|
"Are we
blinded by e-light"
Martyn Daniels, Strategic Development
Director, VISTA Computer Services
International Distribution and Supply Chain
Specialist Meeting Frankfurt, October 2000
We can all relate to the driver, but today
we now have to relate to the rabbits. We are
caught in the glare of e-light of the
e-revolutions that are bearing down on us at
an alarming rate. What is certain, is that we
can’t all expect this vehicle to brake and
give us time to move.
Change within publishing is taking place at
an alarming rate. Today, we all face many
challenges in our business journeys. The
question is, how we respond.
Do we:
- prepare against surprise - and build
defence mechanism against the change
- prepare for surprise - and adapt to
respond quickly to the changes as they occur
- or do we, recognizing the potential
opportunities available, prepare the
surprise itself
Today I intend to overview some of the
traffic, that is bearing down on us and to
offer some insights that may help us on our
journeys and avoid us being caught, transfixed
and blinded by the lights
The changes taking place today are
significant. Larger players are getting larger
and are changing the economies of scale and
scope, vertical integration is blurring the
roles of some within the supply chain, media
convergence is introducing new players and
globalization is challenging many of the
traditional publishing "rules". Convergence
and consolidation, is by itself, reshaping the
supply chain.
We are all familiar with the impact that
the likes of Guttenberg, Ingram and others had
in shaping today's publishing environment. You
may not be as familiar with the changes that
effected the UK market in the 18th century.
However, the 18th century literacy revolution
completely changed the roles of booksellers,
authors, printers and publishers. It redefined
the value chain and removed a number of
significant players. Like Guttenberg, Ingram
and others, the likes of Robert Dodsley
prepared the surprise in this revolution. The
question we all must now ask is, who is
preparing the surprise today?
Today, everyone is grappling with movement
on these Product and Market axis. We all start
from different positions, we all have
different goals and different time-scales in
which we aim to achieve them. Each of the
following axis has a different impact,
according to our roles within the value chain
and the sector in which we operate:
| Physical |
Vs |
Online |
| Direct Market Reactive
|
Vs |
Customer Driven |
| Direct Market Reactive
|
Vs |
Direct Market Reactive Vs Customer
Driven |
| Print and Distribute |
Vs |
Distribute and Print |
| Print in Case |
Vs |
Print on Demand |
| Out of Print |
Vs |
Always in Print |
| Front List |
Vs |
Back List |
| Consolidated |
Vs |
Fragmented |
| Sale or Return |
Vs |
Firm sale |
| Territory pricing |
Vs |
Global pricing |
The questions we now all need to ask are:
Where exactly are we? What is the position
of the marketplace? Where do we want to go and
in what timescales? What are the associated
actions and risks.
Digitization is a subject in itself. The
question of whether the ebook as we see it to
today is a mere transitional stage like the
CDROM and that broadband online technologies
are the end game is another debate. The impact
of the ebook alone is however forcing us to
revisit standard such as the ISBN and the
internet can clearly claim credit for the long
overdue emergence of ONIX / EPICS standards.
The jury remains out on the DOI.
In many cases we are not dealing with a
future we can predict or control. We can't
adopt a wait and see policy, if we do will not
have the competencies to compete and more
importantly will probably find others, sitting
in our seat and eating our dinner.
Earlier this year I asked a similar
audience to this, the following questions:
- When Simon and Schuster published
“Riding the Bullet” by Stephen King and made
it only available by digital download over
the Internet, how many downloads were
achieved in the first 24 hours?
- How many digital and e-articles appeared
in The Bookseller in the first quarter of
this year?
- How many online e-tailers databases are
updated daily and weekly online with rich
Bibliographic information via BookData?
The answers now seem dated, but when asked
less than half the audience got any one
question correct and they were extremely
conservative in their responses.
We only need to open up our press today it
see that the publishing e-lights are switched
on.
The speed of change should not be doubted.
A recent article in "wired" pointed out that
technology is now outstripping Moore's law,
which to-date, has accurately predicted the
exponential rise computing processing power to
time.
That change is happening should not be
doubted. That all change costs money is a
fact.
I think Terry McGraw captures the issue
perfectly when he says its now about the speed
of change.
However, we also have to remember that for
some time the current traditional environment
will still be the major revenue generator and
will still require continued support and
investment
In 1996, as a result of our research
programme "Publishing in the 21ts Century", we
predicted that the shift from physical to
digital product would gather momentum in the
year 2000, but that it would still represent
the minority of the overall product mix. We
also predicted that by 2020 the position would
flip, with physical product becoming the
minority of the mix. We are clearly moving in
this direction and therefore face with an
interesting quandary?
If we accept that overall growth in the
market is at a marginal, say 3% to 5% and we
take a hypothetical books and journals
publisher with revenues around $80 million, we
see marginal growth across the total business
over the next 5 years. However we must respect
that the e-publishing revenues will grow.
We could expect e-publishing growth over
the same period to rise to 25% of revenues.
Some may say this is conservative, others that
it is generous. The point is that if we accept
the principle, we have to accept that revenues
from the physical product must decline to
compensate the switch to electronic product.
The principle is simple, if the revenues
remain relative flat and electronic revenues
is growing, then physical revenues must reduce
The publishers now find themselves having
to continue to support the cost of the
declining physical product overhead with
declining revenues. Whilst at the other end
they are having to invest heavily to make the
e-publishing transition in order to realize
the new potential revenues. A clear double
wammy and new squeeze on the margins.
In this new environment we need to step
back and realize we need to re-evaluate how we
do business, the marketplace in which we do
business, partners we do business with, our
competitors etc. This is not an IT or
logistics issue it is a corporate one that
clearly forces strategic vision, corporate
consensus and corporate action if we are to
avoid being paralyzed by e-lights. Piecemeal
actions are no longer the answer
I have drawn up 7 principles of e-business
that I believe you should consider when
formulating or reviewing your corporate
e-business strategy. They are not
comprehensive neither are they mandatory. They
just make a lot of sense in this brave new
world.
First is a focus on your core
competency.
Recognizing the key elements of trading
involve:
- Content the product in a digital,
physical or any combination of media
- Context the bibliographic information
that describes the product
- Commerce the commercials and customer
information and processes
Just as within any environment, all are
essential within the e-business world, 2 out
of 3 will not do. All are linked irrespective
of whether you are selling virtual or physical
product or servicing customers the on the
Internet
The key question to ask is where is your
core competency, where do you add value in the
evolving value chain and proposition?
Some may believe that they provided added
value and competitive advantage by doing all
three themselves and that they are truly
self-sufficient.
You may develop and publish content, but
can you provide it in every format, every type
of ebook, Digitally distribute it, and provide
it on demand? Or do you recognise the
competency of others and outsource those
tasks? Are you equally focused across your
full list? Are you now focusing on being
"never out of print?"
These are just a fraction of the new
players on the radar of publishing who deal
with content and need to be evaluated,
understood and positioned. Many will fail, but
what is certain, is that a number will succeed
and will radically change aspects of
publishing as we known them today. Are you
comfortable that you understand their
competencies and value add?
Remember, only a few years ago Amazon was
dismissed by many. An interesting thought to
ponder…is that all major trade publishers now
have a clear vested interest in Amazon’s
continued growth and success and that failure
of the some of the dotcom’s could have a fatal
impact on some.
Ask yourselves what the role of the
wholesaler is today? Look at how many are
currently positioning themselves for tomorrow.
They clearly are embracing digital
distribution, they are clearly providing total
web fulfillment services to many bookstores,
they are providing drop shipment and could
even be regarded by some as distributors. What
is their core competency and value add and
where do they now position themselves in
tomorrow's supply chain?
Second is a focus on Integration - not
replication
When it comes to online fulfillment
Publishers have a clear choice - replicate
their commercial systems online or seamlessly
integrated their e-business activity with
their existing systems and existing
information.
Unfortunately, many have learned the hard
way. The skill and knowledge set required to
achieve this business integration, is
different to that owned by even the best web
designers let alone the “garage boys”, that
are all too often here today and gone
tomorrow.
An example of replication. The commercial
systems feed the digital warehouse in real
time, with information on customers, products,
trading terms etc. The consumer enters via an
intermediary and selects the ebook and
required format. They submit an order on
behalf of the consumer to the digital
warehouse, who proceed to download the ebook
to the consumer and confirm the transmission
to the etailor and the sale to the publisher.
Finally, the publisher's commercial systems
raise an invoice to the etailer. Seems fairly
straightforward, until you start to think
about the synchronization between the Digital
warehouse and the publisher's commercial
systems and the fact the digital warehouse
will have to virtually replicate the
publisher's commercial systems etc.
Unfortunately this process is not fictional
but is one fraught with risk.
When we look at the integration options, we
start to remove duplication and
synchronization of data and replication of
functionality. The solution is simple and
importantly recognizes the core competencies
of those involved and importantly is
consistent with physical fulfillment.
There are many people who we now have to
interface with. We need to think about how we
interface them. Integration not replication is
the only answer. Many who adopt a replication
route will fail not because their digital
warehouse was wrong but because they
introduced risk and cost when it could have
been avoided. Think about how you will need to
synchronize functionality and data and not just
with one but many partners. Critically, you
are not just replicating your functionality
and data, you could find, you are also giving
away your customers and your interface with
them.
Third focus on a Standard Interface
Many believe that the ability to process a
credit card transition is all that is required
today and that B2B and B2C are completely
separate.
Increasingly, the demands of servicing even
the B2C customers will become complex. They
themselves will be more demanding and their
needs will be driven not by what publishers
can provide but by their total e-experience.
The need to manage all customer’s through a
standard interface is compelling. It offers
standardization, commercial flexibility,
development economics and effective customer
service.
Fourth focus on Core Relationships
across the Value Chain
In one of our research reports, "The Impact
on The Publishing Value Chain of Online
Networks", we created, from the work of
Professor Michael Porter, a modified
Publishing Value Chain. It is critical that we
focus on product and customer information and
the associated trading terms across this
lifecycle.
As illustrated by the initiatives such as
ONIX/EPICS and the earlier BIC Basic, product
information does not just materialise when the
product hits the warehouse and neither does it
stop there. Over 70 % of customer Service
calls are about basic information. The demand
for product information is exploding, after
all if you can't find it you can't value it
and you can't buy it.
Today all the major chains, e-tailers,
wholesalers all have book in hand processes.
Collectively this is a huge cost to all. It's
primarily focus is to collect rich information
which is often not available any other way.
The problem is that this is too late in the
lifecycle.
Inconsistent and inaccurate information is
costing this industry millions and also losing
sales.
The question is not so much as to who will
provide the information to the marketplace,
but how publishers will produce and provide
the information in a timely manner.
To survive in this new environment, all
publishers now need a rich product database
with full export capability as much as they
need a customer database and fulfillment
system.
Fifth focus on the different user /
community perspectives
Yesterday we would have built different
systems for different users groups and even
different networks.
Our problem is that we all have:
- Close relatives and friends with whom we
share close information. (our Intranet)
- More distant relatives and friends we
see less frequently and share less
information with (our Extranet)
- Finally, relatives and people we only
see at births, marriages and deaths and
share little information with (our
Internet).
However we have all three types within the
same user groups and their individual
closeness will vary over time.
In addition, we also have to recognise that
the difference between what one group
customers wants and another group may vary as
little as 5%. There is often more commonality
than we think.
We now need to recognise that there are
many community builders out there. However we
need to be wary. Some want to totally own
their community, others only wish to be
service providers. In all cases, we have to
recognise what is best for the user and the
community and ensure that intermediaries don't
lock you out from even knowing who your
customers are.
Again Terry McGraw recognizes the key focus
required. Sharing information and trust, and
in doing so understanding behaviour become
important if not critical factors. Some today
will give these away in the belief they are
growing business, they are wrong, they are
giving away their future.
Sixth - focus on servicing everybody -
not the just the few
Although it is relatively easy for large
publishers to trade electronically with large
booksellers, this is often restricted to base
transactions and rarely filters down to the
80% that constitute 20% of value and volume
but a high cost of service.
Here we see traditional communications such
as fax, phone and even post. EDI or e-commerce
is often too complex and costly to prevail, is
not real time and doesn’t deal with customer
service queries effectively.
Also we need to remember that 40% of the UK
Book trade is export, they can’t be ignored,
they need 24 x 7 hour access to their
information and ability to trade both
efficiently and effectively.
Last - focus on Web access
Yesterday users wanted an integrated
desktop, one from which they could access all
their information in a consistent manner.
Today is no different except it is no longer
restricted to the confines of the local
environment, it is global and more important
people now only want to see and have access to
their world. They want "My Web",
identification, personalization and
consistency from anywhere and anytime.
ebusiness is about providing solutions to all
both inside and outside of the organization.
Theses seven principles are not fixed they
are fluid, they will evolve but they are
today's issues. The technology exists, the
opportunities exist what is now required is a
broad e-business vision, a corporate strategy
and the business commitment to make it happen.
Today we must stop thinking that ebusiness
is different. It is business.
We now need to cross the road, recognise
the opportunities, actions and risks and avoid
being caught in the glare of the e-light.
Return to top of page
Learning to Manage in the World of the
Unexpected
Paper By Martyn Daniels
Published as Chapter 3
Information in Action: Putting
Knowledge to Work in the Publishing Industry
1999,
©VISTA
Computer Services
ISBN 0952556685
3.
