Chris Elliott, Consulting Manager, Supply Chain
Helping companies improve their supply chains to drive greater business value through efficiency and productivity
For an industry that was once believed to be going down for the count, book publishers’ revenue is actually on the rise. According to the Association of American Publishers, the first four months of 2019 saw an increase of 4.5% over the same period in 2018.
Book publishers were the very first to get hit by the Amazon-effect (remember when Amazon sold just books?). And the publishers that are still in business today proved that you must transform to compete.
Revamping distribution and fulfillment operations are often key plays in book publisher profitability. Book distributors typically follow one of three paths to supply chain profitability.
Get in-house fulfillment in order
Outsource distribution and focus on the book business
Diversify revenue by offering 3PL services
What cues can you take from their strategies? Here are tips to help you evaluate these options for your business.
Get in-house fulfillment in order
Many companies want to maintain total control over their distribution processes. But if you want to maximize profits, you need to strip all latency from your supply chain. Conducting a feasibility study is a good place to start. Areas of focus of a supply chain feasibility study may include:
Warehouse location - Rent, utilities, labor costs/availability, and proximity to shipping routes all come into play when evaluating the location of your warehouse.
Distribution center design – Are you maximizing your warehouse space and the flow of the product in to and out of your distribution center? Do you have the capacity and ability to flex as your business changes?
Automation – Warehouse automation can greatly impact the long-term warehouse costs by increasing efficiency and reducing labor requirements.
Technology – Do you have the right systems in place to help you manage processes, understand performance indicators, and position you to take advantage of artificial intelligence to optimize inventory?
Outsource fulfillment operations
Managing a distribution center isn’t right every business. This understanding of tactical operations requires specialized know-how as well as an investment in facilities, technology, and human resources.
Many book distributors choose to outsource their distribution and fulfillment operations. While the reasons can vary, they typically fall into the following categories.
Focus – You probably didn’t get into the business you’re in so you can spend time and resources on managing a warehouse. Outsourcing fulfillment helps you focus on your core business, your customers, as well as provides you the opportunity to concentrate on how to transform to compete.
Cost – Running a warehouse can be expensive, even if you own the space. Maintenance, technology, staffing, shipping all come into play when managing a warehouse. The sale of your shuttered distribution facility could add to the bottom line.
Risk – Running a warehouse alongside your core business is risky if you don’t have the right resources in place. If you have your eye on getting your products into the hands of your customers when they expect it, you may not be paying enough attention to market trends, consumer demands, and how to position your business.
Offer 3PL Services
Smaller-volume book distributors are discovering significant benefits of teaming up with larger distributors for fulfillment operations.
If you have your supply chain operations in order and you have the space, consider offering warehousing and fulfillment services. You may not want to team up with a smaller competitor, but you could consider working with businesses that have a different seasonality.
You can offset expenses associated with fulfillment costs associated with your own business as well as find additional savings. This includes volume pricing for packing materials like dunnage, tape, labels, and corrugate as well as preferred shipping rates with carriers.
Your industry may not face the same disruptions as the book industry, but there’s no doubt there will be time you to respond to change or reposition your business. Having a profitable supply chain helps position you for success.