Bookseller Gets ERP's Edge

Smaller companies increasingly rely on enterprise-resource-planning software to gain a competitive edge. Businesses with less than $30 million in revenue last year spent $1.1 billion on ERP licenses, up from $926 million in 2003, according to AMR Research.

The book business runs on data sharing, Consortium's Linn says.

Among recent adopters: Consortium Book Sales and Distribution Inc. turned to Microsoft's Navision ERP software and other technologies to improve business processes and spur its growth in an industry marked by razor-thin margins. Don Linn, a Wall Street investment banker turned entrepreneur, bought the company in February 2002 and, with ink on the contract barely dry, began planning to rip out two 17-year-old Unix-based Pick systems and invest $850,000 in a new IT infrastructure.

The Pick systems had handled 80% of Consortium's business operations, including accounting, finance, fulfillment, order processing, and inventory management. But they didn't work with other technologies such as spreadsheets, customer-relationship-management software, and Web applications, forcing manual re-entry of data and slowing down workflows.

Nor did the Pick systems have reporting capabilities to let Consortium share sales, stock, and return data with publishers and bookstores. The book business requires that huge amounts of data be shared among these three parties, CEO Linn says. For example, booksellers might return unsold books years after the sale, he says, and the distributor needs to have data to prove that books were originally shipped in good condition to counter a bookseller's demand for credit on a book returned damaged.

Since Consortium's IT infusion, productivity per employee doubled to more than $300,000 in the past two years. During the same period, the company's employee head count only rose from 43 to 48. Revenue estimates for fiscal 2005, ended June 30, exceed $25 million, up from $12 million in 2002.

Consortium hired systems integrator Integrated Knowledge Systems to assess business processes and rebuild an ERP platform that would let the distributor share data electronically with publishers and bookstores. Knowledge Systems used Telelogic/Popkin System Architect V10, an enterprise and modeling tool from Telelogic AB, to capture and process data, create models for the data warehouse, generate business and technology requirements, and guide deployment. In addition to using Navision, the company also uses Microsoft SQL Server database.

In the volume-driven book-distribution business, having access to detailed information improves a company's ability to distribute more titles and sign on larger publishers such as Methuen Publishing, Seven Stories Press, and Soho Press. "Without the new IT system, the transaction volume would have been impossible," Linn says. He estimates sales today for new titles at about 1,500 books annually, up from between 700 and 800 two years ago.

At Consortium, about 35 users access the system daily to make business decisions from accounting to purchasing to shipping. Publishers can access in near real time reports on orders in process, back orders, returns, and stock levels, an improvement over the printed reports that were sent monthly through snail mail. Data availability also makes it easier to plan business and marketing strategies. "We're pretty much out of the paper business for reports because we push most information to publishers electronically, or they can find it at our Web site," Linn says.

A fully automated distribution center is in the works, too. That will go live when Consortium relocates its 100,000-square-foot Saint Paul, Minn., warehouse to a larger facility within two years.