Having turned from poacher to gamekeeper and unless somebody makes me a better offer, back to poacher again, I’ve seen and experienced professional life on both sides of the fence.
What I’ve witnessed over the last few years is suppliers struggling to compete and adapt to the vast reduction in mail volumes the digital age has brought them and publishers looking to capitalise on new media channels.
The question publishing companies should be asking right now is, what value can postal suppliers add to my business, how can I realise that value and what are the risks?
I’m sorry to say that, where magazine are concerned, things are pretty grim with few real opportunities to write about. If you read my articles published in previous issues of this magazine, you will find the information as valid today as it was then, with little change in the market or publisher buying habits. And therein lies the root of the problem. My time with DHL has shown me just how effective publishers have been at driving rates down in what is now a fully competitive and well served industry. In my opinion, suppliers have given as much of their margin back to customers as they can and streamlined as far as they are able. So much so, I think it’s got to the point where prices for most publishers can only go one way and it isn’t down.
From the publishers’ perspective, little seems to have changed. Price is still king, so buying habits are much the same and the same suppliers are still offering the same services etc. Domestically, Downstream Access (DSA) is still viewed by many as a service unsuitable for magazine distribution, but few have even considered investigating if it can be used in other areas of their business. Hand delivery on the other hand is still limited to titles with a high concentration of city centre deliveries, yet there are other areas where these companies can add value and cut costs, but only if buyers are savvy enough to realise it.
Strategic outlook required
Going forward, I can definitely see opportunities for publishers to cut costs, improve service levels and streamline operations, but to realise many of them, it will require publishers to take a more strategic view of mail providers and the services they offer. With magazine distribution offering relatively low percentage savings, I believe the bigger opportunities will come if publishers are willing and able to consider maximising their value to suppliers. Despite the recent reduction in head room between Royal Mail Retail and RM Wholesale, I still think DSA can offer savings. However, for one of any number of reasons, much of the mail publishers generate still seems to be sent via Royal Mail and is still off limits to their competitors. There is no doubt in my mind that the vast majority of mail publishing companies produce each week could be manufactured, fulfilled and posted by as little as one single supplier. Unfortunately, most publishers take a traditional view of their mail operations and account for and manage magazines separately to mail generated from other areas of the business such as customer services, HR, Marketing, Ad Sales etc.
With the market as it is, I wonder if it’s time for publishers to take a more strategic and holistic view of their mail operations and cost base with a view to maximising their buying power and value to potential suppliers. I’m confident that if you were to tell your existing supplier how much mail your company generates and how it is generated, most will be able to provide a technology driven, workable and cost effective solution for most if not all of that business.
Many have been quietly and methodically positioning themselves for the 21st century and many are offering services you wouldn’t ordinarily expect from a postal supplier. The recent sale of QSS to Air Business is a classic case in point. E-fulfilment is another service area in which mail suppliers don’t initially spring to mind, though there is an obvious synergy. They’ve been fulfilling back issue orders for years, so why not e-commerce orders too?
The tender process
If anybody is reading this thinking it all sounds attractive, before launching into a full blown tender project, it’s worth doing some quick internal research before you get carried away with yourself. To paraphrase Jeff Goldblum in Jurassic Park, just because you knew you could, shouldn’t you stop to think if you should? Having run a wholesale review of mail operations for Emap, in my experience (and depending on the size of the business and complexity of the supply chain) it can take two to six months or perhaps longer for a full time senior manager to compile, issue, assess, appoint and implement a domestic mail tender like this. I’m sure one look at your postage and overhead budget will tell you if you can spare the management time and cost to realise £x000s etc.
If I haven’t put you off and this sounds like a strategy you’d like to consider, but you’re uncertain as to how best to manage such a project, my advice is to take the time to talk to and visit your existing suppliers and try to gain a good understanding of how the supply chain works at the moment, why it works that way and what measures and contracts are in place which may affect the project. With this done, you will then be well placed to decide if you have the time and expertise within your company to run and implement such a tender. Making wholesale changes to your supply chain is not a project to be undertaken lightly and needs careful consideration. Get it wrong and your suppliers could soon be in disarray with mail going out late, or worse, across the business.
If the savings are attractive but you think the workload may be unmanageable or you lack the experience to manage such a project in house, another option you may want to consider is hiring a postal consultant to do the work for you. There are now a few people and companies out there who specialise in helping their clients realise process and cost efficiencies from their supply chain operations. Despite the obvious upfront cost, these types of services can work out to be extremely cost effective in the long run, particularly with regards to mitigation and management of risk during the implementation stage. There can be no substitute for experience and any consultant worth his or her salt should ensure that they fully implement the accepted solutions they’ve proposed and leave you with a supply chain fit for the 21st century, complete with standard operating procedures and KPI measures in place with all suppliers and internal stakeholders.
The final bit of procurement advice I’d like to offer up, and almost certainly the most controversial, is collaboration. Buying power is the name of the game here and maximising it often brings the biggest reward. Collaborating with one or more of your fellow publishing companies could well provide some publishers with the clout and volume they need to secure the rates the big boys have been enjoying for years. I know such a proposal brings a whole host of problems to overcome, however the benefits to SME publishers in particular could be substantial, but so is the value of the business to the supplier, so everybody wins. What makes this type of proposal viable is the fact that all publishers want pretty much the same things, from the same suppliers and work in a similar way to get it. By default, it shouldn’t be too hard to find some common goals on which to take things forward.
Second class options
Basically what I am saying is that with ever rising costs and the threat of digital delivery marching ever onwards, I can see few opportunities to cut costs without changing the way we work with and buy mail services. However I do wonder if we will start to see some minor, more localised changes. Printed weeklies sent 2nd class does not sound as daft these days as it did when somebody first suggested it. I know for a fact some publishers have considered it and I know of one who put what was a 1st class fortnightly onto a 2 day DSA service (although they changed it back after a few months due to complaints from subscribers). That said, you have to wonder if we are getting close to the time when publishers are forced to consider downgrading some titles currently sent out 1st class to DSA 2 day or even titles currently sent Presstream 2 to Mailsort 3 or similar? It will mean a change to the production schedules to allow subs copies to be mailed a full week ahead of publication but so what? And what about international copies reverting back to surfacemail? Now that would be a step back to the past for the printed medium but the more time moves on, the more I think it’s a logical move publishers may want to consider.
In summary, the mail industry still has a lot to offer the publishing industry and publishers have a lot to offer them. However it’s up to publishers to open their minds and their doors if they want to benefit from everything the mail industry has to offer.