Strategically Speaking: Outsourcing Your Distribution—The RFP Process Made Simple

The RFP should, at minimum, request the following:

• Distributor background, including history, ownership, organization chart, client list and financial statements.

• Operational descriptions. Request a list of critical warehouse, fulfillment and service processes, and written descriptions including workflow diagrams. The operations should include order intake, pick, pack and ship, customer service, invoicing, credit and collections, and processing of incoming shipments.

• Service-level standards. Request that the distributor provide details of service-level standards (e.g., time in process) for critical business operations.

• Inventory management, including physical inventory processes, shrink-
control procedures, back-order reporting and management, and audit controls.

• Digital services. Several major distributors have established strategic alliances with POD specialists, digital asset management service providers and e-book distributors to offer a broader range of services. These services offer the smaller publisher a remarkable opportunity and should be fully explored as part of the RFP process.

• Computer systems, including a complete description of the hardware and business software in place, plans for any upgrades or replacement of the business systems, EDI/ONIX capabilities, client information access and reporting capabilities.

• Contingency plans, including
disaster-recovery plans for the facility and business systems, and a readiness plan in the event of a pandemic flu outbreak. A surprising number of publishers have asked their suppliers to provide their business continuity plans for managing through a flu epidemic.

• Customer references. While references provided by the distributor will only be from satisfied customers, they are nonetheless valuable and should be thoroughly researched.

• Fee structure. Distributors typically will quote services on a transaction basis or as a percentage of net sales. The publisher should specify the preferred pricing method, but for ease of comparing prospective costs with historical spending, the percentage of net sales method is recommended. In addition to the base costs, the distributor should be asked to provide a detailed list of costs that are not included in the base fee, such as excess returns charges, excess inventory, customized reporting fees, etc.