by Marty Porter
Hollywood could have done a lot more to help keep Brian Dunn his job.
You don’t need to be reading this newsletter to find out that the Best Buy CEO was shown the door earlier today amidst lousy financial reports and following a blitzkrieg attack by Wall St. analysts. Growing online sales (aka digital media) was not enough to make up for a decline in TV and laptop sales (aka physical media). Meanwhile, Apple is devouring the entire consumer electronics category with their own products and their own stores — even though the blue shirts at Best Buy sell about 13% of their iPhones in North America.
It’s ironic too that the hottest CE category (connected devices) are the very products that are breeding the perceived demise of a big box house living in a commoditized, virtual world of mobile devices, apps and downloadable entertainment.
Probably Dunn was too much of an old-school retail guy anyway — having worked his way up from the store level over 28 years. If Best Buy is going to survive they’re going to need go Apple-style in their stores while they buy time building a digital strategy that the analysts will buy into — while we all, as a collective industry, figure out what we’re going to do when (not if) what’s happening to Big Blue happens to our own Big Blu.
Dunn’s ultimate ouster started with an article on Forbes.com entitled “Why Best Buy is Going out of Business…Gradually” .
This was matched by an equally vicious attack published on AOL Finance entitled “9 CEOs who Need to Get Fired” Read it here.
Wedbush Securities analyst Michael Pachter explained it best in a late last month when he was quoted as saying: “With the Internet and smartphones, we don’t need to shop at Best Buy to figure out which TV or electronics we want. Their solution may be good for 2011 but will be irrelevant by 2014. Technology is going to pass them by like they’re standing still.”
Pachter should have thrown in a few A-words (Apple and Amazon) while he was at it because there’s where all the money’s going — those are the retailers that are successfully fighting the lowest prices at Costco and Wal-mart with an elegant shopping experience combined with anywhere, anytime entertainment.
But remember — as a collective industry — we had a silent pact with all our retail partners; they’ll sell our discs as long as those discs are driving people into their stores. The fact that Dunn failed at his job doesn’t exactly make us look very good at holding up our half of the bargain.
was the first to spot the role of entertainment in Best Buy’s decline when it reported in a recent posting the fact that its entertainment category (games, DVD, Blu-ray) had dropped from 14% last Q4 to an ugly 20% decline this Q4.
So what do we do? A healthy physical retail presence for home entertainment is in everyone’s best interest. A mission of supply chain experts (digital and physical) need to start camping out in Richfield, Minnesota helping shore up their distribution backbone, while the marketing types need to spend some all-nighters creating a host of event-driven special Hollywood-style events for new releases. Meanwhile, the digital dudes have to accelerate their roadmap for the future — they need to quickly help Best Buy and all our industry’s retail partners build out their digital entertainment infrastructures so they can drive traffic to their new storefronts on the web.
In a world of where a none-company named Instagram gets $1 billion from Facebook — valuation is all about digital strategy. With Apple’s retail genius Ron Johnson off the short-list of potential execs as he recreates JC Penney, Best Buy is left nothing else by a digital play. Don’t be surprised when their new CEO comes knocking on home entertainment doors in Hollywood someday soon asking to know how we’re going to help him build web traffic moving forward — and when that day comes, we better have a really good answer — for our customer and for ourselves.
Packaged media distributor Cinram International continues to expand its digital operations with the hiring of studio veteran John Crosier as senior VP of digital architecture and delivery.
Crosier joins Cinram from Warner Bros., where he oversaw the studio’s digital supply chain as executive director of global operations. He also has led standards development efforts and other initiatives as digital ambassador for the industry’s DEG: Digital Entertainment Group. Cinram said Crosier will continue to work closely with the trade association.
“John brings a great perspective to our digital team,” said Cinram chief executive Steve Brown in a statement. “He has first-hand insight into digital supply chain and delivery methods to meet the ever changing needs of our customers.”
The hire follows Cinram’s acquisition of Los Angeles digital media specialist 1K Studios earlier this year.
