach to supplier management UK Supplier Qualification crossfunctional Material Strategies 2012 Output / value add UK Supplier Development Continuous improvement of our supply chain performance UK Supplier Audit FPL Supplier Portfolio UK Supplier Classification Factor Development of a portfolio of best-in-class suppliers Supplier Award 2012 Awarding process Focus on To. Co-installed Transparency on performance in build and aftermarket projects 0, 98 1, 04 UK 1, 08 Page 22 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Closure & outlook n Siemens has exciting prospects and great opportunities n We also have demanding customers and challenging competitors n We want to engage with our suppliers such that together we can gain a real advantage over our competition and delight our customers n We want to be number one together across all aspects of our working relationship – technical innovation, lowest total cost, comunication, reliability and availabily. . . n We want you to be part of our future success Page 23 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division

Q&A Andrew Lister Head of Procurement & Materials UK Siemens plc Infrastructure & Cities Sector Rail Systems Division United Kingdom +44 1530 258 125 andrew. lister@siemens. com Page 24 March 2012 © Siemens AG 2012 Infrastructure & Cities Sector, Rail Systems Division