Electronic Data Interchange, or EDI, is computer-to-computer communication of business documents, in a standardized format, between two companies. Even though publishers are being put under pressure by big distributors to implement EDI transactions, there is much confusion about what an EDI transaction really is.

Electronic data interchange has created a vocabulary of specific terms that publishers will need to be familiar with. Below is an English version of some of those technical terms.

You can now download the “Guide to EDI for Publishers,” which includes the full glossary of terms, from the white paper library on the Ware-Pak website, along with any of our other white papers. To do so, please click here.

Purchase Order Acknowledgements:
A POA tells the bookstore the status of their Purchase Order: what books were shipped, back-ordered, canceled, the list price, and discount.

Transaction Set:
A transaction set is the EDI term for a business document. Each transaction set has a standard three-digit numerical code that identifies it.

The four most common sets are: 850: Purchase Order (PO); 855: Purchase Order Acknowledgement (POA); 856: Advance Ship Notice (ASN); 810: Invoice

Important Note: Your first two EDI transaction sets must be Purchase Orders and Purchase Order Acknowledgements. Future transaction sets are your choice.

ANSI X12:
This cryptic term refers to the overall set of standards governing the use of EDI documents by all industries in the U.S. It is the protocol that makes sure all items on a document land in the right spaces. Usually called “X12.”

Translation Software:
The program that takes an EDI standardized X12 document and converts, or translates it, into a format that your Order Processing computer can recognize.

Communication Software:
The program that allows you to connect to your EDI mailbox.

Descriptions of EDI Mailbox, VAN, EDI Provider and several additional terms can be found in the white paper “A Guide to EDI for Publishers” in the Ware-Pak White Paper Library. If you’d like to request a PDF of any of the white papers in our library, please contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Publishers are being put under a great deal of pressure by the big distributors, such as Amazon, Baker & Taylor and Border’s, to implement EDI transactions. There is a lot of confusion about what an EDI transaction is. I decided to put together this blog post to help explain some of these technical terms.

EDI: What does it stand for and what exactly is it?

EDI, or Electronic Data Interchange, is a computer-to-computer of business documents, in a standardized format, between two companies.

Although it has a technical-sounding name, EDI is fundamentally a business initiative that has been developed over the past 30 years. It was pioneered by the transportation, retail and grocery industries in an effort to increase quality and customer service, and offer long-term cost benefits. EDI also represents a major step in creating a paperless office.

By replacing paper documents, such as purchase orders or invoices, with their EDI “equivalent” (a computer-readable EDI document), four key benefits are realized:

1. Accuracy is increased because human intervention (the acts of entering and re-keying data) is eliminated.
2. Timeliness is increased (the electronic transmission of forms eliminates the delays inherent in conventional mail, or even Fax).
3. Customer service process is automated.
4. Bottom line costs are reduced for the trading partners.

The Definition of EDI Explained:

“Computer-to-computer” means that the data you send or receive from a bookstore (the most common examples are invoices or purchase orders) is communicated via electronic transmission, without human intervention or interpretation.

“Business documents” means that EDI will be used for the exchange of specific documents only, such as purchase orders or invoices.

“Standardized format” is at the heart of EDI and causes much confusion among publishers. EDI requires you to follow standards that define the format and content of your business documents. When you start using EDI, PO’s and invoices will be converted by the EDI translation software program into the exact same format as those used by all the other publishers using EDI. (The publishing industry EDI standards have been set by the BISAC - recently renamed BASIC - committee of the Book Industry Study Group.) This means that each purchase order, invoice, or pack slip will be completely readable by any computer used by any bookseller using EDI.

In Summary:

When you do business via EDI, you send business documents directly from one computer to another, the documents are in a machine-processable format, the exchange is limited to documents, and the document exchange is governed by standards.

