ACMA’s National Catalog Advocacy & Strategy Forum
Save the Date:
National Catalog Advocacy & Strategy Forum
June 26-27, 2008
Washington, D.C.
The American Catalog Mailers Association (ACMA) has been engaged in continuing important discussions on how we can address the current state of affairs in the catalog industry with the USPS, and has been making progress on a number of fronts. These will be covered at the National Catalog Advocacy & Strategy Forum in Washington, D.C. on Thursday, June 26 & Friday, June 27, 2008. The Forum will include the Postmaster General of the U.S. Postal Service, the Chairman of the Postal Regulatory Commission and a number of key personnel from both of these important institutions. Non-ACMA members are invited to attend this first-of-its-kind event.
This top-to-top forum, only for catalogers and their key suppliers, is an opportunity to join in dialog with executives of the Postal Service and their Regulator, visit with members of Congress and their key staff members to communicate the value of cataloging and educate policymakers on the critical issues facing our industry, and discuss Do Not Mail and ACMA work on how preference requests are handled by catalogers. Members will also be able to participate in an ACMA annual meeting to vote for officers & directors and get up to date on ACMA’s Program of Work to improve the external environment for cataloging.
ACMA is putting together a “Who’s Who†in postal affairs for the event. “It is critical we have a strong showing from the industry of top executives, owners and thought leaders to make our voice heard,†says Hamilton Davison, Executive Director of ACMA. “Representation from ownership and C-level executives in ACMA’s membership will, in and of itself, speak volumes,†adds Davison, who urges everyone to “pull a colleague or two from another company to attend with you.†Explains Davison, “When a bunch of CEO types descend on our nation’s capital with the same agenda, it gets noticed. Your participation will show the USPS and PRC through your action that you are committed to keeping the mail open for your products. Your questions and comments will reinforce the points I have been making that this is now difficult and proposed changes threaten to make it harder. Your passion and intensity will convey that this industry has terrific growth potential if properly managed, even though the last two years has taken us in completely the wrong direction.â€
Please also help generate catalog industry participation from other companies by spreading the word about this Advocacy Forum to your network. This is an important opportunity to do something to help control the external environment that impacts your company’s financial performance for the future!
For more information, visit www.catalogmailersforum.org or contact:
Executive Director: Hamilton Davison
hdavison@catalogmailers.org
Direct telephone: 401-529-8183
Assistant to the Executive Director: Cathy Roden
croden@catalogmailers.org
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Is There a Wall Between IT and the Rest of the Company?
Here’s the picture: A multichannel company with sales of $20 million has an aging order management system that has been in place for over 20 years. While there are some things that the users like about it, they have basically outgrown the system. They need far better marketing information, e-commerce site to business systems interfaces, forecasting and inventory management, and the ability to deal better with light manufacturing and tracking sets and kits, which are a major part of their business.
The president authorizes a project to investigate replacing the system. Immediately a turf battle ensues. IT is already researching the Internet for the most technically up-to-date IT platform. The users’ comments are predictable: “They’ll pick the most expensive, technology-driven system out there regardless of whether it fits our business.†There is a proverbial glass wall between the two groups in many companies.
The outcome: After months of no progress, the president shrinks from his responsibility and says, “We’ll keep the current system.â€
Unfortunately, this scene is played out on a daily basis in many companies both large and small. In defense of the IT department, they are often given responsibility for everything from telephone systems, to help desk, to advanced WMS systems, e-commerce systems and e-mail systems. Most often they are under budgeted. Management backs into a percent to net sales that the company can afford to spend. Additionally, the technology is diverse, complex and represents generations of different languages, databases and standards.
But in defense of the users, IT more and more takes a technological point of view rather than a business perspective. By a “business perspective†I mean that, in many cases, IT no longer knows the company’s business—not the mechanical things like how to enter an order. They lack knowledge of the industry overall. And they lack the understanding of how to help you grow and manage your business. Examples include details about what will make your marketing more effective; what do the merchants need to plan, grow and evaluate their merchandise selection; and how to help operations become more efficient. In many companies, IT often looks at application function as secondary to technology. Additionally, they hide behind a lot of technical jargon that pushes users away from them.
And systems software vendor salesmen are no better off. Gone is the day when talented sales and support people really understood the industry. Many barely know their company’s system, and many can’t even demonstrate their system without the aid of a support analyst.
The result of all this is a collection of negatives.
A technically advanced system or a system that fits the IT standard is selected. It may be a weak system from a business perspective. Technology by itself rarely gives an ROI.
The IT department’s lack of a business focus means that users don’t ever make high-level use of the systems in place, because they don’t know what applications and capabilities exist in commercial systems or in previous generations of in-house developed systems.
