Operations
Conference ’97
Special Wrap-Up Report
President
And Chairman Welcome Attendees To Ops Conference ’97
EAS: The Time Is Now
Bar Codes Enter A New Dimension
Creating A Web Site Economically
WEA’s DVD Plant:
Seeing Is Believing
Operations
Committee Sets Standards For The Future
Industry Database Rolls On
President And Chairman Welcome Attendees To Ops
Conference ’97
1997-98 NARM Chairman Bob Schneider
Anderson Merchandisers |
NARM President Pamela Horovitz welcomed
over 80 attendees to Operations Conference ’97, which was held in the Marriott Hotel
at the Newark, New Jersey Airport on August 7 and 8.
She stressed the importance of the
accomplishments made by industry executives in the operations field, and promised that
NARM would strive to promote operations projects to increase awareness of, and
appreciation for, the operations community’s contributions to our business.
Horovitz turned the podium over to Bob
Schneider, Anderson Merchandisers, the first NARM Chairman ever to come from the
Operations Committee!
After a short recap on the current state of
the industry, Schneider cited statistics that reflect encouraging signs of recovery. After
our well-publicized tough times, there is some healthy sales activity on several new acts
and exciting titles on the horizon for both music and video. Schneider also spoke about
the impact of efforts to revitalize cassette sales and commented on the buzz surrounding
the introduction of DVD. Regarding the hype surrounding the Internet, he noted everyone in
the room was probably assured of a job for a while. Nevertheless, he admonished attendees
to stay focused on the challenges ahead.
Schneider then focused attention on one of
NARM’s biggest priorities—the implementation of source tagging—and
encouraged the audience to learn from what other industries are now doing so that an EAS
rollout might be accomplished by the first quarter of 1998. He also reviewed the status of
the industry database, which has been posted on NARM On-line each week for the past two
years by the six branch distribution companies, and introduced the Association’s new
MIS Manager Steve Wooton. Schneider encouraged everyone to utilize this terrific program
and to help it grow.
He concluded by noting the Operations
Committee’s work on the two-dimensional bar code and said there are two packaging
initiatives under way, one for DVD and another for CD singles.
EAS:
The Time Is Now
Sensormatic’s bulk
activation/deactivation equipment.
Checkpoint’s recommended tag
placement.
With litigation behind us, companies are
again evaluating options to implement source tagging.
Operations Committee Co-Chairman Rob Cain,
Valley Record Dist., kicked off the Conference’s opening night presentations by
imitating a ringside announcer at a boxing match (“And in this corner, standing
6’1’’...”) to introduce executives from Sensormatic and Checkpoint.
After the welcomed humor, attendees were
ready to get down to the serious business of understanding the logistics involved in
source tagging home entertainment products.
Sensormatic’s Chris Brown began by
noting that last year his company had 1,300 manufacturers applying tags to over
440,000,000 products. There are now some 30 packaging suppliers and 12 application
companies conversant with the operations involved in source tagging. Two
companies—Wallace and Avery Dennison—have been licensed to manufacture the tags
themselves and will be in production sometime in 1998. Brown outlined key factors
management should consider in evaluating their options (i.e. tag pollution, customer mix)
and offered profiles from other industries for each option.
Gillette, for example, is stocking separate
SKUs for product tagged with each of two different EAS technologies, plus a third SKU for
untagged product. Microsoft tagged its entire inventory of “Office 97” with live
tags from both Sensormatic and Checkpoint. Gillette’s approach is more costly than
Microsoft’s, but has the advantage of controlling for tag pollution. A third company,
Lutron, tags its entire production with inactive tags—and maintains a single
SKU—but will bulk activate the tags on request for specific retailers. The last
option Brown shared is in use by a variety of manufacturers and simply calls for manual
tagging on the outside of packages on a custom basis for selected retailers. He finished
by inviting attendees to see the application equipment installed at WEA Manufacturing the
following day.
“Round 2” was handled by
Check-point’s Dave Shoemaker, who recapped the company’s 40%+ growth over the
last five years, reviewed the radio frequency technology, and boasted its source tagging
success with over 10,000 SKUs.
