p3l newspaper supply chains web

8/7/2019 P3L Newspaper Supply Chains web

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2006 P3L, LLC 2

SUPPLY CHAINSTHEUNIVERSALDEFINITION

NEWSPAPER CHALLENGES

NEWSPAPER SUPPLY CHAIN

FINDINGTHE VALUENEWSPAPER SUPPLY CHAINS

NEWSPRINT & INK

ADVERTISING & NEWS

PRESS OPERATIONS PACKAGING OPERATIONS

DISTRIBUTION OPERATIONS

MANAGEMENT INFORMATION

TYINGITTOGETHER SUPPLYCHAININTEGRATION

N E W S P A P E R S U P P L Y C H A I N S A G E N D A


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2006 P3L, LLC 3

Supply chain management is the oversight of materials, infor-mation, and finances as they move in a process from supplier tomanufacturer to wholesaler to retailer to consumer. Supplychain management involves coordinating and integrating theseflows both within and among companies. It is said that the ulti-mate goal of any effective supply chain management system isto reduce inventory while maintaining necessary product avail-ability.

Supply chain management flows can be divided into three main flows:

The product flow

The information flow

The finances flow

S U P P L Y C H A I N M A N A G E M E N T G E N E R A L D E F I N I T I O N


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2006 P3L, LLC 4

Newspapers are a difficult fit for traditional supply chain

models and suppliers.

Newspapers speak a foreign language, with each propertyadopting its own dialect.

Complex inbound strategy for raw materials is replaced bycommodity buying of newsprint and ink.

The intangible and unpredictable flow of news and information definesproduction parameters.

Product size, shape, and configuration vary from day-to-day and week-to-week.

Time available from production to useful consumer delivery is shorter thanany other industry.

All critical distribution is performed at night, in predominantly short shifts.

S U P P L Y C H A I N M A N A G E M E N T N E W S P A P E R C H A L L E N G E S


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2006 P3L, LLC 5

Newspapers require unique definition of their product, informa-tion, and financial flows to be adapted to supply chain and otherquantifiable management programs.

The primary supply chain flow for newspapers is the outboundproduct flow and its associated information flow.

Newspapers have successfully separated subscriber and adver-tiser cash flow timing from product delivery. As such, all financial flowswithin the newspaper supply chain are either discretionary (how much news-print and ink inventory is carried), or direct costs resulting from the supplychain in place.

The primary components affecting the total supply chain cost for a news-

paper are:

Inbound Information: advertising, news, editorial, pagination

Press Operations: platemaking through pressing

Packaging Operations: handling, insertion, storage, package design & flow

Distribution Operations: transport mode, timing, locations, and handling

N E W S P A P E R S U P P L Y C H A I N S F I N D I N G T H E V A L U E

Adver t is ing &

New s

Press

Operat ions

Newspr in t &

Ink

Packaging

Operat ions

Dist r ibut ion

Operat ions

B A S I C N E W S P A P E R S U P P L Y C H A I N

INFORMATION


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2006 P3L, LLC 6

Each link in the newspaper supply chain requires scrutiny, bothin how it performs its task, and how its results affect the per-formance and cost of the entire chain.

Before evaluating the total potential for improvement within anewspaper supply chain, each components potential must bedefined.

What is the gain in changing the process?

How easy is the process to change?

What controls the start time for the process?

What controls the duration of the process?

What controls the end of the process?

How does this process interact with other pieces of the chain?

N E W S P A P E R S U P P L Y C H A I N S F I N D I N G T H E V A L U E

Adver t is ing &

New s

Press

Operat ions

Newspr in t &

Ink

Packaging

Operat ions

Dist r ibut ion

Operat ions


INFORMATION


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2006 P3L, LLC 7

The traditional inbound raw material supply chain opportunityfor a newspaper is limited. While value and potentially a cashinfusion can be gained from a hard look at necessary inventoryin-house, most newspapers prefer a better safe than sorryapproach to raw material inventory management.

Inbound transportation of newsprint and ink is largely governedby broad purchasing contracts and commodity pricing. These channels arebest left flexible to leverage base product pricing, as this pricing gain exceeds

any potential for savings from an optimized inbound supply chain.

POTENTIAL METERNEWSPRINT & INK

Financial Gainpotential reduction in inventory carrying costs

Ease of Changeoffline from sensitive activity

Positive impact on other linksno impact on other links

Start Time Controlprocess timing controlled by newspaper

Process Time Controldelivery process unchanged

End Time Controlprocess timing controlled by newspaper

POTENTIAL SUMMARYNEWSPRINT & INK

Overall Potential RatingUnless newsprint and ink storage andhandling is cumbersome, or the property is willing to reduce on-handinventory of raw newsprint, refining this link will bring only limitedvalue to most newspapers.

