Supply Chain Management
When it comes to improving the supply chain function in book publishing, the watchword is communication—between various components of the chain, and especially between manufacturing, distribution and retail. Saying this, however, is not saying nearly enough, as the quality of information and the way it’s used matter just as much as making the right connections.
“Communication is the No. 1 supply chain issue,” says Rich Eby, director of inbound distribution at Thomson Learning, the Stamford, Conn.-based provider of educational, training and reference books for academic and corporate customers.
For Thomson, that means anticipating shipments from manufacturers around the world for distribution in the United States.
“Small efficiencies add up,” notes Eby, citing components of the company’s state-of-the-art distribution center in Kentucky. For example, a voice-controlled system has replaced packing slips and scanning bar codes, creating a hands-free, simplified warehousing process that also makes training new employees easier.
Books are weighed and measured as they come in and placed in the 835,000-square-foot facility based on dimensions and priority. The system controls the flow of stock in the building, including tracking back orders. It can be—and often is—adjusted daily for optimal efficiency.
In terms of technology and procedure, Thomson’s distribution process is closely tied to manufacturing.
“We make [manufacturers] live up to our standards,” says Joe Steffney, vice president of North American distribution. Each supplier must conform to an order-tracking system; books come in as finished products based on Thomson’s specs and are standardized in the way they are packaged.
The Book Industry Study Group (BISG) believes the entire industry would benefit from this type of standardization. The association is working to eliminate the practice of dual identification (EAN and UPC) on books and improve communication between manufacturers, publishers and retailers by developing universal ship notices and carton labels. The group also would improve the quality of warehouse performance through annual benchmarking.
“If you look at any link in the chain, there’s room for [increased] efficiency,” notes Michael Healy, executive director of BISG. “Standards inform all aspects, whether it’s product identification, shipping or standards of communication.”
Fine-tuning supply and demand
For some companies, quick and streamlined access to warehouse stock doesn’t go far enough when it comes to building efficiency into the system. To varying degrees, technological innovation has allowed book publishers to embrace a “just in time” ethos with the goal of speeding the production and manufacturing process while minimizing returns as well as bulk storage and handling costs.
“People have learned from Wal-Mart,” notes Steve Sprague, vice president of product strategy at Seeburger, Inc., a global supplier of supply chain technology with headquarters in Atlanta. Wal-Mart’s automated supply chain processes, which enable instant communication between the cash register, the product warehouses and the manufacturer, have been the gold standard for many others.
“The more point-of-sale knowledge you have, the more successful you will be. Those organizations that can get that information faster are the ones succeeding,” says Sprague. Automating throughout the supply chain enables significantly expedited replenishment of new stock, as well as eliminates the overstocking of items that are projected to be popular, but end up not selling.
Carl Brewer, president of Downers Grove, Ill.-based Integrated Warehousing Solutions, agrees that this type of immediate information transfer is extremely important. “The role we play is really fine-tuning supply and demand. What we’re doing is bridging the gap between board-room manufacturing and end-user consumption,” he says.
Brewer’s company does this by analyzing warehouse operations with the goal of improving communication with retailers and having real-time visibility, tracking sales information on a daily basis and adjusting operations accordingly to “supply instant customer need” with “smaller bursts of inventory.”
The supply chain is becoming more demand-driven, Brewer notes, which means narrowing the gap between production and consumption in order to ensure adequate quantities on the shelves without holding extra stock. Therefore, good communication with vendors and real-time warehouse tracking is essential, and publishers without the right technology to make this happen are “subjecting their business model to major blackout holes,” he says.
“In a tightly organized, well-communicated network of distribution, you control what you push to get money out of the supply chain,” Brewer continues. “Downstream thinking is not enough; this is why reverse logistics are so important.”
In other words, supply chain conduits are dynamic and bi-directional, as forecasts of supply and demand (ideally) meet up against real-time data that indicate what is selling where and how best to adjust stock, manufacturing schedules or even marketing strategies.
An example, notes Brewer, is the “Harry Potter” book series, which sells better in the Northeast than in the Deep South. In this case, it’s easy to see why analyzing regional data matters––but, with the right tools, the same process can be done for any book, even on a store-by-store level.
“A lot of people running businesses are coming from sales and marketing backgrounds,” Brewer notes. “The instinct is push, push, push …” But, while the marketing push and the investment in getting the book out are natural ways of thinking to those with sales backgrounds, it may not be so natural to go back after the big initial push and parse the numbers and analyze stock. That’s what many companies are missing, he says.
Brewer suggests publishers should consider looking back up the chain—reverse logistics—to capitalize on their investment long-term. For example, knowing what product they have in stock and what condition it’s in (i.e., able to sell as new, to be sold at a discount, sold to a third-party distributor, donated, pulped, etc.) can help publishers manage inventory more efficiently and cost-effectively.
To those rooted in a traditional mind-set, some forms of supply chain efficiency will come more naturally than others. For instance, it’s easy to understand why Thomson Learning would join the federal government’s Customs Trade Partners Against Terrorism initiative, sharing information about its security measures in exchange for a streamlined customs process. It may be harder to grasp the necessity of going back to frequently reevaluate inventory in order to facilitate quick asset recovery—or in other words, recovery from the expense of storing books in a warehouse when you could be evaluating what that stock is worth based on a number of factors, such as backorder needs, condition of books, imbalance of stock in various areas, etc.
Just enough, just in time
For the publisher of books with the shortest shelf life in the industry, inventory management has risen almost to an art form. Harlequin Enterprises Ltd.—whose dominance of the women’s romance fiction market is built on series titles with very short life cycles—has had to meet supply chain challenges many publishers are only beginning to face.