Learning to Manage in the World of the
Unexpected
"In an economy where the only certainty is
uncertainty, the one sure source of lasting
competitive advantage is knowledge"
Ikujiro Nonaka
1
When we set out on a journey, we have many
decisions to make:
•
Which route should we take?
•
What conditions will we face?
•
How long will it take?
•
Do we know of any delays, road works, and
hazards?
•
Have we sufficient gas to make the journey?
We know how to drive and how to minimize
the risk of accidents. We understand the
automobile's dashboard and the many messages
it conveys. But even with all this
preparation, information and experience, we
know we have to expect the unexpected.
When on our journey we are faced with a new
road sign, an oncoming car flashing its
headlights at us, or a warning light on our
dashboard, we recognize the potential risk
associated with the message and take
appropriate action. We collate all the
information available to us at the time,
relate this to our experience and knowledge,
and decide what we should do.
Our business journeys towards our strategic
and tactical goals are no different, just more
complex. We are all in different vehicles with
different capabilities, moving at different
speeds, often going in different directions.
We all want to avoid tailbacks, getting lost,
accident, break down – and running out of gas!
However, we often find ourselves confronted
with the unexpected; then we have to draw on
our personal and organizational skills and
knowledge to manoeuvre around the obstacle and
continue our journey.
Unfortunately, the information signals we
receive – from both inside and outside the
organization – are obscure and ambiguous.
Often the information is out of date, which
means that our responses, instead of being
proactive, can only be reactive. In many
instances, the person who is best equipped
with the experience and knowledge to deal with
a particular issue is not the one who receives
the relevant information.
Before we start to look for a response to
these issues, we must reflect on the
contribution that technology has already made
in capturing and exploiting information,
experience and knowledge and, as a result,
providing competitive advantage to the
companies that have used it effectively.
3.1 Yesterday's Journeys
Automating the process and accumulating the
transactional data
"So far computer users still use the new
technology only to do faster what they have
always done before, crunch conventional
numbers"
2
We have all in the past experienced some
degree of success in reducing the cost of
doing business. We have automated data entry,
reduced accounting and clerical resources and
significantly reduced the cost of processing
transactions. We have also enabled our
organizations to grow, handling greater
volumes of data more effectively. It is
difficult if not impossible to imagine the
same levels of growth being achieved using the
old paper- and people-intensive business
systems.
However, in automating our business
processes, we implemented little change; the
processes remained essentially the same as
they were before they were automated. In many
instances, innovative “best practice”
solutions to particular problems were neither
widely identified nor widely adopted. As a
result, these frequently remained proprietary
to an organization or an industry sector.
Taking the view that the individual
organization always knew best, "packaged"
system solutions were customized to support
proprietary practices and processes and as a
result became unsupportable by the vendor.
These "batch based" business system
solutions were all too often inward looking
and focused not on the supply or value chains
but on internal organizational processes.
Competitive advantage was seen as flowing from
reduction in the business's cost base, even if
this reduction was made at the expense of
others in the chain. Investment in technology
was high – and any competitive advantage
gained proved unsustainable.
Businesses created "data islands" that did
little to provide the organization with the
information it required for making its
tactical – let alone its strategic –
decisions. These "islands" of data were often
hard to locate within the organization. It was
cumbersome to extract useable information from
them and it required specialists to provide or
amend the simplest of reports. In many cases,
the data was incorrect, inconsistent or out of
date.
Organizations made many of their decisions
entirely "blind of the facts". Despite the
investment in technology, they remained
totally reliant on the internal,
unsystematized expertise and knowledge on
which they had always depended.
"In the absence of learning, companies and
individuals, simply repeat old practices.
Change remains cosmetic and improvements are
either fortuitous or short lived"
3
Providing power to the desktop but not
the organization
The PC and local network revolution brought
a realignment of focus from the organization
and the back office to the user. This change,
together with previously unimaginable local
computing power and software capability,
broadened the computing franchise beyond the
IT specialists.
We now found ourselves wielding new tools
that could download the data, manipulate it
and report on it more effectively and
efficiently than ever before. However, we
often found a significant gap between those
who could and those who just thought they
could. Newly empowered users often spent hours
designing (and over-engineering) spreadsheets
and other analysis tools.
The data was certainly turned into
information – of a sort. However, in this “new
frontier” environment, it was still doubtful
that the right information reached the right
people at the right time.
The more that data was collated and
analyzed, the more information we wanted. Our
thirst could not be quenched. All too often we
failed to stop and think – we just had to
analyze everything. Every finance department
had its own spreadsheet "magician". The
autonomous became even more autonomous. We had
deployed "island technology" that spawned
"island information" and the information
created even more information in this
seemingly lawless maze.
The myriad "information islands" that now
dominate the publishing front office often
inhibit easy access to comprehensive
information covering the complete life-cycle
of a title. However, we need to recognize that
the information alone is effectively valueless
unless we can also find ways of capturing and
exploiting the organizational knowledge that
gives it context.
In this era, competitive advantage was
still seen as residing in the ability to
analyze a business's performance in detail, to
seek out inefficiency and to apply corrective
action. However, it turned out that monitoring
the organization was hard: all too often,
conflicts occurred when two departments
presented two (or more!) different
perspectives using precisely the same
information.
Investment in technology remained high,
technical effort across the organization rose
sharply and any competitive advantage again
proved unsustainable. Organizations became
increasingly "sceptical about the facts" and
were still totally reliant on –and exposed to
– that internal decision making expertise and
knowledge they had always used.
Information is not static and lives all
around us
"Most organizations have habits and
structures that keep them at arm's length from
the rest of the world"
4
In the second paper in this series,
"Profiting From Tomorrow's Customers",
5 we highlighted many of the issues
surrounding the publishing supply chain and
the growing shift from a product-oriented
business to a customer-driven one. We
highlighted the often-adversarial
relationships that existed then and that
(perhaps to a lesser extent) still exist
today.
Sharing of data, let alone information,
with trading partners is only now starting to
take place across the industry. Publishing
still lags a long way behind other industries
in the area of EDI (electronic data
interchange). Such sharing of information as
does exist in the book industry would be
regarded as unacceptably meagre in many other
trading communities today.
However, movement is perceptible. The
industry has started to confront the massive
gaps in information that have existed between
trading partners across the publishing supply
chain.
• In the subscription sector, it is
recognized that the vast majority of claims –
and the resultant costs – are a direct result
of there being little or no sharing of
publication schedules.
• In the book sector, over 65% of calls to
publisher's customer service departments are
inquiries on price, availability and the
status of an order.
Organizations are beginning to realize that
significant efficiency can be gained by the
adoption of "open information trading" with
their supply chain partners.
EDI will address a considerable proportion
of the transactional information exchanges but
will not address real time requests for
information. Innovative services, such as
PubEasy.com,
6 Ingram I,
6 Oasis
6 and others,
are starting to redefine information access,
presentation and exchange. Other industry
services such as BookTrack
6 and BookScan 5
are now collating and analyzing cross-industry
information.
In the third and fourth papers in this
series,
7 we highlighted many of the
issues relating to the publishing value chain
and the information and technology needs of
the core "value adding" front office
activities within publishing. Integrating
information from the myriad of "information
islands" that dominate the front office is
often a daunting task. What is more, bridging
the cultural divide between publishing back
and front office is not as important as
bridging the information divide between these
two areas of the business.
Significant competitive advantage can flow
from sharing data and information both within
the organization and in trading partnerships.
However, realizing the benefits from this
activity requires vision, commitment and
co-operation between "information traders".
Data standards are also essential, not just
between the different trading partners but
also within the organization!
However, merely throwing information "over
the wall" without the insight and knowledge
that gives it meaning does not create the
"win-win" environment that is essential for
future success.
"There is no future for hermetically sealed
closed systems in the networked economy."
8
Yesterday's journeys brought us greater
efficiency and started to unlock the
information available from inside and outside
the organization. In doing so, they served to
highlight the exposure of the organization to
inadequate management of its information and
knowledge resources.
3.2 The dynamic landscape we now live in
3.2.1 Convergence, convergence, convergence
Not only does everyone now have internal
systems and information sources, we have many
external ones as well. We are all continually
bombarded with email and have increasingly
high mountains of it to climb every day. We
still have the telephone; thanks to mobile
telephony, we can no longer escape from its
call. If we do escape briefly, we have a
string of voice mails, all crying out for our
attention. We still have the constant arrival
of faxes and even traditional "snail mail”
seems never to decline in volume.
We are, as individuals, becoming
increasingly "open all hours", to do business
with anyone, from anywhere and at anytime. We
are continuously "plugged in" to the
information and communication network.
"I meet refuges coming out of Kosovo with
the few possessions they could carry. I was
amazed to see them carrying their cellular
phones with them"
9
Will it get worse? “Certainly” is the only
possible answer. Potentially at least, we are
now recipients of more information in one day
than Jane Austen or Mark Twain would have
received in a decade. Telecommunication and
information services will continue to merge
and develop. Anytime, anywhere access to
information (and others’ access to us) will
become inescapable. At the same time, the
quality and utility of that access will
improve. We will find the "office in our
hands" a reality.
Most of us can remember life without
laptops, mobile phones, personal organizers;
our new employees will never have known life
without them. The new workforce will expect,
indeed demand, much greater and more
sophisticated use of technology.
King Canute failed to hold back the tide.
The question today is not how we can contain
this new tidal wave of intrusion, but how we
can manage and exploit it to our advantage. We
will need automatic filters on what we receive
and when we receive it – and we will need to
personalize these to reflect our individual
needs. In a world of convergence, we will need
to find new ways of establishing lines of
demarcation between our social and working
lives.
Publishing and the media are at the very
heart of this technology convergence. The
formats and channels in which content is
delivered (with its supportive contextual
information) are rapidly evolving.
The speed at which this convergence is
happening is frightening, even to a
professional technologist. We are constantly
being bombarded with new and innovative
technology and prototype applications. If we
thought that the choice in the beginning
between Betamax and VHS was a close call, then
we are in for some tough decisions.
Broadcasting and telecommunications
technologies are converging, along with the
infrastructure and tools that we use to access
them; at the same time, their carrying
capacity is increasing exponentially.
What this all means for the future is
uncertain. Who will dominate this marketplace
and what their offer will be remains unclear.
What is certain is that out of today's myriad
of options will emerge a winner, just as in
the past we had IBM (mainframes), DEC
(midrange), Intel (PC chips), Microsoft (PC
Windows), Oracle (relational databases) and
SAP (ERP software). What may be worth noting
is that no dominant technology position has
ever proved to be defendable against the next
wave – at least, not yet.
3.2.2 Drowning in the sea of data
"Mistakes get repeated, but smart decisions
do not. Most important, the old ways of
thinking are never discussed, so they are
still in place to spawn new mishaps"
10
As with telecommunications, we are
increasingly being bombarded with
“information”. Some of it is still only
“data”; some has been collated and analyzed
and can now claim to be “information”.
Nevertheless it is clear that we all spend far
too much time and effort reading the wrong
news.
We have office systems which create their
own information flows, some structured and
some not. How many emails and attached reports
are circulated to us just “for your
information”? We now have the all too simple
capability to fire off at random "just in
case" information. Are we expecting some sort
of response, a reaction – or are we merely
covering our backs? Irrespective of our
expectations, the recipient has to make some
decision about it. To make that decision, at
least part of what we send has to be read by
all those to whom we send it.
We also have external feeds, both in the
form of transactional and operational
information and access to external market
information. These feeds are sometimes
"pushed" at us in the form of an online
newsletter or alerts; alternatively we have to
go and pull the information in the form of
online "self service".
We are increasingly information and
communication slaves, all conscious that
non-participation in the information chain
(both creating and digesting) is a not an
option; exclusion from the chain could have a
terminal effect if not on our business then at
least on our careers.
Ask yourself these questions:
•
How much of my day is now spent dealing with
"noise"?
•
What percentage of all the information I
receive actually makes a difference?
•
What information don't I get that would really
make a difference?
" Who depends on me for information? And on
whom do I depend? Everyone should be
constantly thinking through what information
he or she needs to do the job and to make a
contribution"
11
Management by exception must be the goal –
with automated profiling and filtering of
information an essential means of reaching
that goal.
However, we often forget that communication
is a two way process. What information do we
send to others today that instead of enriching
their contribution potentially dilutes it?
There is little point in giving trading
partners advanced supply chain information,
such as demand forecasts, if they are unable
to use it effectively, or choose to ignore it,
or, worse, actively use the information as a
weapon against us.
We need to learn the art of navigating a
safe passage through this sea of data and to
ensure that in doing so we do not
inadvertently sink those on whom we also
depend.
3.2.3 The e-business environment
"With electronic business not only
commercial transactions but whole businesses
will go online"
12
The migration from e-commerce to e-business
is so significant and difficult to achieve
that many companies will miss the boat and
perish as a result. The move from the physical
world to the virtual world is not just about
digital product; it is about doing business,
irrespective of whether the product itself is
physical, virtual or multi-format.
Early adopters may be seen to be operating
at a commercial disadvantage, apparently
spending money for little or no tangible
return. They are however learning the new
rules, establishing their brands and gaining
knowledge about customers and the market that
will be essential to their survival.
3.2.4 The net redefines the customer
"Electronic commerce gets over hyped today.
