bisc Progress Review 17 june

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Information about bisc Progress Review 17 june

Published on December 3, 2007

Author: Dixon


Tackling Returns:  Tackling Returns Summary of progress Thursday 17 June 1999 Progress Review:  Progress Review Stock management Authorisation Returns handling & disposal Credit processing and reconciliation 7 Golden Rules The Rulebook:  The Rulebook (Workshop 2c) The Rulebook : The Proposal:  Format Readable CAP Volume X and Y Sales & Type Credit Time Credit Calculation RULE 1 RULE 2 RULE 3 RULE 4 RULE 5 RULE 6 RULE 7 Fail ? The Rulebook : The Proposal Adoption of ‘ 7 Golden Rules’ to support automation and simplification of Authorisation, Handling and Credit Processes The Rulebook : Benefits:  The Rulebook : Benefits The Rulebook is KEY to accessing the benefits associated with simplification and automation of the authorisation, physical handling and credit areas of the Returns Process The Rulebook : Basis of Agreement, Rule 1:  Recommendation Purpose To ensure that the returns request is legible, complete and readable. Ideally the request should be submitted to an industry standard. The return request will be the output from the authorisation process and thus will have completed its authorisation cycle. Options FORMAT READABILITY & STANDARDISATION Rule 1 The industry should develop/embrace an accessible/affordable set of solutions, particularly to include an Internet based facility underpinned by a standard Returns XML or EDI type message. Standardised paper based forms would serve as a fall back and means to manage transition. All returns must comply with the new standards I.e. they will not be processed if they are not submitted in the correct format. The Rulebook : Basis of Agreement, Rule 1 The Rulebook : Basis of Agreement, Rule 2:  Recommendation Purpose To ensure that where a sale is made and taken on a “firm basis” that no future returns will be made of the Product or products which constituted the sale. Options Contract required Tagging/marking of transaction (and product?) SALES TYPE VALIDITY Rule 2 Firm sale obligations must be observed by all players The process will link to “Returns Capping” recommendations Cap manipulation offers an alternative to tagging or marking The Rulebook : Basis of Agreement, Rule 2 The Rulebook : Basis of Agreement, Rule 3:  Recommendation Purpose Radically simplify the parameters governing the return of product. In so doing, the industry will standardise on one set of simple and easily administered business criteria. The basis of the rule is that no product can be returned until “X weeks after date of despatch or after Y weeks from date of despatch”. The X and Y parameters will be set to ensure that product remains in the supply chain for an acceptable minimum period whilst providing a mechanism for the management of obsolescence. Options X & Y parameters may be different for different genre of books (e.g. trade, academic, dated). “X & Y” Rule 3 That a single range, applicable to all product should be adopted: where X = 3 months measured from Publication Date, Y = 15 months measured from Despatch Date The Rulebook : Basis of Agreement, Rule 3 The Rulebook : Basis of Agreement, Rule 4:  Recommendation Purpose Agreement that no product will be returned to a source in greater volume than supplied from that source Options If the rule is breached then the expense is deducted from future credits VOLUME Rule 4 Authorisation will not allow rule to be breached That this should be applied at CHAIN level The Rulebook : Basis of Agreement, Rule 4 The Rulebook : Basis of Agreement, Rule 5:  Recommendation Purpose Ensures that product returns do not exceed agreed returns cap in operation between the supplier and customer Options Is the cap based on value, quantity, MAT? (Simplicity should be a driver) Is a time period to be defined? Default cap set at 100% at industry level? This would help concept introduction Could work in tandem with a recall process CAP Rule 5 Capping should be embraced as an industry tool Firm sales should be managed via this mechanism Default should start at 100% Basis for CAPS is open to negotiation between individual players - this rule ensures cap is adhered to where it is being used The Rulebook : Basis of Agreement, Rule 5 The Rulebook : Basis of Agreement, Rule 6:  CREDIT CALCULATION Rule 6 Options MDL-type ‘cascade’ through most recent transactions - seen as complex, however optimum since gives actual cost value Highest discount achieved by that customer for that product - simplistic but favours publishers/distribution Average discount achieved by that customer for that product - complex and voluminous - fairest on average Latest discount achieved by that customer for that product - simplistic but favours the retailer