Thursday, December 1, 2011

IRI: was it worth it?

BIC spent the better part of a decade working out the detail of the Industry Returns Initiative proposed by KPMG in the late 90s; and with OUP adopting it a month or so ago it has now probably gone about as far as it is going towards a universal UK standard. Although implementation was much slower than anyone envisaged at the outset, it has been a real success story for our industry: the first and only place anywhere in the world where the returns problem has been rationalised and controlled.

It is ironic that the point when the vast majority of books were sold within the IRI terms coincided with a decline in book sales and the possibility that through digital substitution returns will in due course be a thing of the past; but even so I doubt if any of the organisations which have invested in IRI has any regrets about doing so. It has become part of the supply chain fabric and a recognised contributor to lowered distribution costs.

I also doubt whether any of the participants has ever done the sums to establish how great those savings have been. In a perfect world, analysis of before and after costs would have been carried out; and the numbers made widely available. Unfortunately supply chain investment doesn't work like that.

Major investments lurk in IT budgets and sometimes they come out at the top. Sometimes, as with IRI, there is some peer pressure (or retailer pressure) to accelerate the process. The mix of carrot and stick has to be just right to get things done.

There are two good current examples of how this works (or doesn't work). Digital sales reporting in its present chaotic form is costing the industry a fortune, but sadly no one is working out how big that fortune is. If they did, they might realise that with the standard tools ready and waiting there was a big saving to be made. Unfortunately this is a case where there is little or no retailer pressure (yet).

Migration to ONIX 3.0, which the UK ONIX Group has been considering this week, is another. Specifically built to enable the description of digital products and at the impatient request of the digital community, ONIX 3.0 remains largely unused: no justifiable return on the investment from publishers' perspective; no pressure from the digital resellers. Some publishers are resorting to a policy of ONIX 3.0 for digital while retaining ONIX 2.1 for books. So much for a single product information standard.

If the industry doesn't measure cost and benefit, it can never understand the rationale for investment. But if it had not been far-sighted enough in the past to invest in the future, as with IRI and a host of other projects, it would be simply incapable of managing the complexities of today's supply chain.

 

Posted by BIC

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