There's nothing dramatic about the fact that
an order that used to come on paper now comes
on the Internet. What's profound is when
buyers and sellers who never would have been
matched before are being matched"
13
We speak today about ERP (Enterprise
Resource Planning) and “Enterprise Systems”
but these are already being overtaken by CRM
(Customer Relationship Management) and
“Customer Systems”. Vendors are realizing that
information about their customers sales are
not enough and that they need to understand
their buying patterns and preferences.
Categorizing customers by this analysis can be
far more productive than by sales and
territory alone.
The traditional vendor driven publishing
model is fast becoming extinct. Power has
already shifted firmly to the intermediary but
is moving at an increasing speed to the
consumer. Those who ignore this – and the
rising role of the Infomediaries – may well
find themselves not driving the development of
their products and the market but firmly being
driven by others down the supply chain.14
"Customers don't have to buy the books -
the mere fact that they looked for information
about such books can be recorded and marketed
to others"
15
The customer is king in the world of "MyNet"
"There's no such thing as a personal
computer in the future. There are only
available appliances. You'll use your smart
card or smart ring or some sort of proximity
device, the device knows who you are, what
you're authorized to access - and you type in
your password to get whatever service you paid
for"
16
Utility of access works two ways and comes
with a heavy price. Consumers can be accessed
and targeted just as easily as they can access
and target vendors and information. Consumers
are besieged, telemarketers phoning at home at
all hours, direct marketers stuffing the
mailbox with junk mail, relationship marketers
demanding more information. "Spam" junk email
now constitutes 10% of all worldwide email.
Yesterday the consumer was happy to give
their personal information and often had the
option to refuse its reuse or sale to third
parties. Today we only have to view our PC
files to see the profusion of "cookies" that
are being deposited in them. Customers
understand that their information and feedback
has real value and is no longer an
afterthought. It has the potential to become
"the tail that wags the dog".
• A 1996 DIRECT survey found 83% of those
surveyed said there should be a law requiring
an opt-in procedure for names to be included
on direct mail lists
• A 1998 survey of more than 10,000 World
Wide web users by Graphic, Visualization &
Usability (GVU) found that 72% of Internet
users believed there should be new laws to
protect privacy on the Internet and that 82%
of users objected to the sale of personal
information.
• A 1998 Business Week poll found that 53%
of respondents said government should pass
laws now for how personal information can be
captured and used online, a figure 3 times
higher than the number of consumers who
supported the idea that the government should
let trade groups develop voluntary privacy
standards.17
Another aspect of this new environment is
the development of Intelligent Agent
technology. We are all familiar with the
search services available on the Internet.
Without the search engines, we would not be
capable of finding the haystack, let alone the
needle. These agents collect information and
allow us to search against it. However they
perform simple "word match" searches (however
sophisticated these may be) and are "dumb" as
to the relevance of what they find to any
particular individual.
A new breed of tools are taking this one
stage further and are starting to search more
intelligently against specific requirements
and on a narrower range of directly relevant
sites. Comparison shoppers, for example, are
powerful aids to the user who is searching for
the "best buy" – and can kill traffic to sites
that are not in their search path. If
customers see value in their service, then
there is much to be lost in blocking their
entry. However, who is then the real service
provider to the customer?
Infomediaries18 are
now using agent technologies both to profile
users and to enable users to profile
themselves. This profiling then enables the
user to be automatically alerted to any new
information or services that match their
profile. This technology has the potential to
make a really significant impact on everything
we do, both in our commercial and in our
social lives.
Imagine for example a bookstore that
currently generates insufficient trade to
warrant a call from a sales representative.
The bookstore’s buyer inevitably goes to a
wholesaler today. With more sophisticated
tools, publishers could profile these
accounts, not just by their sales history
(which only says what they bought), but
against their own description of what they
want, when they want it, and those many other
factors that together create an “intelligent
profile” of their business.
This would then present the opportunity,
for example, to "push" appropriate marketing
and promotional materials to them at the
appropriate time. Potentially a "win–win"
solution – and one that could address a
significant proportion of today’s supply chain
issues.
3.3 Learning to swim in the sea of data
"A Corporation's success today lies more in
its intellectual and systems capabilities than
in its physical assets"
19
How do we prepare for the unexpected and
arm ourselves react more quickly – or to
pre-empt the surprise? We need to focus on what
we need to know in order to perform our
individual tasks and to remove unnecessary
data that is currently cluttering our vision.
The schematic in Figure 1generically
depicts the different information roles within
any organization. The framework is defined by
the type of actions required from a member of
staff, from routine everyday tasks to
exceptional ones and from those that are often
heavily systematized to those that require
substantial intellectual "knowledge" input.
Figure 1

Clerical Support activities require routine
and systematized information flows that feed
regular inputs, that can be processed and
output to the next activity in the chain. The
information is transactional and needs to be
minimized to facilitate efficiency. This area
of activity is where the paper chain (and
resultant paper mountains) need urgently to
migrate online and where integration and
portable technologies such as hand held
terminals, radio frequency, and mobile
telephony can bring significant efficiency.
The overall objective is to "feed the
conveyor-belt" and ensure that operations are
kept moving.
Users need workflow tools that provide "to
do lists", automated routing, process
management and full integration of their
information and communication systems and
services. They also require full online
enquiry and entry capabilities and minimal
paper reporting.
The service objective is: "check it in
and check it out".
Process Management activities differ from
the clerical ones in that these are focused
not on the performance of tasks but on the
performance of process. Process managers
require access to the same transactional
information used in the clerical process but
their usage of the data and their application
requirements are very different. They often
require access to associated information from
a number of sources to enable them to manage
risk and change in the day to day activities
associated with the process.
Users here still require workflow tools but
in this case to alert them to process
exceptions, performance bottlenecks and future
resource requirements. They also need basic
analysis and standard online reporting against
targets, thresholds and trends.
In today's flat organizational structures,
a program manager may be involved in the
management of a process or processes not just
within a single functional area but right
across the whole business. This involves the
management of cross-functional teams and
appropriate allocation of resources. The
resource information associated with these
dynamics is similar to that found in the
traditional project management toolkit; this
adds a further dimension to the information
requirement.
The service objective is: "keep today on
schedule".
"Strong businesses and economies draw on
deep reservoirs of know-how and expertise"
20
Business Analysis activities tend to be
associated not so much with process, but with
monitoring and analyzing overall business
activities and performance. This analysis may
be prompted by a variance to that expected or
by a search to discover the parameters that
effect an operation or process. All involve
deep "data mining" of the information.
"Data mining" describes the functionality
required to drill down through a huge volume
of data, tapping off into specific rich
“seams” as necessary. This involves not
viewing information in a single dimension but
in multiple dimensions.
Analysis is often performed "offline",
often using a Data Warehouse, in which both
operational information and information from
many other sources has been aggregated. This
approach protects live operational data from
the performance demands of the analysis
techniques while at the same time providing
analysts with both the performance they
require and the wider business picture. The
tools used vary considerably from the PC
spreadsheet to very sophisticated modelling and
forecasting tools. It is important that the
results of any analysis can be presented in a
graphical and accessible format using industry
standard tools.
The service objective is to enable the
analyst to: "turn over the stones and look for
the issues".
Enterprise Decision Support is focused at
managing the key performance indicators (KPIs)
within the business. The activity is focused
not on “fixing what isn't broke”, but
identifying what is broke and fixing it, or
even more importantly on identifying what
could be breaking and taking actions to
prevent the fracture. There is also an
often-unrecognized need to understand where
and why performance is exceeded. The role is
proactive as well as reactive and users need
to be able to pose sophisticated "what if"
questions against information at a high level.
.
This area of activity is at the senior
executive level and again needs to accommodate
external as well as internal information
sources. However, unlike the "search and
discovery" role of the analyst, executives
need an active feed that alerts them to where
they need to look more closely at information.
This type of approach can be referred to as
"traffic lighting". They do not need to know
when the lights are green but only when they
are on amber or red. When on amber they also
need to understand if they are about to turn
green – or red.
The service object is to: "identify which
key performance indicators need attention".
"The management of knowledge involves
essentially the creation of behaviours that
allow people to transform information into
business results"
21
All too often we seek a single solution or
toolkit that covers all these disparate needs
for information; we end up by servicing only
lowest common denominator needs.
Alternatively, we develop lots of different
information islands and become incapable of a
complete and consistent understanding of the
business.
3.4 A technology architecture for the
millennium publishing business
Few new technologies suddenly appear and
get instantly deployed. They need to mature.
They develop from what is initially announced,
start to be adapted to meet a specific need,
then when viable they start to be widely
adopted. Finally, they go full circle and
spawn new technology.
This should not be seen to imply that we
believe that all announcements end up being
adopted or even that all adaptations progress.
There are many good ideas and good
technologies that never made it.
However, if we look at publishing, we can
see a number of examples of this virtuous
circle of development. Today the e-book is a
classic example that may be somewhere around
the initial adaptation stage. Radio frequency
tagging is another example where the
technology has been adapted to address the
issue of bookstore shrinkage, but where its
adoption is now waiting for the price of the
technology to drop sufficiently. Wide spread
adoption may eventually depend on the
potential use of RF in managing returns.
In last year's white paper in this series,6
we first introduced a schematic architecture
for systems to support publishing. Having
reviewed and qualified this basic
architecture, it has now been further refined
and developed to become a driving vision of
how we see the future being serviced. This
vision should not be seen as “finished”, it is
continuing to develop. What we envisaged some
six months ago is being enhanced as we
continue to adapt and adopt it.
The unique architecture is focused on
delivering front and back office solutions for
publishers that are full integrated with
e-business applications. These business
solutions are able to access the corporate
databases that underpin the business and
provide a common user presentation for the
information.
The business processes that are required to
support publishing activities and projects are
controlled by use of work flow and data flow
technology and a powerful reporting tool. The
architecture also includes a powerful decision
support and analysis tool to provide intuitive
access and presentation of all the business
information within the organization.
The schematic in Figure 2 depicts this
architecture
Figure 2 
The Databases are built on the core
publishing foundations of Content, Context and
Commerce.
•
Content consists of the books, chapters,
journals, issues, pictures, and fragments of
information in all its many formats.
•
Context is the product and bibliographic
information that describes the content and
enables you and your customers to find it and
establish its value.
•
Commerce is the final dimension, the business
information that relates to pricing, sales,
inventory, customers and royalties systems.
The process management and control layer
focuses on the need to manage and control the
business across its operational activities and
also various product and project life cycles.
•
Work Flow technology enables the various
activities within a process to be integrated
and for them to be controlled from start to
finish.
•
Data Flow technology enables the flow of
content and its associated context, to be
managed and controlled from receipt of
manuscript to delivery of finished product.
Business Transaction Processing provides a framework
that is focused at supporting any publisher’s
specific requirements across the total life
cycle of a product, from conception to final
royalty payment. Different activities within a
publisher will require different aspects of
the functionality and will need individual
combinations of the back and front office
applications as well as e-business solutions.
This layer incorporates not only the front
office applications that are shown
but also back office applications (customer
service, ordering and fulfillment,
distribution and warehousing, finance and
administration, royalties and inventory
management). Also in this layer are the
e-business applications that open all of the
company’s applications to communication with
the outside world. This recognizes that the
successful operation of a publishing company
implies the management a “virtual
organization” with many out-sourced
operations.
Information Management focuses on using
database and knowledge technologies to
enable all information to be accessed and
analyzed both at summary and detail levels.
The User Presentation layer recognizes the
need for consistency and integration of data
and its presentation through a standard user
interface. Today, the user interface is a
Windows Client for internal use and a Web
Browser externally. We need to satisfy both
and recognize that they will shortly converge,
with the browser becoming the dominant
presentation technology for the next
millennium.
In order to understand the significant
changes that an information and knowledge
driven environment will have, it is necessary
to develop these latter layers further.
3.4.1 Information Management
We regard the application and database
layers as being the primary information feeds
into the business. Figure 4 shows the three
primary feeds.
Figure 3

The traditional approach is to view the
corporate analysis and reporting layer simply
in the context of the corporate data
warehouse. The warehouse is a storage
aggregation of all the corporate information
within a structured relational database
environment. However, this perspective often
limits the vision and development to focus
only on operational needs and creates a narrow
perspective on the overall organizational
needs.
As we have already discussed, we can no
longer afford to ignore perspectives provided
by external information; there is also a need
to deliver a wide range of types of
information in a consistent user interface,
not just commercial information but also
contextual information, and even completely
unstructured information.
The architecture also acknowledges the
critical relationship between information and
one of the key knowledge-adding inputs –
process. The requirement to manage, control,
monitor the business processes and product
development is achieved through the sub layers
and tools provided by Workflow and Dataflow.
Given the different information roles and
needs we discussed earlier, we can now extend
this critical aspect of the architecture even
further as depicted in Figure 4.
Figure 4

3.4.2 Preparing for "MyNet"
It is not possible to ensure that your
customers in the future will not elect to bar
you from their world. The technology is
rapidly becoming available for them to profile
what they want, when they want it and how they
want it. Full self-service is becoming a
reality; e-business is not something you
should be thinking about, it is something you
must be doing now. Those who enter the fray
late will have to spend heavily on the skills
and knowledge to enable them simply to stay in
the game; if they fail to make the migration
to customer relationship management they will
surely perish in the world of the infomediary
and permissions marketing.
Figure 5 depicts how the new permission
layers will need to be accommodated.
Figure 5

We can now further develop the vision to
recognize this new and evolving environment.