F I N D I N G T H E V A L U E N E W S P R I N T & I N K

Newspr in t &Newspr in t &Newspr in t &

InkInkInk

Poor Minimal Fair Good Excellent

Ratings Key:

Minimal


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2006 P3L, LLC 8

Unlike virtually any other manufacturing supply chain model,the inbound raw material that controls the start time of criticalmanufacturing processes is intangible. News happens withoutregard for newspaper deadlines.

News deadlines are set to provide the latest possible news to thesubscriber, while advertising deadlines are set to allow the wid-

est possible purchasing window for advertisers. Both deadlines must allownecessary time for the remaining links in the supply chain to process any pack-

ages fronted by these start times, and backed by consumer delivery deadlines.

Since service in this model is an absolute requirement, all necessary assets andresources are defined by the time available to complete the tasks essential togood service.

Most supply chain models are tuned to balance service and cost. This modeldoesnt work for newspapers, since service mustbe a given. For example:

The typical supply chain model,forced to represent service as

fixed, will balance time and cost.

The newspaper supply chainmodel must dramatically addcost to compensate for thesmall amount of time avail-able while balancing service.

This leaves two options to maintain service balance while reducing cost:skinnying the cost elephant, or feeding the little girl time.

F I N D I N G T H E V A L U E A D V E R T I S I N G & N E W S

Adver t is ing &Advert is ing &Adver t is ing &

New sNew sNew s

SERVICE

TIMECOST

SERVICE

TIMECOST


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2006 P3L, LLC 9

For the purposes of this discussion, we have ignored the com-plexities involved in the editorial and pagination processes.While these areas lend themselves to great potential gains, thefollowing is assumed about these processes:

Pre-press formatting has received a great deal of attention, both in termsof process and technology over the past 10 years.

Gains to these processes are largely driven by technology and asset purchases that enablegreater efficiency.

Transforming information to ready for press plate news takes a fixed amount of timefrom the start point, the news or advertising deadline.

This leaves the advertising and news deadlines, the start points, as the primaryfocus for supply chain efficiency gains.

POTENTIAL METERADVERTISING & NEWS

Financial Gainhuge potential supply chain impact from even smalladditions of time to the process

Ease of Changerequires understanding of downstream impact, butsmall changes can usually be implemented easily

Positive impact on other linksthe addition of time to the downstreamsupply chain can yield huge economic gains

Start Time Controlprocess timing controlled by newspaper

Process Time Controleditorial and pagination processes and timeremain unchanged

End Time Controldirect function of start time and fixed process time

F I N D I N G T H E V A L U E A D V E R T I S I N G & N E W S ( C O N T . )


New sNew sNew s


Ratings Key:


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POTENTIAL SUMMARYADVERTISING & NEWS

Overall Potential Ratingwhile movingnews deadlines to earlier has not been apopular historical strategy among newspa-

per executives, changing news delivery formats and technologymay warrant a true understanding of the costto the entire sup-

ply chainof late news, or even advertising.

Assessing this type of potentialis easiest by looking backwardfrom bulk and carrier distribu-tion. How much can be savedif press, packaging, and distri-bution operations were given anextra hour? Fifteen minutes?

In order to preserve both latenews and early deliverydeadlines, traditional effi-

ciency gains have come byskinnying the elephant reducing costs.

Looking forward, gain to painratios may be better by feedingthe girl adding time to theprocess, allowing cost to be re-duced further, while keeping ser-vice levels intact.

F I N D I N G T H E V A L U E A D V E R T I S I N G & N E W S ( C O N T . )


New sNew sNew s Good

SERVICE

TIMECOST

SERVICE

TIMECOST

SERVICE

TIMECOST


Ratings Key:


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In general, the critical time for press operations is the fixed runtime. Papers per hour output is limited by the speed of a pressand the number of presses. The number and type of press isdifficult and costly to alter.

Remaining opportunities inside press operations involve elimi-nating any barriers to maximum sustainable speed. The value of

each stop and start, each edition change, or once weekly collect run, should beassessed versus its total cost to the supply chain.

POTENTIAL METERPRESS OPERATIONS

Financial Gainpotential reduction in packaging and distribution costs

Ease of Changedepends on the proposed changeeliminating anedition is easier than eliminating a collect run

Positive impact on other linksmust be modeled, but small time addi-tions can yield large results

Start Time Controlcontrolled by news & advertising

Process Time Controlcan be reduced by increasing average speed

End Time Controlcan be reduced by increasing average speed

POTENTIAL SUMMARYPRESS OPERATIONS

Overall Potential RatingOdd production days and unnecessary edi-tion breaks can add time and cost to the supply chain. However,unless all current final production runs deliver directly to stackers

rather than to the mailroom for additional processing, value can best be de-rived from other areas of the newspaper supply chain.

