At every step in the product and promotion life cycle, these three departments’ needs are different—but at the same time they all revolve around gross demand planning and results.  (By “life cycle” I’m talking about the Marketing side of planning a campaign, re-forecasting results once the initial demand is in, and then potentially re-projecting after half the campaign when the majority of sales are in.)

Merchandising’s needs are about the pre-season merchandise plan or the continual planning for the e-commerce site; the forecasting by catalog drop; and the end of the season.  What quantity of each product is needed across all promotions—print, e-commerce and store?

The thing that ties these three departments’ planning and results efforts together is gross demand data.  Marketing arrives at the catalog gross demand plan based on their circulation plans by drop, by house file, and by outside list segment.  They also must think through all the “electronic” media in which specific products are featured—website home pages, e-mail, affiliate campaigns, etc.—and give some direction to Merchandising and Inventory Control.

Ideally, Merchandising’s catalog pre-season plans are built top-down by merchandise category, and bottom-up by product.  But they should come close to tying together with Marketing’s demand plans at the demand level.

Then we have Inventory Control.  It’s their job to interpret the plans and selling results and purchase product far enough in advance to be in stock when customers order.  From an inventory perspective, the Inventory Control plans aren’t going to tie back to the others’ plans exactly.  Management allows Inventory Control to purchase more product than the demand plans indicate, based on vendor lead time, vendor discounts offered, etc.

Week-for-week, one of the hardest things to do is read selling trends and interpret them in a way that allows you to make the right decisions—which ultimately provide the base line projections for yet other departments, such as Call Center and Fulfillment.  Yet from an uninitiated perspective, it looks like a free-for-all, with many different versions of plans and results.

How can BI, dashboard and executive analytic tools help with this critical decision-making?  They can provide a consistent view of all the data, so that whether they’re analyzing demand or sales, all departments are utilizing a standardized view of the same data.  This allows each department to look at the segment of data that is meaningful to them.  Business Intelligence solutions allow users to take cuts of the data and compare them in multiple ways, whether it be this year to last year or actual to plan, as well as to reassemble the data and analyze it from one department to another.  Each department needs to maintain their own way of analyzing data, but also be able to bring their plans and results together in a consistent, uniform way.

The more we talked, the more the client’s managers got back inside their skins. And they realized how important having a single version of the truth, through BI tools and executive analytics, would be to planning and reconciling results—day-for-day, week-to-week, and throughout the year.

Brian Barry is a Senior Consultant with 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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• Best Practices in Multichannel Operations & Fulfillment – Our New Book (1)

Our team understands the issues and challenges facing multichannel businesses and provides insight on the following topics:

• Business Management – including “Developing Your Corporate Dashboard Of Key Performance Metrics”
• Contact Centers & Call Centers – including “Managing Your Cost Per Call”
• Forecasting & Inventory Management – including “10 Ways To Improve Vendor Quality Control”
• Direct Commerce Systems – including “How to Select Any Business System: Four Steps To Take Now”
• Warehouse & Distribution -including “Rising Transportation Costs – And What To Do About Them”

With over 45 articles filled with data, results and in-the-trenches experience, we compiled this information to provide a how-to and best practices resource to our clients and others in the industry. The articles in this book reflect the type of in-depth knowledge that a consulting firm with 250+ published articles in US and European trade publications should have – the type of knowledge and experience that F. Curtis Barry & Company brings to every client engagement. Each article was reviewed by our team and edited with timely updates.

Best Practices in Multichannel Operations & Fulfillment provides quick tips and thoughtful answers to companies working to increase their profitability, improve efficiency & productivity and reduce costs.

To order visit: http://www.fcbco.com/book.asp.

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It has been a couple of months since our last industry general update. While the summer months are typically a slower time, this period has been anything but. The pace of change at the USPS continues to accelerate with numerous issues that affect cataloging moving one way then the other, requiring more effort than usual to track and affect issues of importance to catalogers.

IMB Requirements nearing finalization?

