Spend Matters is running a series of interviews with senior procurement and supply chain practitioners to highlight and share common experiences with their peers. We are discussing their challenges, their thoughts on people, process and technology, and their concerns or hopes for the future, across many industries.
The publishing industry, like all industries in recent years, has seen huge shifts in technology to help them operate, particularly within the supply chain. Often thought of as part of the analogue-based age of the dusty printing press, the industry and the supply chain that surrounds it has moved on: books have shifted to digital, inkjet has paved the way for shorter print runs that are closer to the location of sale, and print on demand has seen extended use.
We spoke with someone who has 25 years of experience working in various roles within the industry, but primarily as Head of Supply Chain Operations at Cambridge University Press (UK) and as Publishing Services Manager at Elsevier (MA US). Simon Crump, now with SGC Publishing Consultants Ltd., has faced the challenges of running geographically dispersed production and supply chain operations. He understands the challenges of keeping to budget, driving management teams, allocating people and resource to large projects, all while navigating risk — subjects all procurement and supply professionals with are familiar with.
“The massive shifts we’ve witnessed in publishing in recent years,” Simon says, “can be exemplified by changes in print run quantities. When I started out, the shortest book print run would be 1,000 copies using lithographic printing, to be cost effective. With improvements in machines and the advent of modern inkjet printing, which came to market commercially and was in widespread use by the late ’10s, the shortest print run could be as little as 100 copies. And now, we have the global expansion of print on demand, with printers collaborating globally as well, where you can print one copy to order. So there’s been a lot of movement in that area, and consequently a very different and complex supply chain.”
So what does he see as some of the biggest challenges facing the publishing industry?
Understanding how your supply chain affects other markets
“The COVID crisis put much pressure on the paper supply chain, as with other commodities. In the UK and Europe, however, we also have Brexit to consider. Printers have to be sure they have usable paper stocks at the ready — you can imagine the vast amounts of paper a printer gets through — and getting paper into the country is a big consideration. So printers are stocking up now, and the price of paper for books has gone up and continues to climb. Alongside that, we have the raw material cost of pulp escalating as demand for packaging has risen exponentially: People have been doing much more online shopping than ever before and that has driven the need for packaging. If we look at Black Friday sales for Amazon alone, we see that sales totaled £3 billion in one day just for the US. If we compare that with the £30 billion worth of sales generated by Alibaba also in a day, we can see just how much packaging that would generate. It’s no wonder the pulp industry can make far more money out of packaging than out of supplying paper. So changing demands on the industry (like newspaper and magazine print in decline and packaging on the up) affect your ability to source what you need when you need it. This is all about understanding not just your own market, but other affected markets, and how they impact your supply chain.”
This tells us that even when you understand your own market really well, as you go down through the layers of your supply chain, you find all the other markets with demands on the same source. “Then there’s the impact of COVID on supply,” says Simon. “While the majority of color print for example is carried out in the Far East, because of cheaper pricing points, much of the work is being brought back into Europe because of the issues of shipping it around continents. So like all markets it’s constantly shifting, with many factors at play.”
So what considerations should you be addressing with your suppliers?
“As we know, in any production process it’s always the people at the end that get squeezed. So the book manufacturer feels that pressure, because even if manufacturing slips, you cannot slip a release date. The printing process takes a certain amount of time, and it is not a variable. So it’s incredibly important to work with two or three suppliers, and points of entry for your supplies (i.e., ports) depending on their area of speciality, so that you can move work between them.”
“The COVID situation has taught us that we need to give productIon more time, because we know that they need longer to be able to react to supply chain slowdown. For example, in our industry, a textbook has to be out in time for the beginning of the academic term, and that varies depending on region. If you miss the adoption slot, it could be five years or more before you are able to sell and get that book adopted. So there is a lot of pressure on manufacturing to react to changes in the supply chain and still produce on time. We need therefore to be asking our suppliers how they are mitigating disruption in their supply chain. If we know that lead times are growing, in this case paper delivery, we need to know what mechanisms they have in place to get us that paper in time, so that we know whether we have to move our lead times out to make our publication dates.”
“We also need to check our printers are shoring up and check how much they can hold. You need to be constantly talking to suppliers about their strategies.”
Collaboration is key, but it all boils down to risk
“It all comes down to collaboration with your supplier — you need flexibility. Obviously price is important, because the more work you give them the better deals they can give you — but price isn’t everything,” he says.