Another result is that there isn’t a partnership between the user departments and IT, which optimizes the full, untapped potential of IT. The company suffers because the rather large investments in critical applications don’t materialize or they are years off of the projection.
Tear down the wall
You will have to start thinking differently in order to change things.
- Is there failure to recognize problems with IT? This amounts to costly neglect. Ask, is IT an expensive utility or a necessity in your company? Your management team and IT need to have a clear understanding of the mission and charter of IT, to provide information systems that assist in company profit and growth.
- Is there failure to get IT to realize its role in the future of the business? Put IT management in place that understands the bigger picture of your business and the information that is required to manage and grow it.
- Is there failure to make your IT director an equal partner in your strategic planning process? There must be exposure to the company’s direction and an understanding of where IT plays the crucial role. Get IT buy-in early rather than just handing them a list of requests after many months of meetings.
- Is there failure to fully utilize IT resources? Develop internally, or hire, business analysts who are interested and dedicated to maximizing the user community’s use of the systems.
- Is there failure to hold users accountable? Don’t let the users hide behind IT flaws and shortcomings. They should know the business and they need to take responsibility for understanding the applications with which they’ve been provided.
Outside resources can help your company make this transition. In our consulting assignments, we have successfully assisted companies in making these types of sea changes.
We believe that IT—for good or bad (and ineffectiveness is certainly bad)—governs the productivity and profitability of this industry. How well is your company tapping its potential?
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and warehouse consulting company. Helping you understand how to reduce freight costs is just one of the ways we can help your multichannel business.
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70 Ways to Reduce Costs, Increase Productivity and Improve Customer Service
Cost Reduction and Productivity Improvement Assessment
70+ Ways to Reduce Costs, Increase Productivity and Improve Customer Service
By Curt Barry
Over the past 23 years F. Curtis Barry & Company’s work with multichannel companies in operations and fulfillment consulting has allowed us to compile these 70+ ways that can cut costs and increase productivity, which will ultimately lead to an improvement in customer service. We have focused our cost reduction and productivity assessment efforts in the following four major areas:
Contact Center (Call Center)
Scheduling and staffing models, service levels and technology in the call center are all affected by the increasing eCommerce order volumes. What are the ways to be more efficient and serve the customer better from the contact center? Learn how to reduce costs and increase productivity in your contact center.
Warehouse & Distribution
With most companies coming out of a less than perfect holiday season, there is a real need to increase productivity without having to make major capital purchases to do so. Discover ways to reduce your warehouse cost per order, increase capacity without expansion and improve service levels.
Forecasting & Inventory Management
Inventory is most companies’ largest balance sheet asset. How it’s managed determines customer service and profitability. Learn ways to improve the management and forecasting of inventory.
Multichannel Business Systems
Order management, warehouse, e-commerce and inventory management systems are at the heart of the company. These systems affect the productivity and sales of all departments including merchandising, marketing, fulfillment and contact center. Investigate ways to plan for, select and implement effective Multichannel Business Systems.
We ask that you please consider using F. Curtis Barry & Company’s consulting services to tailor a cost reduction and productivity improvement assessment to your company’s needs in order to evaluate, develop and implement these improvements and cost reduction practices.
Download the PDF: 70 Ways to Reduce Costs, Increase Productivity and Improve Customer Service
For more information contact Jeff Barry at 804-740-8743 or email jbarry@fcbco.com.
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Are We Trying to Make a Broken Business Model Work?
At our recent Executive Forum we talked about how rising postage costs, increasing paper costs and the fall off in prospecting response rates have radically changed the traditional catalog business model. While there are large, efficient catalogs that spend in the high 20-percents on the total cost to create and mail catalogs, many businesses are paying 30% to 35% of net sales. Postage will continue to go up.
List prospecting has declined for 10 years and has been dismal for many companies. Some attendees felt that the co-op databases, while they developed responsive lists and expanded circulation for the membership, may in the long run have eroded response rates as customers are receiving too many pieces of mail.
When you look at major expense categories, other than merchandise purchases, the total marketing cost is the major expense well ahead of fulfillment and G&A overhead combined. To turn around company profitability, the industry has got to get more prospects and sales at a lower cost than we are used to with the traditional catalog model.
But the real question is this: are we, in the catalog industry, relying on a broken business model? And is the old traditional catalog business model one that can be fixed? We have had occasion to work with a couple dozen Internet pure plays in the past year. None of them use catalogs. Granted, they are all smaller companies. But they generate traffic to their sites with search engine optimization (SEO), mostly organic rather than paid search.
How much money are you spending on SEO? If the traditional business is broken, is that expenditure enough to push your company to more financial viability? In talking with clients, I’ve found very few who are experienced and comfortable with this new electronic media and can decrease their dependence on print catalogs.
