If you are a supplier of anything - pieces, parts, products, whatever - you're no doubt feeling the pressure to hone your sales forecasting and tighten your inventory control. When the supply inside your facility exceeds demand from your customers, you end up with inventory languishing on your shelves. Conversely, when customer demands exceed your current or quickly replenishable stock, you leave potential sales languishing in the field. Both consequences are costly. Avoid them.
To keep from wasting inventory or running short when it comes to fulfilling orders, your organization will need to become a shrewd demand planner. Although shrewd demand planners take into consideration historical trends reflecting months, if not years, of sales, perhaps the most important information represents only a small slice of the recent past and foreseeable future. Given the one-day to three-day supply chain turnaround times increasingly common across vertical industries, companies must be able to answer these three questions: How much stock did we need to meet yesterday's sales demands? Do we have enough for today? How much are we going to need for tomorrow? By continuously rolling those questions on to the top of each subsequent day's forecasting agenda, companies quickly take on, as second nature, a "just in time" or "lean manufacturing" mind-set.
One type of organization with a "first nature" understanding of the approach is a daily newspaper. There, it's not just one-day turnaround; it's same-day turnaround. After all, news implies "new." Hot off the press becomes cold in the warehouse plenty fast in the newspaper game. Except for the issue in which your wedding photo appeared or your kid belted two homers in a Little League game, you probably don't pop by the offices of the local rag to help them clear out extra copies of last Saturday's issue.
At USA TODAY, the Gannett Co., Inc.'s flagship publication, the newspaper's large circulation and national distribution channels complicate the process of matching production to demand. In addition to the 300,000 or so copies delivered to regular subscribers on each of the five weekdays the paper is published, roughly 2 million copies, on average, are sold across more than 180,000 single-copy sales outlets. So, although short runs or overruns during production constitute a relatively small portion of the overall circulation on any given day, they're significant. Short runs mean lost revenue, and they potentially undermine customer loyalty. Threats to customer satisfaction are particularly dangerous in sales environments, such as convenience stores, where the competitors' products are likely on display only a few inches away. Production overruns mean costly misuse of labor, equipment, and materials. As Alan Haws, USA TODAY's director of national circulation systems, explains, "The actual printing process is the most expensive aspect of newspaper publishing. So, we're always trying to maximize the sale and minimize the waste."
To increase its chances of doing both, USA TODAY looked for ways to get more accurate and more timely sales demand information from the field. By having daily sales data captured at the point of sale and fed into the company's core business system, USA TODAY could then determine, with greater precision, how large each day's print run should be. To get that field data, it outfitted its independently contracted carriers with mobile handheld devices, effectively turning each carrier into a route accountant.
Enrich ERP With Field Data
Before the mobile handheld rollout, it would have been generous to call USA TODAY's collection of sales data "accounting." After all, of the more than 180,000 locations at which USA TODAY is sold one copy at a time, only about 50,000 outlets were accounted for within the company's core business system (essentially, a homegrown ERP [enterprise resource planning] suite). And, the carriers who reported sales from those 50,000 sites did so weekly, not daily - and by hard copy. Information from those hard copy reports was then manually entered into the core business system. Obviously, errors and oversights - some traceable, others merely assumed - were occurring along the way.
While not so skewed as to skewer USA TODAY's current market share or its profitability, those inaccuracies and limitations were causing concern beyond the production floor. To meet the bulk of its distribution needs, USA TODAY relies on having solid partnerships with the independent carriers in its delivery chain. While affiliated agent distributors are paid a flat rate for the papers they sell, larger, wholesale distributors actually purchase the papers from USA TODAY and resell them. For both types of carriers, there is incentive to sell all of the papers they receive, and USA TODAY works to support those efforts. "Because we didn't have accurate point of sale information, we couldn't update our distributors about how many papers to put at each location. We just relied on their best judgment," Haws says. "With the new system, we still want them to be able to use their judgment - to override our predictions and add to or take away from the numbers we suggest. But, we want them to base those decisions on thorough, timely information."
Route Accounting Requires A Two-Way Street
Under the new system, carriers use Workabout handheld devices from Psion Teklogix to enter sales data at each location. Running on the Psion Teklogix units is the Route Max mobile distribution application from MJ Systems, a division of Mobile Computing Corp. Into the software's interface, carriers enter at each drop site the number of papers, if any, left unsold from the previous day, as well as the number of papers delivered during the current visit. Once that basic information has been recorded, the carrier presses an entry key, and the display shows the address and route number of the next drop site.
At the end of the day or beginning of the next, a dial-up connection enables the carrier to synchronize the data from the handheld to a Windows 2000 staging server at USA TODAY headquarters. The data is then automatically transferred from the staging server to the DB2 database supporting the core business system, which resides on an IBM AS/400 machine. During the same synchronization session, the next day's route and the suggested draw (number of papers to be delivered at each location) for that day are downloaded from the core system to the carrier's handheld computer. If a USA TODAY account representative has contracted with a new sales outlet since the previous day, the new location and the suggested number of papers for it are also downloaded to the carrier's device.
Handhelds Hold Up Under Cost-Side Scrutiny
Thus far, although the handheld units are untethered, USA TODAY hasn't decided to wirelessly enable the mobile system for real-time data exchange. "We need to calculate draws only once a day, and routes don't typically change much from day to day," says Haws. "So, daily synchronization works for us right now. But, we are evaluating wireless connectivity to determine if the price points make sense for us." In fact, cost was a major factor behind the company's willingness to pull the trigger on such a large-scale rollout of mobile devices. More than 3,400 units are already in the field. "In determining the financial viability of the solution, we ran a comparative test of delivery costs. We learned that the overall cost to maintain a route didn't go up when we added a mobile handheld solution to it."
Even without real-time updates, USA TODAY is pleased with the efficiency, accuracy, and savings it is realizing from the mobile rollout. "The solution has definitely allowed us to reduce costs for manual data entry and to generate increased sales," Haws reports. "The main driver for the rollout was the ability to show carriers historical trends about where our papers are selling and where they aren't. We're now able to do that, and carriers are making better decisions about how much stock to place at each location."
And, as for its internal stock, the company is making better production decisions, too. "With more accurate predictive algorithms coming from our core business system, we're doing a better job of managing costs for our nightly print runs." For this newspaper giant, that's good news.