This vision is shown in Figure 10, which we
believe sets the agenda for tomorrow's
solutions, incorporating the extended
information needs and knowledge input.
Figure 6

3.5 Beware – technology at work
Remember all those dreams we only partially
realized: the paperless office, teleworking,
the virtual organization? All too often we
were presented with the prototype but tactical
priorities dictated our direction and we
adopted a "wait and see" approach.
Today the pace of technology change is
quickening and it is no longer an option to
join the marathon at mile 21.
“Business must compete by exploiting
capabilities which its competitors cannot
easily match or imitate. These distinctive
capabilities are not raw materials, land or
access to cheap labour. They must be knowledge,
skills and creativity…That is why we will only
compete successfully in future if we create an
economy that is genuinely knowledge driven.”
23
Learning to learn continually is our
hardest task. This is not restricted to the
organization itself, or to relationships with
trading partners and customers, or to new
channels to market, or to evolving product
formats, or to business processes, or to
organizational structure. It encompasses all
of these and more. It is about learning to
adapt, adopt and advance technology. It about
learning to share information within a new
"open" commercial environment. It is about
reducing the organization's current exposure
to risk from the failure effectively to manage
knowledge and information assets. It is about
tapping into and exploiting all the
information and knowledge available to provide
a secure future for the organization and the
individual within it.
"We can know more than we can tell"
24
Notes and references:
1. Ikujiro Nonaka, "The Knowledge Creating
Company", Harvard Business Review Nov - Dec
1991
2. Peter F Drucker, "The
Coming of the New
Organization", Harvard Business Review, Jan -
Feb 1988
3. David A Garvin, "Building a learning
organization", Harvard Business Review, July -
Aug 1993
4. S Davis, C Meyer, "Blur: the speed of
change in the connected economy" ,Addison
Wesley 1998
5. M Bide and M Shatzkin (Eds)
"Profiting From Tomorrow's Customers" the
second report in the Publishing in the 21st
Century research series, London and New York:
VISTA Computer Services (1996)
6. PubEasy.com, E-business Internet trading
service developed by VISTA Computer Services
Ingram I , a self service Internet service
developed by the Ingram Book Company OASIS
BookTrack, a retail sales analysis and
reporting service developed for the UK market
by J Whitaker Information Services BookScan, a
retail sales analysis and reporting service
developed for the US market by BookScan Inc.
7. M Bide and M Shatzkin (Eds)
"From N to X - The publishing value chain" the
third report in the Publishing in the 21st
Century research series, London and New York:
VISTA Computer Services (1997)
M
Bide and M Shatzkin (Eds)"Supporting
Creativity: Bringing Technology to Front
Office Operations" the forth report in the
Publishing in the 21st Century research
series, London and New York: VISTA Computer
Services (1998)
8. K Kelly, "New Rules for the New Economy:
Twelve dependable principles for thriving in a
turbulent world" Wired, Sept 1997
9. Richard Gere, CNN May, 1999
10. Art Kliener and George Roth, "How to
make experience your companies best teacher"
Harvard Business Review Sept -Oct 1997
11. Peter F Drucker, "The
Coming of the New
Organization", Harvard Business Review, Jan -
Feb 1988
12. Gigabyte - an annual review of the
Information Technology Sector, Granville
Equity Research, 1999
13. Bill Gates , Microsoft 1999
14. See further chapter 11
in this report
15. John Hagel III, Marc Singer, "Net
Worth", Harvard Business School Press, 1999
16. Scott McNealy, Sun Microsystems, 1999
17. John Hagel III and
Singer M "Net Worth" Harvard Business School
Press (1999)
18. See further chapter 11
in this report
19. "Our Competitive Future" UK Government
Department of Trade and Industry White Paper,
1998
20. A Braganza and Dr K Breu, "Management
Focus" Cranfield School of Management, winter
1998
21. Ibid
22. M Bide and M Shatzkin
(Eds)"Supporting
Creativity: Bringing Technology to Front
Office Operations" the forth report in the
Publishing in the 21st Century research
series, London and New York: VISTA Computer
Services (1998)
23. J B Quinn, P Anderson, S
Finkelstein "Managing Professional Intellect"
Harvard Business Review March - April 1996
24. Michael Polanyi quoted
in "Gigabyte" (see above n12)
Return to top of page
Drive with Care: People with Technology at
Work
Presentation: M Daniels, VISTA "Information
in Action" conference London and New York,
1999
We all, took a journey to get here today
and in taking that journey we faced many
decisions. In fact I took a journey which I
expected to be half an hour, it took an hour.
But we all faced decisions about which route
should we take, how long, what conditions,
what delays - road works, hazards unknown to
us. Do we have sufficient petrol to make the
journey? We all know how to manage the down
the risk of accident and we understand the car
dashboard and the many signals it conveys. But
with all this preparation, knowledge and
information, we know one thing is certain - we
have to expect the unexpected.
A business journey is no different, merely
more complex. We often find ourselves in
different vehicles, with different
capabilities, going at different speeds, often
in different directions. But what we all want
to do is avoid jams, accidents and breakdowns
and of course - running out of petrol.
However, with all this experience and all this
knowledge, we are confronted everyday with the
unexpected and we have to draw upon a large
volume of skill and knowledge within the
organisation that enables us to manoeuvre and
move forward. The signals, the information
that we receive within our businesses is often
obscure. It comes from not only within the
organisation but now increasingly from out
with the organisation and instead of being
proactive a lot of the information that we
receive and how we deal with it is reactive
and overly reactive. Often, the person who is
the best equipped with the skills to deal with
that the issue in itself, is not the person
that receives the information.
What I want to do today is look at some of
the journeys that we took yesterday, look at
some of the challenges that confront us today,
look at information and its utility within the
business and finally look at a potential
business architectural and technology model.
If we look at yesterday’s journeys,
automating the transactions, we all
experienced a huge amount of success in
reducing the cost of doing business, we
automated data entry, we reduced clerical
administration and accounting and we reduced
the cost of processing transactions. In fact
it is difficult to see how we could have
achieved the growth that we have all
experienced under the old paper and people
processes. However, Peter Drucker got it
right, very little has changed, the processes
within our businesses have remained basically
the same. Often proprietary to an organisation
and proprietary to an industry sector.
Solutions are often inward looking and not
focussed on the supply chain or the value
chains but internal processes. Competitive
advantage has been seen as driving down cost,
reducing the cost of doing business, even if
it has been at the expense of others within
the chain. Clearly we have not learnt a lot.
What are the results of this automation? Well
we have ended up with data islands, we have
ended up with information that is hard to
find, hard to extract, where we often rely on
a specialist to produce the simplest of
reports, and by the way you have got to wait.
And often when we get the information it is
out of date.
Many decisions are made blind of the facts
today and we remain very reliant on that
organisation knowledge and skills inherent
within the organisation. We clearly have an
information and knowledge business exposure;
we probably don’t recognise it. If we look at
yesterday’s journeys also we have to look at
the PC and local area network revolution. This
was great we empowered the user. Well we did
that so well that we found users that spent
hours designing and over-engineering
spreadsheets, power point presentations, word
documents etc, etc, etc. And the gap was
great, it was a significant gap between those
who could and those who thought they could,
and we can all relate to that. But the thing
that was underlying is that is still
questionable whether the right information
reached the right people at the right time.
All too often we failed to stop and think we
just had to analyse everything. Ask yourself
how many finance departments and marketing
departments now have their own little Merlin’s
who are the spreadsheet whiz kids within your
organisations, I think you all can relate to
that. What we found as a result of all this
was that we had island technology, that
spawned island information, and that
information created more information and
rather than making it easier to find
information it was even more difficult to get
it in what was now a seamlessly lawless maze
of information. If we look at the mirriad of
information islands that exist within the
publisher’s front office it’s hardly
surprising that it is virtually impossible to
look at the information across the lifecycle
of a title in any coherent manner. We still
had, in fact we had increased our business
exposure with regards to knowledge and
information.
So that is two journeys down, the third
journey was about sharing information with
trading partners it is hardly surprising we
discovered the obvious, information is not
just internal. Sharing of data and information
is critical but publishing still lags a hell
of a long way behind other industries. And
what information sharing takes place within
publishing would be unaccepted to many
industries today. However, movement has at
least started. Throwing data internally or
externally over the wall whether it is to
trading partners or to colleagues without the
insight and knowledge that makes it into
information does not create the win win
environment that we all seek to achieve it
just merely replaces the postman.
So if we move over to today’s challenges, I
think you can relate to this - how many of you
feel like you are drowning in a sea of data? I
do. We are bombarded with information, some of
it is still only data, some of it has been
collated into information, but we spend far
too much time dealing with the wrong news. How
many e-mails are circulated just for
information? We now have the capability of
firing off ‘just in case information’ are we
expecting a response, a reaction or are we
just merely covering our backs? Irrespective
what you have to start thinking about is it
all has to be read, it all has to be
assimilated. We now, in the last 30 years have
produced more information and published more
information than in the previous 5,000 years.
We can now externally get information pushed
at us from newsletters and alerts and we can
pull information in the form of self-service.
One thing that is very frightening though, is
that we all recognise that non-participation
is a non-option, exclusion from the
information chain has a terminal effect. Maybe
on our businesses and definitely on our
personal careers. How much of the information
that you receive today makes a difference? How
much of your time and day is spent dealing
with noise? What information don’t you receive
that would make a difference? Most importantly
what are you doing about it? We have to take
responsibility to learn to navigate safe
passage. However, we must remember that we
must not sink those on whom we also may
depend.
The next challenge is equally as daunting,
in fact it is probably even more daunting, it
is that of convergence and intrusion. We are
now open all hours. We used to be able to
switch off the phone, but now due to mobile
communications – we can’t, in fact we can
never escape the phone and when we do we find
a string of voicemails all crying out for our
attention. We still have the constant delivery
of faxes, e-mails and snail mail. We are
constantly plugged in; anybody who thinks that
they are not constantly plugged in is kidding
themselves. We will do business with
everybody, from anywhere at any time. Will it
get worse? – Yes, telecommunications and
information services are converging at an
alarming rate. It is not just about access to
it is also about the utility of access
becoming inescapable. We can all remember life
without laptops, personal phones, personal
organisers etc. Unfortunately our new staff
never knew life without them.
I’d like you to forget about SGML and XML
and think about WML (wireless mark up
language), or VXML (voice extendable mark up
language) forget about GSM, what about GPRS –
full e-mail and web browsing by a mobile
communications, what about UMNTS which is due
out in 2003, full broad brand wireless by
mobile networks. We have to start thinking
about convergence in a big way. King Canute
failed to stop the tide. The question today is
not whether we stop or contain, but how we
manage and control this new wave of intrusion.
We all need an automatic filter what we
receive, when we receive it, and an absolute
requirement to personalise this to reflect our
individual needs. In the world of convergence
it is essential that we establish new lines of
demarcation between our social life and our
work life.
Another challenge that we face today is
that of e-business. The change from e-commerce
to e-business is not understood by many. But
it is so significant that many companies will
miss the boat and will perish. It is not about
physical world to the virtual world, it is not
about digital product, it is not about any of
these, it is about doing business irrespective
of whether the product is physical, virtual or
a combination of the two. The interesting
thing is that early adopters may be seen to be
working at a commercial disadvantage, they may
be seen to be spending a lot of money with
little return. They are getting huge return,
they are learning the new rules, they are
establishing brand, but most importantly they
are getting knowledge and information about
customers and the market which will be
essential to competing in the new century and
their survival. So what about the consumers?
Well consumers today are besieged, we all in
this audience have telemarketers ringing us at
all hour, direct marketers stuffing post into
our post boxes, relationship marketers wanting
to know our every movements. 10% of worldwide
e-mail is junk spam mail. Yesterday the
vendor never really knew, ask yourselves -
the publishers never really knew whether the
customer was giving them 10%, 20% or 100% of
their business.
We talked about relationship marketing,
getting to know the customers every habits and
taking a share of the wallet. But the reality
is we didn’t, today consumers can be accessed
and targeted in the on-line world but what we
must remember is that they just as easily can
target and access vendors and information.
Yesterday the customer was happy to give
personal information; he often had the option
to refuse its use or sale to third parties.
Today I ask you to look at your PC files and
look at the profusion of cookies that are
planted within them. What is quite clear is
that now customers are starting to understand
their information and feedback has real value
and could become the tail that wags the dog.
The customer is going to be king in the world
of MyNet. We now find ourselves moving speed
into a new permissions marketing environment
which is very significant in terms of
information. It is more significant for those
that are going to become the new infomediaries
who manage and control access to the
information and channel to market.
The traditional vendor driven publishing
model is now under pressure; in fact, it is
going to die. Those who ignore this in the
rising role of infomediaries may find that
they are not driving the development of their
products in the market but are firmly being
driven by others down the supply chain who own
the information, knowledge and access to the
market. In this new personalised world
publishers need to ensure that infomediaries
don’t filter them out from their readers. So
how do we prepare for the unexpected? Our
first priority is quite clear, we must learn
to swim in the sea of data. The schematic that
is coming up depicts the basic information
roles within the organisation and it varies by
the actions required, from the routine to the
exceptional, and from the systemised to those
that are heavily dependant on human knowledge
input. What we often do when we have designed
systems in the past is try and satisfy all
requirements by a single solution and end up
servicing the lowest common denominator or
alternatively we create different islands of
information that are incapable of consistently
seeing both the macro and micro perspectives.