Lowest discount achieved by that customer for that product - simplistic but materialistic favours the retailer and is open to abuse Crude average discount (highest + lowest) achieved for that product - simplistic with floating benefit Previous years discount achieved at business level - simplistic and could be most inaccurate with floating benefit 2 Recommendation Need to understand financial implications of each method for calculating discount Retailers will apply tolerance levels at their discretion to eliminate uneconomical credit queries The Industry recognise the value of the ‘MDL-type’ system when and has set this as the optimal end-state The Rulebook : Basis of Agreement, Rule 6 The Rulebook : Basis of Agreement, Rule 7:  Recommendation Purpose Agree a standard industry duration for account crediting of the Returns transaction in days from receipt of the request Options Rule7 N/A Providing that Retailers make the physical return promptly after authorisation and Distributors process credits within 7 days of receipt, the agreement is:- Overstocks credits will be taken according to the standard payment terms Non-compliance credits will be deducted from the relevant invoice value and the balance settled in accordance with usual invoice terms The Rulebook : Basis of Agreement, Rule 7 The Rulebook : Next Steps:  The Rulebook : Next Steps Agree standard format of returns messages (Rule 1) Model X & Y parameters with historical data to assess impact (Rule 3) Model the credit implications of Credit Value Calculation options (Rule 6) to determine which method is the most equitable Embed rules, where appropriate, in term of trade agreements Returns Authorisation - Summary of Proposal :  Returns Authorisation - Summary of Proposal distributor undertakes pre-authorisation electronic communication between retailer and distributor identification to enable traceability and auditability throughout process key objective is maximum automation and minimum human intervention industry rule book with parameters allows automation of process system must be capable of delivering the 7 ‘golden rules’ authorisation includes value as well as quantity and invoice numbers authorisation time expires retailer confirms back actual quantity at point of despatch Slide16:  frees up reps time and improves their relationship with retailers - ‘account managers’ ensures returns go back to correct seller ensures auditability reduces costs removes ‘blackmail’ between buyer and seller ensures authorisation before any carriage cost creates level playing field - ‘easy returners’ not penalised standardisation means retailers etc. need only remember one set of rules allows instructions as to subsequent action to be returned as part of authorisation shorter cycle times reduces discrepancies greater visibility of authorisation requests within supply chain ability to increase backlist into the retailer Returns Authorisation - benefits identified Slide17:  Broad support, but need to address concerns and dependencies Consensus on principles Enthusiasm and support Principles and objectives agreed with consensus on building on both existing and hybrid technologies Returns Authorisation - basis of agreement Returns Authorisation - Next Steps:  Returns Authorisation - Next Steps take MDL model and expand to pilot with additional participants and disseminate evidence pilots for VAN Internet Telereturns training of both representatives and retailers create rule book agree standard message content understand technology requirements investigate integration with BATCH consider role of RFIDs Improved Returns Handling (Workshops 1b/2b) - Summary of Proposal:  Improved Returns Handling (Workshops 1b/2b) - Summary of Proposal Introduce efficiencies in physical handling of stock via: Consolidation of returns to distributors Identifying “re-usable” (“good”) and “destroyable” (“bad”) returns at retailers Additional consolidation of returns via fewer distributors Alternatives to destruction by Distributor Retailers to treat “to-be-destroyed” stock differently Stock to be destroyed by a “trusted third party” Improved Returns Handling - Benefits Identified:  Improved Returns Handling - Benefits Identified Quicker returns and greater focus on sell-through Consolidation by distributor gives: productivity improvements for retailers freight savings quicker credit reconciliation “Good” split from “Bad” stock gives: faster recovery of “good” stock efficiencies in dealing with stock destined for destruction Centralised destruction gives: consolidated freight savings alternatives to landfill/environmental benefit for publishers; use central facility to dispose of overstocks Improved Returns Handling - Basis of Agreement:  Improved Returns Handling - Basis of Agreement Consolidation by distributor - no issues Split