Crosier, also based in Los Angeles, will be responsible for expanding Cinram’s digital services and overseeing its digital supply side mechanics. He will report to Brown and work in tandem with an executive team that includes Matt Kennedy, 1K Studios’ president, and Ben Higgins, Cinram’s VP of emerging markets and innovation.
By Mel Lambert
Greater sharing of information is a top supply chain priority for videogame publishers, distributors, and retailers, with the instant-access nature of emerging digital business models highlighting the industry’s imperative to improve physical product availability as well. Such was the consensus among game industry executives who spoke at the GameSupply conference in Burbank, Calif. on Wednesday.
Saul Berman, Global and American Strategy Consulting Leader with IBM, considered the changing retail model from physical to digital media in his conference keynote. “The game industry may grow,” he said, “but who will get the enhanced revenue stream? The record industry tried to stop the consumer doing what they wanted [with digital media], instead of monetizing the experience. The gaming industry needs to be agile and focus on the experience, interoperability and new revenue models.”
A panel moderated by Bob Lamont, Vice President of North Highland, acknowledged that as videogame revenues have overtaken both music and home video, supply-chain challenges have intensified. “A key to success is the manufacturers’ responsiveness,” noted Kurt Fisher, VP of Operations at THQ. “It is vital that retailers collaborate with the retail chain and actively share information with suppliers,” added Patricia Vessey, director of Merchandising Services at Best Buy.
“Consumers do not like to wait,” said Steve Brown, CEO of Cinram, reaffirming the game industry’s need to transition from physical to digital products. “We also need to reduce waste through demand management and actionable intelligence,” so that costs can be reduced dramatically by shipping products from multiple vendors in shared boxes. “Collaboration,” Brown agreed, “is the key to eliminating waste.”
The third annual GameSupply Summit was co-produced by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA).
The day-long event ended with the presentation of three Video Game Supply Chain Awards by the EMA. Activision received the trade group’s Supply Chain Innovation award, while Sony DADC received an award for Supply Chain Efficiency and printing/merchandising firm Pacific Color Graphics received an award for Green Supply Chain Leadership.
Mel Lambert is principal of Content-Creators.com, a Los Angeles-based consulting service.
Universal Music Group (UMG) is expanding its relationship with Accenture following a two-year collaboration to develop and deploy Accenture’s digital supply chain platform (via Business Wire).
Under the new arrangement, Accenture plans to roll out its retail services platform, which uses a “hosted model” for content delivery, on a worldwide basis. The platform enables Universal Music entities to sell content directly to fans, as well as power the technology behind various consumer-facing retail and promotional services.
Accenture’s digital supply chain platform – developed by the company’s Digiplug division — ingests all necessary audio, video, artwork and metadata, before transcoding content to meet the multiple digital specifications and delivering it to some 750 online and mobile business partners worldwide.
This year marks the first time that UMG has fully deployed the Accenture platform during the peak fourth-quarter period.
The Entertainment Identifier Registry (EIDR) aims to simplify consumer transactions for digital entertainment with an identification standard for content that’s functionally similar to the UPC code for packaged goods and the ISBN system for books.
Leading the new, nonprofit coalition are the major studios’ MovieLabs initiative; cable operators’ CableLabs group; and firms Comcast and Rovi. Backers include Deluxe, Universal Pictures, Neustar, Paramount Pictures, Sonic Solutions, Sony Pictures Entertainment, Walt Disney Pictures, Warner Bros. Entertainment, Motion Picture Association of America, Civolution, Vobile, and INA (L’institut national de l’audiovisuel).
The registry, which is expected to be available to member companies in early 2011, will catalog and assign a single, unique ID unit to movies and TV assets (from feature-length programs to clips and composites) that can be used for both physical and digital media. Content producers will gain efficiencies in postproduction and distribution by using the standard, EIDR says, while content distributors will gain greater assurance that the right assets/products are being distributed to consumers.
The organization offers a whitepaper on how the registry works at http://eidr.org/whitepaper-download/.
