Textbook Order Consolidation
A Concept Whose Time Has Come

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.

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.

Ron Duvall, BMC’s president, provided the following recap of the effort to bring a state-of-the-art textbook ordering system to UOG.

"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."

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.

Alternative Approach

"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.

"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."

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."

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.

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.

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.

Among the additional benefits accruing to the store that Duvall cited were:

• Reduced paper processing for both the bookstore and the business offices for invoices and credit memos.
• Smaller excess inventories, since textbook return complications are greatly reduced because the books are going back to one source.
• 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.

Wholesaler’s Experience

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."

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.

"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.

"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.

"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."

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.

"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."

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.

Next Steps?

"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."

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."

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.

"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.

"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.

"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.

"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."

"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.