EDI has also created a vocabulary of terms that publishers should know. These terms will be posted in a separate entry later this week. The terms, as well as this guide to EDI for publishers, will be available in whitepaper form on our website, in our Whitepaper Library, shortly. Stay tuned! If you’d like to request a PDF of any of the whitepapers in our library, please contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Regardless of a fulfillment center’s methodology, you are paying for two things - space and activity. Each 3 PL or order fulfillment operation has its own methodology and payment schedule. Some fulfillment warehouses charge fees to store your books and fees to pick-and-pack and ship the books from the warehouse. Others will charge based upon percentage of sales. One of the best ways to control cost is by controlling your inventory. Whatever the fee structure, you must clearly understand the rates, terms and conditions of the contract.

Looking at pricing proposals from different warehousing and fulfillment vendors can be difficult because each one uses a different methodology for computing their rates. For this reason, reviewing the pricing proposals of warehousing and fulfillment companies should be done with great care and diligence. Here are tips to help avoid some of the challenges of warehousing and fulfillment pricing:

• Make sure the warehousing and fulfillment vendor has listed ALL costs
• Beware of monthly minimum charges
• Determine all monthly fixed recurring charges
• Ask if the vendor makes margin on freight charges and UPS discounts
• Double check move-out charges - some warehouse operations add huge penalties for move-out fees
• Ask for referrals from current customers to ensure that costs don’t change after signup
• Check the vendor’s BBB rating
• Make sure that everything is documented in a contract

Want to know additional important considerations when choosing an order fulfillment service? They are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

When choosing a third party fulfillment center, two additional and important issues to consider are the quality of communication and the financial stability of the warehouse.

On the surface, all order fulfillment services may look alike and offer similar services. However, when you take a closer look at their individual methods of delivering those services, there can be large differences. As you investigate the process of outsourcing to an order fulfillment service, you need to really think about what you want and what you need in a business partner to help grow your business.

I’ve discussed several things that I feel are crucial to choosing the right operation. Today, I’d like to discuss two more - “Communication” and “Financial Stability”.

Communication

Communication is always mission critical. There will always be times that require changes in the customer’s address, cancellation of an order or checking specific stock. The fulfillment center that you select must be available by phone, email and fax. You should never have to wait more than an hour or two for any request.

Financial Stability

Your fulfillment center must be financially sound - especially during the current economic environment. You will want to question how much debt the fulfillment center is carrying, if they look and act like a profitable company, their Dunn & Bradstreet rating and whether or not they are willing to give bank references.

There are several other important considerations when choosing an order fulfillment service. They are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

At Ware-Pak, we believe it is our responsibility to help our clients sell more books. To assist us, we are asking some of the leading businesses in the industry to help us in this pursuit. Over time, I will be inviting a number of people I know and trust to write blog entries that will help publishers grow their business.

Today I would like to introduce Scott Jones, Owner of Packaging Design. Scott’s company is a privately held corrugate manufacturing company that specializes in packaging products and point-of-purchase displays. Scott is a business partner that I would highly recommend learning more about. For more information on his company, here is a link to his website: www.pack-design.com.

Recently at Ware-Pak, we have received several questions regarding point-of-purchase displays. Some publishers are increasing their sales with strategically placed displays inside of retail stores.

Here is Scott’s guest blog entry discussing the topic:

Ideas for Publishers to consider when creating a Point-of-Purchase Display:

When considering a Point-of-Purchase display, publishers need to think about the following 4 issues: budget, type of display and versatility needed, the retail environment it will go into and the graphics needed.

1. Budget: Designers of temporary displays can create an eye-catching display to fit any budget. Knowing and communicating this information to the designer BEFORE he or she begins will help ensure they create a display that uses the correct material, correct number of components and correct artwork. Knowing the budget will reduce the number of revisions or redesigns needed, or simply missing your objective all together.

2. Type of Display and Possible Uses: When decided which type of display you need, it is important for the publisher to consider where and how their product sells best. Will it go on a counter, is it best displayed on an end-cap, is your product large and needs to be placed in a pallet pack? Some of these questions will be answered by the quantity, weight, size, shape and type of product you are selling. Based on your needs, a designer can often create a display with enough versatility to be used in several ways.