IMB continues to remain one of the most important initiatives for the USPS and a critical underpinning to postal infrastructure to drive future value in the mail. At last month’s Mailers Technical Advisory Committee (MTAC) meetings, IMB and related concerns were featured predominately. It appears the mailing industry (ACMA joined forces with many others on this issue) has been successful in its request to slow the pace of “forced” compliance with IMB requirements. These were originally scheduled to go into effect May 2009. USPS now indicates industry will get another year to migrate to the IMB from POSTNET before losing automation discounts. There is still a great deal of discussion on “full service” versus “basic” IMB rates and services; this remains an active issue affecting all commercial mailers. The USPS says it is still on track to put in place all required infrastructure to support IMB by May 2009. While the additional “breathing room” before penalties are levied is welcome news indeed, our recommendation is that you continue your work to become IMB compliant at the earliest possible date. Note that automation rate flats must have delivery point routing codes effective May 2009.

USPS Announces $1 Billion Loss

The USPS released financial results for the third fiscal quarter and said it lost nearly a billion in this quarter alone, with most of the loss occurring in June. While the third quarter is traditionally a poor quarter for the USPS and the current economic conditions were expected to adversely affect the result, the magnitude of the loss was surprising. PMG Jack Potter continues to indicate they are not considering an exigent rate case, the “escape valve” mechanism baked into postal reform to allow the USPS to increase rates over and above the CPI. This is a positive signal. An exigent rate case would be a very messy and expensive process using the “old” rate setting procedure of full litigation before the PRC. It would result in higher postage across the board – but also carries with it the very real possibility of significant shifts in overhead costs between mailers that could result in massive increases for a particular group as catalogers experienced in the R2006-1 rate case.

Potter continues to stress the USPS is working aggressively on the cost side of their business. The USPS has taken a billion dollars out of their expense profile each year for the last five or six and so far this year they have removed twice this amount. However, given their labor and transportation expenses, the major drivers of their cost side are fuel and health care, both increasing at rates far greater than inflation so they are certainly hurting. However, USPS officials are mindful that simply raising postage is not in anyone’s best interest and appear to be working hard to curtail overtime, increase productivity and find other areas to improve efficiency.

A final thought on this: every manager knows that you cannot endlessly cut costs to restore profitability – you have to “grow the business.” There is an enormous amount to do to grow the business and the USPS has not yet come to understand what it takes to become proactive marketers to drive volume in the future (see related comments at the end of the reorganization section below).

ACMA Washington Forum a Resounding Success

Hopefully you have seen some of the extensive trade press news coverage on ACMA’s late June event. The participation and quality of dialog were gratifying. Post-Forum attendee surveys were very positive. ACMA staff and volunteers continue the follow up work resulting from the Forum. ACMA members who would like to receive detailed notes from the meetings are welcome to request them via email to croden@catalogmailers.org. The essential takeaways and actionable areas for follow up were in important areas:

Consumer preference requests and Do Not Mail
Postal rates for catalogers and cataloger use of the mail
How catalogers can affect postal policy in Washington
The value of the mail for marketing purposes
Non-members are welcome; look for future meetings coming up early next year. We certainly hope you will make plans to join us at a future event.

What to expect in postage rates

Next February, the USPS will signal its intentions regarding an annual rate increase that will go into effect in May 2009. Catalogers, on the other hand, are preparing budgets for 2009 right now. What should you budget for postage next year? While the dynamic situation on inflation (that ultimately drives the CPI-cap governing the maximum increase possible) makes it somewhat difficult to forecast this, our current recommendation is that you should budget something on the order of 5.5% to be safe. Note: this is a very preliminary estimate subject to change as further data becomes available. While the current moving average CPI-U through July is running at 4%, if we continue to see accelerating inflationary pressure in the remaining months before February, this average could climb sharply. ACMA will be working closely with pricing officials at the USPS to keep whatever increase if ultimately announced to a minimum but given the dramatic increases in fuel and other costs, we do not currently expect the increase will be insignificant (see item 2 above).

