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Building an Intelligent Publishing Supply Chain

Building an Intelligent Publishing Supply Chain

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Published by Michael Cairns
Leveraging technology and communications to improve supply chain efficiency, reduce costs and increase profits in the publishing industry. Presentation originally delivered at Frankfurt Bookfair 2002.
Leveraging technology and communications to improve supply chain efficiency, reduce costs and increase profits in the publishing industry. Presentation originally delivered at Frankfurt Bookfair 2002.

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Published by: Michael Cairns on Feb 22, 2008
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Building an Intelligent Publishing Supply Chain

Leveraging technology and communications to improve supply chain efficiency, reduce costs and increase profits

Michael Cairns Managing Partner, Information Media Partners January 10, 2008

Where We Are Today Past decade of information technology investment in medium to large publishing companies:
Focused on improving basic cost structures of their organizations Investment in updating editorial systems, particularly in educational and journal publishing Reengineering of publishing operational and financial processes Investment justified as part of Y2K solution, return has in many cases not met the promise of the investment

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An Efficient Supply Chain Will Be Publishers· Goal Next area of operational improvement and cost reduction is the supply chain
Leverage investment made in operational systems Conform to new industry standards for identifying titles (ISBN-13), transaction standards and related metadata required for more efficient supply chain processes Integrate internal supply chain processes with those of suppliers and customers, to gain efficiencies of sharing information on supply and demand across the supply chain Only operational area where material expense savings can be made

In context of migrating content to online delivery

3

Information is the Key Ingredient Many publishers have in place transaction data warehouses
New operational systems provide cleaner transaction information for data warehousing and analysis Enables analytics by Customer, Author, Genre, Format, etc. Tools for projecting sales of new titles based on past performance of similar titles
During acquisition, expected revenue streams modeled to determine advance and other contractual obligations For production planning: initial printing and subsequent reprint planning

These analytics have made publishing programs more intelligent Printers, Distributors and Booksellers are also capturing their operational performance data for analytics 4

Publishing Industry Key Business Issues The publishing supply chain is inefficient due to the lack of visibility of day-to-day demand & stock positions Average fill rates no higher than 85% are typical. 15% of sales are missed, deliveries are incomplete, inaccurate, etc. Excessive inventory levels result in excessive capital costs, obsolescence, damage, shrinkage
Some publishers hold over 300 days of stock

Return rates of 40% are not uncommon in our industry

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Visibility of Operational Data is Critical Real time visibility of POS data, multi-level stock information and fill rates would help:
Publishers
Adapt production to demand Re-route stock rather than produce additional inventory Anticipate and pre-empt stock-out situations Spot and troubleshoot logistical problems

Retailers
Re-route stock rather than order new inventory Demand driven inventory

All
Reduce costs for returns management Industry more healthy; Productive use of capital

6

Adding Intelligence to the Supply Chain
Management Manufacturer

Old Environment Partially informed Push / pipeline model One-way info flow
Management Manufacturer Telephony Infrastructure Direct Marketing Transportation Distributors Web Infrastructure Transportation Overnight Delivery

Truckers Distributors Truckers Retailers

Customers

Database and Data Mining

Retailers

Infomediary and Outsourced Service Providers

Customers

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New Environment Fully informed Network model Bi-directional information flow through network

Adapted from ´Information Architects,µ Richard Saul Wurman, editor, 1994 and Price Waterhouse, 1999.

The Traditional Supply Chain for Publishing

Publisher

Distributor

Bookstore

Product Flow Information Flow

Demand Patterns

Fragmented and Inefficient due to poor flow of information 8

The Intelligent Supply Chain for Publishing

Publisher

Distributor

Bookstore

Product Flow Information Flow

‡ ‡ ‡ ‡ ‡ ‡

POS Data Sharing Inventory levels Fill Rates Forecasts Promotional Activities New Product Introduction

Consumer demand drum-beat sets pace for entire Supply Chain

Information & Intelligence9 Sharing for Effectiveness

Why Collaboration in the Supply Chain?
‡ Shared visibility across supply chain - Sales (POS), Inventories ‡ Shared measurement of SC performance and identification of issues ‡ Improved understanding, forecasting and analysis of consumer demand ‡ Improved capability to respond and react to changes ‡ Improved stability, predictability and efficiency of supply chain operations

