Plan 2.0: Supply Planning Re-Engineering Journey of a Web 2.0Josh Miller Daniel SoosaiShutterfly Gaea Global

About the presenters

• Josh Miller

Director Procurement

Shutterfly

Josh Miller is the director in charge of the

supply chain and procurement

organizations in

Shutterfly. In his current role he is in-

charge of

establishing efficient supply chain and

procurement business processes. Prior to

Shutterfly Josh was working with Amazon

in

London managing the European

inventory and

buying teams.

Josh holds a BS in Industrial Engineering

from

Purdue along with an MS Mechanical

Engineering from MIT and an MBA from

MIT/Sloan School of Management.

• Daniel Soosai

Founder & Supply Chain Strategist/Architect

Gaea Global

Daniel Soosai heads the Supply Chain

consulting practice. He has worked with

numerous customers ranging from Fortune 500

customers to early stage start up devising

innovative and value focused supply chain

solutions . Prior to Gaea Global, Daniel was

with Oracle for 11+ years building supply chain

products and architecting supply chain solutions

for Customers. He last served in Oracle as Sr.

Director in charge of selling Supply Chain

Applications to High Technology Industry

Daniel holds a MBA from Wharton and MS in

Industrial Engineering from University of Arizona

Agenda

1. Introduction - Company Background

2. Pre-implementation business processes & need for change

3. Re-Engineered Business Process and the new solution

4. Benefits and Lessons learnt

5. Questions & Answers

Shutterfly at a Glance

• Shutterfly is an internet-based social expression and personal publishing service.

• Founded in December 1999,

• Shutterfly has approximately 2.4 million global customers.

• Net revenues totaled $186.7 million in 2007, representing a year-over-year growth rate of 51 percent.

• Over 2.3 billion images have been uploaded to Shutterfly.

• Offers free online photo storage, and has never deleted a photo.

• Headquartered in Redwood City

• Owns & operates two manufacturing labs in Hayward, CA and Charlotte, NC – enabling control of quality, production, & costs.

• Consistently ranks in Internet Retailer’s Hot 100 Best Retail Web Sites list.

Making the world a better place by helping people share life’s joy

Supply Chain Overview

• Small team – 5 people, 2 centralized buyers

• Approximately 30 suppliers

• Small retail SKU count across 13 product groups

•Landscape

• Currently operate 2 mfg labs in CLT and PHX*

• Product profile: highly seasonal, mixed velocity, make-to-order product

• Processed 19,300 orders per day in 2007

•Mfg Facts

What does Gaea do?

Gaea’s offering

Operations Strategy and BPR

Oracle Technical Implementation

Oracle Functional Consulting

Gaea Oracle Bolt-On Solutions - “g-apps”

Process

Thought

Leadership

Industry

Expertise

Gaea’s Oracle Application extensions

“g-apps”

Oracle

Technology

Mastery

Gaea’s core competency

Maximizing Gaea client’s ROI on Oracle

Enterprise Software

Investments.

Gaea’s goal

We achieve our goals by successfully implementing Best-in-Class business processes in a risk-mitigated approach.

Custom Customer Applications

Gaea’s Focus Area

Oracle Business

Intelligence-- OBI EE &

Business Intelligence

Apps

Oracle Demand Management

-- Demantra DM

RT S&OP, Adv.

Forecasting & TPO

Oracle Supply Planning

-- ASCP, GOP, CP, IO, PS S&OP

Oracle

Supply Chain Management

-- Inventory, WMS OM, Shipping, WMS & MFG.

We are experts in Oracle Fusion Middleware and have deep programming expertise in Business Integration, Business Intelligence, Business Process Management, Application Server and Developer Tool modules of the Fusion Middleware Suite.

