Shipping Slows At Random
Steven M. Zeitchik, with reporting by Kevin Howell -- 2/7/00
Installation of SAP, bad weather, bestsellers and new policies blamed for delivery delays
The installation of SAP software at Random House's huge Westminster, Md., warehouse at the beginning of January appears to be one of the causes of major delays recently in the fulfillment and shipping of Random titles, in addition to bad weather on the Eastern seaboard, a scheduled warehouse shutdown at the end of December and generally increased demand.
According to figures obtained by PW, the Westminster distribution center had a backlog of one million units as of January 6. Of those books, nearly half were shipped, leaving the balance unfilled. As orders continued to come in, the backlog grew, and by January 10, even workers on Saturday shifts couldn't stem the tide of a 2.1 million-unit backlog. Over the next two weeks, orders picked up, and a snowstorm didn't help. At one point in mid-January, the backlog has swelled to nearly 2.3 million, though insiders say that number is dropping and that about 80% of January orders had been shipped by the end of the month.
When SAP, a German software system, works, it's supposed to be beautiful: it integrates software systems within a company; in this case that includes ordering, warehouse, marketing and editorial systems. However, many American companies have had notorious, well-documented difficulties installing the system. Bertelsmann endured many problems when it installed the system three years ago in its BDD warehouse in Des Plaines, Ill. Despite the startling numbers, sources say that when the process is complete, the upheaval from the SAP implementation is likely to be less dramatic than the BDD debacle, when orders were either going to the wrong stores or not shipping at all.
Random House executives maintained that demand for big titles, such as movie tie-ins, and weather conditions also contributed to the delays. In addition, recent policy changes offering a 46% discount and free freight may have led to more direct orders in recent weeks. And they point to the "physical inventory" taken in the week between Christmas and New Year's that forced a 10-day shutdown. Random selected that time because of anticipated low consumer demand, even though store restocking tends to happen shortly after, at the beginning of January.
"Some of the delays booksellers are experiencing are new systems-related. But there are other factors as well," said Random House spokesman Stuart Applebaum. "Inevitably, there will be some short-term fulfillment delays in exchange for long-term fulfillment efficiency," he said, adding, "one month into our startup, given the complexity of this conversion, our implementation has been right on, if not ahead of schedule."
Delays have not affected BDD's Des Plaines warehouse, scheduled to close this coming summer. (At this point, booksellers are being asked to continue returning BDD books to that DC.)
An early look at bookstores bears out reports of delays in Westminster. "We used to be able to count on them delivering titles in four or five days; now it's 10 days or longer," said Ed Morrow, co-owner of Northshire Bookstore in Manchester Center, Vt. "We're ordering more from wholesalers because they're having such problems." Calling SAP "a marvelous system," Morrow said he would shift back to direct ordering when the problems were ironed out, but noted that he thought "the learning curve is steep."
At Unabridged Books, Chicago, Ill., owner Edward Devereaux said he had placed an order in the first full week of January that took three weeks to ship. A more recent order took only about two weeks to ship. "We've been out of Random House books through most of January, and I mean big Random House books," he said. "Usually customer service is so good about that, but I haven't heard from them in several days." He added: "You know how you have your favorite and least favorite publishers? Well, Random House has gone from the top to the bottom very quickly."
So which titles d s all this affect most? Company insiders say new and hot titles are less likely to bear the brunt than midlist and backlist ones. Orders for these titles could take up to two weeks to arrive, they say. According to Applebaum, arrival times dropped to 8-11 days last week, and he estimated that they could drop to 6-8 days this week.
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