Automation to Cut Supply Chain's Weakest Link
Since paper is central to their business, it is understandable that book publishers have become very comfortable in continuing to use a paper trail to document transactions with suppliers. But the reliance on printing and scanning invoices, inventory status reports and receiving statements instead of completely moving to electronic communications has perpetuated a number of unnecessary business practices that should be treated as dead wood.
However, most 20th century supply chain management practices and proprietary technologies will soon be filed under "H" for history. New XML-based standards for sending documents (called messages in the electronic age lingo) are beginning to revolutionize how publishers and suppliers exchange information. Moving to Web-based transactions will reduce the cost of production and provide real-time information that allows publishers to more effectively allocate resources.
A LEGACY OF COMPLEXITY
Publishers currently use a mishmash of paper documents and legacy electronic systems to interact with their suppliers. Because of the cost involved in developing proprietary electronic solutions, the level of automation used in tracking inventory and confirming transactions has largely depended on the financial resources available to publishers, as well as their own willingness to embrace technology.
Many of the supply chain management activities still require a component of manual data entry for processing communications, including purchase orders, acknowledgement of goods received, and shipping instructions. Publishers who have integrated Electronic Data Interchange (EDI) systems into their supply chain during the past few decades are still required to reconcile data formats and agree on a standard language with each new supplier, as EDI does not mandate standards for describing publishing's supply chain transactions.
"I would love it if EDI just went away," says Marty Brown, the IT manager for Timber Press, a Portland, Ore., publisher of books about gardening and horticulture. Brown, who described her company as middle of the road in embracing technology, says her infrastructure for communicating with suppliers "uses bailing wire and duct tape" to function.
Brown says maintaining Timber Press' EDI system was so complicated that the company decided to outsource the function a few years ago. "EDI in some ways is no more than rudimentary e-mail."
XML TO THE RESCUE
Fortunately for publishers (and their beleaguered IT staffs), a newly minted set of messaging standards is available to streamline managing the supply chain. Based on the extensible markup language (XML) that is rapidly becoming the lingua franca of electronic commerce for nearly every industry, XML book industry transaction standards (XBITS) provides formatting information and transaction language for nearly every type of exchange between publisher and supplier.
XBITS was developed under the auspices of PapiNet, an international standards body for the paper industry, and IDEAlliance, a group developing standards for the publishing industry. Diane Degener, information services manager at book manufacturing and services company Von Hoffmann and a chair of the XBITS working group at IDEAlliance, says the standard includes information for describing every part of a book, including the cover, body and inserts such as CDs.
Publishers who work with suppliers that have implemented XBITS will be able to track inventory location and see transactions in near real time. Instead of waiting for faxed or e-mailed copies of receiving statements or purchase orders to be entered into their supply chain software, the standardized information is automatically accepted into their data stream.
"It will greatly reduce the cost of transactions by eliminating paperwork, and eliminate many of the errors from re-keying data," Degener says. "Having access to inventory information in real time is going to be so much better than what you can do today."
Degener says that publishers have been slow to adopt XBITS because many have been focused on upgrading their internal systems. She says companies can migrate to using XBITS data in stages because the well-structured information can be read by any XML-aware application, such as a Web browser.
Also slowing the changeover has been a lack of software. Supply chain management software companies have yet to create an off-the-shelf application using XBITS, but Degener expects they will come on board soon. Degener says that the XBITS working group is now developing marketing and implementation guides to help get the word out.
McGraw-Hill will be one of the first large publishers to integrate XBITS into its supply chain solution, according to Brian Sharlach, McGraw-Hill's director of manufacturing systems and e-commerce. Sharlach—who also helped to develop XBITS and chaired a session at the 2004 BookTech Conference & Expo earlier this year on XBITS' impact on the supply chain (where Degener was a panelist)— says existing EDI solutions are outgrowing their usefulness. While EDI was a novel concept in its time, Sharlach says using proprietary data schemes and networks are not cost competitive with conducting transactions over the Internet using XML standards.
He says that McGraw-Hill, which has to keep tabs on the paper and other supplies at 70 printing locations, expects to save $20,000 in the first year by eliminating paper transactions from its internally developed system. McGraw-Hill will work with its 25 largest suppliers on moving to XBITS, which would encompass 95 percent of their transactions. By using XBITS, "Our transaction time will be reduced and accuracy increased by eliminating manual operations," Sharlach says.
"Book publishing will look more different in 10 years than it did 100 years ago," according to Martin Korsin, vice president of business solutions at content supply chain company Innodata Isogen. Korsin says that by using XML and XBITS for their transactions, publishers can participate more easily in digital printing.
Korsin says publishers can reuse the XML descriptions of book components when they want to distribute content in other formats, such as CDs, online or Adobe's PDF. The need for large book warehouses will decrease as more companies move to local printing. Korsin says the real-time XBITS inventory data will allow publishers to practice just-in-time inventory and to print books on demand.
HARDWARE ON THE HORIZON
Changes brewing in publishing's retail operations may soon impact the supply side. Retailers, led by Wal-Mart, are pushing for their suppliers to attach very small radio frequency identification (RFID) tags to their products. RFID tags are wireless transmitters that send product information such as SKU or ISBN numbers to antennas, replacing manual inventory counting or the scanning of bar codes.
If publishers are required to invest in RFID technology for distribution, then they will try to derive additional value by using the technology to manage inventory from their suppliers too, says Glenn VanLandingham, director of product consulting at Manhattan Associates, an Atlanta-based supply chain consulting company. "RFID will have a profound affect on warehouse management," says VanLandingham.
Because RFID tags do not have to be in the line of sight of the antennas to share information, cases of books or supplies can be instantly acknowledged as received without having to break open the packaging, VanLandingham adds. "If the retailers want [RFID], then it will only be a matter of time before it penetrates the entire supply chain."
- John Gartner
John Gartner is a technology writer based in suburban Philadelphia.