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

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

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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

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Shutterfly at a Glance
Making the world a better place by helping people
share lifes 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 Retailers Hot 100
  Best Retail Web Sites list.

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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

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What does Gaea do?
Gaeas offering
Gaeas core competency
Gaeas goal
Operations Strategy and BPR
Maximizing Gaea clients ROI on Oracle
Enterprise Software Investments.
Oracle Functional Consulting
Process Thought Leadership
Industry Expertise
Oracle Technical Implementation
Gaeas 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.
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Gaeas Focus Area
Oracle Business Intelligence -- OBI EE
Business Intelligence Apps
Oracle Supply Chain Management --
Inventory, WMS OM, Shipping,
WMS MFG.
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 SOP, Adv. Forecasting
TPO
Oracle Supply Planning -- ASCP, GOP,
CP, IO, PS SOP
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.
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Agenda

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

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Strong Revenue Growth
Revenues
MM
Gross Operating Margin
Sales ()

• 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
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Growth challenges scalability

• Implications across Shutterflys 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 SOP cycle time
• Manual reschedule of POs to suppliers

Number of SKU
Organization Size
Order Volume
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Pre-BPR BOM Product Structure
Multiple source of truth for the BOM structure
maintained in excel
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Pre-BPR Supply planning process
Excel based error prone BOM explosion and
non-standardized MRP process
Unit Forecast in XL
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Agenda

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

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Supply Chain BPR and Product Rationalization
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Supply Chain BPR and Product Rationalization
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Supply Chain BPR and Product Rationalization
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Post-BPR BOM and Product Structure
Product Portfolio was rationalized, structured
efficiently
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Post-BPR BOM and Product Structure
and managed in the system
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Post-BPR BOM and Product Structure
Solution Enabler I Streamlined Plan to Procure
process with consistent inventory policy
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Post-BPR BOM and Product Structure
Solution Enabler II Productivity enhancing
exception based planning
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Post-BPR BOM and Product Structure
Solution Enabler III Streamlined ASCP process
with consistent inventory policy
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Post-BPR BOM and Product Structure
Solution Enabler IV Detailed analysis
capabilities using Demand Supply pegging, HZ
Plan etc.
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Case Study II Post-BPR BOM and Product Structure
Solution Enabler V Automated Pur. Req. and Pur.
Ord. generation
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Agenda

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

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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
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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
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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

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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 optionsget references
• Details details detailsdont ask can Oracle
  without asking how
• Workflow implicationsif you cant manage the
  necessary workflow then it doesnt 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

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Q

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