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<td width="590" valign="top"><font SIZE="4">College Store Executive<p>Textbook Order
Consolidation<br>
<i>A Concept Whose Time Has Come</i></p>
<p></font><font size="3">Traditional textbook ordering processes employed by the
University of Guam Bookstore have undergone a radical transformation. Requisition and
ordering cycles have been shortened. Shipping times have been reduced. Timeliness and
cost-effectiveness have been enhanced.</p>
<p>Under a pilot program, developed by Business Management Concepts (BMC) – at the
request of the store – textbook requirements have been single sourced through a
consolidated ordering system that links UOG with a Kentucky-based used book wholesaler.</p>
<p>Eighty-to-90 percent of text requirements for the back-to-school rush period arrived in
a single shipment on July 7, just three weeks after being loaded onto a truck for the
two-stage journey over both land and water. In the past, the process encompassed multiple
– up to 100 – shipments, as well as months and months of time.</p>
<p>Ron Duvall, BMC’s president, provided the following recap of the effort to bring a
state-of-the-art textbook ordering system to UOG.</p>
<p>"Store personnel had been ordering textbooks in the traditional manner of
stateside schools, however, lead time was increased by as much as four months.
Additionally, dealing with publishers and their attendant problems on a 14-hour time
differential was a major problem. Freight costs were of significant concern as well."</p>
<p>BMC, commissioned by UOG to perform a complete bookstore business review, determined
early on that the traditional ordering process was not the answer. As a result, Duvall
reported that the firm entered into discussions with various wholesale distributors in
hopes of identifying an alternative approach.</p>
<p> </p>
<p>Alternative Approach</p>
<p>"The thought was that if UOG personnel could deal with only one company on the
mainland, individual textbook problems could be more easily resolved," he explained.
"It became obvious that if a program could be developed which addressed the lead-time
and freight-handling concerns of UOG, while insuring that the needs of a wholesaler were
met, this would provide the solutions.</p>
<p>"South Eastern Book Co., of Murray Ky., expressed the desire to commit its
resources to assist in the development of this consolidated textbook acquisition
program," Duvall recounted.. "SEB’s willingness to approach this problem
with an open mind allowed for the development of a truly responsive and innovative
program."</p>
<p>Pressed to explain how the textbook consolidation program works, Duvall began by noting
that, "An agreement was signed between UOG and South Eastern Book Co. which dictated
that UOG provide the purchase order to SEB according to a predetermined schedule that
effectively reduced processing time by three months."</p>
<p>The bookstore was required to furnish its fall semester purchase order to SEB by April
1, and those textbooks arrived by July 15. Spring semester purchase orders are to be
received by SEB by Sept. 1, with those textbooks to arrive by Dec. 1. Summer semester
purchase orders are to be received by SEB by January, with merchandise to arrive by April
1. Return of overstock books to SEB is authorized within 12 months to receipt.</p>
<p>Like the bookstore, SEB is obligated to meet certain requirements. It specifically
agreed to: provide textbooks, in a single shipment, within the schedule outlined; offer
buyback services commensurate with competitive industry service and commission structure;
employ single invoicing for book costs, insurance and freight; special order books for
students and faculty; accept returns; and issue weekly management reports on pending
orders.</p>
<p>Duvall claimed that by developing this procedure, " BMC was able to significantly
reduce the textbook procurement problems for UOG." He also noted that, while
analyzing the impact of this program, BMC realized there were additional positives beyond
the identified needs of UOG.</p>
<p>Among the additional benefits accruing to the store that Duvall cited were:<ul>
<ul>
<li>Reduced paper processing for both the bookstore and the business offices for invoices
and credit memos.</li>
<li>Smaller excess inventories, since textbook return complications are greatly reduced
because the books are going back to one source.</li>
<li>Write-offs and markdowns are greatly reduced since any questions concerning order status
are addressed to one company and the majority of receiving activities are controlled since
the store knows exactly when the shipment is arriving and can schedule accordingly.</li>
</ul>
</ul>
<p>Wholesaler’s Experience</p>
<p>Rick Locklier, director of research for SEB, agreed with Duvall’s assessment of
the results. "We shipped about 600 cartons with late orders. In terms of units, the
actual number of books approximated 17,000 with a dollar value of more than $500,000
