addition by addition web

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© 2006 P3L, LLC

A discussion of opportunities to add subscriber, advertiser, and

bottom‐line value to an optimized circulation distribution system.

N E W S P A P E R S U P P L Y C H A I N S

A D D I T I O N . . . B Y A D D I T I O N

863-604-6123

[email protected]

www.p3logistics.com

7707 Nature Trail

Lakeland, FL 33809

P 3 L , L L C

P o s t P r e s sP a c k a g i n g &

L o g i s t i c s



© 2006 P3L, LLC 2

Improving profitability for newspapers has meant a greatdeal of subtraction in recent memory. Whether it’s the sizeof the actual paper, or the staff available to produce it, ad-dition by subtraction has become the rule. The goal of thisdocument is to serve as a catalyst for discussion of hownewspapers can leverage their leaner, better defined, opera-tions and assets to bring more natural growth and profit . . .

ADDITION . . . BY ADDITION !

• THE MATURE NEWSPAPER SUPPLY CHAIN

• DEFINITION

• RESOURCES AVAILABLE

• RESOURCE UTILIZATION OPPORTUNITIES

• VEHICLES ONLY

• BULK DISTRIBUTION OPERATION • ENTIRE DISTRIBUTION OPERATION

• PULLING IT TOGETHER

• DECISIONS & DIRECTION

• MANAGEMENT

•

A D D I T I O N B Y A D D I T I O N —A G E N D A



© 2006 P3L, LLC 3

The mature newspaper supply chain is

defined by the following:

• It meets the service goals of the circulation department.•

It is able to report on its activities.• Through time, it has demonstrated the ability to identify, quan-

tify, and eliminate barriers to efficient operation.• All cost and service trade-offs within the system have been

quantified, allowing for informed management decisions toguide their disposition.

• All drivers and equipment operate within safety regulations, in-cluding vehicle weight capacity and hours-of-service regula-tions.

• A balance between pay-scale, working conditions, and turnover

has been achieved.

A D D I T I O N B Y A D D I T I O NT H E M A T U R E N E W S P A P E R S U P P L YC H A I N — D E F I N I T I O N



© 2006 P3L, LLC 4

In order to

ensure they

get the steak,

newspapers

buy the entire cow.

• The optimum balance of service, control, and cost has histori-cally only been available by owning the distribution channel.

• Both private operations and dedicated third-party operationsrepresent total channel ownership.

• Even at optimum, the nature of newspaper distribution ensuresan underutilized distribution system.

N E W S P A P E R S U P P L Y C H A I N S —R E S O U R C E S A V A I L A B L E

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Typical Newspaper Operations Timing Typical Commercial Operations Timing

6am-6pm

6pm-6am

Combined Weekday

Operations

Total Operations Value Building



© 2006 P3L, LLC 5

Core Newspaper Operations

Newspapers buy the cow for this

prime cut of meat. Time sensitive,

highly controlled, seven-day delivery

requires the best. But, what is left

over?

1. Commercial Vehicles—Fully paid for and mostly unused during primecommercial hours.

2. Transportation Management—Ready for the emergencies 24/7. Under-utilized during daylight hours.

3. Full-Time Drivers—Hard to get and keep. A larger workforce adds toflexibility, efficiency, and control. If you’re not full-time, are you legal?

4. Part-Time Loaders—Premium pay due to short and inconvenient shifts.Can we add work while lowering cost per unit to meet marketplace needfor weekly pay?

5. Dock Facilities—Fully paid for and mostly unused during prime commer-cial hours.

6. Distribution Centers—Fully paid for and mostly unused during primecommercial hours.

7. Field Circulation Management—Essentially downstream transportation/ delivery managers. Can they be better utilized, or differently focused?

8. Carriers—Underutilized, underpaid, disappearing. Can we leverage theonly seven-day-capable, door-to-door, delivery service in the marketplaceto our advantage?

N E W S P A P E R S U P P L Y C H A I N —R E S O U R C E S A V A I L A B L E [ C O N T . ]

2 3

81

4

67

5



© 2006 P3L, LLC 6

COMMERCIAL VEHICLES—

The highest valued depreciating asset and most visible portion of thenewspaper delivery network—thebulk distribution fleet. Paid for infull.

Whatever form your bulk distribution fleet takes, the chances are that morethan half (usually much more) sits idle during normal business hours.

As with any opportunity, the amount of potential gain is related to the valuedriven and associated risk. Using the vehicle only is a low-risk, first-step intomaximizing return on the asset laden newspaper distribution system.

