Supply Chain Thoughts Part 1

As an industry the booktrade has worked hard to address the waste and inefficiencies in its supply chain. Standard practices have been adopted, transactional services such as PubEasy have been adopted by many and generally the exchange of information and transactions has improved. In essence the systems of the large players now talk directly to each other and remove the inefficient passing and deciphering of notes that previously took place. Many will point to standards as the main driver, but some would suggest that the consolidation throughout the industry and the agendas of the large players has been a far greater driver.

However, the route cause of much inefficiency remains. We still have over production not just in titles but more importantly volume and the abdication of real buying through the abuse of sale or return. Some would argue that returns should be abolished. However, we would suggest that firm sale would seriously change the dynamics of supply, what is sold and rather than addressing one issue, create many more. Today, it would be like throwing a non swimmer into the deep sea and expecting them to survive.

We have moved from bulk replenishment models to a more frequent and smaller volume replenishment model. This was great when the economics worked and demand was being meet but becomes a potential pain when demand slows down and flattens. POD is a valuable development but today is often only reducing not removing the inventory. Short cycle printing merely transfers print from large presses producing large print runs to large presses producing short print runs.

The polarisation of the trade is accelerating, with numbers shrinking at one end and exploding at the other. Those who are tethered to the old model and practices are under increasing threat, whilst those shifting position have to grapple with new risk and challenges. If the trade were just physical books then the market share of some would be seen by others as unhealthy, but because the overall landscape is undergoing such radical changes it is in fact the large who are at greater risk as their ability to manoeuvre is often restricted by their inability to react.

So who shows the way? How can develop best practice? Do we look to the industry bodies who have done such fine work in the past and expect the few just men who have sat consistently around those same tables to help interpret and steer the ship? Do we wish to be led by the media feeding frenzy that will predict change before it’s even out of the lab?

In a many to many and diverse sector such as publishing there is often no single solution, no silver supply chain bullets. The 80/20 rules still apply the 20% but what works for the large players is often impractical for the small and visa versa. As digital publishing becomes publishing then these differences become more marked. It’s no longer about transactions and basic information but content and rich information.

Communications not Product and Services is the 21st Century Opportunity: Part 2

Part 2: 

The Organisational Impact of Communications in Today’s World?

A company may have the best product or service and the smartest technology, but these alone no longer guarantee success. They may have a significant marketing budget, but billboards, page adverts, glossy catalogues and call centres now longer guarantee sustainable success. The supply chain may be well oiled and automated, but reducing waste and delivering to just in time models are by themselves now longer offer unique value and guarantee success. The sales and marketing messages may be slick and focused, but the message in a social networked world is no longer the prize and getting it across to the market no longer a simple process.

Mass market advertising still has its place, but direct marketing now is challenging it even in the mass market. Being able to now effectively engage with consumers and feed their habits, respond to them and truly engage and retain them is the real goal. Creating brand loyalty and through that product and service loyalty and a customer for life is the Holy Grail. Once that was the sole domain of the retailer, or end service provider, but in a world of virtual marketplaces the channel to market is changing and with it the communications with the end consumer. Sharing consumers in non-sharing partnerships is the same as not sharing basic trading information before Supply Chain management. 

We now crave the viral hit. That moment when the word of the internet overtakes all the market budgets we could muster and value and perception truly transfer to the mass. When it works it can create instant recognition, market and demand but is just in time world not satisfying it on demand can be as damaging as not creating it in the first place. However, like winning the Lottery it can’t be achieved by all so bets have to be spread and ‘silver bullet’ strategies avoided.

Reputation can be built and destroyed in a click. Consumers, like sheep tend now to follow and identifying the leaders and influences is a challenge to all. It is truer than ever that one bad experience can influence ten others. In fact the numbers are probably significantly higher today and the impact far faster than yesterday’s word of mouth.

So what does this mean to the organisation and its focus?

We would suggest the following thoughts;

Effective trading partnerships across the supply and value chain is more important than ever. In an channel were much is outsourced the performance of others can now often impact a business more than it can imagine. How do you organise your partners and work together for mutual benefit? Who monitors partner relationships and their effectiveness? What information is shared and how does it help the consumer engagement?

What is communicated with who, when and how?

Service extends to more than throwing goods over the wall, or tracking parcels. Knowing what the other party wants to know and responding to them when they want something is as important as the product they bought. How many of us tear our hair out trying to get in touch with a Google, Amazon, eBay, Apple etc. It’s as if the tablets only ever go one way and those that effectively crack this challenge are the winners of tomorrow.