F I N D I N G T H E V A L U E P R E S S O P E R A T I O N S

PressPressPress

Operat ionsOperat ionsOperat ions


Ratings Key:

Fair


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Packaging and Mailroom process, flow, and timing are the key-stone to huge potential cost gains to the total supply chain, espe-cially for newspapers unable to increase value at other links inthe chain.

Speed and accuracy during the final production process are thetypical focus for packaging and mailroom management. A

broader view of the interactions between packaging and the downstream sup-ply chain can add dramatic value to the entire system.

Strategy, equipment, advertisers, history, page count, draw, building configura-tion, available resources . . . All factor into how and when a mailroom oper-ates. The most important value packaging operations bring to the supply chainis balance.

The mailroom must balance therestrictions of the fixed processesbefore it with the fixed time win-dow behind it. Each newspaperssituation and solution are neces-

sarily unique; however, the keyconsiderations remain constant.

KEY CONSIDERATIONSPACKAGING OPERATIONS

Bottlenecking

Is the packaging operation slowing down the supply chain?

The fastest piece of production equipment for a newspaper is the press. If thisrate of production is slowed by any downstream mailroom processing, the

value of this activity versus its alternatives must be measured and balanced interms of cost, speed, and accuracy.

F I N D I N G T H E V A L U E P A C K A G I N G O P E R A T I O N S

PackagingPackagingPackaging


SERVICE

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KEY CONSIDERATIONSPACKAGING OPERATIONS(cont.)

Workflow

The packaging link in the supply chain controls the workflownot only for itself, but for each downstream element in the sup-ply chain. It is especially key to ensure that packaging improve-

ments translate through distribution. Faster in one area of the supply chaindoes not necessarily add time, reduce cost, or build balance.

Package design, count, timing, andhandling must act to balance work-flow for packaging and distributionto achieve the lowest possible cost.

Mailroom headcount and shifts, packaging equipment type and quantity, han-dling methods, storage needs, distribution operations management needs, vehi-cle type and number, driver type, count, and shifting, carrier count and routelengthall of these factors must balance for maximum gain.

Each newspaper will have different needs and priorities, requiring a custom-ized model and considerations; however, the focal point for this balance is thelargest cost in the system, the human resource availability and prevailingwages in the local marketplace.

Will more daylight shifts improve my pool of resources? My wage base?

Are new DOT restrictions on part-time driving hours placing the operation at legal risk?

Are hourly rates at a premium due to short shifts?

Can fewer, better scheduled employees perform the same tasks for less cost more accu-

rately and efficiently?

Can full-time wages, turnover rates, training needs, workers comp claim rates, and pro-ductivity offset the cost of benefits?

F I N D I N G T H E V A L U E P A C K A G I N G O P E R A T I O N S ( C O N T . )



SERVICE

TIMECOST


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Analysis of the ideal packaging operations for any newspaperinvolves balancing packaging and distribution operations formaximum gain to the system.

While time critical operations can yield the most noticeableimpact, workflow for both packaging and distribution can alsobe improved by proper integration of pre-packaged product into

the entire supply chain workflow.

POTENTIAL METERPACKAGING OPERATIONS

Financial Gainpotential reduction in packaging and distribution costs

Ease of Changedepends on the proposed changemost successfulchanges remove some time-sensitive processing burden

Positive impact on other linksmust be modeled, but small time addi-tions can yield large results

Start Time Controlpredominantly controlled by news, advertising, and

storage capability

Process Time Controlcan be reduced by increasing average speed

End Time Controlcan be reduced by increasing average speed

POTENTIAL SUMMARYPACKAGING OPERATIONS

Overall Potential RatingPackaging operations are the keystone to anefficient newspaper supply chain. Balancing circulation and humanresource strategy with the processes and equipment necessary to meet

the defined goals for todays marketplace can yield substantial gains in effi-ciency, accuracy, and cost.

F I N D I N G T H E V A L U E P A C K A G I N G O P E R A T I O N S ( C O N T . )




Ratings Key:

Good


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Distribution operations for most newspapers are reactive. Theyreceive product by time x and must complete operations bytime y. All delays in earlier supply chain links must be com-pensated for by distribution, or the consumer suffers.

These parameters can dramatically be altered by changes up-stream in the supply chain, but solutions inside the distribution

link can still bring broad value to the overall cost of the newspaper supplychain.

In order to assess the potential for improvement within a newspapers distribu-tion operations, the activity must be divided into two parts: Bulk Distributionand Carrier Distribution. In some cases, these areas must also be subdividedby home delivery and single copy. Newspaper treatment of each subset of dis-tribution will dictate the applicability of value considerations.

KEY CONSIDERATIONSDISTRIBUTION

Compliance & Risk

Recent changes to D.O.T. hours of service regulations have exposed manynewspapers to the risk of non-compliance from part-time drivers.

