Operations Management Report on:

Supply Chain Management of Walt Disney

Companys Overview
Since its founding in 1923, The Walt Disney Company and its affiliated companies have remained faithful to their commitment to produce unparalleled entertainment experiences based on the rich legacy of quality creative content and exceptional storytelling. The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products.

The Walt Disney Studios

The Walt Disney Studios is the foundation on which Disney was built, and at its heart are worldrenowned animated features and live-action motion pictures. With the creation of Mickey Mouse and Snow White and the Seven Dwarfs, the world's first full-length animated feature, the Disney name quickly became synonymous with quality entertainment for the whole family. The Walt Disney Studios distributes motion pictures under Walt Disney Pictures - which includes Walt Disney Animation Studios, Pixar Animation Studios and DisneyToon Studios - Touchstone Pictures and Hollywood Pictures. Walt Disney Studios Motion Pictures International serves as the studio's international distribution arm. Walt Disney Studios Home Entertainment distributes Disney and other film titles to the rental and sell-through home entertainment markets worldwide. Disney Theatrical Productions,one of the largest producers of Broadway musicals, also includes Disney Live Family Entertainment and Disney on Ice. Disney Music Group distributes original music and motion picture soundtracks under Walt Disney Records and Hollywood Records. Advancing its strategy of developing outstanding creative content, Disney acquired renowned computer animation leader Pixar in an all-stock transaction completed in May 2006. In February 2007, The Walt Disney Studios joined forces with Academy Award-winning director Robert Zemeckis and his ImageMovers partners/producers Jack Rapke and Steve Starkey to form ImageMovers Digital, a new state of the art studio devoted exclusively to the production of performance capture projects.

Parks and Resorts

Disney's Parks and Resorts is not just home to Disney's beloved characters but the place "Where

Dreams Come True." The segment traces its roots to 1952, when Walt Disney formed what is today known as Walt Disney Imagineering to build Disneyland Park in Anaheim, California. Since then, Parks and Resorts has grown to encompass the world-class Disney Cruise Line, eight Disney Vacation Club resorts (with more than 100,000 members), Adventures by Disney (immersive Disney-guided travel around the world), and five resort locations (encompassing 11 theme parks, including some owned or co-owned by independent entities) on three continents: Disneyland Resort, Anaheim, California Walt Disney World Resort, Lake Buena Vista, Florida Tokyo Disney Resort, Urayasu, Chiba Disneyland Resort Paris, Marne La Valle, France Hong Kong Disneyland, Penny's Bay, Lantau Island Wherever the Guest experience takes place - in our parks, on the high seas, on a guided tour of exotic locales, through our vacation ownership program -- we remain dedicated to the promise that our Cast members turn the ordinary into the extraordinary. Making dreams come true every day is central to our global growth strategy.

Disney Consumer Products

Disney merchandising began in 1929 when Walt Disney was approached by a businessman interested in placing Mickey Mouse on the cover of a children's writing tablet. Disney Consumer Products and affiliates (DCP) extend the Disney brand to merchandise ranging from apparel, toys, home dcor and books and magazines to interactive games, foods and beverages, stationery, electronics and fine art. This is accomplished through DCP's various lines of business which include: Disney Toys, Disney Apparel, Accessories & Footwear, Disney Food, Health & Beauty, Disney Home and Disney Stationery. Disney Publishing Worldwide (DPW) is the world's largest publisher of childrens books and magazines, reaching more than 100 million readers each month in 75 countries. Disney's imprints include Disney Libri, Hyperion Books for Children, Jump at the Sun, Disney Press, and Disney Editions. Other businesses involved in Disney's consumer products sales aredisneystore.com, the company's official shopping portal and the Disney stores retail chain. The Disney stores retail chain, which debuted in 1987, is owned and operated by an unaffiliated third party in Japan under a license agreement with The Walt Disney Company. Disney owns and operates the Disney Store chain in North America and Europe.