Information is as valuable as revenue. Collecting information for the sake of collecting information may appeal but using that information to engage with all is the goal. However, the challenge is learning to share information in a manner which respects the privacy of the individual but enables partners to help deliver and for businesses to engage with them. Remember when suppliers and retailers started to share forecast and demand information and the resultant benefits that gave to some supply chains?

Should we create a CCO (Chief Communication Officer) as it clearly not a CTO (Chief Technology Officer) or a CIO (Chief Information Officer). Perhaps the role fall within the emerging Digital Director remit. Marketing is an obvious home but is often only consumer focused and lacking technology depth. Is a COO (Chief Operating Officer) the appropriate function as is it about process, touch points, messages and responses?

Different organisations will respond differently, according to size, skills and complexity of the chain, but communications now needs to be at the forefront of today’s boardroom thinking and developing the appropriate strategy and measuring its performance and effectiveness is an opportunity for all who sit around the board table to engage with.

Supply Chain Thoughts 3 Digital Reality

Digital logistics presents opportunities that enable the book trade to remove the physical logistics constraints that caused so much waste. In principle a digital title should only be stored once, full stop, and rendered many times. Obviously there is often more than one format of the titles but again, store once applies to each format and render to many still applies.

Does this mean there is only one winner, one store and we simply adopt the flawed iTunes model – No. It means that we create an inclusive not exclusive framework that supports and distributed files on demand. Why should a publisher not retain their assets within their own repository and only let files out on an on demand basis? This is not a theory and is being adopted by the likes of Taylor and Francis and Elsevier today. The alternative is to hand assets over to an increasing number of digital aggregators, who end up effectively controlling the channel to market and restricting it to their reach and relationships. Ask any publisher today who has to deal with many aggregators; how they control or even know what is being sold, how they ensure that their total catalogue is available through all aggregators and how they reconcile sales with different reports, schedules and terms? Often they have little control on what are their assets. With physical goods the next person down the chain buys them at a discount off RRP and sells them again at an increased margin. With digital, the money doesn’t move until the sale happens, its effectively distributed consignment stock.

Drop ship logistics can provide the mechanism which if adapted for digital distribution can go one further removing the need to build huge repositories and the current bragging rites about ‘mine being bigger than yours’. All that matters is the ability to fulfil the demand for online or download, rental or purchase. For many this may be a central aggregation service, but for those who want control of their assets it can remain effectively in their own warehouse and and leave when its sold or rented. The model may be complex to grasp on first hearing, but it is what is being rolled out by Gardners Books in the UK, Danish library service eBog and adopted by publishers such as Taylor and Francis and Elsevier.

Ironically you will find this model described in concept on page 75 of the 2006 Brave New World report.

The digital offer should be fully integrated with the physical one enabling the consumer to have a ‘one stop shop’ transaction experience and not be handed over to a separate aggregator in order to buy digital books . Separating out the transaction and the customer relationship from the instructions and communication flows from the actual pick pack and dispatch of physical and digital or whatever makes consumer sense, publisher sense and supply chain sense.

Supply Chain Thoughts Part 2

How many books are given away as review, gratis, or inspection copies? In the academic world, inspection copies can often account for a double digit percentage volume of the initial print run. Someone said to us recently that the practice of passing around review copies like confetti had long stopped. We merely asked them to swivel round in their chair and describe what was on their shelves – free books. Of course you can’t sell anything if you don’t promote it and show a sample of it, but all too often, the giving is still easier than the monitoring.

Then we have the catalogues, flyers and advance information sheets. Digital marketing has certainly cut down the realms of glossy paper circulated in hope. However, given today’s technology and tightening credit squeeze, which comes first the physical flyer and catalogue or the digital one?

Digital marketing ensures that the control of the asset remains at the source, that the latest material and its consistency is guaranteed and interestingly you know what was read, when, in the case of direct marketing by whom and importantly what wasn’t read or even opened.

The ability to drive both bibliographic and marketing from digital content today is very real. There is no reason why the digital widget should be restricted to today’s ‘look inside’ only functionality. Widgets should be containers that are capable of distributing the richest information on demand; related tiles, web links, podcasts, videos, authors notes, reviews , advanced metadata, whatever. The question of then embedding widgets within widgets and creating digital catalogues is just a natural step.

We suggest that this perspective of digital marketing and metadata distribution changes not only what is distributed and working practices, but how it is created and aligned to digital content.

eBooks Aren't Binary

Sometimes we prescribe before we understand the diagnosis and then we are surprised when the reaction is not what we expected. As a consultant you often merely move on, as a business you count the cost and put it down to experience. We are all guilty.