How is your experience—good or bad—with SEO? Post your experiences, and let’s learn from each other.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm for catalog, e-commerce, and retail businesses. We offer clients expertise in business process and order management systems, inventory management systems, warehouse management systems; warehousing and distribution; contact center services; inventory management and forecasting solutions; and strategic, financial, and operational planning for all business channels.
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Macy’s National Strategy Gets a Makeover
The Wall Street Journal (April 21, 2008, B1) detailed a strategy by Macy’s CEO Terry Lundgren to localize store assortments to cater to what shoppers are more interested in buying. This localization—called “My Macy’sâ€â€”will for now will be only 15% of the total SKUs, which range from 1.5 million to 4 million, depending on store size.
Macy’s same store sales declined 1.3% for 2007 from the previous year and 2% overall. Macy’s is the largest department store in the U.S., with 2007 sales at $26.31 billion. The other department store leaders are J.C. Penney, with sales of $19.86 billion; Sears, $19.50 billion; Kohl’s, $16.47 billion; and Nordstrom at $8.83 billion. Only Sears posted a worse 2007 sales decline than Macy’s.
Mr. Lundgren is obviously one of America’s smartest and leading merchants. But somehow, to me as a shopper, the strategy of all the stores across the country being a cookie cutter didn’t make sense from the beginning. If shoppers didn’t find what they were looking for in one Macy’s store, there was no reason to even set foot in another.
Having acquired nearly all the major regional chains and then homogenizing them to eliminate any differences, Macy’s may be lucky sales weren’t even lower. Even before Macy’s acquisition strategy took place, one of the faults in traditional department store retailing was that stores looked too much like each other and they carried the same national brands.
If you think of your own town, there are sure to be residential areas that are very affluent, with customers who are more selective and can afford better brand names. At the same time, in an urban environment assortments may need to be tailored to shoppers who work downtown. The people who live downtown may be affluent younger professional folks and a minority of lower income residents.
Once again, we believe the Internet has a profound effect on this strategy; in today’s shopping world, comparison shopping engines can pinpoint stores with lower prices and greater availability. This makes national brand names much more comparable and stores more vulnerable.
However, gearing stores to more localized assortments will be harder than one may think. It means turning some of the control over to local management rather than centralized buying and decision making. According to WSJ, “Management behind the scenes will be revamped to have 13 executives oversee the merchandise assortments at 10 stores each, instead of 7 executives overseeing assortments in up to 23 stores.â€
In going localized, Macy’s is following the approaches that Best Buy, Ross Stores, Inc., Wal-Mart and Gap, Inc. have trail-blazed.
We wish Macy’s well as they make their transition—and we’d love to hear what readers think of this new approach.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory management, merchandise planning and benchmarking. Learn more online at: http://www.fcbco.com.
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Economists Say USA is in Recession
Two-thirds of the 52 economists interviewed by USA Today in their quarterly survey say the U.S. is now in a recession. Add to that those surveyed who believe we will be in a recession soon, and the number reaches 79%. If there is any lightheartedness in this tough business climate, it is when people joke that the Feds will take six months to declare what most people experienced in their businesses six months before.
The good news is that the 52 economists interviewed feel that the recession will be “short and shallow and inflation will abate.†Eighty-seven percent of those surveyed expect the Feds to reduce short-term rates to 2%. Inflation was 4% in March, and they feel it will decline throughout 2008. Unemployment will reach 6%, which they feel is low for a recession.
But there was no explanation or rationalization of the terms “short and shallow.â€
From a different angle, FoxBusiness.com’s article this morning reports “The country’s economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday.”
“The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly”, FoxBusiness.com also stated.
I will say that I’m seeing many of our clients dealing as well as they can with the reality of the recession. They have moved out of the stages of confusion and what looked like paralysis earlier in the year.
Our advice is to plan the fall and holiday very conservatively, to avoid severe inventory buildup. There has been less promotional activity in 1Q 2008 than there was in 4Q 2007. Most of our clients are going to be very careful to avoid major mailings in front of the election.
What are other businesses planning? Readers, how are you planning fall and holiday 2008? Let us know.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.
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China Problems Loom
I just heard from one of our gift and hard good direct clients—one in a series of messages like this I’ve had lately. This latest is that their Chinese producers failed to deliver on goods, costing this small catalog $100,000 in sales even though they had purchase orders in and accepted with confirmed delivery dates.
Another client with sales of $600 million in inexpensive merchandise says that their Chinese resources will only quote on a single purchase order at a time and will not hold prices. Prices are going up at a rate of 10 percent several times per year. A third client of upper-end products has not had the problems of the other two. They seem to be holding prices.