VEHICLE ONLY UTILIZATION OPPORTUNITIES

• Advertising—are you using this space, or can it be sold to others?

• Vehicle Rental—Rent your idle fleet for use by local businesses or adver-tisers. (at a below market rate of $50/day, each vehicle can generate $12,500/year in

extremely low risk revenue)

• Vehicle Sharing—Can your idle fleet meet flexible needs for a local busi-ness, while that business’s core fleet serves your weekend needs?

R E S O U R C E U T I L I Z A T I O NO P P O R T U N I T I E S —C O M M E R C I A L V E H I C L E S O N L Y



© 2006 P3L, LLC 7

PEOPLE, PROCESS, TOOLS, & OVER-

HEAD—Whether or not you’ve outsourcedyour distribution, you’re paying for the bestpeople, the most valuable appreciating assetin your supply chain.

You pay for the systems, the reports, the office space,the buildings, utilities, and supplies necessary to run the most time sensitiveseven-day delivery system in your marketplace . . . Just for you!

This asset backed expertise is unrivaled in your marketplace. Why not lever-age this investment with your advertisers, subscribers, and the business mar-ketplace in general?

Because virtually no additional investment is required, the profitpotential of such an endeavor is high, especially in the long-term, while loss risk is low.

In general, a third-party logistics provider would expect to generate about$100,000 in annual ‘dry’ (sans fuel) revenue from each fully managed anddriven vehicle as a part of a larger fleet.

A great deal of these operations functionfrom 6:00am to 6:00pm, Monday throughFriday.

Providers would expect to make about$10,000 in annual profit from such anengagement. Their cost includes payingfor the truck, the manager, the insurance,and a great deal more overhead than is

already in your budget. Your only incremental cost may be the fuel.

R E S O U R C E U T I L I Z A T I O NO P P O R T U N I T I E S —B U L K D I S T R I B U T I O N O P E R A T I O N



© 2006 P3L, LLC 8

While the first step to making better use of a newspaperdistribution system is to fully utilize the capabilities of the big trucks, this is only the tip of the iceberg.

In the same ratio as a newspaper’s carrier expense to itsbulk distribution cost, the revenue and profit potential of creating a cohesive door-to-door, seven day delivery ser-vice from the foundation of

newspaper delivery

is enormous.

Without question,this type of change canadd to the infra-structure needs of the distribution system,thereby adding cost.

The key is organic growth drivenby bulk distribution partnerships, and market-

place demand.

On an “as-developed” basis, depending on marketplace, neighborhood, andvolume, this challenge can be addressed on a route-by-route basis. Someroutes may remain on a newspaper-only contractor basis, while some maywarrant the investment into a full-time delivery force that can net better con-trol and lower cost.

The barriers are larger, but the principles don’t change. A robust delivery net-work, equipped, prepared, and challenged to grow itself as its own product,with the newspaper as its base, needs little investment to position itself to pro-

duce profitable revenue.

R E S O U R C E U T I L I Z A T I O NO P P O R T U N I T I E S —E N T I R E D I S T R I B U T I O N O P E R A T I O N

From plant to

DC to Carrier to

Reader



© 2006 P3L, LLC 9

A D D I T I O N B Y A D D I T I O N —P U L L I N G I T T O G E T H E R

D E C I S I O N S & D I R E C T I O N

Lead or Follow?

Follow—Complete divestiture of

entire Transportation

System

Follow—Potential Providers

• US Postal Service

• Express Delivery

Companies

(i.e. FedEx, UPS, DHL, etc)

Lead—Total Operations Ownership

(as current) augmented

with complementary

partnerships to maxi-

mize asset utilization Lead—External Potential

• Furniture

• Appliances

• Electronics

• Home Improvement

• Heavy Industry

Lead—Internal Potential

• Local Business

Delivery

• Subscriber Benefit

• Advertiser Partnership

Lead—Staffing

• Augment CurrentDriver Hours Only

• Two Circulation Driver Shifts • Outside Work—Inserts—Depart

• Mains—Outside Work—Depart

• Two Driver Shifts

• Circulation Exclusive “as-is”

• Outside Work Exclusive

Marketplace Options

• Risk versus Reward

• Does the market meet our preferences?

• Reassess value of opportunities versus

preferences?

Since this process will vary by newspaper operation, marketplace potential, staff-

ing potential, and newspaper management preferences, the process will repeat asmarketplace opportunities are matched with operational potential and manage-

ment preferences.

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