The offline channels have been buzzing with new business model talk, how publishing should reposition itself and what digital pricing could look like. Its great fun to participate and great to hear others viewpoints but it’s always dangerous to take yourself too seriously and believe that you have invented the silver bullet.

Mike Shatzkin has tried to distil his thoughts and produced a excellent and recommended read,'This eBook thing is just going to get more complicated'. We may not agree with everything that Mike says but there is a lot of insightful thoughts on the market especially on the current omnivore positioning and potential wars between Apple, Google and Amazon.

The one area that struck us and has nibbling away in our conscious, is that of digital content distribution versus ownership. The players we talk most about today; Google, Amazon, Apple, Fictionwise, Stanza, Adobe, Overdrive, Netlibrary, Questia, Ingram etc. do not create content they merely distribute, sell and licence it. Apart from the potential land grab of US orphan by Google, they don’t have exclusivity on the content yet. This itself posses many questions on just how many digital distributors are needed to change a light bulb and whether the proliferation of digital files and different technologies is wise?

We recently wrote our thoughts on the digital supply chain and have also written about the challenges that can exist when a reseller changes digital supplier or a distributor ceases having encrypted DRM licences. In a digital world there would appear little sense in building monolithic repositories to duplicate content. There again, there are no silver bullets.

Communications not Product and Services is the 21st Century Opportunity. Part 1

Part 1: 

How did we arrive to where we are today?

It now seems a lifetime away when we started our technology journey which we w all take for granted today. Back in ’68 there were only 32 computers in the whole of Sheffield and we can even remember the companies, the computers and what they were capable of. The explosion of computing that followed was first aimed at companies and institutions and automating the numbers and providing the information in near to real time as possible.

PCs and networks then changed the landscape and importantly companies became aware of the huge waste created across the Supply Chains and started to migrate from, ‘slipping notes under closed doors’ with trading their partners to communicating and sharing information with them. Supply Chain Management opened up communications through EDI (Electronic Data Interchange) standards and technology. Home computing was also born albeit over extremely poor network services.

Business then started to look hard at their value chains and their core functions and where they added value. Technology was still see as a generic function but it started to deliver effective ERP (Enterprise Resource Planning) and later CRM (Customer Relationship Management) solutions, which were no longer bespoke but packed and configurable. Outsourcing non-core activity became a given. IT finally started to break through the board room glass ceiling and CIOs (Chief Information Officers) and CTOs  (Chief Technology Officers) became common seats around the table. The Internet was born and networks started to move from dirt tracks to super highways and deliver and mobile communications, laptop PCs and consumer technology took off.

Then came two major and significant seismic shifts in the form of mobile communications technology and mobile applications. Social networking became something that impacted all; first the individual both young and old and then the corporate, institution and public entity. This explosion of demand was further fuelled by rapid advances in network technology and the emergence of truly mobile devices. We were all permanently switched on and desired to communicate and carried our computer around in our pocket. Where we and other ‘friends’ were, what we are doing and with whom and our thoughts was now often now just a click away.

Harnessing all this mass of information and creating ‘Big Data’ opportunities is now a business in itself.

Computing was no longer owned by the corporate, even warfare was being waged over the airwaves as much as the battlefield. Fame could be instantaneous at the individual level and commercial success was often no longer reliant on huge marketing budgets and programmes alone.

Today commercial businesses now no longer just have a web presence and ecommerce, but an array icons splattered in their sites to link them to every social network where they also have their own presence. We have Blogs, videos, and tweets to promote their products, services and values. In this multi-dimensional world text is no longer enough and communications is no longer one way. We have a new breed of SEO (Search Engine Optimization) and analytic services knocking on every door and customer and market insight programmes are the buzz.

So where exactly are you today and more importantly where are you going tomorrow and how do you we achieve that journey?

How should businesses organise themselves for the Communications World of tomorrow?

Tomorrow we will give our thoughts what we believe is one of the greatest challenges today and into the near future.

Digital Content Is Different

Yesterday we sat down with someone who is starting a new digital venture. As we discussed the potential, the market, the options and much more, it became apparent to us that there are a lot of things that applied to the physical book market, that simply do not apply, or should be questioned in the digital market. Walking blindly into the digital world assuming that all remains the same is in danger of establishing a set of urban myths that we have written about in the past but that continue to dog all our thinking and real digital opportunities.

We would like to take the opportunity to offer a dozen points as to why we believe digital content is different.

