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32 P


Issue 6 2011


///SECTOR REPORT: PUBLISHING


Supply chain - no longer a closed book to the publishing industry


ublishing is simultaneously far ahead and far behind the curve


as far as supply chain management is concerned. When in the 1970s some of the leading houses made the then radical decision to move printing of glossy full- colour ‘coffee table’ books to Hong Kong, this was arguably one of the very first instances of European manufacturing being outsourced to the Far East. Publishing was also the first industry to recognise the value of


identifying what other


industries would come to call stock control units (SKUs) through the widespread adoption – and now near-universal adoption globally – of the International Standard Book Number (ISBN), which makes it possible to identify, at a glance, the name, author, edition number and format of virtually any English Language book title on the planet.


encourage publishing houses to be over-optimistic in their sales projections and specify over-large print runs. There are though major savings


to be made in the industry by those companies that seek to take their supply chains in hand. SBS, through its its consultancy arm, Virtualized Logistics, has helped major houses cut, typically, $0.5 million off their total supply chain bills, says Steve Walker. For example, HarperCollins UK has entered into a long term freight agreement with SBS Worldwide to digitise its global supply chain. Virtualized Logistics (VL) worked with HarperCollins to conduct a thorough assessment of the publisher’s supply chain requirements


and designed a


tailored solution which not only adds freight visibility at ISBN level


Steve Walker Chairman SBS Worldwide: ‘No book should cross the ocean twice’


reorganising their logistics to suit this new business model.” In the past, HarperCollins was to change its


reluctant logistics


because no system could offer the degree of inventory control and management reporting that it needed. However, the eDC (electronic distribution centre) supply chain soſtware developed by Virtualized Logistics in close collaboration with the book industry, including HarperCollins, offers much better freight visibility and control – down to ISBN level – than ever before. In many publishers, this information tends to stay with the production department and is not disseminated properly throughout the publishing house. At best, the top management might receive a spreadsheet from the freight forwarder. Tony Leach says eDC achieves


Since then, however, things


have stagnated and it’s widely recognised – in the publishing as well as the logistics industry – that the book trade has fallen when behind the supply chain efficiency standards set in automotive or other sectors of consumer retailing. Steve Walker, chairman of


SBS Worldwide, one of the main logistics companies that specialises in the sector, says that a typical supply chain model in the industry is: “To print books in the Far East, bring them back to a European distribution centre and then decide where to ship them to.” The traditional method of dealing with unsold – and otherwise unsellable – stock are the remaindered book shops that can be found on every UK high street - or simply pulping unsold copies. The availability of these two safety valves can oſten


and significantly reduces shipping costs, but cuts lead times as well. The project


includes radical


changes to everything from purchase order management and freight services to book distribution. James Graves, global production


sourcing director for HarperCollins, said: “We made the choice of partnering with SBS based upon what we perceive as an industry leading soſtware solution,


this


coupled with a highly integrated approach to understanding our business, then creating a solution for both our current and future needs.” Tony Leach, director and chief


sales officer at VL said: “Many publishers made the decision to move their printing to China in an effort to control costs. But they have failed to take the next logical step of


end-to-end visibility throughout the extended supply chain and translates top level supply chain strategy into operational best practice. All this improves speed-to- market, cost efficiency, customer satisfaction and the bottom-line. One benefit of the system is that it can give management a real view of the true price per book. VL also proposed that HarperCollins could save costs by printing high volume runs in the traditional ‘off-season’ of late November to April and store the books in China, where warehousing is cheaper than in the UK. With eDC giving full visibility, “they can simply call off the books as needed and ship directly to where they are needed,” says Walker. “Creating a warehouse in Asia


is easy,” James Graves explains. “Coming up with the electronic solution to allow easy visibility is hard. That led us to decide to use SBS Worldwide. Their eDC system, with live data and stock levels, gives a level of reassurance that we could not get with any other system.” SBS manages freight purchase


order management, air and ocean freight, as well as inventory management in China. The eDC system monitors the supply chain, providing proactive alerts if there are unexpected delays.


