Ad Rem – Challenges and Opportunities for the Australian Book Industry

Creator-To-Consumer (C-2-C) Workshop

October 3rd, 2001

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Ad Rem

• Ad Rem was an EPICS funded project which achieved its objectives and outcomes through participation of more than 50 organisations in the Australian book industry

• The Ad Rem value chain analysis painted a quantitative picture of the Australian book industry and identified improvement opportunities estimated to be worth $155 million annually

• The Ad Rem participants and team developed four divergent and plausible scenarios for the Australian book industry and a range of possible strategies

• A final report and an industry forum will mark the end of the Ad Rem project and pass the ‘baton’ on to the industry

3©Accenture 2001 All Rights Reserved

Ad Rem – Objectives and Outcomes

Ad Rem was an EPICS funded project which achieved its objectives and outcomes through participation of more than 50 organisations in the Australian book industry

• To identify and evaluate the challenges and opportunities

• Provide insights as to how the industry and individual firms may achieve a sustainable strategic position in the future

Objectives:

• Short/medium term focus:Improvement opportunities worth $155m

• Long term focus:Industry scenarios and supporting strategies

Outcomes:

Participation:• 50 companies

• 120 executives

Funding:• Main funding under the EPICS scheme by

the Federal Government through its Department of Industry, Science and Resources

• ‘In kind’ contributions from McPherson’s Printing Group, Accenture and other participating organisations

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Value Chain Analysis – The Chain

The Ad Rem value chain analysis painted a quantitative picture of the Australian book industry

Bookseller Publisher Printer AustralianRoyalties

4%

O/S Printing

Local PrintingRoyalties 0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1994 1996 1998 2000

11.1%

8.9%

7.4% 7.6%

- Value Chain - ($10 book retail value, 2000)

- Industry Profitability - (1994 - 2000)

Profitmargin =

3.1%

100%

Profitmargin =

7.9%

62%

Profitmargin =

1.3%

12%

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Value Chain Analysis – Opportunity Areas

The Ad Rem project estimated that greater collaboration and consolidation in the book industry offer opportunities worth approximately $155 million annually

Currentcost level(p.a.)

$101m

$825m

$39m

$116m

$83m

Improvementpotential(p.a.)

$47m (47%)

$39m (5%)

$9m (23%)

$50m (43%)

$10m (12%)

Key levers

Collaborative demand planning

Collaborative inventory planning

Book range management

Consolidation of volume

Aggregation at (near) industry level

Area

Returns

Inventory

Write-offs

Distribution

Paper sourcing

$155m

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Scenario Planning – Scenario Map

Nature of Demand

Nat

ure

of

Su

pp

ly

Increasing demand for reading material, available in mixed formats, with more niche content, available from multiple purchasing channels

Reduced demand for reading material, mainly in

paper-based format, containing content with mass appeal, available

mainly via shops

Some companies, diversified along the book industry value chain, emerge in a transaction

based marketplace

Existing businesses remain specialised and collaborate to maximise industry performanceShoulder to

Shoulder

Land of the Giants

Paradise Found

Dog Eat Dog

The Ad Rem participants and team developed four divergent and plausible scenarios for the Australian book industry and a range of possible strategies

7©Accenture 2001 All Rights Reserved

A final report and an industry forum will mark the end of the Ad Rem project and pass the ‘baton’ on to the industry

• Synthesises of highlights from the Scenario Planning and Value Chain Analysis deliverables

• Contains additional information about industry issues, including views based on interviews with CAL, authors, and others

• Time frame: mid October, 2001

Final Report:

• Accenture will host an industry wide forum to disseminate findings from Ad Rem and pass the ‘baton’ on to the industry

• Time frame: mid November, 2001

Industry Forum:

For more information about Ad Rem and access to thedetailed deliverables, please refer to the project web-site:

www.adrem-online.net

Next Steps