1. Size - 256 pages and x thousand words were mere economic parameters that prevailed and mattered in the physical world. They become meaningless and irrelevant in the digital world. The author is free to write as little, or as much as they feel appropriate and that convey his story and that the consumer can digest. One would argue that small starts to become beautiful and large may be present a page turn too many. Short stories present a great digital opportunity, but may only happen if they are thought through economically and cost is taken out. After all many successful authors started their writing with short stories and articles. We still have still to adopt and adapt the Keitai model in the West, but if Dickens could write and sell by instalments why are we waiting for the finished tome?

2. Price – Some would suggest that prices must relate to the physical book and that any major price reduction on digital could cannibalise physical sales and the market. Some also suggest that digital is a huge investment and that the costs of the physical product are still incurred in the pre production and marketing activities. The problem is all too often this thinking is based on ebooks being just ‘another rendition’ and that each must stand economically on its own two feet. Why aren’t ebooks ‘given away ‘as aperitifs, lost leaders and to stimulate and drive physical sales? Why doesn’t digital content adopt simple price points like other media? Finally, digital content must be different as demonstrated by the differentiation given to it by the vast majority of governments.

3. Age - The consumer may want the ‘latest book’ but this is often driven by media and promotion. How many consumers do you see opening a book at the copyright page to check when it was published before they buy it? Amazon’s advanced search has a publication date field which is missing on The Book Depository, Waterstones and Blackwell’s who has a ‘published between two dates’ option. We may be thick, but we couldn’t even find an advanced search at Barnes and Noble or Kobo. The eWorld now has to compete with, not just the remaining books on the shelf, or in the store, but all books ever published.

4. Rights - When you buy an ebook, it may be literally just for Christmas! eBooks do not have a second life, no first sale doctrine and being able to lend them to friends. Therefore, to say they are merely just another rendition is like saying there is no difference between a taxi and a car, both get you from A to Z, both are driven by an engine but both are very different .

5. Media - Today we see books, music, film, games, being offered separately on some sites and collectively, as a one stop media shop on others. Dedicated media offers will work as long as they offer the consumer value, but when the vast majority of digital media is now supplied through white labelled channels this makes the one stop shop attractive. As some start to ‘enhance ebooks’ the synergy between media sectors could further erode and the one stop shop appear even more compelling. As we have seen it isn’t difficult for supermarkets, associations or in fact anyone to sell white label stock off their brand with no inventory cost.

6. Taste – It used to be said that you could judge a person but the books on their bookshelf. However, when their collection is no longer visible, no judgement is possible. Some would advocate that this merely flips into a social network opportunity, where readers share their book experience, favourite reads and what they have bought. However, we would suggest that this is a different and ignoring the hype has still to be proven between strangers.

7. Device – The ebook evolution was born out of a combination of digital content and reading devices both being widely available. Today we have now passed that stage and replaced the device with a device agnostic platform. Importantly mobile devices have not stood still and we now have smart phones with sufficient power, Amoled screens, apps and broadband connectivity to challenge ereaders, games machines, laptops, and even the emerging tablet itself. Multi media devices have arrived to your hand and technology is going only one way – smaller, cheaper and smarter. We would suggest that the ereader device is fast becoming irrelevant.

8. Leadership – The largest players always dictated the game and the book market has been no different. Amazon has established itself as the largest driver and influencer in the market today and will be for some years and the largest retailers are no longer defined by square footage or constrained physically. Will tomorrows leading retailer be that with the best mailing list and management? As the retail internet offers become somewhat indistinguishable does this open the door for smaller specialists and innovators to survive and thrive? We also assumed the largest publishers will drive the market but is this a given? Will again the innovative and agile score over those who will find it hard to tack and change course in what will be choppy seas?

9. Re reading the novel - People often say that they re read their favourite books and its true, but they often do this after a long period of time. Guess what, the ebook format, device, technology may have changed by the time you get round to re reading it! It may be like going back to cassette, vinyl and eight track.

10. Metadata – We used to cringe when the dreaded ‘m’word was raised and often found ourselves in the uncomfortable position of having to use a word which itself was an instant turn off. Great strides have been made to rationalise the communication between trading partners and improve the physical supply chain and standards and metadata where pivotal to this. However, when you have all the content digitalised and the associated material and information is fully indexed the game starts to change. Some 80% of what you need to know about the book is retrievable from the digital content itself and some other information exists in real time. This must change how we communicate and what we communicate as we move from a transactional and physical supply chain to one that is driven by media content and social interaction. The library world has finally accepted that the old MARC record is past its sell by date and maybe it will be followed by others we regard as essential today. We now have to radically rethink information, access and retrieval and equally who is best to lead us through this revolution.

