Getting A Competitive Edge


Since I've spent most of my professional life on the "squishy" side of the business, I have to admit to an almost Pavlovian reaction of disinterest when terms like "the supply chain" come up. But in my most recent days of Lunching, I've come to understand that, no matter what you call it, in today's no-growth, oversupplied, volatile and margin-pressured publishing business, the back-end of the publishing house is truly where the money is made or lost.

Helping publishers learn more about how peers and intermediaries are doing this very thing, in day-to-day strategies to make for a more efficient matching of supply and demand, was the subject of conference yesterday from the Book Industry Study Group's new Business Solutions Committee, sponsored by Vista.

Perhaps Baker & Taylor senior vp of merchandising Jean Srnecz underscored the importance of the topic at hand the best, proclaiming, "Supply chain people are 'the new gods.' In some cases, power has shifted from sales to the supply chain people." In a climate of "shorter life cycles, higher consumer expectations, and technological changes," Srnecz believes, "The operations part of the industry is what will take us to the next level."

Her plain-speaking advice underscored a host of simple inefficiencies in standard practices: "Many publishers have taught buyers to buy a lot of upfront because you won't get it later." But when print runs are oversubscribed they reduce all orders equally. "What a dumb strategy. Unfortunately publishers have taught customers to play the game theory and lie, and they get a payoff."

Other advice include "Acquire what is saleable" and don't replicate titles that already exist. Slow turn-around time on orders is a real hazard, and "We [the industry] really suck at this." In particular, she urged children's book publishers to find "a way of turning reprints around quicker," suggesting more standardized trim sizes and North American suppliers. "If you can't reprint them, you can't sell them."

Srnecz also underscored the irregular fluctuations in library funding, and called for efforts to "keep the backlist alive" long-term so that when demand resumes, the title are available. POD orders already constitute the equivalent of one of B&T's top 50 suppliers in volume, and correctly executed, Srnecz says it "Could be in our top 10 or top 20."

From the publisher level, Sourcebooks head Dominique Raccah was thrilled at the opportunity to explain how intense modeling, using Bookscan and other retailer data, had helped her "decrease the fundamental costs of doing business, both hidden and explicit." An intense focus on inventory management, both in projecting first printings and calibrating reprints, let Raccah bring down returns by 25 percent in 2003. Her watchwords: "Ship less upfront; assess the sell-through and marketing, and ship more often and more quickly."

Mike Shatzkin of the Idea Logical Company gave concrete examples of his firm's analytic process for taking Barnes & Noble sales data compiled by Bookscan and revealing "very particular details in an actionable way." Echoing the theme of many participants--that "Context is everything; sales data without inventory data is hard to make sense out of"--Shatzkin's process reveals countless examples in which the numbers can show when the chain is undersupplied on backlist titles that are turning quickly (and oversupplied on backlist titles that are not). Notably, his analytics don't apply to the top of the list, which everyone is watching closely, but rather ones like the "the eighty-ninth best performing title" from big company and its peers. He characterizes these "books underneath the very top layer" as "the band of opportunity."

Nielsen Bookscan head Jonathan Nowell also underscored the importance of context in analyzing data. And he shared concrete examples from major publishers in the US, the UK, and Australia who had used Bookscan data to analyze historical trends in a segment, extract a strategy of their own, and then follow and adjust that strategy on-the-fly as it was implemented. While some media facilely look to Bookscan data as a new-and-improved scorecard, Nowell effectively demonstrated the tangible ways publishers are crunching his numbers to aid planning, reprint, and marketing decisions on a regular basis.

And sounding the larger industry-wide goal was Bowker president Michael Cairns, in a reprise of a presentation he made at Frankfurt. Laying down "a concept as well as a challenge," Cairns called for an ultimate goal of "Collaboration across the supply chain" in sharing standardized sale and inventory data, mediated by a "non-partisan facilitator," so that "all parties have equal access to the information they require, that will benefit the total publishing business." Whether or not such broad collaboration is achievable, Cairns echoed the general case that a faster and more efficient supply chain is, "The only opportunity that will result in increased sales, reduced inventories, and reduced costs."

Good stuff, all neatly packed into just a morning. (And BISG says they will post the presentations on their web site within a few days.) Thus persuaded that it may not be what you publish but how you manage your publishing operations that makes all the difference, I went two city blocks and a world away, to Little, Brown's second and now-annual media luncheon celebrating their four debut novelists for spring. Leveraging their success with Lovely Bones, Dogs of Babel, and the recent True and Oustanding Adventures of the Hunt Sisters, the house put authors lead by Sarah Dunn (THE BIG LOVE), plus Jardine Libaire (HERE KITTY KITTY), Lucia Nevai (SERIOUSLY), and Tenaya Darlington (MAYBE BABY) in a buoyant, intimate setting. Abundant with bags of galleys and genuine passion and enthusiasm, not a mention of supply chains was heard.

--Michael Cader

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