Strategically Speaking: Should You Be Outsourcing Your Distribution?
4. Are there environmental factors likely to reduce the value of some or all of your current distribution operations? For example, does the commoditization of POD reduce the need for traditional warehouse operations as currently sized? As POD costs decrease, will the physical size of your distribution operations need to remain the same in terms of staffing and square footage?
5. Does your organization have the capital resources to fund ongoing maintenance and investment in the information- and warehouse-management technologies necessary to reduce transaction costs, improve productivity and respond to the increasing service expectations of both major brick-and-mortar retailers and Internet booksellers?
6. What are the opportunity costs of maintaining the distribution status quo—are there product development opportunities left unexploited because cash is being consumed by the operating and capital requirements of the distribution operations? What is the market value of the physical plant you are now devoting to distribution operations? Can these assets be converted to cash that can be re-deployed to strategically more significant uses?
7. How is technology likely to change the customer demand placed on your organization? Does your organization have the resources and risk tolerance to fund the creation of the dedicated infrastructure to support the demands of the emerging marketplace for e-books, POD and/or online content delivery?
Qualitative vs. Quantitative Considerations
If we take it as a given that the current recession has permanently changed the operating environment of the book publishing industry (albeit to different degrees for different product lines and distribution channels), it is unlikely that any but the largest publishers or distribution specialists will have the scale or functional expertise to manage the increasingly demanding and complex requirements of the marketplace. Even this assertion is something of a misnomer, as the major players in the third-party distribution business are offering supplementary services such as e-book delivery, POD and short-run digital printing through partnerships with specialist firms.