If we look at these quadrangles we clearly see
the need to support clerical activities, the
routine activities, the heavily systemised
activities. Here it is about transactional
information, here it is about automating as
much as possible to gain maximum efficiency,
and it is about checking it in and checking it
out. Process management is often viewed the
same way but it isn’t it is completely
different here it is not about focusing on the
performance of the task, it is about the
performance of the process. Although it is
still the same information the usage and needs
differ greatly and also it requires additional
information about resource allocation and the
management of risk and change. It is all about
keeping today on schedule.
The business analyst activities are
different again. Here we are talking about
monitoring and analysing overall business
activities and performance actually looking at
variance to exception, discovering the
parameters that effect an operation or a
process, data mining its about drilling down a
wide volume of data, tapping into specific
scenes and often not in a single dimensional
view but in a multiple dimensional view. Here
often analysis is performed on a data
warehouse where the operational information
from both internal to the organisation and
external to the organisation could be
aggregated. This approach obviously protects
the operational environment from the
performance demands
of these techniques and also provides the
analyst with both the wider business picture
and the performance they require. The tools
used vary considerably, from the spreadsheet
to sophisticated modelling and forecasting tools. The service objective is to enable the
analyst to "turn over the stones and look for
the issues".
Management Decision Support is focused at
the business key performance indicators, the
issues that really matter. We are talking about management by exception,
this is where we are talking about identifying
what needs attention. Not fixing what isn’t
broke but identifying what is broke and fixing
it and what may be breaking and taking
preventative action. It also needs to be
proactive as well as reactive. Unlike the
analyst the executive needs are proactive feed
alerts, he hasn’t got time to go drilling
down. He needs what we call traffic lighting,
he doesn’t need to know when the signals are
green, he needs to know when they are on red
he also when they are on amber, and when on
amber he also needs to know in which direction
that the information is going. Here it is all
about management by exception, identifying and
understanding the issues that need attention.
Finally, I want to review a publishing
business technology architecture that meets
the challenges in information and knowledge.
What is quite clear when you actually look at
information and knowledge management is that a
piece meal approach to a business is no good
enough. In last years’ white paper we
identified a unique publishing architecture
that separated the constituent elements of
both technology and its utility and what we
discovered last year was not finite it has
evolved and what we think of it now will be
different in 6 months time as we continue to
adapt and adopt it. If we look at the original
concept, first of all it was built on
databases, the database foundation in
publishing is straight forward – content,
books, chapters, journals, issues, pictures
fragments etc. Context, the product
information that describes the content and
enables you and your customers to find and
value it, and commerce the business
information – pricing, inventory, customer
sales etc. On top of that we have a number of
business solutions, in the past we looked at
these as applications all embracing, we now
have to change our view of these, they are
just merely processing engines.
If we actually look at these a bit closer
we have back office engines that form a
comprehensive operations environment handling
products from warehouse to reader – and the
support, customer service, ordering
fulfilment. We are all familiar with these
engines, but they are now engines not
applications. There is a need for engines that
deal with e-business and EDI – significantly
different but recognising the critical role of
standards and also the emergence of
self-service over the Internet. And we have
front office engines that focus on supporting
editorial, production, and marketing and
rights functions. Now all of these engines
could be supplied separately by different
vendors, in different formats etc, etc. but
what is important and what is critical is that
we have a seamless integration of that
processing from author to warehouse. We then
have a process layer and control layer which
looks across the whole product and project
life cycles and operations where we have
consistency of analysis and reporting, we have
data flow managing the flow of product, and
work flow managing the flow of the process and
controlling the process and then on top we
have the converging presentation layer with
windows and browsers.
Having looked at this we now need to look
again, more closely and look at what is the
impact of information and knowledge driven
environment could have on this model. First of
all, it quite clear that we now need to break
down the different information needs and
utility and provide consistency across the
business. The obvious approach is to provide
this through a data warehouse, but we must
remember that we no longer ignore external
information, and this is not just dealing with
commercial information but also contextual
information and even unstructured information.
What we have done is to extend that further
and reflect this within the different usages
that we had already identified. Moving the
work flow and data flow down closer to the
engines that deal with the processing, because
in fact they are process engines themselves.
However, we need to actually look at and
prepare for the world of MI-NET, how are we
going to deal with MI-NET, how are we going to
deal with ensuring that the customer does not
elect to bar us form their world?, or where
they have elected to use us that we optimise
that election? We need to profile, profile
wealth within the organisation and external to
the organisation of what is required, when it
is required and how it is required. The
schematic depicts how new access permission
layers will need to be accommodated both
internal and external to the organisation. But
we need to beware, those that enter this
permissions environment late will spend
heavily on the skills and knowledge to enable
them just to compete. If they fail to make the
migration in customer relationship management
they will perish in the world of the info-mediary
and permissions marketing.
The new vision clearly sets out the agenda
incorporating the extended information needs
and knowledge input, what we have to do is be
prepared that we now see clearly on the road
ahead people with technology at work. What we
must remember however, is can you remember all
those dreams? The paperless office,
tele-worketing, the virtual organisation, all
too often in the past we have been presented
with a prototype – and tactical priorities
have dictated our direction, we have adopted a
wait and see strategy. Today the pace of
technology is changing and quickening at such
a speed that it is no longer an option to join
this marathon at mile twenty-one. You will not
have the capabilities, competencies and skills
within your organisations to even get to mile
twenty-six.
Learning to continually learn is one of the
hardest tasks, it is not restricted to the
organisation, the relationships with trading
partners and customers, new channels to
market, the evolving products, formats, the
business processes, the organisational
structure, it is all these and more. It is
about learning to adapt, adopt and advance
technology, it is about learning to share
information within a new open commercial
environment, it is about tapping into and
exploiting all of the information and
knowledge available both internal and external
to your organisations. But what is clear – it
is about reducing your organisations knowledge
and information exposure.
Return to top of page
Focusing in a Fuzzy World: Trading in the
Networked World
The Institute of Information Scientists 40th
Anniversary Conference, Sheffield. July 8-11,
1998 Speech by Martyn Daniels
I am pleased to be here addressing your 40th
anniversary conference. I am also pleased and
proud that it is Sheffield. My second home
where I grew up, was, or was not educated and
where I started my career.
When I started my career some 30 years ago
this year, the employment exchange presented
me with an interesting decision. Whether to go
to work in a Computer Department of a major
electrical retailer, Henry Wigfalls, or go to
work at English Steel. The career councillor
advised me that English Steel was a job for
life, offered a real career and that computers
were still a bit iffy. I didn’t like the
thought of going down Attercliffe every day so
I choose computers and never looked back.
If we look at Sheffield over those 30 years we
see the steel capital become a steel village,
a shift from heavy manufacturing to service
industry. Sheffield is now the sports capital
of the UK and you only need to drive down the
east end to see the difference. Where
Hatfields once stood proud now read Meadowhall.
But technology has also not stood still. Far
from it we all know what has happened and the
impact it has had. However, we are now faced
with a revolution, not evolution and one
driven by a technology – The Internet. The
world of the information networked
environment. We all know that the Internet is
dynamic and is growing at a phenomenal rate.
It is pervasive and what we thought of it six
months ago is probably different to what we
think today and what we will think of it in
six months time. It is challenging all our
previous thinking and our commercial
environment. But does it pass the "so what
test"? Will it change what we do, what we
sell, how we do it , who we do it with and our
supply and value chains?
The answer to all the above is a resounding,
yes.
Why is it introducing such change and what new
properties does it introduce that enable it to
have such an impact?
- It does not respect geography -- after
all where is the USA in a virtual world,
companies can be oceans apart and still
climb into the same boat. How many know or
care where the head office of Amazon.com is?
- It challenges territorial pricing, that
was designed for the physical world and its
many domains.
- It challenges the traditional thinking
on our bottom line -- image you owned the
goose that laid golden eggs. The balance
sheet just says one goose and assigns no
value to future earnings. Doesn’t Amazon.com
make this challenge today?
- It demands a global economy and could
promote harmonisation, far quicker and wider
than imagined in the corridors of Washington
and Brussels. It is in fact truly stateless.
- It does not respect time – nine to five
is dead , 24 x 365 now rules.
- It does not respect size as a
competitive advantage and enables the small
to be big by connecting to the capabilities
of others and at the same time remain agile
and adaptable because of their size.
- It does not respect ownership or
commerce – it was born an open and free
environment. Does owning physical inventory
now constitute an asset or a risk?
- It does not respect the processes and
standards that prevailed in the physical
world – it is online and demands real-time,
interactive and constantly learning
solutions.
Today when we visit our High Streets, we all
recognise the familiar names. We know what to
expect when we visit a store. We understand
the price proposition and most importantly,
that we have to pay to get anything. We
understand the difference between fashion,
electrical and entertainment stores. We find
ourselves in a comfortable zone.
The Internet removes all those comfort
factors, challenges every assumption and more
importantly it is the greatest opportunity to
our commercial and information environments
since the printing press. It can create and
promote new Brands that may not exist today in
our physical world but brands which are
instantly global and that can gain significant
exposure with little traditional brand
promotion and marketing spend.
How many today are familiar "Amazon" and is
this recognition restricted to just those who
have used the service or even to consumers
within one country? We all know the answer,
but the question now is not what the brand
stands for today but how it can be used
tomorrow. Traditional booksellers are often
physically restricted not just in their offer
but also by their ability to leverage their
brand, Amazon doesn’t have these problems.
We have all witnessed what the likes of Virgin
can do with a brand and I would contest that
Amazon now has an equal opportunity. But
before we start to grapple with this New
World, we must recognise those issues which
yesterday inhibited and constrained our supply
chain. It is important that the New World
addresses these and doesn’t compound them
further.
How do we service the "tail" -- the 80% of
customers and suppliers who only generate 20%
of value and volume but have a high cost of
service? How do we stop drowning in a sea of
paper, faxes, telephone calls, and clerical
administration, all of which tend to inhibit
instead of enable trade? If we fail to address
this in the networked world we could face a
ridiculous situation where the reader finds
the content online, may even buy it online and
thereafter is communicated with and serviced
inefficiently by paper and telephone and ends
up drowning in a sea of frustration.
Those who only focus on one aspect of the
process without looking at the total process
miss the opportunity. If you look at the US
book market it is obsessed with the order
transaction and often ignores the downstream
transactions that make the overall process and
service inefficient.
How long have trading partners operated with
one hand tied behind their backs -- publishers
not knowing what is selling and bookstores not
knowing what is available and what the price
is? Libraries not knowing if a journal has
been published and firing of automatic claims
one minute after the deadline. Agents, who are
equally in the dark on publishing schedules,
either passing these claims onto the
publisher, or conveniently loosing them. Each
step or stage within a broken information
chain adds a buffer for uncertainty. Between
the individual steps this may be 10% extra,
but across all steps this could be quite
significant. Uncertainty and the lack of
effective communication and trading
partnerships, is the mother of all inefficient
supply chains. The Internet can effectively
address the broken information chain and make
information available to all. However, if this
opportunity is not realised then issues and
associated costs will certainly grow.
Studies in the UK, show that some 60 to 70% of
all customer service calls to general trade
publishers are about price, availability and
order status. A study performed by a US
academic press found that of their 11,000 800
presales calls 95% were about price and
availability. An analysis of their post sales
calls showed some 45% were about back order
information and a further 45% were about
shipment status. They could even cost each
call and it doesn’t take long to total this to
over $900K of annual cost. A sobering thought.
What is your cost of service today?
Authoritative and timely bibliographic
information Wherever we look in publishing, we
see a many to many supply chain, with a
significant volume of new and existing
product. The various sectors may have
different numbers but the story is the same.
We think of it as books and serials, but
increasingly we must view it as "stuff". How
do we find stuff? What is core bibliographic
data or information and who will provide it?
We may know the publisher, if he hasn’t be
acquired this month, and look at their
catalogue. However, this has to be first found
and when found we often find that each varies,
even within the same publisher, on how they
present, navigate and in the consistency of
the data presented. The bibliographic agents
and aggregators are often out of date and have
data processing cycles geared to their CD-ROM
production. In all cases we are asked to view
subscription product separately from book
product. Is this acceptable going forward?
Yesterday we all agreed that there were
probably 8 to 12 data elements that made up
the core bibliographic data, but is this still
accurate today? Where does extended data and
core bibliographic data start and finish?
Context aggregation is an increasingly
important requirement, but one which we all
have paid lip service to in the past. It is
interesting to see that some Bookstores in the
US are starting to prefer to search and value
Amazon.com and Barnes&Noble.com bibliographic
data online than that on Books in Print
CD-ROM. This is inevitable, given the richness
of information and ease of access.
Today, all primary or secondary publishers
must have 6 "Cs" embedded within their market
proposition.
Content, Context, Commerce, Community,
Connectivity and Consistency
In the world of publishing we have to first
ask what do we trade over the Internet,
digital product or physical product? Books,
chapters, journals, issues, pictures,
fragments, information, does it matter? If we
are now moving into a world of selling "stuff"
in whatever media format, what is the impact?
What becomes the key to making the sale? Is it
the content, all those books, journals,
magazines and information that you associate
with publishing today? After all it is the
content that the consumer buys. We can now
publish on paper, CDROM, online, etc but the
question of being able to find the "stuff"
remains, if not grows in its complexity.
The Internet enables you to sell content as
"stuff", to anybody anywhere, anytime.