USPS Re-organizes at the top

PMG Jack Potter announced a major reorganization in July. The impact is still being sorted out and some of the changes at the top can be expected to cascade down the structure over the coming months and quarters. What we do know is the USPS has brought in some top level executives from industry and reassigned others. Bob Bernstock has been appointed to the newly created position of President, Shipping and Mailing Services. Bernstock brings experience from marketing or senior positions with General Foods, Campbell Soup, Vlasic, Dial and Scott’s Miracle Gro. Joining Bernstock in another newly created position of VP Sales is David Shoenfeld who was formerly SVP Worldwide Marketing for Federal Express. Longtime USPS executive Steve Kearney was named to the newly created position SVP Customer Services, a move that combines many of the customer facing functions. It currently appears that Kearney will support the revenue building activities of Bernstock/Shoenfeld with internal support groups while navigating the regulatory compliance issues.

Our view is that this is good news for mailers. Given the large number of career managers who have risen through the ranks, the USPS tends to be insular in its thinking and approach. With the many pressures on it, the pace of change must accelerate. Creativity, innovation and a “can do” attitude are required. While Potter has done a lot to bring cultural change to a massive organization, due to the size and complexity of the Postal Service, this is necessarily a long term endeavor. Bringing in high level outsiders, who have a completely different perspective, is also key. While we have not had the chance to work with the newly arrived execs, we look forward to seeing a fresh approach to resistant issues.

We all know becoming more market focused and market responsive is the way to grow. From the industry perspective, when compared to working with other vendors, the relationship the USPS has with its customers is completely backward. Today, customers are expected to work to understand USPS problems and find solutions it can offer its “vendor,” not the other way around as in the rest of the business world. If the USPS will take the time to segment the mailing community into customer segments of common need and characteristics then do a deep dive on each major segment to learn what it can do to create increase customer value, the USPS has a terrific opportunity to deepen relationships, become a valued vendor partner, and build its revenue and cost of switching to alternative media along the way. The real question is: will this happen? Only time will tell but the introduction of those who “get it” from an industry perspective is certainly a step in the right direction from our vantage point.

New Members joining ACMA since the last E-Newsletter

We are pleased to announce the following new members have joined ACMA since our last general update: Ability Commerce, Inc., Daedalus Books, King Arthur Flour, Krames/MediMedia, Lady Grace Intimate Apparel, Mail Optimization, National Wholesale, Orchard Brands, Peachtree Business Products and Thoma Bravo. A big welcome and thank you to our latest supporters!

What can you do to impact your postage costs and access?

We remain with fewer resources than we need to properly represent catalog interests in Washington and this will only change with your action. Please budget some money in your 2009 financial plan to support the only catalog-focused, catalog-controlled advocacy work that is critical for your future. We really need your support! Thank you.

Hamilton Davison

Executive Director

American Catalog Mailers Association

www.catalogmailers.org

Telephone: 1-800-509-9514

Email: hdavison@catalogmailers.org

Direct telephone: 1-401-529-8183

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Eco-Shape Bottle

Poland Spring

Our bottle looks and feels different because it is

purposely designed with an average of 30% less plastic

to be easier on the environment.

We can all make a difference, please recycle.

On August 12^th I wrote on our blog about the need for the catalog industry to “Trumpet Your Green Efforts.” Now I thought to myself, here is a product that I’m sure has a major carbon footprint, but Poland Spring has taken a big practical step to help the environment and diffuse some of the environmental objections. On the Poland Spring website, I later found that the bottle also:

Is made with 30% less plastic than the average half-liter bottle
Features a new label that’s 30% smaller
Is 100% recyclable
Is flexible so it’s easier to crush for recycling
Easy to Carry

A few days later I was looking through the AAA (auto club) magazine and spotted that same recycling symbol, with this statement:

All trees used to manufacture paper for our magazine were harvested from sustainably managed forests. Recycling old magazines and catalogs is one of the easiest ways to help the environment. We urge our readers to support recycling efforts in their communities.

This begs the question, how much more are you planning to do with your business whether it’s recycling office waste, using lighter paper weights, using soy-based inks or supporting environmental issues? Not to mention, are you selling recycled cartons and wastes from your distribution center at a profit?

