1. _______________________________________________________ Book Industry Communication The UK Industry Returns Initiative Brian Green BISAC SCEDI, 10 March 2006

2. _______________________________________________________ Book Industry Communication The scale of the problem Returns approx 14% by value in UK Around 40 million books £100 million per year

3. _______________________________________________________ Book Industry Communication How it started 1997/98: KPMG supply chain report identifies returns as a major potential area for cost saving 1998/99: KPMG commissioned to carry out Tackling returns project Consensus reached on a new process

4. _______________________________________________________ Book Industry Communication KPMGs conclusion …the issues are complex, and few solutions are in the gift of any one company. It is an issue best addressed on an industry-wide, or systemic, level. KPMG

5. _______________________________________________________ Book Industry Communication Principles of the project Returns are a necessary evil if more books are to be sold Eliminate waste of time and money associated with returns Automate labour-intensive procedures Establish a standard returns policy for the industry

6. _______________________________________________________ Book Industry Communication Returns: as handled now Entirely manual process Authorised on individual publisher terms mainly by sales staff Returns as part of buying negotiation Delays in processing returns Books refurbished and returned to stock Pre-emptive debit notes

7. _______________________________________________________ Book Industry Communication Returns: the new way Open returns within industry-standard parameters Consolidation by distributor Automatic authorisation by distributors Pre-agreed credit value Simplified handling processes Standard commercial documents

8. _______________________________________________________ Book Industry Communication Timing parameters Books may not be returned until three months after publication Books may not be returned after fifteen months have elapsed since the last dispatch Quantity not to exceed volume bought in last 15 months

9. _______________________________________________________ Book Industry Communication Other parameters Unit volume: rejection of quantities in excess of lifetime sales Value capping: parameters apply if within existing capping agreements Firm sales: titles supplied on firm sale will be rejected for return

10. _______________________________________________________ Book Industry Communication Credit valuation and timing Quantity-weighted average cost price of all transactions over 12 month period leading up to latest invoice Credit aged back to date of return Same terms for returns credits as apply to invoices between trading partners

11. _______________________________________________________ Book Industry Communication How it works in practice Bookseller sends electronic request Distributors system automatically vets request and responds within hours Bookseller sends electronic confirmation of quantity and dispatches returns Distributor scans and credits

12. _______________________________________________________ Book Industry Communication How it works in practice Bookseller sends electronic request –RETANN message Distributors system automatically vets request and responds within hours –RETINS (for returns authorisation) Bookseller sends electronic confirmation of quantity and dispatches returns –RETINS (for returns adjustments)

13. _______________________________________________________ Book Industry Communication Added functionality Separate track for books required back for restocking and for those to be pulped (green and red boxes) Process can be used to claim credit on damaged books or imperfects … or report short deliveries

14. _______________________________________________________ Book Industry Communication Who benefits, and how?

15. _______________________________________________________ Book Industry Communication Benefits for booksellers Returns authorisation guaranteed subject to transparent parameters Just one returns policy for all books Quick response to returns requests Certainty about credit valuation Consolidation of returns by distributor Improved cash flow

16. _______________________________________________________ Book Industry Communication Benefits for distributors Automatic processing of returns requests: no rekeying Benefits of preauthorisation Single reference point for transactions Simplified handling Common returns policy for all clients

17. _______________________________________________________ Book Industry Communication How everyone benefits Time, effort and cost savings End to accounting disputes Better management information Better trading relationships More books sold

18. _______________________________________________________ Book Industry Communication Has it worked? Major distributors now live All major retailers in support The batch.co.uk initiative All parties report significant benefits

19. _______________________________________________________ Book Industry Communication The messages - EDIFACT RETANN (Request) –Can include overstocks and non-conformance RETINS(Authorisation) –Separate messages for green and red boxes RETINS (Confirmation/adjustment) –Back to supplier; one for each RETINS received Based on EDIFACT D.99A

20. _______________________________________________________ Book Industry Communication For further information go to www.bic.org or contact Peter Kilborn peter@bic.org.uk