Joe Steffney and Rich Eby
January/February 2013, eSide Supply Management Vol. 6, No. 1
The success of the supply chain for this major learning-materials provider hinges on its ability to micromanage inventory and transportation.
A school administrator in Shanghai orders 500 English-language textbooks from Cengage Learning, a major U.S.-based purveyor of higher-education learning materials.
Moments later, at an 835,000-square-foot warehouse in Independence, Kentucky, Cengage Learning's operating system captures the order and feeds it to a multifunctional warehouse management solution. This system instructs Cengage warehouses in Melbourne, Australia and New Delhi, India to overnight 200 textbooks each — their entire current inventories of this specific item — to the customer. Likewise, it tells a distribution facility in Mexico City to procure the final 100 books from a local printing company, and then ship them to Shanghai, ASAP. Within an hour, warehouse workers around the globe are packing the requested items.
The customer receives 500 textbooks within 48 hours of placing the order.
Each day, this basic process is repeated hundreds of times, as Cengage Learning's supply chain ties our suppliers to customers in Asia, Europe, the Americas and Australia. From our main distribution center in Kentucky alone, Cengage ships 63 million parcels each year (while maintaining an on-site inventory of roughly 81 million books and other items). As our company has grown through sales and acquisition, it has implemented innovative technologies and processes that connect suppliers, workers, systems and customers in a global supply chain that is, we believe, a model for our industry.
The success of our supply chain hinges on our ability to micromanage inventory and transportation. At any given moment, we know the location and status of more than 100 million individual textbooks, whether they're being printed by our suppliers, placed on a shelf in one of nine warehouses around the world or en route to customers. A number of robust IT systems make this task possible. We employ Oracle's EnterpriseOne operating system across the company.
This solution works in tandem with a multifunctional warehouse management suite that has proven particularly useful in the learning materials industry. This multifunctional warehouse management suite offers a live view of inventory on hand, and allows customer service reps to direct orders to the regional warehouse closest to the customer to save time and shipping costs. It tells us which books have been sold, where they are in the warehouse, and how to pack them in boxes and ship them in the most cost-effective way. It then projects how many books we'll need to order to meet future demand. We feed this information to our suppliers in the Americas, Europe and Asia, who print and bind the items we sell. The warehouse management suite also offers a strong transportation module, which determines how to move items between suppliers, company warehouses and customers in the fastest, most cost-effective way.
Thanks to both these tools, we keep costly overstocks and misdirected orders to a bare minimum.
In the global economy, even the best supply chain systems and processes can't overcome obstacles often created by customs organizations. Governments rightly want to know if items being shipped across national borders present a security threat. In this regard, the United States' customs procedures have always been more streamlined than most. Yet, following the events of 9/11, everything got bogged down. Recognizing that new security procedures were negatively impacting American business, U.S. Customs and Border Protection created the Customs-Trade Partnership Against Terrorism (C-TPAT) program. Trade and customs communities participating in this initiative work together to create supply chains that are both efficient and secure.
C-TPAT is a strict system that impacts many aspects of the way we work. It dictates how our employees clock in each morning and how they do their jobs. Customs officials visit our facilities — and those of our suppliers — to determine if we're in compliance with current requirements. While this sounds onerous, it's worth the effort in the end. Because we're C-TPAT-compliant, the products we ship into and out of the U.S. face no delays, so there are no lost orders. Our customers don't have to wait for their textbooks, and we have the satisfaction of knowing we're contributing to America's anti-terror efforts. Joining C-TPAT is one of the best things we've ever done as an organization.
Our industry is constantly evolving. Printed educational materials are waning in popularity as educators around the world embrace new digital textbooks. Overseas piracy of intellectual property is growing.
Meanwhile, our company is on a growth trajectory. In 2007, we acquired Houghton Mifflin's College Division. In 2011, we acquired National Geographic Society's digital and print school publishing unit. To continue growing in such a fluid environment, we've specifically designed our supply chain to be flexible.
As technologies emerge and business strategies evolve, we feel confident we'll be able to adapt our current supply chain tools and processes to maintain high levels of customer satisfaction while keeping overhead costs low.
Joe Steffney is senior vice president, global distribution at Cengage Learning.
Rich Eby is vice president, distribution/engineering.
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