The London-based Digital Entertainment Group Europe (DEGE) says that it has completed its first-ever carbon footprint assessment of the region’s home entertainment supply chain.
The DEGE and its members, in collaboration with management consultancy i4b, conducted a four-month research project to identify key best practices companies can implement to reduce their carbon emissions in a manner that also makes sound business sense. The research findings provide a benchmark against which the industry can measure itself as it looks to establish long-term reduction goals for its carbon footprint.
DEGE members including major studios Lionsgate, Paramount Home Entertainment, Sony Pictures Home Entertainment, Twentieth Century Fox Home Entertainment, Universal Studios Home Entertainment, Walt Disney Studios Home Entertainment and Warner Home Video, along with supply chain members including Arvato, Cinram, Sony DADC and Technicolor, commissioned i4b to develop the methodology behind the research. As part of the study, some 1.1 million DVD and Blu-ray products from 2009 were assessed, with materials, manufacturing, transportation among the supply chain components examined.
The group will release the results in the coming months, with the DEGE commencing work on a new carbon reduction program designed to facilitate widespread adoption of identified best practices.
Release via Business Wire.
Katy Perry’s new album, “Teenage Dream” (Capitol/EMI), may have topped the Billboard 200 chart in its first week of release. And sales may very well continue to burn through the label’s subsequent release of surefire hit singles.
But given the yawning gap between actual units sold and units shipped to retail, Billboard implies that there is disappointment, if not disconnect, from a supply chain perspective (via Reuters).
According to Nielsen SoundScan, the album sold 192,000 physical copies in its first week, representing the ninth-best debut of the year to date. But Billboard cites anonymous sources that estimate EMI to have shipped no fewer than 1 million units to the likes of Walmart, Target, and nontraditional retailer Starbucks in anticipation of a bigger hit.
Labels typically ship twice as many units as they expect to sell, Billboard says.
Some defend Perry as primarily a singles artist; indeed the new album’s lead single, “California Gurls,” has scanned 3.6 million downloads to date.
The first week performance, however, has label execs speculating whether any artist can sell 1 million units out of the gate in today’s market.
With its new 17,000-square-meter facility in Pilsen, Czech Republic, Sony DADC is marketing additional special packaging capabilities to entertainment companies throughout Europe. Currently offering a range of manual assembly services, the center plans to expand its portfolio to returns management and point-of-sale display solutions.
PBS takes a stab at analyzing the entertainment and media supply chains for their environmental sustainability. At present, the carbon-footprint calculations are somewhat back-of-the-envelope. But in accounting for everything from newspapers to DVDs and streaming video, there is no doubt the number is huge.
Writer Don Carli, who is also a senior research fellow at the Institute for Sustainable Communication, takes estimates of consumers’ annual spend on media products and services, along with media companies’ annual advertising revenue. “The U.S. Department of Energy reports that approximately 360,000 tons of CO2 equivalent greenhouse gas emissions are associated with each billion dollars of economic activity,” Carli writes, “which would mean the carbon footprint of the media industry could be as much as 500 million metric tons of greenhouse gas.” Since digital media usage itself consumes energy, the total emissions figure linked to media is likely much higher, the article contends.
Industry-wide discussions on ways to address sustainability are just beginning. The article argues that carbon footprint is back on consumers’ radar in the wake of the BP oil spill, and hence may be of growing concern among media investors and advertisers. By PBS
Warner Home Video has promoted Philippe Bastard de Crisnay, its international VP, to the newly created position of SVP International Sales Planning and Operations. De Crisnay now has broad oversight of sales planning and supply chain operations across all of the studio’s international markets, providing procurement, manufacturing, distribution and customer service support to the territory and regional sales teams in conjunction with both their video and games businesses.
The executive also will develop sales planning and supply chain strategies, manage the implementation of systems related initiatives, and facilitate Warner’s transition to Technicolor for disc replication and distribution services. Via Business Wire
Warner Bros.’ Technical Operations unit is assigning new roles to several senior executives in efforts to “reorganize the management of distribution operations globally” and “leverage the logical links and increasing dependencies” between the studio’s physical and digital businesses.