Finally, a consideration that needs to be addressed is how you will ship the display. Will it be filled with product or will the product and display ship separately? Again this information should be relayed upfront to the designer.

3. Retail Environment: All retail stores have their own requirements for displays. Any reputable temporary display company will know these requirements and can create a display that will be accepted at the retail level.

4. Graphic Requirements: There are many options in creating an eye-catching point-of-purchase display - from color to moving parts. A design can incorporate flood-coated or solid ink covered pieces, it can be plain white, have full 4-color graphics, moving parts or even holographic headers. These questions correlate directly with the budget for the display. Each one of the options listed will add cost to the display, but are also critical to making the display stand out at the retail level.

Great display companies can provide 3-D renderings at the beginning of a project to show you some ideas for possible displays. By using these, both you and the designer can “tweak” an idea before any prototyping is done. This can save both time and money. Also, be sure the company can provide you with prototypes to obtain final approval from the retail store.

Always remember, this is a creative process and it may take longer than expected.

In today’s entry I’m going to discuss two additional factors that I believe should be considered when a publisher, large or small, is choosing an order fulfillment service. These factors are “Turn Around Time” and “Technology”.

Turn Around Time

Every warehouse has its own procedures for handling order processing and the amount of time that is acceptable. You need to be aware of what time files are accepted and when you can expect orders to be shipped. You have to take these deadline times into account and see if they fit your client’s needs in terms of shipping times.

A standard in the industry is 3 business days for shipping. You need to determine if this is a timeframe that your client can live with. There are fulfillment warehouses that ship within 2 business days and some are offering same day shipping. You must choose which level of service will help you grow your business.

Technology

When it comes to the various types of technology within an order fulfillment facility, you must explore your needs. In any fulfillment warehouse, technology takes on many forms. These may include:

• Integrated business management systems for publishers
• Warehouse management systems
• RF technology
• Automated picking systems
• Mailing systems
• EDI/ASN
• Secured method for transferring data files
• Customizable order interface
• Push technology for business alerts
• Customizable email alerts
• Reports and Web based data reporting

There are still more important considerations when choosing an order fulfillment service that will be covered here. However, if you can’t wait to read them here, they are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

During the month of December, the number of units shipped was much weaker than the previous year - down by 50%. The number of fulfillment orders were also down, but as a percentage, fulfillment orders were down only 9%. Units shipped in 2008 were unusually high due to a client destroying a large volume of slow moving stock. The 9% reduction in order fulfillment is more reflective of normal business activity. Activities in the Ware-Pak warehouse were enhanced by a special project of assembling 500,000 CD sets. Given the economic conditions, we were satisfied with the overall results.

Below are Ware-Pak’s December Outsourcing Performance Numbers:

Speed and Accuracy Statistics:
Accuracy = 99.995%
Same Day Shipping = 92.4%
Shipped within 24 hours = 98.2%
Returns Processed Same Day = 88.1%

When a publisher is choosing an order fulfillment service, there are several important factors to consider. Having a list of criteria that enhances the compan’s operation is essential. I have already discussed why location and size and volume are important factors when choosing a fulfillment partner. In today’s entry I’ll be discussing why management and staff, and percentage of error are also important.

Management and Staff

Everything that happens in the warehouse will be driven by the management and will convey their business philosophies. Once you find a fulfillment center whose location and size fits your needs, the next area to examine is the management and staff.

• How long have they been associated with the company?
• What has been their impact?
• How do they measure success?
• What are the key business indicators they use to manage the business?
• How are key indicators measured and what is done with that information?

Percentage of Error

In most cases, the error is not as important as how the company handles the error. Whenever you have people and equipment, mistakes are bound to occur. There will be incidences when your clients will receive the wrong items, or a shipment is received at the billing address rather than the shipping address. When you speak to the management staff of a fulfillment center, ask if they measure error and how many there are. Ask them how mistakes are handled and what action is taken to prevent the same errors in the future.

