I went to a conference a few years back presented by Mike Bates, the creator or the Wombles and producer of Katie Melua. During question time he was describing his frustration with working with record companies in trying to co-ordinate between different departments within the one organisation. (The joke was EMI stands for Every Mistake Imaginable). This was in the days of moving physical stock of L.P.s and C.D’s.
He would be spend years developing an act, only to sign them over to a record label, then stand back and watch while they mis-handled every stage of the process. They would conduct a promotion campaign when there was no stock available in store, bands would be on tour with no press interviews organised or releases shelved as an established act would demand all that departments’ resources. As this is a fast moving fashion industry with tight deadlines, if efforts aren’t perfectly co-ordinated, then that could make or break an act. Eventually he gave up working with the majors to start his own label, signed Katie Melua and ran the campaign internally as he thought he could do a better job. With careful planning, and targeted exposure she has become a major star across the world. By taking control of both the creative and logistic sides of his business he could determine when and how to present his act to the public.
The art of logistics can be defined as “getting right quantity of goods, to the right customers, in the right place, at the right time”. The timing of marketing campaigns and the physical delivery of getting stock to market is crucial for maximising any potential sale. Purchasing too much stock can tie up capital and add to wastage. An accounting rule of thumb is that it costs 25% more to hold on to old stock. On the other side of the equation, running out of goods not only loses potential sales but jeopardises relationships with suppliers. A recent survey suggested that when a product was out of stock, 32% of purchasing managers went to a different supplier. This also affects service industries. I was dealing with an organisation that had one person with specialist skills who was about to go on leave. When I asked who would replace him for the job next week, I got blank stares as no one had thought about it. Organising human resources is just as important as physical stock.
According to the Product life cycle most items have a limited time window to capitalise on its popularity and if that opportunity is missed, then this can severely effect a company’s profitability. For some industries, such as media and fashion, these opportunities have extremely tight timelines and co-ordination between publicity and the supply chain is critical to the success or failure of the venture. The term marketing implies that goods need to get to market in order to be sold.
Next in the series we shall look at the development of “Just in Time” delivery
Malcolm Ford has had 25 years business experience and has been involved conducting marketing campaigns for companies both in the UK and in Australia. He currently resells and implements Enterprise software systems.
