Banner Year for the Book Industry Leads to a Holiday Supply Chain Crunch

January 7, 2019

When Supply Chains fail, it has major implications. It can affect a brand (see: KFC’s chicken shortage in the UK), it can affect companies’ strategic expansions (see: Target’s ill-fated sojourn into the Canadian market), and sometimes, it can affect entire categories of products and consumer confidence (see: the recent panic over contaminated romaine lettuce). As anyone in the industry knows, Supply Chains are more complex than ever, and snafus come in all shapes and sizes. They’re the thing that keeps Supply Chain professionals up at night. Problems with inventory, problems with forecasting, customs clearance or other factors can impact revenue and leave a bad taste in consumers’ mouths.

On the Argentus blog, we dig into career advice, trends, salary info, hiring and talent retention tips, but we’re also always interested in chronicling these various Supply Chain issues to keep you up to date about what’s happening in the industry – but also to draw attention to the importance of strong Supply Chain Management to business.

In 2019, Supply Chain Management is what makes or breaks a company.

But there’s another flavour of Supply Chain issue that occasionally pops up: if a product is too successful, and a company fails to either account for that demand in its forecasts, or to secure adequate supply to meet it. The New York Times’ Alexandra Alter recently reported that a bottleneck at printers has impacted book sales over the crucial holiday season. It puts a bit of a crunch on an industry that’s been on a roll this year following several years of anxiety.

Books have always been a bit of an evergreen product. But over the past decade or so, analysts in the publishing industry have been concerned that they’re going under, with digital forms of entertainment – movies, TV, video games – biting into publishers’ revenues. The rise of eBooks has meant lower physical book sales.

But something funny has happened: demand for eBooks has stalled, and hardcover sales and independent bookstores are on the rise as consumers seek to get their entertainment and unplug at the same time. Massive titles like Michelle Obama’s “Becoming” and Bob Woodward’s “Fear” have driven major demand. Now, over the past few months, a crunch has been building on the supply side. Publishers have been unable to print new copies fast enough, so a number of high-demand titles were listed as out of stock on Amazon over the holidays, owing to a few crucial supply chain issues:

  • The printing industry has shrunk and consolidated over the past few years, under the expectation that physical book sales would continue to decline.
  • Edward Brothers Malloy, one of the largest printers and suppliers to the publishing industry, shut down this summer.
  • There’s a global shortage of paper to meet demand.
  • The extremely tight jobs market has made it more difficult for printers to hire seasonal workers to up production.

The upshot: a little bit of coal under the tree for otherwise-happy publishers and book retailers at a crucial time of year.

The Times reports that more publishers are investing in inventory management and improved warehouses to make their Supply Chains more nimble, but that doesn’t solve some upstream factors, namely the lack of paper. But skilled supplier management and forecasting (also known as Demand Planning) can help companies prepare for unexpected rises in demand.

Demand Planning is a tricky business. It’s often a thankless role within Supply Chain Management, if well-compensated. Consumers’ interests, as well as overall market forces that impact demand, are hard to predict. Doubly so over the crucial holiday season. Triply so for an industry like publishing which often relies on high-brow reviews and awards to drive interest towards particular titles. It’s hard enough to forecast consumer demand if you’re manufacturing, say, milk. Now imagine how hard that task becomes if a certain type of milk gets surprise buzz because a reviewer decided it was especially tasty, and consumers need it within two weeks. That’s what publishers are dealing with, which makes good demand planning even more valuable in an already-difficult business.

When you view this challenge from the perspective of book retailers, who are dealing with hundreds of thousands of different SKUs, the task becomes even tougher. As former retail executive Peter Georgocopoulos outlined in our interview with him a little while back, it can be hard to tell which ones are going to “pop” unlike other product categories.

But there are people out there who are skilled enough in demand, supply, and capacity planning, as well as supplier relationship management and Procurement to match supply with demand, even in an industry as tricky as publishing and book retail.

The lesson here is that it’s just as important to plan for success as it is to plan for failure. Supply Chain Managers have a difficult task because they’re often on the hook if a product becomes too successful and the business isn’t able to capitalize in time.

Which reinforces what we believe at Argentus: No matter what state a business is in, Supply Chain Management always brings value to the table.


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