SALES PERFORMANCE FOR APRIL 2007
Produced by Mokrynskidirect
62% of all mailers surveyed reported April sales equal to or better than last year, and 54% reported sales equal to or better than plan for the month. 33% of all mailers had increased circulation in April 2007 vs. April 2006 and 46% kept circulation levels even with last year.
Apparel mailers reported 67% doing equal to or better than last year in April, and 50% meeting or beating plan for the month. The survey also indicated that 56% of the Apparel mailers reporting had increased circulation in April 2007 vs. the prior year.
60% of General Merchandise mailers reported doing equal to or better than last year in April, and 67% reported sales meeting or beating plan for the month. 20% of General Merchandise mailers had increased circulation in April 2007 vs. April 2006, while 53% kept circulation even with last year.
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“Band-Aid†Relief for Unkind Postal Cut
Got a minute? Try taking this week’s USPS quiz. What “leaves Standard letter rates untouched, protects the Postal Service’s financial standing, allows USPS projected revenues to meet expected costs and does not reduce the contingency fund� (The quote is from Dan Blair, chairman of the Postal Regulatory Commission.)
The correct answer is the PRC’s new proposal for a temporary rate decrease of the flat rate that went into effect May 14. Some catalogers are having to deal with increases of up to 40%. The PRC’s proposal would reduce Standard Mail regular flats by 3 cents, with a 2-cent reduction for Standard Regular nonprofit flats until September 29. In theory, this respite should help mailers make the transition to higher rates without requiring additional capital outlay during the interim period. (Just multiply the number of flats by 2 or 3 cents, as necessary, says the PRC.)
The proposal is now in the Board of Governors’ court. The Direct Marketing Association has registered its “disappointment,†calling the proposal nothing more than a “summer break†for mailers and a “Band-Aid.†With the DMA suggesting that this new proposal be made permanent, it seems clear that there is no chance that the flat rate increases will be reduced significantly. They’re here to stay, either at the current rate, or possibly with the 2–3-cent reduction to Sept. 29, or even beyond.
Affected mailers can send their comments—again—to the Postal Board of Governors.
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Jeff Barry is Director of Marketing of F. Curtis Barry & Co., a warehouse consulting company focusing on the entire direct fulfillment process with expertise in freight analysis.
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Push/Pull on Internet-related Taxes
The Internet is new enoughâ hard to believe, isn’t it that it’s still treated as a special case in terms of commerce. Case in point: State governments are currently prohibited from taxing Internet access, but that ban is set to expire Nov. 1 this year. Politicians and lobbyists are now debating whether to extend the current moratorium, make it permanent, or lift it. At the moment, DSL, cable modem, and wireless transmission services are exempt from taxation by state and local governments.
Predictably, Internet-related business interests support continuation of the ban or even making it permanent, while state and local governments argue that protecting those businesses indefinitely from being taxed would remove an important revenue source. Another argument from the state and local government standpoint is that the ban, originally imposed when the Internet was “new†to help it grow commercially, is no longer necessary.
Both houses of Congress have scheduled hearings on this issue, and you can expect more public discussion as the Nov. 1 deadline approaches.
What’s your take on the subject? Would local taxes be enough to discourage investment and slow the growth of the Internet as a commercial vehicle? Or would they have little effect?
Another online tax issue is also heating up: online merchants imposing out-of-state sales taxes? At the moment, state tax laws constitute such a maze that online merchants have been generally absolved from collect out-of-state sales taxes. That may be changing, with the Streamline Sales and Use Tax Agreement coming into play.
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F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm for catalog, e-commerce, and retail businesses. Offers expertise in business process and order management systems, inventory management systems, warehouse management systems.
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Sales Performance for March 2007
As Reported by Mokrynskidirect
The survey results for March report strengthening across the board for mailers vs. last year, but decreased sales performance for mailers vs. plan.
83% of all mailers surveyed reported March sales equal to or better than last year, and 54% reported sales equal to or better than plan for the month. 38% of all mailers had increased circulation in March 2007 vs. March 2006 and 37% kept circulation levels even with last year.
Apparel mailers reported 75% doing equal to or better than last year in March, and 50% meeting or beating plan for the month. The survey also indicated that 63% of the Apparel mailers reporting had increased circulation in March 2007 vs. the prior year.
87% of General Merchandise mailers reported doing equal to or better than last year in March, and 56% reported sales meeting or beating plan for the month. 25% of General Merchandise mailers had increased circulation in March 2007 vs. March 2006, while 58% kept circulation even with last year.
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Sea Change: New Postal Rates, the Catalog Industry, and the DMA
I want to say as a DMA member, speaker at many DMA conferences and a member of the Multichannel Council OPCOM committee, I am disappointed in the quality of the lobbying on the postal rate issues. One DMA executive said to me recently, “The DMA and its lobbyist were caught by surprise by the Rate Commission’s ruling.†I appreciate the candor, but in my naïve way of thinking I always thought lobbyists were paid to shape and influence legislation. I think the DMA has to deal with many conflicting groups in terms of the mailing community and the catalog industry got the short end of the stick this time around. (Other members of the industry have felt the need for a more dedicated voice—see the May 4 blog entry on the new American Catalog Mailers Association.) For my part, I will keep my membership and do everything I can do to help the DMA and our clients work through this crisis and sea change.
