Inventory is one of the most significant assets on a publisher’s balance sheet, and printing is one of the most expensive items on the list. Printing drives two critical line graphs on a publisher’s Profit & Loss statement. One is the paper, printing, and binding cost incurred, and the second is the age-old inventory mechanism.
But publishers can’t afford to be greedy or overly conservative when it comes to inventory management. Insufficient inventory can delay sales or result in sales loss, leading many publisher sales representatives to refer to their Inventory Management Manager as a “Preventing Sales Manager.”
Discussions about suitable printing strategies and the resulting stock levels are time-consuming in this industry. And these conversations rarely resolve the purpose of poor inventory management. Higher inventory levels with associated obsolescence from too many incorrect titles will be balanced by mediocre titles, which means the proportionate rates from a few correct titles will be adjusted with the wrong title.
During the Pandemic (Covid-19 ), this has become more problematic. The industry has seen a significant increase in demand for books. The Publishing house also experienced longer print lead times due to printer consolidation and reduced paper capacity. In the face of these changing supply and demand patterns, a publisher’s intuition based on years of experience is an even less sensible guide today.
Inventory policies consist of several critical decisions, Which include ordering, expediting, and distribution. The order decision actuates the answers to the vital questions of cost, obsolescence, and investment. And when ordering, the two most important decisions are when to Order, often referred to as the order point, and how much to order, often referred to as the order quantity.
Expected demand and likely fluctuations, length and variability in delivery time, and the total cost of ownership of the item are some of the important factors in making decisions. Because volumes vary significantly based on life cycle patterns and seasonality, it will help in planning Order Points and Order Quantity before weeks of delivery. This approach works efficiently for both a reactive approach and a forecast-based approach.
With proper forecasting, planning, and visibility into order points, We can manage unexpected changes in delivery time more effectively.
The order quantity should base on the economics of fixed costs like order, inbound transportation, receipt, payment processing, and manufacturing costs like installation and all other related expenses, regardless of the quantity ordered, variable costs like paper and printing costs per unit and period maintenance cost like storage, capital, insurance.
When publishing colour titles, Publishing houses do not pay enough attention to fixing the production costs, which can often be significant.
Inventory management basics can help answer several questions, including those currently facing the industry. We’ve seen how to deal with changes in delivery time by ordering earlier too. Digital printing is very useful. An alternative to safety stock, especially for books designed for multiple printing technologies. The best way to source wisely is with digital, conventional, and onshore/offshore sources as part of the mix. The solution is to increase supply chain agility by investing in technology that allows them to switch easily between alternatives.