The management changes also bring together support for production, post-production, theatrical distribution, and mastering operations into a single organizational structure.
Brian McKay, promoted to EVP of Production Operations, is now responsible for the management of a newly consolidated organization that includes Media and Corporate Image Archives, Worldwide Mastering and Global Digital Media Xchange (GDMX). McKay also oversees the digital conversion of theatrical and mastering operations and manages their interdependent digital strategies. He reports to Darcy Antonellis, Warner Bros. Technical Operations President.
Meanwhile, Justin Herz advances to become SVP of Warner Bros. Digital Distribution’s direct-to-consumer business, and GM of Warner Bros. Advanced Digital Services. Herz oversees the digital distribution division’s eCommerce, customer relationship management, and loyalty initiatives. Herz is additionally responsible for the services division’s overall operations management, including cross-divisional client management and strategic planning, service offerings, internal product development, vendor services and integration, infrastructure, technology selection, project management, and research and development for future products and services.
Herz dually reports to Vicky Colf, who has been named SVP Digital Solutions and Servicing at Warner Bros. Technical Operations, and Thomas Gewecke, President of Warner Bros. Digital Distribution. Via Business Wire
The world’s largest retailer’s push goes beyond its efforts to date to reduce its own emissions by designing more energy-efficient stores and pursuing alternative fuels for its fleet of trucks. Wal-Mart notes that it has already been working with suppliers of flat-screen TVs and DVDs to cut down emissions, but it is now looking at other opportunities like food and clothing. By AP
What is Ingram Entertainment’s viewpoint on the state of the video game distribution? Bob Geistman, Senior VP Sales & Marketing of Ingram Entertainment Inc. (IEI), will be providing some insights to attendees at the second annual Game Supply conference, in San Jose, CA February 10. Geistman represents the nation’s largest distributor of DVD software and a leading distributor of game software, servicing over 10,000 retail accounts. As chairman of Entertainment Merchants Association (EMA, co-producer of Game Supply), Geistman offered his industry viewpoints in this exclusive Game Supply interview.
Game Supply: Ingram is a vital link between video game publishers and retailers. How would you characterize your trading partners’ responses to the economic crisis of last year?
Bob Geistman: In 2009, our trading partners responded to the economic crisis by bringing in less depth and breadth of product and focusing primarily on new releases and top-selling catalog titles. Subsequently, the lack of depth in titles led to increased turns for the retailers and increased reorders with us. We also saw our trading partners taking fewer purchasing risks due to the economic recession, choosing instead to stay with the tried and true franchises, such as Activision’s “Call of Duty” series.
In an emerging lean supply chain, how have you served your trading partners with value-added services of sales, marketing and distribution?
Since product has been harder to place at retail, we have made an effort to provide more information to help retailers make better purchasing decisions. Along with managing inventory levels more closely, IEI partnered with publishers to offer more presale and incentive programs. In the past year, we did more bundling of products on behalf of the publishers and customers to increase margins and sales, and add value for the consumer. We also partnered with publishers to offer more financial incentives to encourage sales, and increased our third party logistics services.
Recognizing the last 100 feet at retail to be the most critical in the supply chain, how do you ensure effective execution at the store for your publisher clients?
In conjunction with the publishers, we implemented early ship agreements with our retailers that allow them to compete on a level playing field with publisher-direct retailers by having product on shelves when they open for business on street date or conduct “midnight” launch events. We expanded our Advanced Shipment Notice (ASN) capabilities for retail as well, allowing them to have greater visibility of incoming shipments. Over the past year, we made further enhancements to our packing documents to include street date information and early shipping policies. Lastly, we employ third-party merchandisers with select accounts to assist with in-store inventory management and merchandising.
In the current turbulent times, what are a couple of opportunities for transformation of the industry supply chain to become leaner?
There are two ways the supply chain can become leaner and more efficient.