Remember that these are only suggestions for criteria and it is crucial that you spend the time to develop a list of your specific needs. I will continue to discuss other important considerations when choosing an order fulfillment service. If you can’t wait to read them here, they are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Recently, I have been asked by several of our publishers about the advantages of working with a distributor. The more I spoke with them, the more I realized that there is a lot of confusion about how and when they should work with a book distributor. In this blog entry, I have focused on smaller publishers because the initial conversations I had were with friends who have only published a few titles. In a later blog entry I will address the larger publishers and when the economics work for them.

Many authors think that after poring their heart and soul into a book, once it is listed on their website and sites like Amazon, it will automatically sell. The truth is that marketing and selling a book is one of the most difficult parts of publishing. In fact, it is so difficult that the marketing and sales plan should really be developed before the book is written.

For example: If you are planning to work with a distributor, they will be deciding which titles are going to be listed in the fall catalog by the end of January.

It is the author’s responsibility to create buzz around their new book. No matter how the author goes about doing that, it takes hard work. A number of ways an author can generate buzz around their book include:

• Giving interviews
• Speaking engagements
• Book signings
• Establishing a web presence
• Using social media tools
• Sending out review copies
• Obtaining blog reviews and getting bloggers interested in the book

Many people dream that if they could only get their book into the retail chains, it would sell hundreds of thousand of copies. That sounds great, but it is also too good to be true. For that plan to work, the publisher would need to work with a great distributor.

The fees charged by a full service distributor will generally run between 20 to 30% of the sales price, but can be as high as 35 to 40% depending upon the distributor.

The question becomes: can you afford to get into the retail market and can you make any money doing it? The way the math works, a general rule of thumb is that the publisher ends up receiving about 35% of the suggested retail price of the book. This 35% needs to cover the time writing the book, the production costs, and any out-of-pocket expenses incurred for marketing the book. When selling into the retail trade, the normal discount rate is 45 to 55% off the suggested retail price.

For example: A hardcover book with a suggested retail price of $20, the trade discount will be $10 and the distributor fee will be $3.00. This leaves $7.00 for the publisher to cover royalties, production, marketing expenses and profit.

It’s quite obvious that production cost will change the view of this type of arrangement, depending upon the cost. Print-on-demand would be out of the question because the costs are higher - in the area of $5 to $6 per book. On the other hand, if you’re printing 2,500 copies of a 280 page hardcover book for $3.50, the story is different. The question becomes, is the $8,750 investment in the books worth the publishers risk and time? What would be the return on investment? To make this model work, the production costs cannot be higher than 15% of the suggested retail price of the book. Otherwise, it is almost impossible to make this model profitable for the publisher.

In summary, working with a distributor can make good business sense if certain benchmarks work for you. Remember, as the publisher you will end up receiving only 35% of the book’s retail price to cover royalties, marketing expenses and production cost. Therefore, production cannot exceed 15% of the retail price for this model to work. As with any investment, careful analysis and prudent planning are a must.

Over the past several weeks I have been discussing the six (6) major reasons that publishers, large and small, benefit from outsourcing their order fulfillment services to a third party vendor such as Ware-Pak.

Last week I discussed the cost-driven reasons and today, I am discussing the sixth and final topic - employee driven reasons. As promised, the combination of all of these is now available on our website on our new “White Papers” page. If you’d like to explore the white papers that are available there, please click here.

What are the Employee Driven Reasons Publishers Outsource?

Give employees a stronger career path. You should consider whether or not most of your warehouse employees are promotable to the publishing side of the businesses. If there is no possibility of promotion, what types of employees can you attract for the warehouse operation?

Increase commitment and energy to non-core areas. As a warehousing company, Ware-Pak focuses solely on warehousing. Each day, our job is to figure out how to provide publishers with the highest levels of service at the most economical cost.

If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com