Checkpoint also has in development an
enhancement called RFID, in which the capabilities of an EAS tag could be expanded to
include information currently included in bar codes.
Shoemaker cautioned the audience that,
although RFID is not yet in production, the company is very excited about the concept.
Checkpoint has also acquired considerable knowledge of the logistics involved in source
tagging since it now counts Circuit City, Target Stores and Drug Emporium among its
numerous retail partners. Company representatives were in attendance to meet with
Conference attendees.
Several key issues surfaced during the
question and answer session. Suppliers were particularly interested in the subject of
managing multiple inventories. Both speakers discouraged the group from considering
Microsoft’s approach of simply shipping product with live tags from both companies,
since home entertainment retailers are frequently in environments prone to tag pollution.
Everyone agreed further evaluation of the other options is necessary.
The second hot topic was how and when tag
activation should occur. Brown and Shoemaker said the responsibility for activation was
being assumed by manufacturers in all source tagging programs their companies had been
involved in thus far. Both believed it would be difficult to get retailers to invest in
activation equipment in situations where it would only be used for home entertainment
products.
Since there was consensus further
discussion between suppliers and customers is required, NARM will plan a meeting on EAS at
its Fall Conference.
Bar
Codes Enter A New Dimension
Two-dimensional bar code PDF417.
Like so much else in today’s world,
it’s not surprising that the plain, old UPC bar code—now ubiquitous on
entertainment software products—is entering a new dimension. The technology has been
in development for several years. In 1996, the American National Standards Institute
(ANSI) published a formal standard using two-dimensional technology for transportation
applications. The selected technology, PDF417, is designed for use in shipping and
receiving data as well as for supporting documentation sent via Electronic Data
Interchange (EDI).
The NARM Operations Committee has been
following the development and use of PDF417 for the past year and offered attendees the
chance to hear presentations on the technology by Amy Santucci, SmartTran, Inc., who is a
member of the ANSI 2D Committee, and Allan Algazi, Symbol Technologies, the developer of
PDF417.
The 2D bar code takes the traditional
linear bars and cuts them each into sections (see below), affording the opportunity to
hold much more data—as much as 1,000 characters instead of just 12. Therefore,
information such as purchase order numbers, ship from and ship to addresses, and product
descriptions can be included on a carton label which can then be scanned and used as
everything from an advance shipping notice to a packing slip. These applications are
already in use at some companies, eliminating the need to re-key the data and dramatically
reducing errors to help improve the bottom line.
Both presentations generated substantial
interest from NARM members, and the Operations Committee has formed a working group to
begin developing specific 2D standards for use by recorded media companies. The Committee
urges companies that are considering implementation of PDF417 to wait for the publication
of its recommendations so that all trading partners benefit from this collaborative
effort.
Creating
A Web Site Economically
One of today’s hottest topics is the
Internet and how this medium can be used to increase image and presence, thereby
generating sales dollars. While there are certainly Internet success stories, there are
more than enough disappointments and failures among cyberspace pioneers.
E. Reese Bogle of The NetMark Group, Inc.
addressed our Friday breakfast audience and presented the strategies a small or medium
size business can employ to create and maintain an effective Web site at a reasonable
price.
After a brief recap of Internet basics,
Bogle went on to explain the proper ways to create a Home Page, and stressed the
importance of marketing it as a key to success.
He showed how a Web site can supplement or
replace traditional advertising, and how it can, in fact, reduce total advertising costs.
Finally, he addressed minimizing the costs
associated with the site and fielded questions from attendees.
WEA’s DVD Plant: Seeing Is
Believing
WEA Manufacturing’s plant in
Olyphant, Pennsylvania—the largest facility for CD manufacturing in the
country—is pressing DVDs
On Friday afternoon, Conference attendees
boarded a bus headed to Olyphant, Pennsylvania for lunch and a plant tour hosted by WEA
Manufacturing.
President Ellis Kern welcomed everyone and
informed them that the Olyphant plant is the largest manufacturer of recorded media in the
world. Each year, the company produces 240 million CDs, 90 million audio cassettes and 20
million units of vinyl.