It could also lead to a more


logical logistical solution, Steve Walker adds. Too oſten, books are shipped from a Far East printer to the UK, and then all they way back to Australasia, when a more sensible solution would be to hold the stocks for the Australian market in the Far East and ship there direct. “No book should cross the ocean more than once,” as Walker puts it. And he has also seen instances


of two separate LCL shipments being despatched from the same printer destined for the same publisher’s UK warehouse, on completely different carriers. Collaborative logistics could offer the industry a great deal, he argues. In eDC, shipments can be


tracked through each milestone within the freight process, giving HarperCollins


the highest level


of visibility, improved customer service and more control over resource allocation and forecasting for inbound goods. Deliveries are made to HarperCollins’


national


distribution centres in Glasgow and also direct to New Zealand, US and Canada. The HarperCollins business, for


which SBS has won or has been short-listed for a number of awards, is a good example of the sorts of improvements that can be made in this industry. “I think the industry is ripe for changes – a lot of companies are very, very traditional,” says Walker. Even simple ideas, like substituting slip sheets for wooden pallets - which take up space in the shipping container and now also pose a fumigation problem – are only just beginning to be taken up. Use of sophisticated soſtware also means that more than one title can be carried on a single slip sheet. Other publishers’ approach has


been to stuff a container full of books without recourse to pallets or slip sheets and then expensively handball them out at destination. Many publishers have their


own warehousing set ups and have tended to eschew solutions such as shared logistics, but the reality


of today’s business environment, not


competitive least


the effect that online retailers such as Amazon have had on traditional books sales through


high street shops and, more lately, the widespread introduction of e-books, will force many publishers to rethink, he believes. “Shipping and logistics is an area where some of the greatest savings can be made,” Walker believes. He also thinks that while


publishers compete furiously on signing up the latest blockbuster author or in their book production values, most would in fact be happy to collaborate in their supply chains. People do move around in the industry and tend to bring their best ideas with them. As for the likes of Amazon,


Walker says that while they have revolutionised the book trade, they have also cut margins to the bone and many freight forwarders have been wary of signing contracts with them. Two other major changes in


publishing is the emergence and increasing acceptance of the electronic book – where soſtware loaded into a reader replaces the printed, bound volume – and printing on demand. In the long term, the e-book


may affect some segments of the market, particularly school and college textbooks where costs are under the greatest pressure and, of course, many students will be looking to ‘cut and paste’ text for their essays rather than read the whole book in depth. However, there is evidence that the e-book


has actually stimulated demand for printed copies among other readers – people start reading a novel on their electronic reader and, if they like it, decide to order the printed book to finish it. It may be a generational issue – younger readers might be more tolerant of reading a book from start to finish on an electronic device, but many people believe that the death of the printed book has been greatly exaggerated, to paraphrase a famous American novelist. Printing on demand could be important for high-cost, specialised volumes such as medical textbooks or legal volumes that publishers need to keep in their catalogues but for which annual demand might not reach more than single figures. Rather than print off a pallet-load and shove them into the dark recesses of a warehouse and hope that buyers will eventually be found for them all – or conversely, hope that demand will not outstrip the available supply – it could be much better to print off and bind a copy as and when a customer demands one. The concept has been around for some time, but the printing and production quality of print to order books has greatly improved says Walker and while it might not be quite top-notch, it is usually more than adequate for the medical or legal professions.


Indian deal inked


SBS Worldwide has signed a new partnership with Gopsons, one of India’s largest integrated print houses, to deliver more effective end-to- end supply chain solutions. As part of the collaboration, publishers will be able to sign up to


the Forward Print Program, a new service which will allow them to schedule manufacturing during low demand periods, store books at port-centric warehouses for global distribution and view inventory levels in real time. Customers will also have access to eDC. Steve Walker commented: “This partnership will provide publishers


with a unique all-in-one supply chain package that will dramatically change the way they do business, add value and help to cut costs.” Vasant Goel, at Gopsons, said: “With publishers’ supply chains


growing in complexity, it is important that they can keep control of costs, manage their processes and have maximum visibility at all times. We are extremely excited about this partnership with SBS, who are enjoying substantial growth in the publishing sector. Although the deal promises to be mutually beneficial for both parties, undoubtedly it is the publishers who will stand to profit the most from this, at every level in the enterprise and in every possible way.”


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