Harry Potter launch- Logistics and Supply Chain July 23, 2007Posted by Ramnath Rangaswamy in Logistics, Supply Chain.
I am not a Harry Potter fan. I have not read any of his books. I did not stand in the queue on Saturday, 21st July morning.
However as a supply chain professional, I cannot but marvel at the manner in which the the Harry Potter launch [Harry Potter and the Deathly Hallows} was managed from a logistics and supply chain standpoint.
The publishers had done some smart things to ensure the success of the launch. They had asked consumers to pre-book. Thus the demand estimate was fairly accurate and adequate copies of the book could be supplied. Stockouts were minimized.
The retailers were pre-aligned on the launch. They were involved early on in the planning of the launch. Thus they planned for extra counters and called the staff early to sticker the book.
Remarkably, the confidentiality was maintained [though I was told that an e-version of the book was available earlier]. Retailers signed an confidentiality agreement and stuck to it.
What can other marketers learn from this.
1.Accurate demand estimation: Not all products can be pre-booked. But the principle is to get a bottom up estimate from retailers, sales-persons, distributors. The estimate can be given after a preview of the product is shared with the retailers, sales-persons, distributors.
Usually, the bottom up demand estimate is under-called. This is because of the perception that the demand estimate is a commitment and it is better to under-call the demand estimate and then over-deliver.
Sometimes the demand is over-called. This is with a view to ‘hoard’ stocks when stocks are expected to be limited.
One way to overcome this by getting a demand estimate from the sales-persons, distributors . Success of a sales-persons, distributors would be defined as coming between +-20%[ it can be any reasonable tolerance]of the demand estimate. Sales-persons or distributors whose actual sales is within this tolerance would be rewarded.
It is important to have adequate stocks at launch, because advertising, media are all coordinated to be at maximum weights at launch. A consumer who has seen the advertisement on TV, but does not find the product at the store is going to be very upset. And chances are high that she may not come back for the product.
At the same time it is a disaster to have excess stocks at launch. I have seen product launches bombing and have lost count of the number of times I have had to destroy products because we over-estimated demand and were saddled with remnant inventory.
2. Pre-align the distributors and retailers: It is a good practice to get inputs from distributors and a few select retailers ahead of the launch. You get their buy-in to the launch and also get some valuable inputs. The distributors could be given distribution targets to be achieved. Display space can be pre-booked. The FMCG companies usually do this very well.
Product Launch Management is usually a weak area in most companies.
Delays in the launch, out-of-stock, excess inventory, POSM [ Point of Sale Material like posters, danglers, buntings] not reaching are common.
Product Launch Management is a multi-functional effort. It requires coordination between Sales, Marketing, R&D, Supply Chain, Finance, PR and Legal departments.
There are multi-functional Product Launch Management processes that many companies use. The Product Launch Management processes ensure that product launches are effective and efficient, thus giving the brand or product a successful blast-off.