Building an Intelligent Publishing Supply Chain Leveraging technology and communications to improve supply chain efficiency, reduce costs and increase profits

1
Building an Intelligent Publishing Supply
ChainLeveraging technology and communications to
improve supply chain efficiency, reduce costs and
increase profits

• Michael Cairns
• President, RR Bowker
• October 7, 2003

2
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

3
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

4
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

5
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

6
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

7
Adding Intelligence to the Supply Chain
Management
Manufacturer

• Old Environment
• Partially informed
• Push / pipeline model
• One-way info flow

Truckers
Distributors
Truckers
Retailers
Management
Manufacturer
Telephony Infrastructure
Direct Marketing
Customers
Transportation
Distributors

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

Web Infrastructure
Transportation
Overnight Delivery
Database and Data Mining
Retailers
Infomediary and Outsourced Service Providers
Customers
Adapted from Information Architects, Richard
Saul Wurman, editor, 1994 and Price Waterhouse,
1999.
8
The Traditional Supply Chain for Publishing
Bookstore
Publisher
Distributor
Demand Patterns
Product Flow
Information Flow
Fragmented and Inefficient due to poor flow of
information
9
The Intelligent Supply Chain for Publishing
Bookstore
Publisher
Distributor

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

Consumer demand drum-beat sets pace for
entire Supply Chain
Product Flow
Information Flow
Information Intelligence Sharing for
Effectiveness
10
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
• Improved on-shelf availability
• More effective demand generation activities

• Reduced lead times
• Reduced inventories

• Smoother SC execution
• More efficient processes
• Reduction of costs for handling returns

Increased Sales
Reduced Inventories
Reduced Costs
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Leveraging customer information for sales,
marketing, and operational purposes
Internet, WWW, Kiosks
Sales Force
Retail
Catalog - Mail
DATAWAREHOUSE
Product Planning Development
Suppliers
Merchandising
Marketing
Distribution
Customer Service
Operations

• Buying replenishment
• Customer trends
• Return code analysis

• Targeted promotions
• Loyalty programs
• Vendor co-op programs
• Customer trends
• Assortment planning
• Category management
• Department adjacencies

• Refined logistics
• Supporting inventory reduction

• Inventory planning
• Site selection
• Department adjacencies
• Category management

• Service - support
• Return minimization
• Buyer satisfaction

12
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 youre not part of the solution, youre part
  of the problem
• 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)

13
Technology is only part of the solution (contd)

• 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.

14
From Supply Chain to Supply Network
Intelligent PublishingSupply Network

• Common set of services
• Common data standards

15
A common information framework for all
participants
Printer C
Intelligent PublishingSupply Network
Publisher A

• Common set of services
• Common data standards

Bookseller C
Distributor B
16
Supply Network Information Visibility

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

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

Intelligent PublishingSupply Network

• 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

17
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!

Intelligent PublishingSupply Network
18
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

19
Bowker is working towards this vision

• Books In Print Global Books In Print are the
  industrys authoritative title data sources.
  Bowker data is incorporated in business processes
  throughout the global publishing supply chain.
• Over its 11 year history, Pubnet has helped
  establish the data EDI standards for the
  publishing industry. Pubnet is the e-commerce
  solution of choice for over 3,000 U.S.
  booksellers.
• The Bowker acquisition of PubEasy makes its role
  in publishing industry e-commerce truly global,
  providing 11,000 booksellers in 110 countries
  with 24/7 customer self-service to over 3000
  publishers and imprints.

20
Thank You!

• For more information, please contact
• Michael Cairns
• President
• R.R. Bowker LLC
• 630 Central Avenue
• New Providence, NJ 07974
• USA
• email michael.cairns_at_bowker.com