Through publishing and mailing millions of catalogs, you are in control of a major outlet for communicating your own environmental efforts, and for advocating that consumers do the same. Without the consumer taking action and doing their part in recycling, little will be achieved. The “Green Movement” is gaining momentum; are you doing what you can to make sure you are a participant, and not a target?

(Poland Spring Eco-Shape Bottle is a trademark of Nestlé Waters North America Inc.)

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Here’s what the e-mail said:

“There are still many opportunities to receive great wildlife and nature-themed merchandise when you support National Wildlife Federation!

Previously the National Wildlife Federation’s name and logo was licensed to National Wildlife Direct, a separate, unrelated company that offered nature-themed products and gifts. Unfortunately, National Wildlife Direct recently closed its doors and is no longer in operation.

However, we know how much you love helping wildlife and our environment while you shop. Watch your email in-box to find out about new offers coming directly from the National Wildlife Federation such as:

• Carry-all Bags: Handy totes, field bags, backpacks and more
• Outdoor Gear: Umbrellas, windbreakers, fleece jackets, beach towels and blankets
• Animal Adoption Gifts: A special Wildlife Adoption Center with many items to choose from. Receive an adorable plush with each symbolic adoption
• Products just for Bird Lovers: Unique bird feeders, bird-watching kits and binoculars
• Gardening Gifts: Gardening totes, how-to books and tools
• Educational Gifts for your Favorite Children: Magazines that help connect children with nature
• And more!

And the best part is, your gifts directly fund the vital conservation programs of National Wildlife Federation.

We appreciate your love of wildlife, the environment and outdoors.”

As you can see, NWF mentions that BlueSky Brands had licensed their name and is no longer in business. Here is the scoop that I got from the head of Customer Service at NWF:

The catalog, of course, is closed down indefinitely. If existing customers of the catalog/website have outstanding orders, they can call 800-822-9919 or e-mail info@nwf.org. NWF will talk them through what they need to do to resolve the situation. They will not receive the product they ordered. If they ordered via credit card, they will be told to dispute the charge through the bank or credit card company. If payment was via check, they will not receive a refund until the issue with BSB is resolved.

The products mentioned in the e-mail are already sent out to people who sign up for memberships in NWF. These products are distributed via a 3PF vendor that they have been using for some time.

We applaud NWF for stepping up to help these customers, even though it was not their actions that caused the disaster. Such a possibility is always present when you license your name and don’t have direct control over others’ actions.

Jeff Barry is marketing manager of F. Curtis Barry & Co. – we are catalog consultants working with multichannel businesses to improve warehouse operations through the assessment and implementation of warehouse management systems and careful benchmarking of strategic metrics.

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Among the mistakes I noted were the following:

• not having the right project team in place;
• failing to develop detailed business requirements; and
• limiting the search to a preselected number of vendors, based on the premise that someone that somebody knows said “this is the system you should get.

I also focused on the methodologies companies use to ensure their businesses are selecting the right systems. These methodologies include the following:

• assessing your business requirements and documenting them;
• developing a request for a proposal that accurately reflects your business;
• vendor demonstrations;
• vendor negotiations; and
• contracting through implementation.

Also covered in the wide-ranging session were tips on the average timeline for selecting a system, building a budget, selecting a systems model (build, licensed or SaaS), and choosing on-premise or hosted services.

I also covered trends that many businesses are looking for in systems today, including these:

• one system vendor with modules for e-commerce, OMS, customer relationship management and WMS;
• one customer view across the enterprise; and
• the integration of systems still being key for functions such as inventory management.

Catalog Success, F. Curtis Barry Team Up for Systems Workshop
Want to learn more about selecting and implementing the right system for your business? F. Curtis Barry & Company, in partnership with Catalog Success, is hosting a co-branded, two-day interactive workshop, “Evaluating, Selecting and Implementing Direct Commerce Systems,” on June 16 and 17 in Richmond, Va. For registration information, visit www.fcbco.com/seminar

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Peter now owns Chimney Corner, Inc., which has two direct businesses—GiftCollector.com and BoxInBoxOut.com. Both are in the Charlottesville, VA area where these folks live.