Amazon.com yesterday just sold physical books
from their US base, they now sell books and
music globally. Their UK operation is now
operational www.amaozon.co.uk. STM and
professional publishers such as Reed Elsevier,
today sell both physical and digital content.
We are entering the world of "stuff".
Yesterday, trading partners bought "off the
shelf", from what could best be described as
physical catalogues. The sales representative
often physically introduced these catalogues
to the buyer. They, the catalogues and not the
reps, weren’t fully searchable, were limited
in the information available and if you didn’t
find a product you couldn’t buy it. We are
reminded of the traditional retailer’s
statement, "if it is not on the shelf, you
can’t sell it". Today, trading partners still
buy from the catalogue, but increasingly this
is becoming a virtual one and one where
everyone is demanding more and more
information and reference about the potential
product they may wish to buy. If it is a book,
they want to see the jacket, read some
reviews, read about the author, read the first
chapter, understand its market position.
Information that enables you to qualify the
purchase and thereby minimise the risk of a
bad investment. Therefore is it the context,
the information about information that
enriches content, enables you to discover it
and also value it, that is the key going
forward. Today’s challenge is to understand
what context is essential and what is nice to
have?
The Internet enables far richer and current
information to be readily accessible to
anybody anywhere, anytime and can also
facilitate links from one database to another
transparently. Context can now be distributed.
Contextual information is no longer an
afterthought in the networked world its is
fast becoming the tail wagging the dog! The
publishing world is currently obsessed with
online. Publishers must be online, initially
they focused on content. and now it is
context.
I wonder how long before they get round to
commerce and the realisation that all three,
go hand in hand. After all, we have to find
it, qualify it and purchase it, before we can
read it. Context, through commerce, to
content. The Internet enables commerce for
all, from anywhere, at anytime. The challenges
of the online marketplace are very interesting
when one looks at selling "stuff" online. The
discovery and qualification process can be
significantly different, accessing the product
is certainly different and we would expect the
business models to also be different. So why
do we continue to be tied yesterday’s
commercial models? We must recognise that
"stuff" will demand new "stuff" commercial
models.
The next "c" is that of Community. That
network of relationships and added value that
together make it happen. Today’s challenge is
to remember this network, this landscape and
map it into the network. Together there is
strength, individually, we all may perish as
we are increasingly all marginalised. It is
easier to respect and accommodate the value
added that others bring to the equation, than
to start from the naive perspective that one
can do it alone. How many today are competing
where they should be collaborating and by
doing so wasting effort, money and potential
opportunities. The Internet enables trading
partners to be virtually linked together to
anybody anywhere, anytime and we should not
forget that together there is often a unique
strength and protection from competitive
threat.
The penultimate "c" is Connectivity. If you
are not connected, then forget it, you’re
dead. Removing the old restrictions imposed by
the postman, the telephone, the fax, the old
Monday to Friday, nine to five and batch
processes are essential to moving into the
future. Often some think that technologies
such as EDI solve this issue, they don’t. EDI
was in fact an extension of the postman, a
batch process that even referred to the
transfer mechanism in terms of "mailboxes" and
"postboxes". EDI will always have its place
for simple, high volume transactions between
established trading partners, but it will not
deal with queries, low volume transfers and
more complex information transfers effectively
or economically.
We must not however dismiss the EDI message
standards that are still important and go some
way to provide another "c" that of
consistency. More important though in the
online world, is the consistency of
presentation, navigation and information. If
everyone did it different, forget it. If there
was logic is the collaboration of message
format standards there is equal logic in
recognising the needs go even further in the
New World.
We are no longer in the world of E/commerce
but also the world of E/service. Content,
Context, Commerce, Community, Connectivity and
Consistency.
The 6 Cs are like a marathon. You don’t enter
at mile 24. You’ve got to be there from the
beginning. So understanding and saying ‘We’ll
just wait’ is not a viable option. You end up
in a position where you don’t have the
competencies, you don’t have the capabilities
and you don’t get into the opportunity set.
The acid test is to ask yourselves how your
business aligns with these foundations for
tomorrow’s world. If you only have parts of
the set you may well find yourselves outside
tomorrow’s opportunities. Two or three out of
six isn’t good enough! It is not enough to
just develop new standards that describe the
content and automatically link to the
appropriate reference. It is not enough to
develop commerce models for selling physical
or online product, either as a whole or
increasingly by fragment. It is not enough to
deploy content online and develop new and
exciting ways of presenting it.
All these steps are necessary but often we
forget the lessons we learnt from yesterday on
how we often failed in the physical world.
Lessons that could now be addressed more
effectively in the network world. So how do we
move forward and what is our vision? How many
understand the concept of "self service?"
"Self service" is about the ability for you to
go and serve yourself to your information, on
a trading partner's system. Home banking is
one example of this. FedEx and UPS are others
where anyone can log onto the Internet and by
entering their parcel tracking number,
instantly track it down world-wide.
Bankers shut up shop and go home every night,
but their money stays out all night. Why not
allow a bookstore or library customer of a
publisher or distributor to service themselves
to publisher information, not Monday to Friday
9 to 5, but 7 days a week, 24 hours per day,
irrespective of time zones.
Effective "Self Service" is a unique Internet
function. E/commerce and E/service is not just
about orders and invoices but about all
communications between trading partners.
Transactions and queries, fulfilment and
customer service. The Internet can break down
the walls that exist between trading partners
and enable us together to redesign the
business process, not to reflect yesterday's
landscape, that relied on the postman or the
phone, but on the new virtual landscape.
A fundamental cornerstone going forward, must
be that a bookstore or library should not be
asked to perform the same function differently
on every web site they go to. It doesn't make
sense to expect them to do this. The key is to
make it simple, affordable and enjoyable to do
business. If every publisher and distributor
creates their own solution to performing the
same standard functions, they will all fail by
competing where they should be in fact
collaborating.
Which brings us to the BookEasyTM family and
the implementation platform of our vision. It
offers standards, functionality, and
significant self-service provision over the
Internet. BookEasyTM is a partnership between
VISTA Computer Services (which can access and
understand publisher systems and information),
Whitaker, the UK ISBN Agency and R.R. Bowker,
the US ISBN agency and a significant number of
publishers, distributors and other industry
players.
In the UK, BookEasy also partners with the
Booksellers Association, who own the UK book
industry payment clearance house. These are
key partnerships that make up the trading
landscape and we expect to expand to include
many others. BookEasyTM through Whitakers
offers central bibliographic search and
discovery, central routing and security
management, as well as central ordering
facilities. At the distributed publisher
sites, it today provides direct access to
publisher operational systems, that offer
current pricing, availability, and ordering
options, as well as the ability to check order
status.
It is an E/commerce and E/service unique
industry community service and is being
developed as such. With all players in the
industry sitting down and working together, to
make the cake bigger for all and not just
enlarging their own slice of the existing
cake. Together we are providing Content,
Context, Commerce, Community, Connectivity and
Consistency.
Every site looks, feels, navigates and
performs exactly the same, a unique
achievement built on real collaboration.
BookEasyTM is not theory, it is real. It was
developed in Internet time-scales (weeks not
months or years).
It puts the book trade back to the vanguard of
electronic trading, where it once was when it
developed and implemented the ISBN. It shows
what can be achieved when we co-operate and
not compete.
It starts to be the vehicle which can address
a great deal of today's supply chain issues
and build tomorrow's supply chain It
strengthens today's partnerships and enables
them to compete in the virtual world. It
enables us to cast off yesterday's paper chain
"baggage" and take advantage of today's
networked opportunities. We call it a family
because we recognise that we are only at the
first base.
We are already working of a number of other
interesting "Easy" services that will enable
publishers to trade upstream, downstream,
service all aspects of their business and
perform in the world of "stuff". Today one of
the opportunities we are seriously currently
exploring, involves a number of major STM
publishers, major subscription agents and a
ISSN bibliographic agency. We are working
together to fully review and jointly specify
SubsEasy or as I refer to it "StuffEasy".
But it doesn’t stop there. There are many
different interfaces with Publishers and
therefore many opportunities to do things
"Easier". Today our processes are governed by
history, the constraints of the paper chain
and the uncertainty in which we all operate.
Within the publishing industry there is
probably one further "C" we must all learn to
practice, that of collaboration. One we all
agree in public to do, but when we get back to
our organisations, we often forget to
practise.
Finally, if one thinks back to the Steel
industry and the changes it has experienced
over these years, I would suggest that the
publishing industry today, is in a similar
position to that of the steel industry 30
years ago. Change is coming far greater than
any of us can predict and far faster than ever
before, who will survive and what the
marketplace will look like in even 5 years is
a challenge. We have to learn and adopt new
ways that enable us together to do things
simpler, smarter and of course "Easier."
Return to top of page
Trading on
the Internet
Trading on the internet should be no
different to trading anywhere. Before we start
to trade we must first understand the
landscape, the market its; size, needs,
issues, etc. We then need to understand our
position within, or related to that market. We
then need a proposition or offer to the
market. Finally we need to set expectations ,
objectives on our costs, returns and
associated time-scales However we all know
that the Internet is dynamic , is growing at a
phenomenal rate, it is pervasive and what we
thought of it six months ago is probably
different to what we think today and what we
will think of it in six months time.
If we briefly look at this challenging
market we see that the Internet challenges all
our previous thinking and environment. It does
not respect geography after all where is the
US in a virtual world. It will demand the
growth of the global economy. It does not
respect size as a competitive advantage and
enables the physically small to be virtually
large. It creates a level playing-field for
all.
What do we trade over the Internet, Digital
product or Physical product ? This is a
virtual world which respects both. You should
not be trying to sell digital product if your
buyer still wants physical. We have to learn
to sell “stuff”. You don’t have to stock the
physical product to sell it over the Internet.
An interesting merchandising issue, the
virtual warehouse.
What is more important in this virtual
world, the full online digital content or the
context? Context being the bibliographic
reference, reviews, abstracts, blurbs, covers,
etc that enrich content, enable you to
discover it and also value it. How do we
balance the current phobia of publishers to
spend money developing marketing vanity sites
with the need to perform commerce and make
money? Today, we clearly see publishers
wallpapering the web with marketing “stuff”
but with little thought to the commerce need
to selling it. Do they wish to strengthen
there existing channels to market and
relationships that bring in their revenues
today, or do they believe that they can build
their direct market and will this weaken their
existing channels? Obviously the issues vary
between the different sectors, but can they as
individual publishers be found on the web ,
let alone satisfy individual consumers needs.
Who will emerge as the intermediaries in this
market? Who will offer “one stop shopping” ?
It is clear that that there are new content
hungry entrants waiting in the wings ;
Microsoft, AOL, Dialogue, etc. as well as
global brands ; B&N, Amazon, Ingram, etc. The
Publisher’s focus must remain on making money.
In the UK ,an extensive review of the
Supply Chain was jointly commissioned by the
BA and PA and performed by KPMG. It did not
tell us anything we didn’t already know. But
it has galvanised our thinking, if only for
this month! How do we service the “tail”. The
80% of customers and suppliers who only
generate 20% of value and volume but have a
high cost of service? How do we stop drowning
in a sea of paper, faxes, telephone calls, and
clerical administration , all of which tend to
inhibit instead of enable trade. How do we
establish common authoritative and timely
information?
How long have trading partners hand
operated with one hand tied behind their backs
- publishers not knowing what is selling and
bookstores not knowing what is available and
what the price is? Studies in the UK, show
that some 60 to 70% of all customer service
calls to publishers are about price,
availability and order status. How do we start
to think about minimising stock holding and
not maximising it across the chain? How do we
increase stock turn and investment return? How
do we build trading partnerships in an
adversarial landscape where a “deal culture”
prevails and results not on growing the cake
for all, but on growing slices of it at the
expense of others?. Uncertainty , the lack of
effective communication and trading
partnerships is the mother of all inefficient
supply chains.
How can the internet help move us forward?
How many understand the concept of “self
service” ? “Self service” is about the ability
for you to go and serve yourself, to your
information, on a trading partners system.
Home banking is one example of this. FedEx and
UPS is another, where anyone can log onto the
Internet and by entering their parcel tracking
number, instantly track it down world-wide.
Why not allow the Bookstore customer to
service themselves to publisher information,
not Monday to Friday 9 to 5, but 7 X 24,
irrespective of time zones. Some would have
you believe that EDI as we know it today will
be the answer. They are wrong. EDI will work
where there is volume and simple transactions.
It will not work with the “tail”, where it is
too expensive, cumbersome and complex, and
cost and utility will always prevail. It will
not work for queries, or forecast information.
The internet is cheap, effective and can reach
the people and needs EDI can’t. On the
internet you can build virtual trading
networks, where you can go from one partner to
the next at the click of a mouse button in
real time. The internet can not only build on
the EDI transaction standards that we have
today, but also introduce new presentation
standards.
A Bookstore should not be asked to do the
same function differently on every web site
they go to. It doesn’t make sense to expect
them to accept this, but we have done.
The internet can break down the Chinese
walls that exist between trading partners and
enable us together to redesign the business
process, not to reflect yesterday’s landscape,
that relied on the postman or the phone, but
on the new virtual landscape. What is clear to
our vision is that the user will only want to
learn once, if everybody did it differently
forget it, and they also want a community
network they haven’t time to surf. So
standards are important but different.