First, publishers need to more widely embrace early shipping, which will enable distribution to consolidate multiple shipments to retailers to decrease logistical expenses. This will also reduce reconciliation, A/P, and other labor expense for retail.
Second, we need common street dates. Common street dates lower the supply chain cost and level the playing field at retail, and allow the entire industry to more effectively market new releases. In the heavy selling season (fourth quarter), we need to have extra product of the anticipated top-selling new release and catalog titles as close to retail as possible for rapid replenishment, not only for distributor customers, but for publisher-direct retailers as well. Currently, no one in the supply chain wants to take on the inventory risks associated with bringing in extra product. This means that publishers should share the risk of placing additional inventories that they already have made by allowing distributors to return unsold product on mutually-agreed-to titles and quantities.
In your opinion, what are the obstacles to progress for the video game industry that had a setback for the first time last year?
The industry made real progress on common street dates in 2009. Unfortunately, some retailers did not honor the street dates, which was a setback for the industry. The EMA is currently evaluating a means for the publishers to track these violations so repeat offenders can be more easily identified and addressed. Though not necessarily new for 2009, we continue to experience product shortages and allocations, which is a continual source of frustration.
How can information and information technology help address these frustrations?
Information and information technology can expand vendor-managed inventory for games. As an example, Ingram Entertainment provides full category management services for over 5,000 retail DVD departments. Again, publishers need to share some of the risk and expenses distributors face in stocking product, and in managing and merchandising retail departments. The industry also needs to work toward better adoption of standard EDI transactions. And, the industry needs to quickly adopt benefit denial technology to help reduce retail shrink concerns, decrease labor costs, increase consumer access, and reduce packaging costs.
This is an industry where a very large number of publishers, about 25 of the top 30, represent a small market share. What suggestions do you have for them to achieve cost efficiencies?
I know this is easier said than done, but putting out fewer but better games would be a start (i.e., quality over quantity). They should also recognize what their core competencies are, and possibly outsource those functions that are not core to what they do or work together to reduce redundancies.
How are you strategically positioning your enterprise for the emerging digital delivery of video games?
We recognize that we are a physical goods distributor. As with video products, we will continue to monitor emerging delivery technologies, maintain a dialog with all of our vendor partners, and study industry models and forecasts. In the short term, we will continue to provide our retail partners with products that allow consumers to obtain downloadable content through retail products such as Microsoft’s “Live” cards.
Any closing thoughts?
The video game industry still lacks many standards that other industries rely on to get product to consumers in an efficient and timely manner. By adopting standards, the game industry can increase sales, lower expenses, and better satisfy our retail customers, and more importantly, the consumer.
The second annual Game Supply Academy convenes in San Jose, CA February 10. For more information visit www.GameSuppplyAcademy.com.
GameStop CEO Daniel DeMatteo says the videogame retailer’s holiday sales were impacted in part by unexpected shortages of products such as Nintendo’s New Super Mario Bros. Wii game and the PlayStation 3. Nintendo and Sony couldn’t keep up with demand for consoles, DeMatteo tells Business Week in an interview. “They were out of stock right before Christmas,” DeMatteo says of Sony’s PS3. By Business Week
New CDSA Executive Director, Martin Porter, to Assist in the Launch of New Standards to Protect Digital Assets Throughout the Supply Chain
CDSA, the Content Delivery & Storage Association, has named MESA, the Media & Entertainment Services Alliance, as its association management company of record. As its first responsibility, MESA will manage the continued rollout of CDSA’s newly updated and expanded international Content Protection Certification Program next year.
Martin Porter, MESA Executive Director, will also serve as Executive Director of CDSA as the successor to Charles Van Horn, CDSA President, who is retiring after 26 years with the organization. Under this new structure, MESA will provide organizational management for CDSA, while CDSA will continue to maintain its independent activities under the direction of its own Board of Directors.
“I have known and worked with Marty Porter in various capacities over the past 20 plus years and I feel confident that he will provide the value proposition for CDSA members that is so vital to the future health of the Association,” Van Horn said.
