1 Buckeye Warehouse Project at Philosophy Oracle Warehouse Management System DAZ Systems, Inc. Walt Zipperman, Partner

2 WMS at Philosophy Agenda  Background for the Project  Introduction to Philosophy Inc  Scope of the project  Pain Points & Drivers  New Features  Implementation Considerations and Challenges  Q&A

3 Background of the Project Philosophy Inc.  More than 200M in Revenue  Skin Care, Bath and Beauty  Full EBS Suite Implementation Live April 2009 – Financials – Process Manufacturing – Distribution – Planning – Warehouse Management System – B2B

4 Introduction to Philosophy Inc  Portfolio member of The Carlyle Group  Founded in 1996  Size and Growth: – Average 20% Annual Sales growth  Profile: – Research, Manufacturer and Distributer – Operations in US and UK, currently operates 3 warehouses  Products: – Skin Care Products – Bath and Beauty – Perfume  Brands – Philosophy

5 Scope of the Project  New Warehouse with 225k Square Foot – New Racking System Supports Single SKU per Locator – New Conveyer Systems  Consolidate Three Physical Warehouse Locations – Production Facility to Occupy One Facility – Distribution to Occupy Separate Facility  Increase Efficiency in Order Fulfillment Process  Enhance Existing Forecasting System Interface  Upgrade Web Interfaces

6 Pain Points and Drivers  Reservations/Allocation Management – Labor Intensive to “borrow” Against Existing Reservations – Unable to Redistribute Reservations Quantities Systemically Solution: Create Dynamic Reserve Unreserve program  Limited Fill Rate Visibility – Unable to Achieve Targeted Fill Rates for Top Customers – Extensive Order Handling to Achieve Targeted Rates Solution: Customer Hierarchy and Fill Rate Forms 1. Preset Fulfillment Target Rates by Customer Class 2. Reservation Created and Sequenced by Customer Class 3. Custom Fill Rate Form to View Exceptions and Allow Override

7 Pain Points and Drivers  Pick Release Visibility – Unable to Plan Labor for Pick Waves – Replenishment Not Tied to Pick Release Solution: Custom Pick Release Form 1. Order Availability Driven by Fill Rate 2. Pick Wave Calculation of Labor Time by Pallet, Case and Each 3. Replenishment Indicator Prompt when Insufficient Quantity  Warehouse Management Inefficiencies – One LPN Per Receipt – Discrete Pick Only – Labeling Performed at Conclusion of Process – No Cartonization in Retail Pick – No Quality Audits – Case Count not Predetermined – Limited Lot Swapping Functionality – No LPN Visibility on RF Handhelds

8 Pain Points and Drivers Solution: Warehouse Upgraded Features 1. Single LPN per Pallet 2. Discrete Zone and Each Pick 3. Shipping Label Applied Prior to Pick 4. Cartonization for Retail Pick Customer 5. Quality Audits Systemically Driven 6. Predetermined Case Count 7. Complete Lot Swapping 8. LPN Visibility on RF Handhelds

9 New Features – Fill Rate Form

10 New Features – Pick Release Form

11 Implementation Considerations and Challenges  Investigated Upgrade versus Current  Limited Timeframe – Project Start Date 3/22/2010 – Warehouse Conversion – Project Go-live 6/1/2010  Coordinate Physical Warehouse Consolidation without Systemic Interruption  Maximize Standard Functionality  Provide Extensions and Customizations to Enhance Functionality  Accommodate New CMS System and Interface  Partner with 3PL Organization, Designing Warehouse Layout and Warehouse Build-out

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