Gift Collector.com has a wide range of gifts, china, crystal, tableware, home and garden, jewelry and collectibles from many leading resources, including Royal Doulton, Kirk Stieff, Swarovski Crystal and the like. Internet Retailer ranked GiftCollector.com among its Top 500 Internet businesses.

BoxInBoxOut.com is an outsource provider to both direct and brick and mortar merchants. They have a wide range of logistics, kitting, preparation and distribution services.

We wish Peter and his team the best in their new ventures!

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E-commerce has just received another kudo. “Customer satisfaction with the e-commerce sector hits an all time high” begins a February 19 press release from the University of Michigan regarding its latest American Customer Satisfaction Index (ACSI).

On a 100-point scale, Amazon ranks #2 at an all time high of 88, in the survey of 200 companies across different sectors. Newegg debuts at 87 and Netflix at 84. Amazon is ahead of consumer pleasing companies Apple and Southwest Airlines.

“The improvement in e-commerce is impressive, given the downward trend in the national ACSI” ratings, said the head of the ACSI at University of Michigan.

I think they are right on in some of their observations.

• Amazon’s efforts are paying off—and not only in its high ranking in this survey. Amazon recorded its biggest fourth quarter revenue ever. Are there very many brick and mortar stores or catalog businesses that can say that about 2007?

• Against the backdrop of the weakening economy and the transition that catalog must go through because of paper and postage price escalation, e-commerce is a channel we must find the appropriate strategies to grow.

Customers find the convenience of Web shopping, the product and service research capabilities, the ability to price compare, and the order tracking capabilities a good fit to their business lifestyles.

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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Nielsen Online reported that Internet traffic to major retailers grew 10% over the previous year, representing more than 21.2 million unique visitors spread across 120 online retailers. We hope that our catalog and e-commerce clients shared in this good weekend.

What was interesting was that traditional retailers were using web-based strategies to lure shoppers. Macy’s, for example, bought sponsored links for key words such as cashmere (men’s cashmere was to expire 11-26-07, but overnight was extended until 12/6/07), Cuisinart, boots (women’s), coat (was to expire 11-26-07 but was extended until 12/6/07). Given the general nature of several of those keywords, that strategy could get pretty pricey. Macy’s offered free shipping for online orders of over $90 on coats and over $99 on cashmere.

Stores were crowded with shoppers lured by huge percent-off ads and coupons. Free shipping and handling offers abounded in the week leading up to Thanksgiving. My Inbox—like yours, I’m sure—has been jammed full for weeks with offers of deep discounts and free shipping in an effort to jumpstart shopping.

Many of the businesses we talk to continue to be very soft. ShopperTrak estimates customer visits to stores will drop 2.5 percent this holiday season, which covers the 32 days between Thanksgiving Day and Christmas. Black Friday and Cyber Monday helped, but most businesses need several strong weeks to have a chance at making plan. One day doesn’t make the season.

In this holiday season that is projected to be the weakest since 2002, it’s better to offer free shipping and processing than to be stuck with the merchandise. While I don’t like it, it’s the lesser of two evils.

–

F. Curtis Barry & Co., an operations and fulfillment consulting firm, uses best practices to recommend and implement order management systems for multichannel businesses.

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Take, for instance, two of our clients: Coldwater Creek and Norm Thompson.

Coldwater Creek has recently converted to company-wide use of wind energy to power its corporate headquarters, distribution center, and call centers, as well as a number of its retail stores.

Norm Thompson built one of the country’s first “green buildings”, using recycled materials and sustainably harvested wood, and is highly energy efficient.

Other firms are engaged in equally environmentally-conscious practices, such as using soy ink for catalog printing, using paper that has a higher recycled fiber content and using packaging fill that can be recycled.

Average environmentally conscious Americans and businesses know that what they are doing is making a positive impact on the environment, and that is its own reward. They should be our real role models.

Let us know what your company is doing to reduce your impact on the environment by clicking on “Leave A Comment” link below.

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