“CDSA has been the respected advocate for the content delivery and storage industry for 38 years. Most recently, our association has been recognized worldwide for our long track record of effectively administrating industry-developed content protection procedures,” says CDSA Chairman Frank Russomanno. “We welcome Martin Porter and MESA on board to manage our membership and to market our new IP auditing system, which is the end-product of a tremendous collaborative effort by our member companies and which has been created to address the changing needs of a changing industry.”
Linda Dyson will remain in the position of worldwide director of CDSA’s global standards and certification processes for the Content Protection and Security Standards, and the Copyright and Licensing Verification Standards and Procedures.
“The new CDSA Content Protection Certification Program is an incredibly relevant and flexible series of IP protection protocols that set the gold standard for the way that service providers will handle and process their customers’ assets in this exciting period of transition for content delivery and storage,” Porter explained. “Our plans include promoting those companies that play a leadership role by their adoption of these programs, by enhancing the program’s overall visibility throughout the international content and storage community.”
Linda Dyson can be contacted at email@example.com. Martin Porter can be contacted at marty@MESAlliance.org.
About CDSA’s Content Protection and Security Standards
For over a decade, CDSA has been recognized as the worldwide leader of Anti-Piracy and Compliance Programs. Most recently, the Content Protection and Security Standards (CPSS) were first written in 2008 by an international team of intellectual property, anti-piracy and security experts from both the physical and digital security arenas, thus giving coverage to the whole supply chain. By implementing these Standards, organizations effectively demonstrate effective process approaches for the handling, manufacturing, storage and delivery of valuable entertainment, software and information and assets in the home entertainment, video game and music recording industries.
CDSA, the Content Delivery & Storage Association (formerly IRMA, the International Recording Media Association), is the worldwide forum advocating the innovative and responsible delivery and storage of entertainment, software and information content. Founded in 1970, this global trade association’s membership includes companies involved in every facet along the digital and physical media supply chain. Beginning with the audiocassette, through the home video revolution, and into today’s digital delivery era, CDSA has always been the organization companies turn to address the most important industry-wide issues of their time. More information is available online at: www.contentdeliveryandstorage.org
“Lack of visibility in supply chain increases financial risks,” says Monster Cable CFO Leo Lin. “Adding ‘global’ in front of the supply chain, the uncertainty and complexity multiplies, and so are the difficulties and challenges. That’s why many financial executives are partnering closely with their supply chain counterparts and spending more time and efforts getting involved in managing this important area.” Lin will lead a panel of finance leaders discussing the state of capital liquidity in today’s consumer electronics marketplace at the International CES in Las Vegas on Jan. 8. Consumer Electronics Supply Chain Academy
The 2010 “GameSupply” conference, the supply chain academy for interactive entertainment, will feature seven sessions that will focus on the entire videogame supply chain, from manufacturing, through packaging and distribution, to the sales floor, according to the conference organizers. The one-day event brings together videogame retailers, distributors, publishers, and their service providers to share knowledge about new developments and technologies in the interactive entertainment supply chain. The conference, which was inaugurated this year, will be held February 10, 2010 at the Hilton San Jose in Silicon Valley. GameSupply is jointly produced by the Entertainment Merchants Association (EMA) and the Media & Entertainment Services Alliance (MESA). GameSupply
While most of Lil Wayne’s fans will have to wait until at least February for the rapper’s often-promised and often-delayed album, about 500 Amazon customers who pre-ordered “Rebirth” are enjoying the record already, thanks to a shipping mishap. Lil Wayne’s 2008 album, “Tha Carter III,” was the last in the music industry to move 1 million units in its debut week. By Billboard/Reuters
Mark Payne, VP of Operations for Cisco’s Linksys, will share strategies on balancing inventory across a multi-tier infrastructure of retail stores and distribution centers at the Consumer Electronics Supply Chain Academy (CESCA), Jan 8, 2010 in Las Vegas. Consumer Electronics Supply Chain Academy
Sony Corp.’s various consumer divisions are adopting an increasingly coordinated approach to supply chain management to strengthen the company’s retail relationships, according to Yuka Yu, VP of Global Supply Chain Operations for Sony Electronics.