11. Rental and the public Library - We strongly believe that ebook sales are going to move from downloads as we know them today to online and cloud based rentals. Netflix, Last FM, Pandora and our favourite Spotify are among those leading the way. Many may see this as a huge threat but is this real or more based on the challenge it poses to the existing business model . We have written much on this radical change and on the redefinition of the library tomorrow. Some may resist the move to online and rental, but it will happen and it may well not be a top down driven but a bottom up revolution.

12. External agents –5 years ago, when we wrote the Brave New World report, we recognised that the digital world was going to be heavily shaped, not from inside but from the outside. Today we have all seen the impact that the likes of Amazon, Apple, Google and others continue to have on the market and the evolution of digital publishing. These new entrants have bothered to invest in the physical channel and when some suggest that they should acquire Borders, B&N etc the answer is obvious and negative.

There are many thoughts we all have as to how the market will evolve. It is important that we start to see digital content as different and free it from the physical book spine that will continue to choke it.

Digital Publishing: Whose Zooming Who?

Today we read two different but insightful views on the current digital book arena one that looks from a fresh perspective at the ‘Great Book Bank Robbery’ (Google Book Settlement) from Erik Sherman at Bnet.com titled ‘An End Run Around Authors' Contracts and Copyright,’ and the other, from Joseph J. Esposito, CEO of Gaintchair.com, posted at
‘The Scholarly Kitchen’ and titled, ‘Platform Wars Come to the Book Business.’

Joe claims that the 3 technology giants; Amazon, Apple, and Google, ‘are now implicating the book business in their attempt to establish a technical platform. These are big players — and, more importantly, smart players — for whom books are the equivalent of software applications. The idea is simple — get enough books running on your platform, and everyone will want to have access to that platform. The risk for publishers, if not the likelihood, is that they will become collateral damage.’

Joe recounts his experience at Encyclopaedia Britannica when it was embroiled with a war with Microsoft and its ‘Encarta.’

He offers his thoughts on Apple pricing, ‘If Apple could have gotten publishers to price the books lower, they would. Indeed, how about free? Free is a good price. It will expose the brand, and don’t you want to participate in the future of the digital world?’

On Amazon’s strategy, ‘ lock consumers into its e-commerce platform… monopolize their (best customers) online book purchases … if aggressive pricing means that the entire bricks-and-mortar supply chain goes up in smoke, who cares .’

On Google, ‘Google, as the index to the Web, occupies a privileged position. As more content comes online, the need to look things up in that index grows. This means more advertising to be sold on the many Google services. The Web is a rising tide lifting the fleet of Google’s many boats.’

Joe makes a strong case as to why Google through their approach could be the one to watch, ‘Google wins twice — from the sale of Google Editions and also from the sale of marketing services that publishers will invest in to drive Web traffic to the various sites, including the publishers’ own, that sell Google Editions… the more e-books that are displayed through a Web browser, the better it is for Google. This does not mean that Google Editions are not in publishers’ interest… What is not in publishers’ interest is being in a situation where there is no escape from the platform wars fought by others.’

Which brings us to the article by Erik Sherman in Bnet.com. Erik claims, contary to ourselves, that the orphans aren’t the prize in the Google settlement and that, ‘Suddenly, a scanned version of the book becomes an e-title, and the publisher walks around the limitations of an existing contract with the author. Through the power of the settlement, authors would find that they were locked into arrangements with publishers that they never made. Publishers can now get a piece of the electronic pie, even if they didn’t negotiate for it…So the publishers can use Google as an outlet to offset Amazon’s power, and Google becomes a favored reseller because it can electronically sell book titles when a normal e-book version isn’t available.'

As we all try to predict the future it is often wise to understand today and explore all the angles. We may not agree with them all or on everything they say, but what is clear, is that the agenda is now being driven by Amazon, Google, Adobe and Apple and there are many wars and skirmishes ahead. Ironically we found these parting words from Joe interesting to ponder, ‘ why it is that people outside the book industry developed the first major online bookstore, the first sexy e-reading device, and the premier search index to books.’


To read Joseph J. Esposito at The Scholarly Kitchen, ‘http://scholarlykitchen.sspnet.org/2010/02/23/platform-wars-come-to-the-book-business/

To read Erik Sherman at Bnet.com titled ‘An End Run Around Authors' Contracts and Copyright,’