Home > Uncategorized > Goldilocks and the Three Suppliers

Goldilocks and the Three Suppliers

img 112715These are tough times in our industry, and that necessitates running with peak efficiency. If you think it’s tough buying for your own store, imagine being a Canadian wholesale distributor and having to buy for the entire country. At sales conferences distributors are hyped on upcoming releases, but sometimes the enthusiasm doesn’t transfer to those of us in the retail trenches. On the other end of the spectrum are the sleeper titles that take off unexpectedly through television exposure, social media or word-of-mouth, leaving our suppliers caught short.

So we end up with different types of inventory levels.

Way too much inventory. The best example here was R. G. Mitchell. Once the receivers took over, stores had access to inventory numbers only to discover there were instances where RGM had two cartons of an obscure academic book in stock, when you’d be lucky to sell two copies in Canada in an entire year. I guess they were trying to make a good impression with their publisher partners, and if a title tanked, they could always feature it in an upcoming catalogue in their retail stores. There was little austerity or restraint.

Far too little inventory. The example here would be Foundation Distributing, though I need to qualify that by saying I’m never sure if it’s just me, or if some stock is held back for key accounts and flyer participants. The company certainly plays favorites in all its dealings, and could probably run the whole operation on the basis of the top 20 accounts and tell the rest of us to take a hike. Either way, the fill rates we experience are abysmal. As a retailer, you want to maintain loyalty to your domestic distributor, but at the same time, you want your customers to get things in a timely fashion. I mentioned to them once that their competition is not Send the Light, or Anchor, or Spring Arbor; their competition is Amazon. Should their American publishers insist that FDI has to have one copy of the full catalogue in stock in Canada at all times? It’s not too much to ask.

Just the right amount. The example here would be David C. Cook and no, they didn’t sponsor this article. I don’t know how much of their system is manually controlled and how much is a computer restoring basic minimum inventory quantities. Whatever they do, it appears to be fairly intuitive, ordering what’s needed ahead of time and occasionally reverting to a just-in-time system on the less active titles. For all types of products, the basic levels need to be adjusted periodically. Some titles start selling and you think you’re seeing the tip of the iceberg, when in fact you’re seeing the entire iceberg. An unexpected appearance on 100 Huntley Street or Life Today with James Robison can be a game-changer. I suspect sometimes the pre-pub response determines what the operating minimums will look like. Whatever they do, Cook Canada seems to find the balance between unnecessary large inventory and chronic shortages, though I would also place Augsburg-Fortress Canada in this category.

  1. Heidi
    November 27, 2015 at 8:07 pm

    One thing Cook is doing, is being very aggressive to get churches buying direct, so they are selling to end users, as does Augsburg, but with less of a bricks and mortar focus (unlike Mitchell’s). Maybe that is part of the difference.

    • November 27, 2015 at 8:16 pm

      I know they are very active at conferences, but an insider told me that yourchurchzone.com is not racking up significant sales numbers. My wife is signed up for Cook’s program for worship leaders, but communications are few and far between, and probably doesn’t begin to tap the potential of what they could be doing. (Which of course, as a retailer with a worship-contact mailing list, suits me fine.)

      HarperCollins, whose new logistics are still not stable enough to be considered in this article, is going to be ramping up a stronger Canadian version of Church Source. That would concern me and impact me more.

      • November 27, 2015 at 11:02 pm

        I’m replying to my own comment here. Because of the nature of the situation between HarperCollins and R.R. Donnelly, the issue of fill rates doesn’t really apply, so they would never have landed in this article anyway. Anything that’s not in stock is print-on-demand; so technically, Harper’s fill rate could be considered to be 100% except where something is in reprint, and they can remedy that situation within days if not hours.

  2. Tim
    November 27, 2015 at 10:07 pm

    With respect to RGM, they had an academic rep whose focus was universities and Bible colleges, academic conferences, so one should factor that in. I don’t know the story behind the one title in question but there could be many factors leading to this situation. I remember many situations of wrong shipments/duplicate shipments.

    RGM did have a lot of certain books (overstock, obscure to some markets, promo items) near the end that was one of the things that caused a cascade of issues and that was problematic for RGM… the sales focus (more channels, more sales was the desperate mantra) it was placing on the general market, in particular, Costco and Supermarkets where the stakes were high. One title, high volume, high discount, full returns from Costco, shipped back in banana boxes, damaged, no returns to publisher. Win some, lose some; and near the end, because of a lot of other factors, lose lots! A lot of titles hit back at the same time that last year in this same manner.

    There is a lot more to the RGM inventory story (maybe for another time), but since your post is about distribution inventory levels and I was so involved in that, I figured that I would enter the conversation.

    RGM certainly had some excessive stock outliers; some stock may have more of a logical explanation for their existence; others may not have as much of a logical story.

    RGM was large. The stock was wide and deep. In the end, accounting ran out of rope.

    • November 27, 2015 at 10:59 pm

      Why do so many people seem to have a love affair with banana boxes? No top. No bottom.

      More seriously, many of the titles were just obscure. By saying that perhaps some were academic, I’m being charitable; trying to give them some excuse. In truth, they were just D-list titles. I know that RGM wined and dined the suppliers, from the limousine pick up at Pearson Airport to the best meals, hotels, etc. and I suspect that some bravado in the buying process was part of all that. It’s easy to sit in a sales presentation and say “We’ll take two cases of that one.” It’s another thing to sell them once you realize the author is completely unknown to Canadians.

      A-list books don’t simply do better arithmatically (it’s a word if I say it is) but do better geometrically. Especially these days. (I’ll be around after class to explain the difference in more detail.) I’m told there are remnants of that whole liquidation process still floating around at 29-cents per-unit in a warehouse in Orono. Which is about 27-cents too much.

      • Tim
        November 28, 2015 at 1:07 am

        For the record during the 7 years I was there, the only titles that were purchased by main division of RGM on spec were ones like Lucado, Maxwell, Eldredge, etc and new flyer titles. All other new titles were presold to stores before purchased.

        Now, for a few years there was a remainder/division that had separate purchasing ability and I recall walking by mixed skids in horror on a few occasions; but as you know, you gamble to get the good ones from the skid and know the rest are throw-aways, As I said, there are a lot of stories, but you have me now wondering what obscure title you are referring to…

        No wining and dining in the purchase process that I was ever part of. There might have been wining and dining for other reasons…

        Having said that, in its later years RGM struggled with inventory constantly for many reasons; most of which not so glorious.

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