Last year, WEA became one of the first
manufacturers to begin making the Digital Versatile Disc (DVD), and this year will ship
over 32 million units. The DVD area generated a lot of interest, particularly from the
video company attendees, most of whom are either already releasing DVD titles or
contemplating a schedule in the future.
Another popular attraction on the tour was
the live demonstration of source tagging. Representatives from Sensormatic were on hand to
help field questions about the off-line equipment, which had been installed to put
acousto-magnetic tags on CD trays.
After trekking through the one million
square feet of WEA Manufacturing, attendees seemed happy to rest their feet on the bus
ride back to Newark!
Operations Committee
Sets Standards For The Future
The NARM Operations Committee held its
quarterly meeting in conjunction with the Conference. The Committee boasts numerous
accomplishments (UPC implementation, EDI standard protocols, standards for carton counts
and labeling, etc.) and has an ambitious list of projects currently underway.
Year 2000 Compatibility—First on the
agenda was a review of the NARM and ANSI standards as they relate to this issue. Neither
standard allows for the four-position field required to list all four digits in the year,
which is already causing problems in some industries (i.e. credit cards expiring in the
year 2000 only show “00”). The NARM Committee, meeting jointly with its
Recording Industry Association of America (RIAA) counterparts, concluded it made more
sense to have individual companies change applications if necessary rather than change the
standard.
- The Scoreboard—The group then shifted
attention to this tracking sheet used to monitor compliance of major companies with
standards recommended by NARM and RIAA Committees.Scoreboard compliance has been very good
for several years in several areas: all major suppliers and customers have EDI capability
on orders, invoices, return requests (where required), and return authorizations; and all
have UPC codes on their products. All suppliers have followed the recommended format for
carton labels and for standard carton counts, as EMI Music Distribution moves to 30-count
cartons. Source tagging is being added to the manufacturer Scoreboard and suppliers will
begin tracking “special handling requests” from customers. For example, after a
discussion of the need to have purchase orders attached to each carton, the two groups
agreed that for a skidlot of a single SKU new release, a single document would suffice.
- Etcetera—The Committee also reviewed
progress of the Industry Database service (see article below), the decision to form the
PDF417 Sub-Committee to work on home entertainment standards, and the creation of a
sub-committee to make recommendations for CD singles packaging. The Committee received
proposals to form industry credit reporting groups and recommended that NARM solicit
participants from the Association’s wholesaler and supplier ranks.
The NARM Committee will meet during the
next quarter with video manufacturers.
Industry
Database Rolls On
For the past two years, the six branch
distribution companies have posted information on their catalog selections and promotional
deal programs on an electronic bulletin board run by NARM. Authorized customer companies
can download this information directly into their own databases, saving countless hours
and errors. The system has been tested and refined with suggestions from users and is now
ready for an industry-wide rollout. Invitations to the supplier community have gone out
and M.S. Distributing and Koch International have announced plans to begin using the
bulletin board. Others are expected to follow suit. If you are interested in getting more
information on how to participate, contact VP of Administration & Operations Yale
Hoffstein at the NARM Office.
Over the past year, NARM has also been
tracking requests from users for additional features or information. Plans are now
underway to begin implementing many of these requests, including the following:
- Internet Access—The bulletin board will
be made available on the Internet, in addition to the dedicated phone lines, beginning
December 1997.
- New Fields—Several new fields will be
added to the database formats, including weights and measures for both units and cartons.
Other fields requested for the future include primary and secondary label information,
repertoire information, Parental Advisory sticker, product lines, and carton lot
quantities.
- Query Capabilities & More—Many
companies have requested that we add query capabilities. NARM hopes to have a downloadable
runtime query program ready for users by October 1997. There have also been lots of
requests for sections on new releases, video, cut-outs, one-way products, and deals. All
are in the works.
In order to provide these enhancements and
others, NARM has hired computer specialist Steve Wooton as the Association’s MIS
Manager, under Hoffstein’s direction. He will have day-to-day responsibilities for
the bulletin board and for NARM’s Web site. Last, but not least, NARM will be forming
a user-group to ensure that the performance of our online services meets your
expectations.
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