It seems odd to hear Andrew Leggatt, Global Logistics Manager for Lonely Planet Publications, talk about the “short shelf life” of travel guidebooks, especially since his previous employer was in the grocery supply business.
Even so, when he arrived at Lonely Planet from McCormick Foods to implement a forecasting solution, “you could have knocked me down with a feather,” Leggatt says. That was more than three years ago. While Lonely Planet has used Demand Solutions for most of his tenure, before Leggatt there was an attempt to do a quarterly forecast using spreadsheets. However, that had problems.
“We needed a way we could virtually and actually centralize demand,” Leggatt said. “This allowed us to reap a huge amount of freight savings and is inextricably linked with our savings on printing achieved through improved planning. This could not have been accomplished without a robust forecasting process. Demand Solutions One provided an effective solution and when factors such as global support and an informative Australian user conference were considered, the choice was simple. We felt very much a part of the Demand Solutions family.”
In tandem with the implementation of Demand Solutions One, the company began outsourcing a warehouse in Singapore. The Demand Solutions implementation took three months from start to finish, allowing the business to quickly reap the benefits offered by the new warehouse.
Leggatt and his team knew what they wanted, and they knew it wouldn’t come from the company’s ERP environment at the time. “We were looking for pure forecasting,” Leggatt said. “When the software companies came around, a lot of them couldn’t do what we wanted to do. It was disappointing. Then came Demand Solutions. It was like a breath of fresh air.”
Lonely Planet Publications is the world’s largest independent travel guidebook publisher with more than 500 titles in print. Begun in the early 1970s after founders Tony and Maureen Wheeler completed an overland journey from London through Asia and Australia, Lonely Planet Publications has grown to more than 500 staff with offices in London and Oakland, Calif., as well as a head office in Melbourne.
“Historically, Publishing is not a business that runs on a lot of supply chain metrics, and the fact we have metrics at all is a credit to DS One. Demand Solutions has given us the ability to plan improvements and then test their efectiveness.” As a consequence of some of these improvements, forecast accuracy at the line-item level has improved from 10 percent three years ago to 60 percent today.
Some of what Leggatt discovered about his company’s book titles might have been predicted. “We have discovered that there is some seasonality that applies to particular titles, but we didn’t know where it existed until we put in lifecycles and cut away most of the confusion in the information we were getting.” Such improvements required new thinking.
For instance, three years ago scanned sales data “could not be fully utilized, as we did not have a reference point for comparison,” Leggatt says. “Now we buy book scan data and compare it to our current forecast. The sales data tells us what the consumer is actually buying, and we can create a metric where we can see quite accurately what books will hit their profit targets very early in their lifecycle. We see this as a key competitive advantage as most publishers have to wait some time before they find out how their titles performed.”
Another helpful strategy made possible by Demand Solutions was the ability to pull field forecasts from the company’s five global regional sales managers using Demand Solutions Feedback. “We’re a global business, and we needed training delivered to all sales managers. We used a local Demand Solutions office in three different global locations to provide the training. To us, that was fantastic,” Leggatt said. “We can now enjoy the flexibility of Feedback as well as promote the idea that all our sales managers ‘own’ their numbers. They are now measured on their forecasting accuracy every month, and we give people a very detailed analysis of where they’re going.”
“We like to say that Lonely Planet is ‘the world’s smallest global company,’” Leggatt said. “We can’t spend millions of dollars on a global enterprise forecasting system, and I don’t think we’ve ever seen a problem we couldn’t solve with DS One. We like the idea that we have a flexible forecast management system outside of our ERP,” Leggatt said. “It’s difficult to get information out of other systems. When you put our titles into SAP, there is a huge amount of data there—certainly more than you need to manage a forecast. We get reports out of DS One very easily, using lifecycle curves and interpolation. We can do scenario planning and see if the budget numbers work out. If something doesn’t work it’s not an issue for any of the other users accessing that data set.”
Leggatt says even the budget process is much easier because “we have a way to manage the forecast. We create scenarios, we get agreement, sales reps can have their budget loaded into their computers for charting their regional goals, and we get much better management of our budget as a result of the process.”
As one might imagine, the price of printing a title is an important metric in the publishing business. By increasing the average run size, a publisher can save millions of dollars.
“Each reprint amount was calculated to stock three regional warehouses for nine months worth of demand based on historical sales averages,” Leggatt says. “Now that we’re forward-planning, everytime we get a reprint trigger we plan two more reprints beyond that point and, for all intents and purposes, we’re done with that title. DS One has helped us control printing costs by providing visibility to information we never had before. Our reprint run size has more than doubled over the last three years, and that is a massive improvement,” Leggatt says.
“We’re getting more sales off the same inventory turn,” Leggatt says. “We’re doing larger print runs but because DS One gives us a better picture of demand, so we are utilizing our stock more effectively.
“What is really important to us, since our books have a short shelf-life, is to turn over our products fairly regularly. It is important for us to maintain optimal stock levels. Demand Solutions has allowed us to manage our lifecycles much better, reducing the number of books we have to discard.”
Short shelf-life compared to grocery?
“It’s food for thought,” Leggatt said with a grin, “for a Lonely Planet.”