‡ Improved Fill Rates ‡ Reduced lead times ‡ Smoother SC execution ‡ Improved on-shelf ‡ Reduced inventories ‡ More efficient processes availability ‡ Reduction of costs for ‡ More effective demand handling returns generation activities

Increased Sales

Reduced Inventories
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Reduced Costs

Leveraging customer information for sales, marketing, and operational purposes
Retail Catalog - Mail Internet, WWW, Kiosks Sales Force

DATAWAREHOUSE Product Planning & Development
Marketing
‡ Buying &

Suppliers
Distribution
‡ Refined logistics

Merchandising
‡ Targeted promotions ‡ Loyalty programs ‡ Vendor co-op ‡ Assortment ‡ Customer trends

Operations
‡ Inventory planning

Customer Service
‡ Service ‡ Return

replenishment ‡ Customer trends ‡ Return code analysis

‡ Supporting inventory ‡ Site selection

programs reduction

support minimization ‡ Department adjacencies ‡ Buyer satisfaction ‡ Category management

planning

‡ Category management ‡ Department adjacencies

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Technology is only part of the solution, culture plays a part
Booksellers reluctant to share point-of-sale data
They believe they alone own relationship with consumers/readers Reluctant to share this relationship with publishers and competitive booksellers

Return problem has long been considered a Publisher problem
There are costs for returns for all industry participants Better information flow, collaborative forecasting through the supply chain can greatly diminish severity of problem ´If you·re not part of the solution, you·re part of the problemµ

The mystique of first printing size
Entwined in marketing of book as key indicator of success Size alone does not matter First printing size requirements will change as the supply chain becomes more intelligent Short-run printing technologies can fill gaps in traditional production

New key performance indicators needed
Net average unit cost for books sold (factor cost of printing and handling returns into cost of units actually sold) 12

Technology is only part of the solution (cont·d) Sharing of data across the supply chain requires trust
Aggregated data will be shared among participants Visibility of detail for own transactions Visibility at aggregate level only for transactions of others Sharing of detail is only way to produce meaningful aggregate data for all

Need for an intelligent supply chain facilitator
Bring to table experience of implementing experience with intelligent supply chain integration in other industries Deep understanding of publishing industry culture and perspectives Appreciation of both publisher and bookseller points of view Trusted partner of all industry participants Create aggregate information for shared industry use from the detailed data of the various participants.
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From Supply Chain to Supply Network
Printer A Printer B Printer C
Stores Bookseller A HQ

Publisher A
Stores

Publisher B

Intelligent Publishing Supply Network

Bookseller B HQ

Stores

Publisher C

‡ Common set of services ‡ Common data standards

Bookseller C HQ

Distributor A

Distributor B
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Distributor C

A common information framework for all participants
Printer A Printer B Printer C
Stores Bookseller A HQ

Publisher A
Stores Bookseller B HQ

Intelligent Publishing Supply Network
Publisher B

Publisher C

‡ Common set of services ‡ Common data standards
Bookseller C

Distributor A

Distributor B
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Distributor C

Supply Network Information Visibility
Printer

‡ Inventory in distribution center ‡ Demand forecast projections ‡ Aggregate sales data ‡ Production orders in process ‡ Customer orders to be filled
Publisher

‡ Available capacity calendar ‡ Printer-owned paper inventory ‡ Publisher-owned paper inventory ‡ Component inventory ‡ Finished book inventory

Stores

Intelligent Publishing Supply Network

Bookseller HQ

‡ POS data ‡ Stock levels in stores ‡ Inventory in central warehouse ‡ New inventory in transit ‡ Inventory in internal-transit ‡ Available inventory ‡ Inventory on order ‡ Inventory in transit ‡ Orders to be filled

Distributor
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From Supply Network to Title Availability Marketplace
Allows a bookseller needing to restock a title to post requirement to the network and find quantity/price/delivery date from both the publisher and all distributors who list it Bookseller systems or IPSN provided services could use rules to determine most cost effective way to meet requirement Lowest cost source is not always most cost effective!
Stores

Publisher

Intelligent Publishing Supply Network

Bookseller HQ

Distributor A

Distributor B
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Distributor C

Conclusion Future significant cost savings and efficiency gains will come only from industry wide supply chain initiatives Technology investments can and will be leveraged further Publishing lags other industries There are many examples of successful implementations Industry groups must take up the challenge

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Thank You!

For more information, please contact:
Michael Cairns Managing Partner Information Media Partners 908 938 4889 michael.cairns@infomediapartners.com

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