reflected on the UOG invoice."</p>
<p>Labeling the initiative a "pilot program," Locklier said, "It’s a
good deal for the UOG store. It allowed it to get the used book market.</p>
<p>"We did all the legwork for the store and submitted one invoice and one credit
memo. Its entire fall needs arrived at one time – alphabetically boxed up – and
a great deal of money was saved in the process.</p>
<p>"For example: A typical order of five books from Prentice Hall would carry per
unit freight charges of $10-$12 when shipped to Guam. We got unit costs down where it
should be.</p>
<p>"The store incurred this problem because it typically ordered three or four
cartons of texts from 90 or more publishers. Transportation costs on one-tenth of an
ocean-going container are nearly identical to shipping costs incurred for a fully-loaded
container."</p>
<p>Locklier noted that SEB allowed UOG to dictate the new to used text ratio and estimated
the ratio at 90 percent : 10 percent. New text were easily distinguished from the used
because they were individually shrink-wrapped.</p>
<p>"SEB didn’t get rich doing this for Guam, but it didn’t lose money
either. The program, as it exists today, is not a windfall for a wholesaler,"
Locklier reported. "It allowed us to sell more books on a booklist we’ve never
seen before."</p>
<p>He described communication as the key to the program’s success and credited all
parties with doing their part. As a result, fall text orders for UOG were nearly
completely processed by May 15. As shipments arrived from publishers a separate staging
area for UOG requirements was established, and product was held until a single order was
consolidated and shipped out.</p>
<p> </p>
<p>Next Steps?</p>
<p>"These benefits, as well as the freight savings, are applicable to any college
bookstore," Duvall maintained. "BMC believes that the use of this system will
provide a significant operational advantage to small and medium stores by effectively
reducing operating costs and inventory investment. The benefits, as well as the freight
savings, are applicable to any college bookstore."</p>
<p>Locklier agreed and indicated that SEB looks forward to providing the service to
college and university bookstores within the continental U.S. "I know of a lot of
3,000-5,000 enrollment schools that could benefit from this approach. Ron has hit on a
true service for small, institutional stores."</p>
<p>Adopting such a system, Duvall said would mean, "The bookstore will obtain and
edit all text requisitions, including total quantity to be ordered of both new and used
books. Then, rather than generating multiple purchase orders and sending them to over 100
different publishers, it will generate between 1-10 purchase orders to one main source.</p>
<p>"The source, or wholesaler, will then fill as much as possible of the used book
quantity requested from its own stock, and then provide a used book search for the
remainder of the requirements," Duvall continued. "At a pre-determined time, the
wholesaler closes the used book search, records are updated and PO’s are submitted to
the publishers. All books are shipped to wholesaler, re-boxed in alphabetical order by
author and shipped in one shipment by truck to the store.</p>
<p>"Initial shipments will normally contain between 80 percent and 90 percent of the
store’s entire needs. The remainders are the late requisitions. These are filled and
shipped expeditiously.</p>
<p>"According to the architect of this textbook consolidation program, "It is
estimated that shipping 80 percent to 90 percent of all texts in one shipment by truck
will result in approximately a 35 percent savings in freight charges for the store.</p>
<p>"In addition, the store will know in advance when the books will be arriving. This
will allow it to more accurately gauge the timing and number of temporary employees needed
to receive and shelve books."</p>
<p>"Savings to the store in terms of time and money spent in processing paperwork
will be substantial," Duvall declared. "Most stores deal with at least 100
different publishers. A conservative estimate is that this translates into at least
150-300 individual purchase orders per semester. Each of these purchase orders is
generally handled by a receiving clerk, a store clerk, a text manager, as well as by
accounts payable.</p>
<p>"By single sourcing most of the textbook ordering and procurement process, the
store will significantly reduce the time spent telephoning publishers, following up on
problems and processing paperwork. Additionally, returning all overstock texts to one
source will significantly reduce the amount of chargeback follow-up and text write-offs
for the store. The fee that the store will pay for this program will be offset by the
saving in direct and indirect costs."</font><font SIZE="4"></p>
</font><hr>
<p align="center"><small><small>�1999 Duvall Group, Inc.</small></small></td>
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