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Category: Supply Chain

Below is part eight of a continuing series on our blog regarding the key elements to successful e-commerce book fulfillment titled “Electronic Data Interchange”. At Ware-Pak, we make it a point to aid in understanding some rudimentary terms and addressing the complexities of e-commerce fulfillment.

Knowing what’s important to the e-retailer from a warehousing and fulfillment perspective is critical. Products need to be made available across multiple channels and e-commerce is one of the best ways to make your business accessible to your customers.

Electronic Data Interchange

In making a selection of a fulfillment center, double check to make sure they can support your electronic data interchange (EDI) initiatives.  The fulfillment center must be able to generate the SSCC-18 Carton License Plate and affix the label to the carton.  From there, the fulfillment house must send you a data set to meet your customers’ ASN requirements.  To identify this file, know that it will contain the SSCC-18 license number and the contents of that specific carton.  This completes the information required for the ASN.  Finally, the fulfillment warehouse will generate the UCC-128 label to be affixed to the cartons completing the ASN transaction.

Today’s blog entry is part five of a continuing series regarding e-commerce and successful book fulfillment. In case you are just joining us now, the previous four topics have discussed scalability, integration and 3rd party sites, real-time communication of order details and inventory visibility and synchronization.

# 5: Increased Pick Accuracy

Today’s customers expect to receive the correct product in a timely fashion. In a time when accuracy is not something to be compromised, it is good to know that the best fulfillment centers utilizing barcode scanning technology at the time of pick-and-pack can dramatically increase accuracy over the old pick-to-paper model.

Barcode scanning functionality directs a warehouse picker to the correct inventory location as well as verifying the picked product. It is critical to have the capability to immediately verify that the correct SKU was selected at the time the product is picked. Having this real-time verification based on the Item Number or UPC barcode provides immediate feedback to the picker. Barcode scanning is one of the best ways to increase shipment accuracy resulting in happier customers and consumers.

With the growth of online sales increasing substantially over the next 5 years, e-commerce is one of the best ways to make yourself and your business accessible all the time. Providing accurate book fulfillment services is key to keep customers happy and increase customer loyalty to your brand. The next entry will discuss custom branded packing slips and integration with different shipping services – so check back, you won’t want to miss it.

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.

The only thing that makes the process of warehouse operations difficult to manage is volume. Assembly or kitting projects can run smoothly or be problematic – the difference is in the management process. As a book fulfillment warehouse, Ware-Pak will assemble 300,000 to 750,000 different kits for educational and retail publishers in any given year. These projects can be for school adoption kits, point-of-sale book displays, special assortments, application of retailer’s SKU stickers or any other reason to sell more books. Over time, we have learned there are 5 critical steps that can make all of the difference. Performing these steps consistently allows Ware-Pak to produce kits accurately.

The 5 steps to ensure quality kit production include:

1. Develop a written Bill of Materials (BOM)
2. Creating the kit within your computer system
3. First off approval
4. Production / quality checks
5. Bulk product preparation per customer specifications

Bill of Materials
This may sound like a simple matter, but it’s amazing how often small or non-salable items are left off the list. The written bill of materials (BOM) must be created for each unique kit to ensure that the correct kit components, along with accurate component quantities, are included.

Creating the Kit Within the Ware-Pak System
We have developed software that can search our inventory with the touch of a button and tell us the exact inventory of each component so that we can advise our client’s whether or not we can build the number of kits requested. If we do not have enough stock to complete the desired quantities, we know how many can be made and which component piece and quantity are required to complete the order.

First Off Approval
The old adage, measure twice – cut once, is so important. Once all of the components for a particular kit are received, assemble a sample kit. By having a secondary manager approve the sample, we always have a fresh set of eyes reviewing the sample before it is sent to the client. We know deadlines are critical, but the process must be completed before production begins.

Production / Quality Checks
The kit run quantity will determine the necessary intervals for quality checks. For example, if you are making only 100 kits, typically you should quality check every 20th kit. For larger runs of say 5,000, you may only check every 200 kits. The kits should be pulled off the assembly line, opened, and inspected for quality assembly, as well as quality of product.

Bulk Product Preparation per Customer Specifications
The finished kits are packed on to skids per customer specifications (pallet size, pallet height, pattern requirements, no overhang).

These 5 steps will help your assembly projects run smoothly. We provide a detailed written procedure of our kitting process for each and every Ware-Pak client. If you have any questions, please let us know and we would be happy to help.


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