“Nowadays, the relationship rests on what value add the supplier can contribute. Yes you need a price that everyone is happy with, but you also need to know:
- What processes can they they take from you, automate and do more efficiently?
- Can they store your product?
- If you decide to flip from warehouse stock to on-demand, or JIT, can you do that directly with them?
- Can they do auto stock replenishment?
“But at the end of the day, it all comes down to risk and how much you are prepared to let them do for you. They might have some great capabilities, but you might be risk-averse. You may not want to hand over your inventory levels for them to manage, you might not want to give them access to your data to run analyses, and often there are disconnects between the publisher and the printer in terms of systems compatibility.”
And alongside risk, is that other big consideration — sustainability.
Sustainability in the publishing world
Sustainability is a huge topic in the publishing world — no one wants to buy paper that has been involved in the deforestation of rain forests or tied to modern slavery issues. So what can you do?
“Of course,” says Simon, “the FSC logo should appear on all wood-related products, and of course paper. A sustainability disclosure database will tell you where your paper came from, whether it is FSC-certified, what mills it has been produced in, what raw materials have gone into your paper, so you can find out if it has been responsibly sourced. You can actually trace your paper from tree to book. This is something that has not yet been fully embraced by all printers — but we are moving in the right direction. But we mustn’t forget that it goes beyond just the paper — books need laminate too, i.e., plastic — so we must be all-embracing when it comes to responsible sourcing. Again, it’s about understanding your total market.”
And this is where procurement comes in.
The suppy chain-procurement relationship
“Procurement’s profile has risen greatly in the past five years, mostly because there has been a greater emphasis on getting better deals for our money. But procurement and supply chain managers and buyers must have a good relationship. Procurement brings a lot of market expertise to the table — but we bring the product knowledge. So it has to be a partnership.
“Procuring isn’t just about sourcing suppliers; in publishing we know who all the printers are, we talk to them all the time and we speak the same language. So while the relationship is important it’s vital that each party understands its own value and works optimally.
“The buyer will know more about the suitability. For example, procurement wouldn’t know that a particular printer (which might be cheaper) only deals in color work, which might account for only 4% of our business in academic publishing. Procurement may not understand the manufacturing techniques, the formats and paper types, the volume of work that goes down various lines, whether it’s case bound or paperback. If I stipulated that two-thirds of our work is ‘pinched crown quarto,’ procurement wouldn’t know that terminology — but the printer would. So that’s why it’s important to work together.
“Procurement are the negotiation experts. They can also help with review, compliance, vetting and RFPs. They see things differently and might spot something you don’t. But at the end of the day, both parties must be engaged early on in the process — in fact at the very start of when you are putting your documentation together. I expect to be involved in the sourcing, the tender, the approvals. In my business, it is the senior supply manager who creates the documents and receives them back, after all it’s their name on the contract. So I need to have input on turnaround times, break clauses and caveats. One thing I have learnt, is that it’s imperative to jointly agree on the objectives upfront, then build out together.”
This is another great example of why procurement should be looking at S2C platforms that can be shared with other business units to enhance their processes.
“Allowing access to their sourcing software or data analysis tool or optimization software would be very beneficial as a collaborative tool. Anything that can help us make better decisions backed by data analysis is very interesting to us because there are so many variables in our industry,” says Simon.
A shift toward AI in process automation
“The publishing industry has definitely seen a shift towards automation of processes,” he says. “Clever people spending time on data entry that can be automated is becoming a thing of the past — we need to apply their knowledge elsewhere where it can be more valuable.”
Automation can play a big hand in this industry, in PO automation, data entry and cleansing, content classification and meta data tagging, marketing and sales, identifying market trends and IP and risk management.
Annie Callanan, President of the Publishers Association and CEO of Taylor & Francis, notes from the recent report, “People Plus Machines,” that “publishers are investing in AI in large numbers.” And Catherine Etienne, Senior Associate at Frontier Economics and co-author of the report, emphasized that the next couple of years will be critical for investment in AI. “Despite most investment starting recently, within two years we can expect to see AI present in every step of the publishing value chain,” she says.
Simon attests to this with one caveat: “In reality, no one should need to touch your book. From the moment it is ordered to being printed to being packaged and landing on your doorstep 48 hours later — and that’s the way it is rightfully going. Digital is growing and disrupting the academic market as students want access to blended learning. But I’m happy to say, that people still want the book — there’s something comforting about the physical book, especially now at the end of a day of online meetings and studying.”