“Controlling inventory that never sees the light of day is certainly a problem within the publishing industry in general,” notes Jim Robinson, Harlequin’s vice president of operations. “The cycle of printing begins before you have a read on what the market orders are going to be.
“Inventory write-down has been a challenge for us. We’re becoming an industry that’s more sensitive to the use of raw materials and to supply chain efficiency, particularly in a market that is not showing great growth, and I think all publishers are working to maintain market share,” says Robinson.
Given the cost per book, shifting entirely to digital print-on-demand (POD) was “not an option” for Harlequin, according to Robinson. The goal instead was to supplement the traditional offset process with POD geared solely to quickly making up any shortfalls in the initial print run.
The biggest challenge was producing a POD product that replicated exactly the look and feel of offset printed books. Working with print and imaging solutions provider Océ, the company developed a digital product printed, like offset books, on bulked up newsprint.
“We were looking for a process that could mimic identically what we get from the offset world, so the consumer could not tell the difference. It’s a lot cheaper than producing way too many [books] and pulping them,” Robinson notes.
The new process has had ripple effects throughout the company’s supply chain. Previously, production runs were set based on predictions from three sales and marketing groups (Internet, direct marketing and retail sales), all providing numbers meant to ensure product availability.
The company now can pull back on print orders without risking a shortfall. It also has shifted responsibility for managing inventory from marketing to manufacturing, helping to ensure that marketing forecasts are as accurate as possible and allowing available inventory to be sent through the channels where it is most needed.
“The old supply chain has to be constantly reworked,” Robinson says. “Cost is the game, and margins are sacred.”
Within Harlequin, the move toward revamping the supply chain “was not an easy sell.” However, the firm’s leadership was progressive.
“We asked people to take a leap of faith to see this work,” he says. “There’s an investment here.”
For Chattanooga, Tenn.-based AMG Publishers, the investment involved adopting technology to dramatically cut the time it takes to move a project out of production. A secure, online repository of project information allows for instant tracking, automatic preflight and error notification, and flagging of upcoming deadlines.
The idea is to automate as much of the production process as possible, making it faster and more predictable without any corresponding loss in quality control. “It streamlines the whole process of manufacturing,” says Tim Taylor—market leader of the Religious Books in Media group at Montreal-based Transcontinental, provider of AMG’s Digital Workshop software—who stresses the connection between production, manufacturing and distribution in a well-managed supply chain. “With a limited amount of warehouse space, it’s important to manage the flow more efficiently in order to more accurately predict inventory needs.”
At academic and scientific publisher Elsevier, the challenge was to tailor book production for a wide-ranging market, from small, specialized technical manuals to textbooks with 1,000 contributors.
The use of author templates allows the work of textbook contributors to be moved easily through production with minimal editing. (Harlequin also makes use of fixed word and page counts to allow for maximum predictability.) Additionally, a management tool similar to the system adopted by AMG allows for tracking books on a day-by-day basis.
“There are no surprises, and that saves time and money,” notes Jim Donohue, managing director of science and technology books for Elsevier.
Printing on-demand for smaller runs (under 500) has become an important part of the company’s business model, allowing for more control, direct shipping from the printer and reduced warehousing and returns.
For all orders, “we work with suppliers and brick-and-mortars, sharing information both ways. They are judicious about what they order and sell, and we work closely with them on advance orders.”
Significantly, Elsevier now publishes 100 specialized academic books only electronically. Other printed books are supplemented by online content.
“Improving the time to market for books is the essence of what you’re doing,” notes Guy Broadhurst, director of product marketing at Océ.
(An interesting development was the Expresso Book Machine launched last year, which was designed to print and bind books ordered online at ATM-like machines set up in libraries and bookstores, altogether eliminating inventory, shipping and returns.)
Broadhurst sees wider applications for Harlequin’s combination of offset and digital printing. As sales taper off from a book’s original print run, POD can function as a way to capture sales along the “long tail” for large catalogs of backlisted titles.
For books likely to sell in small quantities for a long time, a smaller initial print run coupled with digital printing would make sense.
Sticking to the basics
Sprague, of Seeburger, identifies four basic elements that companies often fail to focus on when looking to improve supply chain function.
“If the data is not good, what good is tracking it?” Sprague notes.
The first is ensuring an effective “integration infrastructure”—making sure a company’s myriad parts function well together, and that these elements work seamlessly with shippers and retailers.
“We have this integration area that has become more spaghetti-like,” he says. “So, consolidate systems, enable training partners. Integration and technology simplify that.”
Once connected, data validation and exception management (the ability to verify orders and correct errors quickly) become critically important. This is where universal work lists and task managers, such as those used by AMG and Elsevier, become important. Quickly identifying and fixing problems is essential, whether on the production end (flagging font incompatibility, for instance) or in shipping (mismatched invoices and payment errors). This works best with an automated process that cues the right person to immediately interact with the system.
Having ensured the quality of the data, the best-run companies make use of this information as effectively as possible, requiring certain procedure-to-pay processes and point-of-sale information on a daily basis. Only at this point can inventory-monitoring solutions—the fourth element—be utilized as effectively as possible. “Until you know what you’re shipping, finding [the shipment] does not really add value,” he notes.
In some ways, book publishers need to catch up to the supply chain practices already in place among the large retailers with whom they do so much business.
“You have the Wal-Marts and Targets of the world saving millions of dollars a year on information exchange,” Sprague says, referencing a publishing client that until recently still was using paper invoices. “Everything I talk about is about making information management more efficient, so that I have money to spend in other places.”
His central message: With information being so critical to the process, quality is just as important as quantity.
James Sturdivant is an award-winning freelance writer based in Philadelphia, Pa.