Media Networks
Media Networks comprise a vast array of broadcast, cable, radio, publishing and Internet businesses. Key areas include: Disney-ABC Television Group, ESPN Inc., Walt Disney Internet Group, ABC owned television stations, and a supporting headquarters group. Marketing, research, sales and communications functions also exist within the segment. The Disney-ABC Television Group is home to all of Disney's worldwide entertainment and news television properties. The Group includes the ABC Television Network (including ABC Daytime, ABC Entertainment Group and ABC News divisions); the Disney Channels Worldwide global kids' TV business, ABC Family and SOAP net; as well as television distribution divisions Disney-ABC Domestic Television and Disney-ABC ESPN Television. The Disney-ABC Television Group also manages the Radio Disney Network, general interest and non-fiction book imprint Hyperion, as well the Company's equity interest in A&E Television Networks. ESPN, Inc., The Worldwide Leader in Sports, is the leading multinational, multimedia sports entertainment company featuring the broadest portfolio of multimedia sports assets with over 50 business entities. Sports media assets include ESPN on ABC, six domestic cable television networks (ESPN, launched in 1979; ESPN2; ESPN Classic; ESPNEWS; ESPN Deportes; ESPNU), ESPN HD and ESPN2 HD (high-definition simulcast services of ESPN and ESPN2, respectively), ESPN Regional Television, ESPN International (31 international networks and syndication), ESPN Radio, ESPN.com, ESPN The Magazine, ESPN Enterprises, ESPN Zones (sports-themed restaurants licensed by ESPN), and other growing new businesses including ESPN360.com (Broadband), ESPN Mobile Properties (wireless), ESPN On Demand, ESPN Interactive and ESPN PPV. Based in Bristol, Ct., ESPN is 80 percent owned by ABC, Inc., which is an indirect subsidiary of The Walt Disney Company. The Hearst Corporation holds a 20 percent interest in ESPN.

About Disney Interactive Media Group

The Disney Interactive Media Group (DIMG) is a segment of The Walt Disney Company (NYSE: DIS) responsible for the creation and delivery of Disney branded interactive entertainment and informational content across multiple platforms including online, mobile and video game consoles around the globe. DIMG core businesses include Disney Interactive Studios, which self publishes and distributes a broad portfolio of multi-platform video games, mobile games and interactive entertainment worldwide; and Disney Online, which produces the

No. 1 Community-Family & Parenting Web site and an industry-leading suite of online virtual worlds for kids and families.
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Since this is an integrated website, which includes references to The Walt Disney Company and/or its affiliated entities, "Disney" or the "Company" means, as appropriate, either The Walt Disney Company and/or one or more of its affiliated companies.

Agenda
Background of the Walt Disney Company and Strategic Sourcing Disney Supply Chain Context Sample Activities across Business Segments 1. Parks and Resorts 2. Studio Operations VHS and DVD 3. Consumer Products The Disney Store, DisneyStore.com, Catalog North American Supply Chain Assessment and Initiatives Additional Improvement

The Walt Disney Company Operations span four business segments

Media Networks ABC Television Network ABC Radio Networks ESPN Disney Channel Disney Channel Worldwide Soap Net Toon Disney Joint ventures A&E Television Networks, Lifetime Entertainment Services, The History Channel, E!Entertainment Television ESPN, ABC, Disney, and family branded Internet Web sites Studio Entertainment Buena Vista Home Entertainment (BVHE) Domestic and International Buena Vista Music Group Buena Vista Television

Walt Disney Theatrical Movie banners: Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax, and Dimension Parks and Resorts $ 7.0 billion Walt Disney World Resort (WDW) four theme parks, two water parks, 25 hotels Disney Cruise Line Disneyland Resort two theme parks, four resort hotels Disney Regional Entertainment Tokyo Disneyland Resort (royalties arrangement with Oriental Land Company) Disneyland Resort Paris (royalties arrangement with Euro Disney) Walt Disney Imagineering Mighty Ducks Anaheim Angels Consumer Products $ 2.6 billion The Disney Stores (TDS) Disney Store Catalog Disney Store Online Disney Interactive Disney Publishing Worldwide Baby Einstein

Overview of Key Portions of the Disney Supply Chain

Disney BU supply chains depend on different core processes and drivers to respond to differing customer and guest requirements Cursory review shows sizeable assets are deployed to support Disney North American merchandise supply chain activities More than 20 warehouses owned or operating on behalf of Disney More than 900 retail locations across the stores, parks, and resorts European operations depend on significantly higher numbers of warehouses and third-party providers than seen in North America The majority of costs and assets are in Disney Consumer Products, Parks and Resorts, and Buena Vista Home Entertainment An overview of activities and suppliers across BUs indicate that there are more opportunities for cross-BU synergy than are currently in operation

 Most supply chain activities are managed independently Many contracts are negotiated and managed separately Internal warehousing is underutilized, while significant external warehouses and 3PL activities are utilized