The electronics unit has recently embarked on a number of joint supply chain projects with sister divisions such as Sony Pictures and Sony Computer Entertainment, under a broad corporate theme entitled “Sony United.”
The theme, Yu says, “has been expressed more and more in the past few years. For example, Sony Pictures and Electronics have collaborated to make exclusive streaming content available on Sony TVs; Sony projection systems in movie theaters have been used to host multi-player gaming events in support of the Sony Computer Entertainment group; and Sony Supply Chain Services supports both the electronics and gaming divisions.”
“From a supply chain perspective,” Yu continues, “we are starting to think about how to present one face to key retailers and potentially leverage areas of expertise across the different companies.
“For example, Sony Pictures has store-level fulfillment capabilities and VMI relationships built into their distribution network, so we now have a project within Sony Electronics to work with the Pictures supply chain team to explore joint operations.”
Yu will moderate a workshop on supply chain issues for the home entertainment industry at the Consumer Electronics Supply Chain Academy (CESCA) on January 8, 2010 at the International CES. For more details, visit the Consumer Electronics Supply Chain Academy site.
Michael Aguilar is widely known throughout the consumer electronics industry for his global supply chain initiatives on behalf of one of the world’s biggest companies – Panasonic U.S.A., where he had direct oversight of corporate strategic initiatives involving sales, marketing, supply chain and logistics. He brings this broad perspective to his role as a Conference Session Chair at the upcoming Consumer Electronics Supply Chain Academy (CESCA) at International CES on January 8, 2010 in Las Vegas.
Aguilar’s CESCA workshop, entitled “The Art and Science of Collaborative Planning and Forecasting,” is of particular importance in a business environment of reduced inventories and hyper-time-sensitive promotions.
Currently President of the Intrepid Consulting Group, LLC, which is located in New York, Aguilar is involved assisting a variety of industries in producing high levels of accuracy in forecasting demand, replenishment, and maximizing “right product – right location” in their supply chain, as well as those of the customers. In his Panasonic days Aguilar was recognized for his pioneering development of a vendor-managed inventory program utilizing offshore resources to predict demand and supply – a first in the consumer electronics industry.
Aguilar recently spoke with CESCA Conference Chairman and Pepperdine University Professor, Devendra Mishra, on the the state of supply chain management in consumer electronics and what’s ahead for the industry.
Knowing the firm believer you have been of POS-driven decision-making, what strides have been made by the consumer electronics industry and what are the low hanging fruits?
Ask any CE company if they are using POS and of course the answer is yes. But dig a little deeper and ask what are they doing with the information and you’ll discover that most are not really using POS as an integrated part of forecasting.
The lowest hanging fruit is to allow a sales rep to validate his or her forecast utilizing the latest POS. Of course this is not the most scientific or accurate tool, but it provides the beginnings of a demand driven forecast. The next logical step is to create a demand-shaping tool that allows the current POS data to be used to model future demand.
How would you assess the retail’s ability to provide timely and accurate POS data to suppliers for efficient replenishment?
If this question were asked a year ago the answer would have been a definite yes – there is a lot of POS data that is being shared. But look at the changing nature of CE with regional chains now on the rise, and becoming more important to every supplier. That is where the weak link is – rapid expansion and systems that need to catch up are not readily in place with many of the regional players.
What are the opportunities for collaboration in the consumer electronics industry?
I think that to truly collaborate you need to get down into the weeds, which means that you can’t look a single rolled up number by SKU. You need to become an expert on collaborating at the region or DC level with each retailer – in essence becoming the second set of eyes. Everyone wants their product to sell well, but if you can’t collaborate on where to place that product you’re only creating half a collaborative effort.
In your opinion, what is the most effective way to get sales, operations and finance to coordinate the development of a forecast?
