Presentation given to annual publishing industry supply chain conference at Frankfurt Bookfair

1. Michael Cairns
Managing Partner
Information Media Partners
Building an Intelligent
Publishing Supply Chain
Leveraging technology and
communications to improve supply chain
efficiency, reduce costs and increase
profits – Frankfurt Book Fair 2002

2. 2
Introduction
Michael Cairns is a publishing and media executive with over 25 years experience in
business strategy, operations and technology implementation. As a business
executive, Mr. Cairns has successfully managed several troubled and under-
performing businesses, creating new business opportunities, developing new funding
sources and enhancing shareholder value for investors. His years spent as an
operating executive have largely been with brand-name publishing companies such
as Macmillan, Inc., Berlitz International, Wolters Kluwer Health, Reed Elsevier and
R.R. Bowker. As a consultant, Mr. Cairns has worked with clients as diverse as
AARP, Hewlett Packard, InterPublic Companies and Reed Elsevier with an emphasis
on business strategy, market development and corporate development.
His skills and experience include:
 Business and corporate strategy development and implementation
 Operations management and business transformation
 Traditional and digital publishing and operations
 Print-to-digital transformation and adoption of new business models
 Software development and software services
Mr. Cairns holds an MBA (Finance) from Georgetown University and a BA from
Boston University. He has served on several boards and advisory groups including
the Association of American Publishers, Book Industry Study Group and the
International ISBN organization. Additionally, he has public and private company
board experience.
2
Michael Cairns
Information Media Partners
Strategy Consulting
New York, London, Melbourne
Tel: 908 938 4889
Michael.cairns@infomediapartners.com
Find me:
LinkedIn Twitter Blog Flickr InstaGram

3. 3
Information Media Partners
Michael Cairns established Information Media Partners in 2006 as a boutique strategy
consulting firm focused on the information and education publishing segment. The work
conducted by the firm includes product development, corporate development, sales
management and corporate reorganizations. We work with established businesses, private
equity owners and potential acquirers.
Examples of our work include:
 Reorganized and re-focused a $25 million software publishing company by aligning
business operations with client priorities; implementing internal collaboration tools and
project management standards; re-building executive team to focus on effective and
efficient management
 Defined a new business strategy for a large non-profit association and advocacy group,
expanding their business model into global markets to exploit their core knowledge and
expertise across a broader market
 Led an information technology capabilities review at a large international advertising
holding company. Completed over 200 interviews in 15 international offices and multiple
group focus sessions to define the operational ‘gaps’ between existing agency capabilities
and those necessary and important for client delivery by region
 Completed a sales management effectiveness review for a global software company and
defined six key project initiatives to improve sales effectiveness, market development and
account management
We approach our client engagements in a standardized, logical manner which creates the best
environment to identify key business drivers, administrative and logistical road blocks and/or
product or market definition issues. Our investigative approach leads to better insights into
your businesses and supports the development of workable solutions and recommendations
for success.
Visit the Information Media Partners website for more information.
Sample Client List

4. 4
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

5. 5
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
 In context of migrating content to online delivery

6. 6
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

7. 7
7
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

8. 8
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

9. 9
Adding intelligence to the supply chain
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Adapted from “Information Architects,” Richard Saul Wurman, editor, 1994 and Price Waterhouse, 1999.
Manufacturer
Truckers
Retailers
Customers
Distributors
Management
Truckers
Old Environment
 Partially informed
 Push / pipeline model
 One-way info flow
Database and Data
Mining
Web Infrastructure
Telephony
Infrastructure
Manufacturer
Retailers
Customers
Transportation
Transportation
Overnight Delivery
Distributors
Management
Direct
Marketing
Infomediary and
Outsourced Service
Providers
New Environment
 Fully informed
 Network model
 Bi-directional
information flow
through network

10. 10
The traditional supply chain for publishing
Fragmented and Inefficient due to poor flow of information
Product Flow
Information Flow
Demand Patterns
Publisher Distributor Bookstore

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The intelligent supply chain for publishing
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Information & Intelligence Sharing for Effectiveness
Product Flow
Information Flow
Consumer demand
drum-beat sets pace
for entire
Supply Chain
Publisher Distributor Bookstore
• POS Data Sharing
• Inventory levels
• Fill Rates
• Forecasts
• Promotional Activities
• New Product Introduction

12. 12
Why collaboration in the supply chain?
 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
Increased
Sales
 Reduced lead times
 Reduced
inventories
Reduced
Inventories
 Smoother SC
execution
 More efficient
processes
 Reduction of costs for
handling returns
Reduced
Costs
 Shared visibility across supply chain - Sales (POS), Inventories
 Shared measurement of SC performance and identification of issues

13. 13
Leveraging customer information for sales,
marketing, and operational purposes
Product Planning
& Development
Retail Catalog - Mail
Internet, WWW,
Kiosks
Suppliers
MerchandisingMarketing Distribution Customer ServiceOperations
• 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
DATAWAREHOUSE
Sales Force

14. 14
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 you’re not part of the solution, you’re 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)

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Technology is only part of the solution (cont’d)
 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.

16. 16
From supply chain to supply network
Publisher B
Intelligent Publishing
Supply Network
Printer A
Publisher A
Publisher C
Printer B Printer C
Stores
Bookseller A
HQ
Stores
Bookseller B
HQ
Stores
Bookseller C
HQ
Distributor A Distributor B Distributor C
• Common set of services
• Common data standards

17. 17
A common information framework for all
participants
Publisher B
Intelligent Publishing
Supply Network
Printer A
Publisher A
Publisher C
Printer B Printer C
Stores
Bookseller A
HQ
Stores
Bookseller B
HQ
Bookseller C
Distributor A Distributor B Distributor C
• Common set of services
• Common data standards

18. 18
Supply network information visibility
Publisher
Intelligent Publishing
Supply Network
Printer
Stores
Bookseller
HQ
Distributor
Available capacity calendar
• Printer-owned paper inventory
• Publisher-owned paper inventory
• Component inventory
• Finished book inventory
Available inventory
• Inventory on order
• Inventory in transit
• Orders to be filled
POS data
• Stock levels in stores
• Inventory in central warehouse
• New inventory in transit
• Inventory in internal-transit
Inventory in distribution center
• Demand forecast projections
• Aggregate sales data
• Production orders in process
• Customer orders to be filled

19. 19
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!
Publisher
Intelligent Publishing
Supply Network
Stores
Bookseller
HQ
Distributor A Distributor B Distributor C

20. 20
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

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Please review my blog post associated
with this presentation:
http://personanondata.blogspot.com/2006
/09/publishing-supply-chain.html
Michael Cairns
Managing Partner
Michael.Cairns@InfoMediaPartners.com
908 938 4889
LinkedIn Twitter Blog Flickr InstaGram