Consumer Electronics

Network Equipment Mfg

Semiconductor

Web 2.0, Media & Entertainment

Consumer Packaged Goods

Distribution

Industrial Manufacturing

Industry Focus

Agenda

1. Shutterfly Background

2. Pre-implementation business processes & need for change

3. Re-Engineered Business Process and the new solution

4. Benefits and Lessons learnt

5. Questions & Answers

Strong Revenue Growth

Source: 10-K

Revenues

$ MM

Gross & Operating Margin

Sales (%)

$0

$50

$100

$150

$200

2004 2005 2006 2007

0%

10%

20%

30%

40%

50%

60%

2004 2005 2006 2007

• Shutterfly (SFLY) has grown at north of 50% over the last four years driven by Personalized Products and Services:

• 56% of revenues in 2007

• 51% of revenues in 2006

• 42% of revenues in 2005

Growth challenges scalability

Number of

SKU

Organization

SizeOrder

Volume

Implications across Shutterfly’s Supply Chain Organization

Manually blow through the BOM in XL to get the dependent demand

Manual netting and planned order creation which is error prone

Manual release of POs to supplier

Forecast collaboration with suppliers using XL

Long supply planning cycle time

Long disjoint S&OP cycle time

Manual reschedule of POs to suppliers

Pre-BPR BOM & Product StructureMultiple source of truth for the BOM structure maintained in excel

Pre-BPR Supply planning processExcel based error prone BOM explosion and non-standardized MRP process

Unit Forecast in XL

Agenda

1. Shutterfly Background

2. Pre-implementation business processes & need for change

3. Re-Engineered Business Process and the new solution

4. Benefits and Lessons learnt

5. Questions & Answers

Supply Chain BPR and Product Rationalization

Supply Chain BPR and Product Rationalization

Supply Chain BPR and Product Rationalization

Post-BPR BOM and Product StructureProduct Portfolio was rationalized, structured efficiently …

Post-BPR BOM and Product Structure … and managed in the system

Post-BPR BOM and Product StructureSolution Enabler I: Streamlined Plan to Procure process with consistent inventory policy

Post-BPR BOM and Product StructureSolution Enabler II: Productivity enhancing exception based planning

Post-BPR BOM and Product StructureSolution Enabler III: Streamlined ASCP process with consistent inventory policy

Post-BPR BOM and Product StructureSolution Enabler IV: Detailed analysis capabilities using Demand & Supply pegging, HZ Plan etc.

Case Study II: Post-BPR BOM and Product StructureSolution Enabler V: Automated Pur. Req. and Pur. Ord. generation

Agenda

1. Shutterfly Background

2. Pre-implementation business processes & need for change

3. Re-Engineered Business Process and the new solution

4. Benefits and Lessons learnt

5. Questions & Answers

Product Portfolio Rationalization based Transformation

Multiple source of truth for the BOM structure maintained in excel

Product Portfolio was rationalized and structured efficiently and managed in the system

Transformation enabled by Supply Planning BPR

Excel based error-prone BOM-explosion & non-standardized MRP

Streamlined Plan-to-Procure process with consistent inventory policy & exception based planning

Benefits

• Allowed us to migrate from primarily a min/max planning system to one that leverages a bill of materials

– Long term material planning– Enabled collaboration with supply base (order qtys, timing)

• Provides process structure and maintains logic in a system easier to understand and less prone to errors

– Explicit BOMs and BOM management capability (vs. embedded excel calculations)

– Data representation (horizontal plan, supply/demand list, netting)– Exception mgmt and buyer workflow capabilities

• Automation– Automated purchase requisition creation– Netting and planned order generation

• Clarity & Control – Improved ability to manage inventory & safety stock policies– Enabled quicker and more thorough research ability– Better metrics = better decision capabilities

Lessons Learned

• Continually re-think the process to avoid customizations

• Lower your expectations

• Do not underestimate the value of an A+ functional expert during the implementation phase.

– Knows Oracle capabilities but also understands the business process and can figure out the best way to marry the two

– Include time and funds in the budget to work on “best practice” business process after you go-live

– A lot of options…get references

• Details details details…don’t ask “can Oracle…” without asking “how”

– Workflow implications…if you can’t manage the necessary workflow then it doesn’t matter

– Aspects of Oracle definitely leave plenty of room for improvement

• SME / project owner must be detailed & action oriented – willing to roll up his/her sleeves and really get into the depths of implementation

AQ&Q U E S T I O N SA N S W E R S