Community is important but different. The key
is understanding these needs and inventing the
surprise, the new way, the environment that
enables publishers to sell “stuff” and make
money.
I don want to talk about BookEasyTM, other
than to that it offers , the standards, the
functionality, the network significant service
functionally over the Internet. BookEasyTM is
a partnership between : Vista , who can access
and understand publisher systems and
information, Whitaker, the UK ISBN agency who
also own Teleordering, RR Bowker the US,
Canadian ISBN agency and in the UK, the
Booksellers Association, won own the UK
industry payment clearance house. The
partnerships that make up the trading
landscape and that we expect to expand to
include many others. It is a true virtual
industry and community service and is being
developed as such. With both publisher’s and
bookstores sitting down and working together
to make their businesses more efficient.
BookEasyTM is not theory, it is real. It
was developed in Internet time-scales (weeks
not months or years). It puts the book trade
back to the vanguard of electronic trading,
where it once was when it developed and
implemented the ISBN. It shows where we should
co-operate and not compete It starts to be the
vehicle which can address a great deal of
today’s supply chain issues and build
tomorrow’s supply chain It strengthens today’s
partnerships and enables them to compete in
the virtual world. It enables us to cast off
yesterday’s paper chain baggage and do things
smarter.
Return to top of page
“Substituting Information for Inventory”
Martyn Daniels Director of Strategic
Development Vista Computer Services
Paper for BA Conference 21st April, 1997
Some eight years ago I first read Sam
Walton’s book “Made in America”. For those who
maybe do not recognise that name, Sam Walton
was the founder of Wal-Mart stores - the
world’s largest and most successful retailer.
In it he talks of the effort companies go to
understand their customers, but that they do
not share this knowledge with their trading
partners. Also a conversation he had with a
major trading partner.
“We both decided that the entire
relationship between vendor and retailer was
the issue. Both focused on the end user - the
customer - but both did it independently of
the other. No sharing of information, no
planning together, no systems co-ordination.
We were simply two giant entities going our
separate ways, oblivious to the excess costs
created by this obsolete system. We were
communicating, in effect, by slipping notes
under the door”.
The traditional book channel can be
characterised by the adversarial
relationships, lack of trust and mutual
respect, all of which seriously obviate the
adoption of Supply Chain Management. All too
often players will tolerate inefficiencies, as
long as they are borne by another in the
chain. This view fails to recognise that any
costs and inefficiency incurred within the
chain, is lost to all in the chain. All
commercial sectors have a degree of
adversarial friction but those who adopt a
Supply Chain approach have to address this
head-on. If communication is a key to working
together, how do we move away from “slipping
notes under the door?”
How do we establish a true open trading
partnership across the chain? How do we start
to share responsibility for the efficiency of
the chain? How do we share the benefits
achieved? How do we share trading information
and not as some seem to believe, sell trading
information to partners? How we start to focus
is on stock throughput, stock location,
service and margin across the chain and to the
consumer?
One of the main benefits of Supply Chain
Management is that it starts to distinguish
those activities that can benefit from
collaboration, from those which produce the
greatest benefit when left to competitive
forces.
The “substitution of information for
inventory” enables collaboration through joint
management by trading partners. What is this
information and how will it or can it be used?
Three types of information can be exchanged
between trading partners:
Transactional information, such as
the order, the invoice, the despatch note.
This is critical to triggering events such as
despatch, receipt and payment.
Master file information, such as
price, product and availability. This is
critical to the provision of service across
the chain and to the consumer and can reduce,
if not remove, a significant volume of queries
and disputes.
Finally, planning and reporting
information. This is critical to the
provision of timely and accurate response.
The planning and reporting information is
the hardest to use. There is a wide variety of
information available, some of which is very
sensitive. However, the exchange of this data
by itself is of little value. When used
pro-actively and integrated within the
business decision process, this information
can make a significant impact by lowering
costs and improving performance via greater
speed and certainty of decision making.
Booktrack is good news, as it starts to
introduce much needed sales reporting
information. However, will this remain just
within the Sales and Marketing department or
be shared across the publishing business? If
this information is not shared and understood
it could easily be misinterpreted.
I have taken three actual Booktrack sales
profiles from the top ten titles.
The
first I will call, “The Big Dipper”, sales
take an unexpected big nose dive and then
recover. The second I will call, “The Alps”,
sales are volatile and are up and down from
week to week. Finally, “The Surprise”, sales
climb rapidly, peak and then all but vanish.
They all should automatically beg for more
information, not just on why but also on the
resultant impact and service to the consumer.
This is just sales data, it omits
publishing production, distribution,
fulfilment, service and returns information.
It does not show stock movements, print and
reprint decisions, dues, etc. It is merely one
perspective and by itself is not
authoritative. It indicates consumer lost
sales to a title but does not cover consumer
substitutions or basket sales analysis.
In the US some publishers want to hook into
the EPOS systems but what will publishers do
on receipt of EPOS sales and potentially
retail stock data.
Will they treat it with scepticism, ignore
it and continue to do business the same way.
Will they relax, adjust stocks accordingly and
respond to service criticism from the
bookshops by pointing to the data, or worst
still used as a stick to beat them. Will they
assume joint responsibility and work with the
bookshops and other trading partners to
extract the benefits and in doing so help
service the consumer.
Information by itself is just that,
information. Information with the right
commitment, vision and systems is a powerful
business tool.
Using information to optimise stockholding
and plan production. Sounds easy and everyone
already does it today, but it is not and they
do not. It involves sitting down with each
major trading partner and understanding and
sharing your business. It is important for
each company to map out its own supply and
associated information chain, its value adding
stages, its key decision-taking points and how
any change can be achieved. Understanding the
total process and by doing this understand
what information could help remove
uncertainty, reduce inventory, improve
business efficiency and add to each company’s
bottom line. The supply chain does not start
at the warehouse and decisions taken in
production on an individual title, can
influence the efficiency of the total supply
chain.
Market consolidation has assisted the
development of Supply Chain Management in
other commercial sectors. How do we achieve
it, in what we could describe as a “many to
many” supply chain, where you all have such a
high number of trading partners?
For the last two years at the International
Distributor’s forum at Frankfurt I have talked
about a book trade supply chain extension of
Pareto’s 80/20 principle. The premise is that
the top 20% of trading partners actually
constitute around 80% of revenue and 80% of
volume. Conversely, 80% of trading partners
not only generate only 20% of business they
probably also incur a very high and
disproportionate amount of fulfilment and
service cost. This view is the same across the
chain.
If we look at the profile of the top 20% we
see; high volume across a narrow range,
consolidated shipment, high risk of returns,
sensitive pricing, more complex transaction
requirements and at a unit sale level, low
margin, which is dependant on high volume.
If we now look at the profile of the 80% we
see a marked difference; low volumes across a
wide range, low volume shipments, high
variability in demand, low risk of returns,
simple transactions, and at unit sale level,
high margin, which is dependant on minimising
administrative cost.
These two diverse groups should not be
viewed or managed in the same way. They have
two different service requirements and
commercial profiles.
Time today does not permit me to address
the 80%. However, I will predict that the
broken information chain here will not be
addressed by the EDI services and networks as
we know them. It can and increasingly will be
addressed, by the Internet. The Internet is
not just a new force for electronic product
and electronic delivery it clearly is a major
force for doing electronic commerce more
economically. It enables the smaller trading
partners to “serve themselves”, and also “the
physically and geographically” small, to be
“virtually and globally” big. It is a
leveller.
Returning to the 20%. I would propose that
the broken information chain here will need to
focus on the wider opportunity for Supply
Chain Management. Given the service profile
and market impact, this has to be across the
chain and needs to understand the decision and
information flows as well as the product and
operational flows.
The unexpected, can and often does, pump
inventory into the chain. Supply Chain
Management needs to remove the uncertainty
that exists when trading partners keep each
other at arm's length. Uncertainty on
forecast, on pricing and availability, on
returns, on sales and on stock holding. It
needs to remove the stock buffers that guard
against uncertainty. It needs to input and
integrate back into the publishing production
decision process, thereby optimising print,
reprint and stockholding decisions.
It is very important to recognise, that
even within the same trading market, not all
supply chains are the same. WHS has a central
ordering and warehouse facility, others do
not. WHS has just changed their supply with
respect to customer orders, which again is
different to others. There is not one generic
solution for all, but probably three or four
supply chain templates that cover the 20%.
Some templates will offer greater opportunity
than others and some will overlap. Only by
examining the individual relationships,
processes and information flows will it be
possible to exploit the opportunities.
Today, you need to decide how you wish to
do business, you may need to decide whom you
want to do business with and you must never
forget the consumer. You will certainly need
an information strategy, not one just for your
organisation but one that encompasses the
supply chain. In some cases it will impact
where and how you stock product and in others
the planning and process. In all cases the
exchange, integration and full use of
information will be key to the future.
The weakest link in any chain actually
dictates the strength of the chain. Many today
believe that they are “OK” and the problem is
elsewhere. In doing so they happily go on,
oblivious to the excess baggage and cost they
are carrying for others.
I believe the committment to addressing the
Supply Chain from the BA and PA is great news.
It is long overdue.
To maximise its success it must challenge
and question all the assumptions that exist in
today’s supply chain and start from the
premise that these are wrong. The review
should be comprehensive and ensure that there
are no “no go areas.” Most importantly, it has
to start with and focus on the customer, the
consumer.
This is not one homogenous industry but
several that joined by a common media. There
is a need to review the different sector’s
supply chains, as these accommodate potential
important different perspectives and customer
expectations, values and perceptions. In
addition the review must include the 80/20
principles of supply and needs to recognise
that even within the same sector not all
supply chains the same and that they comprise
of more than just publishers and bookshops.
The supply chain actually flows from author
to consumer, but to in order to achieve
maximum benefit the initial focus should be on
the manufacturer to consumer supply chain and
the consumer book market.
The following processes need to be
established:
- The physical / logistics flow - stock
movements, handling, location, storage,
service responses and throughput.
- The transactional information flow -
order through to payment.
- The financial flow - who pays who, when,
how and why.
- The value added stages - who adds value
when and how.
- Master file information - the sources,
location, accuracy and level of detail.
- An activity cost analysis - all the
costs associated with the supply and service
to the consumer.
The results will identify among other
things:
- Broken links in the chain.
- Things that do not get done.
- Misunderstanding about other’s
processes.
- Duplication of effort.
- None value added activities.
- The under optimisation of information.
In particularly, it could give us the new
models, which will take us forward not in
small and insignificant steps, but in bold and
mutually rewarding ones.
It should, optimise the efficiency of
everybody in the chain and in doing so reduce
everyone’s cost base and this will result in
an increased profitability for all. That’s
certainly an attractive proposition, which
must appeal to everyone.
Wal-Mart continues to grow and dominate the
US retail market and recently the Walton
family were ranked in the top three richest in
the USA. So it was interesting to see this
article earlier this month in “The
Bookseller”.
Wal-Mart to expand online books US chain
Wal-Mart is considering an aggressive
expansion of its online selling operation to
include 50,000 book titles, according to
“Bookselling This Week”. BTW reports Phil
Martz, Director of Wal-Mart Online, as saying
that the offer would complement similar
offerings in music and video.
Sadly, Sam Walton is no longer with us
today. However, Wal-Mart clearly have some
more words of wisdom that they could
potentially share with us on “Profiting from
Tomorrow’s Customers”.
Return to top of page
Substituting
Information for Inventory
Martyn Daniels Director of Strategic
Development Vista Computer Services
18th International Distribution Specialists
Meeting Frankfurt, October 1st, 1996
Background:
It is easy for us all to reserve our seats
at this forum in three years time, in order
that we can celebrate together the dawn of the
new millennium. However, as we approach the
21st century we are now faced with a radically
changing and challenging market, where
reserving your seat may not be enough.
Change is happening all around us. It is
occurring at an alarming rate. It is effecting
the way you do business, who you do business
with and what you sell. It is effecting the
Publishing Industry, at least as much as any
other commercial sector and in some cases is
different to any change that has gone before.
Some sectors of publishing are moving
faster and are effected today more than
others. But what is clear, is that, “you can
run, but you can not hide”, no-one is immune,
no-one can afford to be complacent.
More content is being produced each year.
In fact, as the ability to publish becomes
easier and cheaper with the increase of new
publishing formats, we could well realise the
saying , “there is a book inside all of us,
waiting to be published”.
As content continues to proliferate, the
identification of product and quality becomes
harder. The effect that this has on the
publishing value chain is further compounded
by the shift from print-on-paper, to the
network environment. This can be best thought
of as the change from content to context and
this will have a significant impact on all of
us.
Distribution:
So what about Distribution? More direct
sales, smaller and more frequent orders, more
digital and less physical product, greater
differentiation between fast and slow sellers,
an increase in digital distribution etc. etc.
etc.
What is also clear, in this increasingly
customer orientated environment, is that
distribution services can no longer be geared
to satisfying the “average” customer.
I would like to draw attention to the
special service statements made by leading
organisations in this years “Academic
Hotlines” in the Bookseller in August. Not
only is there significant variation in minimal
order values and quantities but delivery
commitments for these urgent orders vary from
next day to four days. Also some even stated
that they were unable to receive “urgent” EDI
and Teleordering orders. Obviously, some
operations today are unable to adapt from
meeting their average customer’s requirements
to meeting the demands made by individual
customers during their busiest trading period.