into “good” and “bad” is feasible, but needs pilot and development to demonstrate benefits Fewer returns destinations is desirable but considered to be a longer term objective Retailers can and should treat “to-be-destroyed” stock differently Centralised destruction by a secure third party should be evaluated seriously Improved Returns Handling - Next Steps:  Improved Returns Handling - Next Steps Pilot of splitting stock at retailers to be assessed by large publisher with specific retailers (interest shown by HarperCollins/Ottakars/Waterstones) A trial of “Red Box” (separated stock destined for disposal) return to distributor to be arranged Set up working party to evaluate and prepare business case for central disposal. Working party (could include Penguin/ITPS/TBS/Securicor/BIC/ Audit experts) to consider: Freight/handling Opportunities for recycling/Environmental impact Security/Admin & Auditing processes Where the benefits accrue (Current costs vs future) Credit Processing:  Credit Processing (Workshop 3b) Credit Processing : The Proposal:  Credit Processing : The Proposal Credit value per unit is notified with the Authorisation Retailer confirms back actual quantity at point of despatch The authorisation process will allow a common reference (probably the Returns Authorisation Reference) to be used across Returns Authorisation, Credit Claim and Credit Note Credit values will reached by a common calculation across the industry (Rule 6 from the ‘rulebook’) Credit periods will be measured from receipt by the distributor or TTP and will reflect the payment terms for invoices for overstocks - Non-compliance credits will be immediate (Rule 7 from the ‘rulebook’) Debit notes will only be raised where credit is not received within the agreed time frames at retailer’s discretion This system will allow credit adjustment for “non-usable” returns (where allowance of this is included in trading terms) Credit Processing : The benefits:  Credit Processing : The benefits Reduced time to reconcile Reduced working capital in outstanding claims/credits Reduce occurrence of sporadic write-offs Reduce resource consumed in reconciliation activity Reduce (eliminate?) need for quoting invoice numbers on returns of overstocks Credit Processing : Basis of Agreement:  Credit Processing : Basis of Agreement Credit Timing In accordance with the rulebook Credit Calculation, In accordance with the rulebook Credit Note may only be raised in response to a credit claim, i.e. if there is an invoice query, the whole invoice should be paid in full and claim issued for discrepancy amount Retailers will quote the returns authorisation reference in claims Distributors to raise credit notes promptly (within 7 days) Credit Processing : Next Steps:  Credit Processing : Next Steps Model the credit implications of Rule 6 - Credit Value Calculation to determine which method is the most equitable Information Sharing (Workshop 3c) - Summary of Proposal:  Information Sharing (Workshop 3c) - Summary of Proposal Free sharing of sales & stock information vertically within the supply chain Publishers to have visibility of their product stocks and sell-through at wholesalers and retailers Wholesalers and retailers to have visibility of publishers’ stocks Information Sharing - Benefits Identified:  Information Sharing - Benefits Identified Helps to build trust and honesty, and enable a “Partnership for Sales” Key component of Red Box audit process Provides data and the right signals for supporting re-ordering and re-print decisions Provides data to support decisions on stock management to avoid returns, particularly mark-downs and transfers Provides data to enable Reps to be true account managers, and for retailers to manage core stock effectively Information Sharing - conclusions :  Information Sharing - conclusions Basis of Agreement Vertical stock and sales information to be made freely available Information sharing can use various systems including Booktrack and bi-lateral sharing Next Steps Pilot study to identify mechanics and benefits of the sharing of stock information at branch level Get agreement by all to proposal of free vertical sharing Encourage Booktrack to prioritise development of stock system Define how processes and roles may change as a result Where to from here ?:  Where to from here ? Steering committee 30 JUNE to finalise recommendations for change Sell-in to BA/PA for industry-wide adoption of principles for change (July/August) Pilot critical elements of proposed changes processes/modelling (Autumn ‘99) Steering committee to finalise proposals for implementation industry-wide (early 2000) What do we want from you ?:  What do we want from you ? Ongoing support Sell-in to own companies Industry-wide advocacy TALK IT UP !

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