Speaking of sea change. The CTO of a major cataloger said to me last week that there are some bright sides: “We will be killing less trees; we will have to be more on target with our mailings and use more sophisticated database marketing; the postal increase will change the nature of the catalog and necessarily drive business to the Web where we can show the total product line; and the total costs may be lower.â€
Maybe we all need to step back and give a total assessment!
Jeff Barry is Director of Marketing of F. Curtis Barry & Co., a multichannel operations consulting company focusing on the entire direct fulfillment process with expertise in freight analysis.
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10 Ways to Improve Efficiency and Reduce Costs in Your Warehouse Operations
Absolute productivity has declined in many companies.
Indeed, in conducting our benchmarking surveys (which we’ve done since 1996), we’ve discovered that many metrics, such as orders processed per full-time warehouse worker, remained flat, while dollars of sales processed per warehouse square foot have declined. In turn, labor rates have increased from an average of $5.50 to $10.50 per direct labor hour. To help you boost productivity at your catalog, I’ll focus on the warehouse audit process and the application of a few key warehouse success factors.
An Operations Audit
When trying to reduce costs and boost customer satisfaction and profits, first measure and analyze what’s currently being done. To determine if your warehouse operation in particular is as efficient as it can be, start with a warehouse operations audit. Such an audit takes a quantitative and qualitative look at your fulfillment operation’s productivity and accuracy, and does so in a systematic way.
A good operations audit enables you to measure warehouse productivity and other important metrics to identify patterns and trends. It also allows you to complete both internal and external comparisons. Once you gather the data and make comparisons, you’ll be able to draft an action plan for improvement.
Unfortunately, there isn’t a fail-safe, textbook approach to the operations audit. Many companies employ an independent resource to conduct the audit for an unbiased and independent perspective.
The audit should consist of a method for evaluating your own operation against a set of internal expectations, as well as external, industry-accepted, best practices and averages (outlined below). Remember, you can’t improve something if you don’t measure it.
Using a template – that is, a list of predetermined key evaluation points – for each area of the warehouse can aid in the audit’s organization. Focus on labor, facilities, systems and workflow procedures. By analyzing your operation against your existing expectations, you can develop a basis of measurement for future actions.
10 Critical Success Factors
The following is a list of key factors common to successful warehouse operations.
1. Use the cube.
Our studies show that occupancy (cost of space and utilities) ranges from 25 percent to 35 percent of the cost per order.
One of the single biggest culprits in optimization of your warehouse asset is not adequately using available cubic space. Your first look as you walk through the facility should be up.
Inefficient use of the available cube can translate into increased costs for additional warehouse space that you may not actually need. Typically, receiving, picking, packing and shipping generally use 40 percent to 50 percent of your space; product storage the remainder. Use racking, mezzanines, multilevel order-picking concepts and powered conveyor placement to increase your facility’s utilization.
In addition, look at the cube use in your picking slots and reserve locations to determine if a space reconfiguration can boost the amount of products stored.
2. Ensure that sufficient product is available when a picker needs it.
Use a combination of scheduled replenishment of the primary pick slot utilizing the min-max and demand-replenishment concepts. Most warehouse management systems and some catalog order management systems support these concepts. However, a shortcoming of many catalog management systems is that the picking-ticket process assumes that the pick face has been restocked and product is available. This frequently can hinder picker’s productivity.
3. Develop appropriate pick locations.
As much as 70 percent of a picker’s work hours may be spent walking. Consider product velocity (sales movement) and size (cube) when selecting the picking slots sizes and location. Many operations replenish forward picking too often. Set up a system in which you can store at least one week’s average unit movement in the pick slot and a “hot pick†area for extremely fast movers. Provide various slot sizes. Read more
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NCOF Shipping and Handling Roundtable: Freight Analysis
Focused discussion groups and roundtables can make you aware of innovative ideas, provide feedback from your peers about issues or concepts you might want to explore, and spark your own thought processes. Curt Barry hosted a Shipping and Handling Roundtable at this year’s National Conference on Operations and Fulfillment, and here are a few of the ideas that surfaced.
Are you looking for a cost-saving idea? One distribution center partnered with a carrier and serves as a third-party shipping consolidator by receiving outbound packages from other fulfillment centers, running them through their shipping system, and gaining volume discounts on 3rd- and 4th-class mail.
Would the response to this question be beneficial to you? As the postal rate continues to rise, at what point does the increase negatively impact sales, and by how much?
Would multiple East-West United States facilities work for you? Would you benefit from reduced outbound freight costs? Would you benefit from potential savings by receiving Asian freight into a Western facility and reshipping to the Eastern location? Are you able to effectively manage and absorb the increase in inventory that naturally occurs with multiple facilities? Is your management team strong enough to control two facilities? How will you handle an item out of stock in one facility and in stock at the other? Multiple facilities are a tremendous opportunity with unique requirements for successful management.
