Monday, September 2, 2019

How to Handle Publisher Out of Stocks

However, before I get into that, I want to call your attention to an interesting column I ran across demonstrating the importance of names to a successful product, in this case Campbell’s Chicken Noodle Soup. Introduced in 1934 the soup, then called Noodle with Chicken Soup,  sold comparatively poorly. However, in 1938, Campbell’s started sponsoring the Amos and Andy Show. During that era, and well up until the 1960s, actors in a show would often speak in character extolling the sponsor’s products (Check out this Winston cigarette commercial featuring Fred Flintstone and Barney Rubble shilling for the cigarette, which sponsored the show during its first season.) During a show in 1938, actor Freeman Gosden’s script called for him to speak highly of Campbell’s Noodle with Chicken soup. However, he flubbed the line, calling it “Chicken Noodle Soup”. In the middle of the Great Depression, millions of customers thought the idea of a can of Chicken Noodle Soup sounded pretty good and started besieging grocers looking for the product. For a few weeks, Campbell’s tried explaining that the soup did not exist but eventually gave in to demand, printed new labels and renamed the product which sold like wildfire and still does today. Chicken Noodle remains Campbell’s best selling soup, with over a half million cans sold per day last month.

Anyhow, back to reshoring and flooring. Reshoring is simply the concept of moving production that a company offshored due to cheaper production costs, back home. The trade off between offshoring and producing products overseas and in the publisher’s home country is that of lower production costs versus the loss of sales due to the extended supply chain. Overseas production runs save costs in terms of lower materials costs, lower labor costs and greater flexibility but add costs in terms of additional shipping costs, wait time and managerial and oversight costs. A survey of manufacturers in 2015 found that 17% had already reshored production to the US while another 37% had plans in the works to do so. A number of US game publishers, including Kobold Press, Troll Lord Games, Looney Labs and Catan Studios, have never off shored production, finding that the speed with which they can print and restock product outweighs the cost savings of offshoring.

Flooring is the concept of a publisher or manufacturer which uses a distributor storing additional product on site at the distributor but retaining ownership of the product. When the distributor gets low on product, it simply moves product from the publisher’s stock to the distributor’s , taking ownership and paying the publisher. This allows the publisher to make more product than it could easily warehouse and drastically reduces out of stocks. Steve Jackson Games had a successful flooring arrangement with Alliance for several years and, when Chessex Manufacturing was located in the same building with Alliance Fort Wayne, a out of stock on dice could be rectified with a walk next door.

Adopting either of these practices, or some others, would certainly help in reducing out of stocks, especially during the crucial 4th quarter.

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