There is only one way to break down the walls – everyone needs to have skin in the game. What that means in this instance is that compensation programs need to be aligned with the same goals and it’s amazing how quickly coordination happens.
We talk of supply chain management yielding system-wide minimization of cost. What has been your experience in achieving such a goal?
The unfortunate part of almost all supply chain initiatives is that estimated savings are generally forecasted due to the improvements of the supply chain group. In almost every instance, the cause and effect relationship on other strategic areas of the business are never really analyzed beforehand. Consequently – at the end of the year – one group may in fact have created savings at the additional expense of another, or the perceived speed up created by the supply chain group may have taken the flexibility away from another – that had been in place. In reality very few companies take a holistic view of the entire operation prior to a supply chain implementation – this is due to so much compartmentalization within companies.
What will the supply chain of the CE industry look like in five years?
I believe radical changes are on the horizon. First we need to take a lesson from the DVD and music industry – direct to store deliveries are coming as retailers hope to reduce their costs. Direct to consumer deliveries on larger items may also be in the future as retailers strive to have zero net owned inventory. So collaboration then moves a step further into the weeds – down to the store level – and we all need to begin preparing for that now. Most retailers are not good at this level of granularity, so it’s going to be a long learning curve for suppliers.
For more about the fourth annual Consumer Electronics Supply Chain Academy (CESCA), January 8 in Las Vegas, NV, click here.
GameSupply, the first ever supply chain academy for the video game industry, brought together the publishers, retailers, service providers, research organizations, management consultants and thought leaders in the interactive entertainment industry! It is certainly very opportune that the stakeholders of the industry were there to explore how we can collaborate, particularly to address the unprecedented challenges of the current somber and turbulent times. After all supply chain strategies are fundamental to improving liquidity of enterprises and enhancing earnings.
Pundits assure us that the interactive entertainment industry is poised for continued growth, albeit at a more modest pace than what we saw the last two years. While the industry is expected to continue to capitalize on technology, and its creativity and innovation on the content side, a proactive approach to pursuing elimination of waste, increasing efficiency and growing the category is a mandate.
The conference program was designed to bring the experience and knowledge of industry executives and research organizations, focus on technology-driven solutions to reduce stock outs and in-store product shrinkage, embrace the emerging digital and online gaming, understand the execution challenges in the last 100 feet of retail, and address our responsibility to ensure sustainability of the environment in a profitable manner.
It is our collective quest for the shortest, fastest and greatest results throughout the supply chain that will usher in a healthier industry and a greener planet. The conference marked the first steps where work has only just begun. It is our mission to establish task forces to address opportunities in the supply chain, based on your support and ongoing commitment. As a participant, attendee or sponsor, you have a unique opportunity to join an online community specifically created by MESA, Media & Entertainment Services Alliance, which is designed to facilitate collaborative efforts.
Striving for the greater good will transform the corporate mindset, establish new business bench marks for success, and create an inseparable bond between content creators, suppliers, vendors, retailers and the consumers demanding interactive entertainment. Let us collaborate for the benefit of our individual companies, the betterment of our industry, as well as for the greater good of mankind.
The over-capacity attendance demonstrated that supply chain management is everyone’s business. In the coming days we invite you to join our cause, participate, ask a question and continue networking for a better tomorrow.
Conference Co-Chairman, GameSupply;
Chief Strategy Officer, MESA; and
Professor, Decision Sciences
Graziadio School of Business and Management
GameStop’s Mike Mauler talks with GameDaily about the complexities of the supply chain for interactive entertainment
In advance of the conference next month, GameDaily BIZ caught up with Mauler to discuss the challenges and opportunities in the video game supply chain. Read the whole interview here: Mike Mauler Interview
Mike Mauler, Senior Vice President of Supply Chain and Refurbishment for GameStop, Inc., will deliver one of two keynote addresses at February 11th’s GameSupply Academy in Burbank. His speech, entitled, “Supply Chain Optimization: Opportunities in Collaboration,” will address how achieving an agile, cost-effective supply chain will benefit video game customers through improved service levels and increased profitability for all partners.