The North American distribution network is primarily domestic, but sources of supply extend internationally

Supply chain characteristics:

Distribute merchandise, food, operating supplies, and MRO items 30+ warehouses across commodities (8+ owned) More than 250 logistics services suppliers Multiple ERP, WMS, TMS, and APS systems deployed Strategic outsourcing relationships span BUs Asia and Europe are the primary sources for imported merchandise Import management teams support multiple BUs

Business activity levels:

All Lines of Business (LOBs) operate in region Ship to 400 TDS stores, large and specialty retailers More than 100 million videos distributed to 14,000+ points of distribution More than 100,000 SKUs across business units

The European market has multinational supply chains for TDS, BVHE, and Disneyland Paris

Business activity levels:

5 LOBs in 10 countries Over 3,000 shipments per day 4,200 SKUs shipped to 120 stores 60 million videos to 30,000 points of distribution

Supply chain characteristics:

48 warehouses (2 owned, 46 third party) 75 logistics services suppliers 500+ cast and temps in logistics/operations 10 different IT systems

Parks & Resorts Supply Chain Characteristics

Significant international sources of supply On-site warehousing support for merchandise, food, and general supplies Strategic outsourcing relationships in place Hundreds of unique store layouts in each resort Tens of thousands of active SKUs SKU management driven by guest service and The Show Daily replenishment of A items Holistic approach to supply chain management Electronic integration of supply base Total cost approach to sourcing Lead-time analysis and reduction

Major BU initiatives

Supply chain system rationalization Facility utilization

Hong Kong Disneyland and Asia supply chain strategy

Current plans are to open by the middle of the decade One theme park is initially planned, with significant expansion provisions Merchandise, food, and general supplies warehousing and distribution operations must be established Merchandise operations have the potential for servicing more than the Hong Kong park Existing supply chain services will be leveraged as much as possible to support the new park

Studio Operations Business Unit Example Video and DVD Supply Chain Characteristics
Single core manufacturing partner, and multiple distribution partners in North America and Europe 14,000+ distribution points in North America and 30,000 in Europe 100+ million units of production per year New releases drive sales and are focused on street date Hit title sales exceed 10 million units for a single release Multiple Point of Purchase (POP) displays are shipped for in-store displays Thousands of catalog SKUs are active for distribution and sale Shifting product demand from VHS to DVD Industry average of 20-25% returns

Major BU initiatives
Sales forecasting improvement Inventory reduction Distribution optimization Enhanced supplier partnerships Next generation technologies: video-on-demand and digital cinema

Main drivers:
Improve customer service Reduce administration on a Pan-European basis Achieve physical supply chain efficiencies Reduce exceptions Reduce cost

Structural impact:
Reduction in suppliers from seven to one Same supplier for manufacturing and distribution Single SAP SOP system Ability to move to consolidated billing and administration in the future

Supply Chain Characteristics Retail

Highly automated retail distribution center in Memphis, TN, of more than 600,000 sq.ft. Less automated retail distribution center in Lutterworth, UK, of 200,000 sq.ft. Approximately 700 locations in nine countries Approximately 250 million guests each year visit the stores Peak seasons are Easter, Halloween, and Christmas Products are diverse in size and weight and include beds, pins, plush, garments, snow globes, toys, and kitchenware Utilize distribution partners for delivery

B-to-C (DisneyStore.com and Catalog)

Main B-to-C distribution center in Jonesville, SC, of more than 400,000 sq.ft. 2,400 Disney products offered on-line Also provides distribution services for other business units

Home office provide import and customs support for all North American business units except Walt Disney World and Walt Disney Imagineering Major BU initiatives
Distribution optimization through shared assets

Migration to demand-based replenishment Store conversion new layouts and new formats Supply chain visibility inbound and outbound

The North American Supply Chain Assessment is focused on transportation-related processes

Strategic Sourcing/Supply Chain Improvement Roadmap will be followed to ensure a robust solution is developed

A common process and metrics terminology will be communicated; training and education will be important parts of the improvement process

Logistics providers will be reevaluated to determine their ability to support Disneys supply chain vision at a competitive cost

Additional operational improvements are underway

European VHS and DVD distribution sourcing and enhanced supply chain improvements Global ERP Standardization Data availability Administrative cost reduction eSource Electronic supplier catalogs Auctions Paperless receipts and payments Sourcing improvements Vendor compliance MRO inventory management and global service contracts Consistent contracts Total landed cost