Multichannel businesses and suppliers have painted themselves into a corner – it means developing other resources in a hurry. I hear comments about low cost production moving to Vietnam, Sri Lanka, India, Pakistan, etc. But while many of these countries have low-cost labor supplies, they don’t have the scale of manufacturing and the infrastructure in place to match the production output of China. And with most of our factories long since shut down, the machinery shipped overseas in many cases, and labor now mostly in other jobs in the service sector, you can forget about moving production back to the U. S.
China—even as it cracks down on protesters in Tibet or has air pollution that makes Los Angeles look pristine—is the “major player in townâ€.
But with the Chinese government having cut back on rebates, factories suddenly having to start paying attention to environmental laws and new regulations, a labor shortage causing production cutbacks, and the Chinese yuan having gained as much as 15 to 20 percent in value versus the American dollar in just the past two years, it appears inevitable that we will pay higher costs. How will that, in turn, affect our sales?
So readers, we’d like to know: What’s going on out there from your purchasing perspective?
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory mangement, and benchmarking; Learn more online at: http://www.fcbco.com.
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Direct Commerce Systems Workshop
The F. Curtis Barry & Company and Catalog Success’ co-branded two-day interactive systems workshop, “Evaluating, Selecting and Implementing Direct Commerce Systems†has added a new twist to the registration for this workshop.
The first 20 registrants for the systems workshop will receive a discount of $100 off the registration fee of $795. The spots are filling up quick, so please don’t hesitate to register for this interactive systems workshop.
To learn more about the workshop and to register visit our website at http://www.fcbco.com/seminar
Have more questions, please contact Jeff Barry at 804-740-8743 or email him at jbarry@fcbco.com
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Operations Expense Reduction – Managing the Pennies
Nobody needs to tell you it’s a tough business climate. Last week at NCOF, I gave a speech to 180+ people on Operations Expense Reduction – Managing the Pennies. You can access the speech on our website. Also, in working with our clients to reduce expenses, F. Curtis Barry & Company has compiled an 11-page handout, “70+ Ways to Reduce Expense, Increase Productivity and Improve Customer Service.â€
Reduce costs. Increase productivity. Improve customer service. 70+ Tips & Ideas to help your company in the following areas:
One thing that was instructive and a lot of fun at NCOF was that we got the audience to volunteer what they had implemented to reduce expenses, as well as to reveal the ROI. Here are a few of the major points:
Direct and indirect labor is 60%-65% of the cost per order plus benefits, which in many businesses were 20% or higher. Labor costs can be reduced with training programs for management, incentives, setting benchmark expectations (or engineered standards for larger companies), developing a labor budget, reducing attrition, etc.
Vendor compliance policies reduce your DC expenses and speed receipts.
Renegotiate inbound and outbound freight regularly.
Invest in bar coding to reduce inventory shrinkage and track product throughout the center.
There are benefits through slotting and directed put away from WMS systems.
Utilize methods of minimizing picker walk time including hot pick zones, pick to light, pick and pass, re-slot regularly, etc. Investigate voice picking to speed picks and improve accuracy.
Ergonomically redesign work stations for packers and returns.
There were some really creative and quick ROI solutions. Rather than talking about the doom and gloom, these managers are at work finding out where they can “reduce the pennies.â€
Call me today at 804-740-8743 to discuss how we can help you perform an operations audit, which will reduce expenses.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.
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Take 10 Minutes to Protect Your Future Profitability
No CEO needs one more thing to do. Everyone has been hard at work to offset the effects of the postal increase. But have you been proactive with your congressional representative or the USPS? I am concerned that catalog executives are not making their voices heard.
Recently, F. Curtis Barry & Company joined American Catalog Mailers Association (ACMA) because we believed that they were truly representing the catalog mailers’ interests. Today, I got an update from Hamilton Davison, Executive Director of ACMA. From that call I think that ACMA is having a meaningful dialog with the management of USPS about how the recent postal increases have destroyed the catalog industry’s profitability. Davison says, “While we have made a positive start on a wide variety of fronts, there is much work remaining to do. Today, we are only 60 companies and without a significant increase in our membership, it will be necessary to reduce the level of intensity with which we pursue issues of import to catalog companies, including prioritizing those issues that are most significant to our membership. Please consider supporting us, we need your help to help you.â€
One of the latest issues ACMA is dealing with is the potential change in the size of “slim jims.†ACMA is truly out front on these types of issues with USPS.
Pick up the phone and take a couple of minutes to talk with Hamilton Davison (401-529-8183, or visit www.catalogmailers.org). It may be the best thing you can do to protect your future profitability.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.