Plan 2.0: Supply Planning Re-Engineering Journey of a Web 2.0

Plan 2.0: Supply Planning Re-Engineering Journey of a Web 2.0 Josh 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 • Introduction - Company Background • Pre-implementation business processes & need for change • Re-Engineered Business Process and the new solution • Benefits and Lessons learnt • Questions & Answers

Shutterfly at a Glance Making the world a better place by helping people share life’s joy • 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.

Landscape • Mfg Facts Supply Chain Overview • Small team – 5 people, 2 centralized buyers • Approximately 30 suppliers • Small retail SKU count across 13 product groups • 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

What does Gaea do? Gaea’s core competency Gaea’s offering Gaea’s goal Operations Strategy and BPR Maximizing Gaea client’s ROI on Oracle Enterprise Software Investments. Oracle Functional Consulting Process Thought Leadership Industry Expertise Oracle Technical Implementation Gaea’s Oracle Application extensions “g-apps” Oracle Technology Mastery Gaea Oracle Bolt-On Solutions - “g-apps” Custom Customer Applications We achieve our goals by successfully implementing Best-in-Class business processes in a risk-mitigated approach.

Gaea’s Focus Area Oracle Supply Chain Management -- Inventory, WMS OM, Shipping, WMS & MFG. Oracle Business Intelligence -- OBI EE & Business Intelligence Apps Industry Focus • Consumer Electronics • Network Equipment Mfg • Semiconductor • Web 2.0, Media & Entertainment • Consumer Packaged Goods • Distribution • Industrial Manufacturing Oracle Demand Management -- Demantra DM RT S&OP, Adv. Forecasting & TPO Oracle Supply Planning -- ASCP, GOP, CP, IO, PS S&OP We are experts in Oracle Fusion Middleware and have deep programming expertise in Business Integration, Business Intelligence, Business Process Management, Application Server and Developer Toolmodules of the Fusion Middleware Suite.

Agenda • Shutterfly Background • Pre-implementation business processes & need for change • Re-Engineered Business Process and the new solution • Benefits and Lessons learnt • Questions & Answers

Strong Revenue Growth • 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 Source: 10-K

Growth challenges scalability 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 Number of SKU Organization Size Order Volume

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

Excel based error prone BOM explosion and non-standardized MRP process Pre-BPR Supply planning process Unit Forecast in XL

Supply Chain BPR and Product Rationalization

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

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

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

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

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

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

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

Product Portfolio Rationalization based Transformation Product Portfolio was rationalized and structured efficiently and managed in the system Multiple source of truth for the BOM structure maintained in excel

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 detailsdetails…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

Q & A Q U E S T I O N S A N S W E R S

Plan 2.0: Supply Planning Re-Engineering Journey of a Web 2.0