In order to simplify driver hiring, many newspapers use trucks rated below26,000 pounds gross vehicle weight. At the very most, these trucks canhaul 10,000 pounds worth of product. (For newspapers, this means five (5) pal-lets, ten (10) carts, or about 350 bundles.)

Tail-Loading. . . the practice of placing smaller straight truck loads ontothe tail of the bed to speed unloading. This practice, combined with lightsprings and single rear axles, leads to the dangerous situation of headlightsprojecting too high on outbound loads, and too low on return.

The combination of an illegal driver, an overweight truck, and an accidentcan be extremely costly.

F I N D I N G T H E V A L U E D I S T R I B U T I O N O P E R A T I O N S

Dis t r ibut ionDis t r ibu t ionDis t r ibu t ion



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Utilization

Since most of the parameters of bulk distribution are dictatedby the links before and after this piece of the supply chain, theresulting equipment and driver utilization must be explored as

an opportunity for gain. The following graph illustrates a typical utilizationgraph for a mid-sized newspaper fleet. The graph reads left to right over a

time period of one-week, showing trucks in use as black bars.

Daylight hours are shown in yellow, revealing that 11 of this 15 truck fleet areavailable for further utilization during prime commercial hours. Additionally,this graph illustrates the potential for small time gains to allow a fleet reduc-tion. This graph focuses on bulk distribution. Is this the tip of the iceberg?The key to leveraging this potential is information.

F I N D I N G T H E V A L U E D I S T R I B U T I O N O P E R A T I O N S ( C O N T . )



.

SUN MON TUE WED THU FRI SAT4 8 1216200 4 8 1216200 4 8 1216200 4 8 1216200 4 8 1216200 4 8 1216200 4 8 121620

Truck #01

Truck #02

Truck #03

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light

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Information

Information is the thread that binds the entire newspaper sup-ply chain. Newspapers have histori-cally been leaders in information ex-

change process and technology inside the walls of theproduction facility. Unfortunately, this technology

and process usually leaves distribution with a printout.

Because each newspaper has different strategies,needs, and priorities, information is the key to improvement within the distri-bution link of the supply chain. Until recently, only two measurements werecommon or necessary within newspaper distribution: 1) Did the job get done?,and 2) Did they meet budget? Further integration of the information flow wassimply too costly to be warranted. The increasingcomplexity at every stepof distribution made fol-lowing the data difficult,

if not technologicallyimpossible.

Times have changed.

Jumping directly to GPSbased dynamic carrier routing withreal-time product delivery confirmationis not a realistic or advisable next step for mostnewspapers. The future of this type of need; however, is undeniable.

The best place to start is bulk distribution, where first-rate data, combined withmeasurements to form management information, can yield fast results. Start-ing at this point makes the information set manageable. This first step also al-lows experience with what type of information will be most valuable whenconsidering an expansion of measurement inside the distribution link.




From plant toDC to Carrier to

Reader


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2006 P3L, LLC 19

POTENTIAL METERDISTRIBUTION OPERATIONS

Financial Gainscope defines potential, but oneaverage newspaper truck can save over $2,000 an-nually with a 1 mpg fuel efficiency improvement

Ease of Changeoutside forces can affect changehere, but most initiatives will improve workflowand conditions, easing transition

Positive impact on other linksAdding quality distribution informationinto newspapers management toolbox can unlock potential in everyother link in the supply chain

Start Time Controlcontrolled by news, advertising, and packaging

Process Time Controlthe tools, equipment and processes used by dis-tribution can have dramatic impact on the total process time

End Time Controlwhile any end time gains can be traded up and

down the supply chain, improvements in process time will yield imme-diate results here

POTENTIAL SUMMARYDISTRIBUTION OPERATIONS

Overall Potential RatingRisk and utilization are major factors infinding value within a newspaper distribution operation. Informationis key to unlocking the potential of these factors. Improving utiliza-

tion will improve risk. Whether the opportunities revealed by better informa-tion are internal or external to newspaper operations, better used trucks meanbetter used drivers. Better used drivers mean less turnover and less risk, more

efficiency and more potential.


Dis t i rbut ionDis t i rbut ionDis t i rbut ion



Ratings Key:

Good


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While individual value can be gained from examining each link in the newspa-per supply chain, the real value is in the big picture.

Balancing time and workflow acrossthe supply chain will yield the largest

results.

The key to unlocking thispotential is the availabilityof information. While efficient, system wide information capture

will take time and a step-by-step approach, gains will be realized each step ofthe way.

A dynamic cost and process flow model of the newspaper supply chain will beessential in keeping pace with changing needs and demands within the news-paper industry.

T Y I N G I T T O G E T H E R S U P P L Y C H A I N I N T E G R A T I O N

Adver t is ing &

New s

Press

Operat ionsNewspr in t &

Ink

Packaging

Operat ions

Dist r ibut ion

Operat ions


INFORMATION

SERVICE

TIMECOST

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