I will be as bold as to predict that; the
number of titles published will continue to
rise, the shift from physical to digital
product will dramatically increase, full
on-line fulfilment will become very important
and direct sales will rise dramatically in
some sectors. The impact of servicing and
supplying the range of demand, will require
not just one, but a number of supply
strategies.
I also predict that there will be fewer
distributors to occupy these seats in three
years time. The announcement made by Reed and
Excel last week, further demonstrates that the
economics of distribution are about to
radically change. Publishers will find it
increasingly difficult to resist the economics
of outsourcing. This will be further fuelled
by the continued consolidation in distribution
and wholesale and the resultant economies of
scale. However , success in this environment
will also depend on a solid information and
technology infrastructure. Reserving your seat
will not be good enough.
The 80/20 Concept:
Last year at this forum I presented a paper
on the “Virtual Warehouse” which introduced
what I call the 80/20 concept. This is based
on the premise that your top 20% of customers
actually constitute around 80% of your revenue
and 80% of your volume. Conversely, 80% of
your customers not only generate only 20% of
your business they probably also incur a
disproportionate amount of fulfilment and
service cost.
If we look at the profile of the 20% we see
; high volume across a narrow range,
consolidated shipment, high risk returns,
sensitive pricing, more complex transaction
requirements and at a unit sale level, low
margin, which is dependant on high volume.
If we now look at the profile of the 80% we
see a marked difference; low volumes across a
wide range, low volume shipments, high
variability in demand, low risk returns,
simple transactions, and at unit sale level,
high margin, which is dependant on minimising
administrative cost.
You should not manage these two diverse
groups the same. They have two different
service requirements and commercial profiles.
Time today does not permit me to address
the 80%. However, I will predict that it will
not be addressed by the EDI services and
networks as we know them today. Standards will
continue to be pivotal but these will also
need to change to meet the needs of the
networked environment. There are some
interesting models starting to appear in the
market and the marriage of cost efficient
fulfilment and customer intimacy, across
today’s 80% and the emerging direct market, is
a very interesting subject in itself.
The Top 20% - Supply Chain Management
Returning to the 20%. I would propose that
these require a different strategy, one based
on Supply Chain Management. This has to be
across the chain and understand the decision
and information flows as well as the product
and operational flows. It needs to remove the
uncertainty that exists when trading partners
keep each other at arms length. Uncertainty;
on forecast, on pricing and availability, on
returns, on sales, on stock holding and
availability. It needs to remove the stock
buffers that are built up to guard against
uncertainty. It needs to input and integrate
back into the publishing production decision
process, thereby optimising print, reprint and
stockholding decisions.
Simply to be able to function on average
more quickly, but without dependability, will
not make you better in this area, nor will
dependability without speed. For good customer
service to be affordable it requires both
speed and certainty of response.
Supply Chain Management is not about
“slipping” orders and invoices under the door
to unsuspecting trading partners.
It recognises that there is only one
customer that counts. There is only one
customer who puts money in, the Consumer. All
too often we hear of people passing costs on
to their customers and believing that in doing
so they have scored a major success. This is
naďve, as it forgets that all costs, all
inefficiency, everything that happens in the
chain, effects the chain. Supply Chain
Management is not about servicing the next
intermediary in the chain but about servicing
the whole chain and focusing together on the
end consumer.
Unlike one leading high street book
retailer, it is not about selling information
to your trading partners. It is about sharing
information with your trading partners.
Using information to optimise stockholding
and plan production. Sounds easy and everyone
already does it today, but it isn’t and they
don’t. It involves sitting down with each of
your major trading partners and understanding
and sharing your business. It is important for
each company to map out its own supply chain,
its value adding stages, its key
decision-taking points and how change can best
be managed and integrated with Supply Chain
planning. Understanding the total process and
by doing this understand what information
could help remove uncertainty, inventory,
improve business efficiency and each company’s
bottom line.
There are three types of information which
can be exchanged between trading partners;
transactional information, such as the order,
the invoice, the despatch note; master file
information, such as price, product and
availability ,and finally planning and
reporting information. The later is the
hardest, not only because of the wide variety
of information available and its sensitivity
but because the exchange of this data by
itself is of little value. However, when it is
pro-actively used and integrated within the
business decision process it can make a
significant impact by lowering costs and
improving performance via greater speed and
certainty of decision making.
I was always brought up to acknowledge that
when stock stands still it costs money , every
time it is handled it also costs money and
that these costs can only can be offset by
service.
Each Supply Chain is Different:
I applaud the pilot adopted by Dillons and
Tiptree this year on Dillons 300 Christmas
titles. It was like a breath of fresh air. The
logic that you don’t have to hold the
inventory to realise the benefits could have a
significant impact when it is proven. I
believe it will be a success and is one
further example of the effect of Supply Chain
logistics. Dillons only require the
information exchange and a mature trading
relationship, they don’t require a “Swindon”.
They don’t require to stuff their stores full
of stock for three months, in order to counter
the variability of service, mid-season
reprints etc. They can afford to “drip feed”
stock into their stores on a “quick response”
basis and thereby will get significantly
improved stock turn, return on investment and
radically reduce end of season returns. I am
not in a position to comment on the issues of
liability and risk but I do applaud the
initiative.
It would be very interesting to monitor WHS
business performance against those same lines.
Unfortunately, books are only one of the
products shipped via Swindon. If they were to
follow the same route , they would find
themselves with a classic “catch 22”, whereby
the cost of supply of their other products,
such as stationary, would change significantly
and their overall space, resource and vehicle
utilisation would need to be downgraded. This
brings home my point that each supply chain
trading partnership is potentially different
and that each need to be reviewed and
understood in order to find the most
appropriate solution fit.
You will probably discover that there is
not one but three or four supply chain
templates that cover your 20%. Some will offer
greater opportunity than others, some will
overlap. Only by examining the individual
relationships, processes and information flows
will you be able to exploit supply chain
opportunities.
The decision process can be enriched
further by industry information. The best
example of this today is Whitacker’s Booktrack
data. However, will this data sit in the Sales
and Marketing department or across the
publishing business? The real trick is taking
all this industry data , your individual
trading partner data and your own business
data and consolidating it so that you can
interpret trends and directions and enrich the
decision making process throughout your
business. Again not an easy task, one that
requires a solid technology and information
infrastructure and is a subject in its own
right.
“Substituting Information for
Inventory”:
To return to “substituting information for
inventory”. I believe that to take your seat
there in three years you have to start
adopting a Supply Chain approach to your top
20%. You will need to decide how you wish to
do business, you may need to decide who you
want to do business with and you certainly
should not forget the product. You will
certainly need a comprehensive information
strategy, not one just for your organisation
but one which encompasses the supply chain and
is enterprise-wide. In some cases it will
effect where and how you stock product, in
others the planning and process but in all
cases the exchange, integration and effective
use of information will be key.
Reserving your seat for the 21st Century is
clearly not enough; corporate vision, business
planning, an information infrastructure and
action are now required if you wish to survive
to be a player and enjoy the rewards in the
new millennium.
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Supply Chain
Management
Martyn Daniels, Independent Consultant.
Presentation as part of an EU delegation of
EDI experts, addressing a conference of
leading Israeli businessmen and technologists
on ecommerce. The presentation was based on
experience and achievements whilst at B&Q PLC.
October 1995
The development of the central distribution
service enabled B&Q to review the way in which
product demand patterns fluctuated, and
understand the effect this had on the service
levels from manufacturers and consequently on
the stores and customers.
B&Q's products are slow selling and have an
erratic sales pattern. In order to attempt
continuity of supply, stock buffers are built
up throughout the supply chain. However, this
is a very inefficient method of stock
management to say nothing of it being very
costly.
The flow of orders move flow through each link
in the supply chain. These orders are
characterised by a variability in the demand
between each link and have a different
requirement for frequency or replenishment. A
small variation in demand at the consumer end
becomes magnified as it progresses back trough
the chain. These demand changes also lag
behind one another in time at each point in
the chain.
As a result of the order materials and
finished product flow back through each link
in the chain. Each link is characterised by
the replenishment lead time ( how long does it
take to move materials and products from one
link to the next?). Stock is held in the
system to buffer against demand variability,
length of the chain, lack of manufacturing
flexibility and the service level requirement
at each point in the system.
Critically excessive stocks are held to buffer
out uncertainty, uncertainty caused by broken
information flow.
t is important that both partners understand
the characteristics of the individual chain:
The manufacturing processes The bottlenecks
The characteristics of the supplier processes
The consequent cycle times and stock levels
The planning approaches adopted The
forecasting systems used.
To try to smooth this merchandise flow B&Q
worked with a number of its larger suppliers
on sharing "forecast" demand data. The
objectives were to:
minimise the time stock stands still and to
substitute information for inventory.
The exchange of forecast data is the "lynch
pin" of supply chain integration, removing the
need for suppliers to double guess the actions
of a retailer. However, the exchange of
forecast data is not as easy as it sounds.
Firstly what should the forecast be of?
Consumer demand or epos data, as it is
commonly known, Store order demand? What
is the relationship between a store
replenishment order and sales through the
till, or replenishment of stock in the central
distribution facility?
The whole essence of central order management
is to reflect future demand. Each retailer's
supply chain is different and requires
individual analysis.
The second reason why the exchange of forecast
data is not easy is the internal business
relationships. It will change the traditional
role of the buyer and his relationships with
his supplier. At B&Q, the tactical day to day
links with the supplier are now with the
logistics area with the strategic commercial
relationship remaining clearly with the buyer.
The big question is how the supplier will
react when in receipt of demand forecast data?
Will he:
- Relax and cut stocks and respond to
criticism from the retailer by pointing to
the forecast?
- Ignore the data and do nothing
differently?
- Or assume joint responsibility for
product availability and work with the
retailer to extract benefits from the supply
chain?
B&Q now send forecast product sales data to an
increasing number of suppliers, so that they
can feed in this information into their
production schedules. This forecast can be for
3 months ahead, and is gradually firmed until
it is committed at order. The object is to
reduce the amount of surprises in the
merchandise orders, whilst enabling the
manufacturer to smooth their production
scheduling and stocktaking.
This initiative has now been working for over
a year and has brought encouraging results.
The benefits from exchange and joint use of
forecast data are significant. They can:
- Reduce supplier lead times resulting in
lower stockholding Improve service levels to
store and therefore to customers
- Reduce cost down the whole chain
The next area is that of pre-order to delivery
process. The order confirmation is designed to
remove opportunities for error in the
exportation and receipt of goods. If 10,000
units of goods have been ordered but the
supplier can only deliver 8,000, then the
sooner it is known then the easier it will be
for B&Q to plan. Furthermore, if B&Q confirm
the quantity received at delivery, this again
allows more accurate invoicing and
consequently more efficient administration for
booth ourselves and the supplier.
Again it removes the "surprises" and allows the
true service levels to be managed.
The next area is that of the invoice
remittance payment cycle. B&Q introduced
electronic invoicing in '92 and currently have
75% of invoices being sent electronically. The
benefits have been immediate in speeding up
invoicing whilst reducing data input staff.
Remittance advices are now being sent
electronically to suppliers. This is further
removing a significant volume of paper,
postage and the need for a supplier to rekey
the information into their system. It should
significantly assist the supplier in
reconciling multiple invoices with a single
payment. This is particularly relevant where
he receives orders and raises invoices with
individual stores.
But this is only seen as the first step in
reducing non value adding activities. The
benefit opportunities in this area are:
Management by exception. By removing the need
to check things that reconcile Reduced cost.
Paper, postage and rekeying time Reduced
manual intervention The process is from ledger
to ledger electronically.
The last area I wish to cover is that of price
and product data - The big challenge.
Currently, these are updated internally from
agreed specifications between B&Q and the
supplier. This is merely a duplication of
effort. Why shouldn't the supplier have access
to a retailer's product file to update details
on such areas as: description bar code minimum
quantities prices. Now this is quite a change
of culture, since it allows capture and
verification of details at source, without the
consequential paper process delay. It also
reduces one of the variables in invoicing; the
price of the product. A great amount of
discussion currently takes place as to when a
price is effective; order date or despatch
date.
Under a joint scheme the price of the product
is agreed because the retailer and the
supplier are referencing what is in effect the
same file. The quantity is not in dispute,
since the delivery advice quantities have been
transmitted on receipt of goods. With all this
in place, you can eliminate invoicing
altogether and move to self billing. Payment
can therefore be effected at the time of the
agreed terms from date of receipt of goods if
necessary, rather than invoice. Now that would
be a novelty.
The other day I was thumbing trough a copy of
Sam Walton's book " Made in America". For
those of you who maybe don't recognise that
name, Sam Walton was the founder of Wal-Mart
stores. In there he talks of the effort that
corporations go to, to understand their
customers, but that they don't share it with
their trading partners. I quote: "We both
decided that the entire relationship between
vendor and retailer was at issue. Both focused
on the end user - the customer - but both did
it independently of the other. No sharing of
information, no planning together, no systems
co-ordination. We were simply two giant
entities going our separate ways, oblivious to
the excess costs created by this obsolete
system. We were communicating, in effect, by
slipping notes under the door".
If you really want to get away from "stuffing
pieces of paper under each others doors"
reflect how electronic trading could be used
to advantage in your business. It is an
enabler to assist your business strategy, not
a strategy in itself and allows information to
flow from the appropriate retailer and
supplier systems.
The technology exists, the standards exists,
all that is needed is the vision and
commitment
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