Provided your vendor inbound freight compliance is good, manage the number of outbound packages by holding backorders for two or three days until you can ship complete, then upgrade the shipment for free and still potentially reduce costs while creating customer satisfaction.
Do you understand your outbound freight volume and the subsequent charges by your carriers? If you hope to negotiate your shipping contracts favorably, you must understand your business. Carriers are in the strongest bargaining position because they have all the information on your account. Your carrier should provide you with monthly reports of detailed activity so you can drill down to the average cost by package type. The carrier should also make available daily dashboards indicating your activity.
F. Curtis Barry & Co., a multichannel operations consulting company, focuses on the entire direct fulfillment process with expertise in distribution, shipping and handling, and freight analysis.
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Contact Center Metrics
Multichannel Merchant did a good job of reporting on one of Tocky Lawrence’s NCOF presentations last week (“Developing and Applying Multichannel Contact Center Benchmarksâ€). The presentation concentrated on defining and describing actual metrics with some real numbers that the audience could use to gauge their call center operations: call abandon rates, service level, handle time, and call-to-order ratio/productivity.
According to Tocky, one difference in F. Curtis Barry & Company recommendations about call center benchmarking compared to many other consultants, is that “Other consultants recommend not benchmarking yourself against other companies. We say you should do that every so often, because it can raise a red flag that you might not spot if you are just measuring against yourself. It’s hard to get an apples-to-apples comparison, because everyone measures differently.†There is not necessarily a single right or wrong way to define a given metric, he says, but call center managers need to be aware of what they actually choose to measure before comparing their numbers to another company’s.
For instance, as Tocky points out, “You can measure the average speed of answer from when a call starts or from when an operator picks up. If you have an IVR, do you include that time in measuring speed of answer, or do you keep it separate time. The difference could be seconds to a minute more per call.â€
Tocky Lawrence is vice president of F. Curtis Barry & Co., a multichannel operations consulting company focusing on the entire direct fulfillment process with expertise in call center consulting and benchmarking.
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New Organization to Represent the Catalog Industry
ACMA. If you Google the acronym this week, you’ll find sites from Italy and Australia, organizations related to composites, case management, Chinese medical associations . . . but if you’re a cataloger, keep an eye open in the next couple of weeks for the brand-new American Catalog Mailers Association, which filed a statement of intent on April 24, 2007. The organization’s mission statement reads in part: “Advocate for the collective interest of catalog mailers in regulatory public, and administrative matters. . . . Participate in rulemaking or commercial proceedings of significance where a single collective voice magnifies effectiveness.â€
Citing the current USPS regulation case as an example of precisely the sort of situation that the ACMA means to help members resolve to their greatest benefit as an industry, a letter from the officers (Executive Director Hamilton Davison, Chairman Neil Sexton, and Membership VP Ralph Drybrough) makes the point that the new organization is not interested in competing with such groups as the DMA, NEMOA, or PostCom, but rather in focusing on catalog-specific issues.
ACMA membership, which has an initial annual dues assessment of $5,000, will include not only catalog mailers but printers, designers, list managers, Website developers—“and others who derive their livelihood from a vibrant catalog marketing industryâ€â€” and multichannel direct marketers “have a substantial portion of their activities directed to the production and mailing of catalogs.†Charter members of the American Catalog Mailers Association include American Girl, Gardeners Supply, Lillian Vernon, Market Force, Northern Safety Co., J. Schmid & Assoc., Inc., Pet Edge, Taylor, and Vcom, over 30 members in all in this initial phase. Besides Davison, Sexton, and Drybrough, named above, the initial board of directors includes Don Libey, Michael Muoio, Mark Taxel, and Don Treis.
The American Catalog Mailers Association Web site is currently under construction, but it is scheduled to be up and running by mid-May (you can bookmark it at http://www.catalogmailers.org). Right now, in order to contact the organization directly the number to call is (800) 509-9514; the organization’s offices are at:
American Catalog Mailers Association, Inc.
2001 K Street NW
Suite 206
Washington, DC 20006
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Postal Rate Case, Act IV, and Still Counting
Another quick update in this ongoing saga: If you haven’t already done so, you can still add your voice to those asking the Postal Regulatory Commission to reconsider its decision on new Standard Flat Mail rates. The deadline for public comment has been extended to Friday, May 4. The Direct Marketing Association recommends that concerned businesses contact their Congressional Representatives and to send letters to the following:
Fax your letter to the Postal Regulatory Commission:
The Honorable Dan G. Blair, Chairman, Postal Regulatory Commission
Fax: (202) 789-6886
Fax a copy of your letter to:
The Honorable James C. Miller III, Chairman, Board of Governors, United States Postal Service
Fax: (202) 268-5472; and
The Honorable John E. Potter, Postmaster General and Chief Executive Officer, United States Postal Service
Fax: (202) 268-4860
In a related development, several industry organizations (the USPS, the Direct Marketing Association, the Association for Postal Commerce, the Mail Order Association of America, and the Parcel Shippers Association have asked that implementation of the proposed new Standard Regular and Nonprofit Mail rates be delayed until July 15 so that mail users don’t have to face two sets of changes in case the Board of Governors does decide to change the proposed rates.