DEG identifies solutions in DVD supply chain

Study shows opportunities for smoother, more profitable product flow

By Marcy Magiera -- Video Business, 6/19/2008

JUNE 19 | LOS ANGELES—The Digital Entertainment Group’s first study on the state of the DVD supply chain highlighted a number of areas where retailers and studios can work together to achieve a smoother and more profitable flow of product to store shelves.

Theodore Garcia, media and entertainment lead at management consultant Capgemini, which conducted the study for DEG, said the exercise had several goals, including to take cost out of the supply chain, leverage investment in I.T., speed adoption of new technologies such as RFID and learn from other industries.

Underscoring the importance of supply chain improvement is the statistic, cited by Garcia, that returns of unsold product to studios from retailers has been as high as 25%.

The final report identified 17 opportunities for “collaborative improvement” between retailers and studios, Garcia said. Among them: on-hand inventory accuracy, forecasting, packaging, shipping, score-carding and merchandising.

Dan Miron, executive VP of worldwide supply chain management at Warner Home Video, said the DEG has not yet “tasked anyone with doing anything specific” regarding the recommendations in the study, but that the results have been shared with the studios.

During a panel at the Entertainment Supply Chain Academy conference here, a number of options were discussed.

Miron suggested that the reporting of on-hand inventory could be improved by developing industrywide data standards, perhaps through a third party such as DEG.

Standard metrics also were suggested as a way to improve the score-carding process by which retailers give feedback to their vendors.

The challenge in packaging, studio execs who participated in a panel discussion on the study agreed, is to come up with something attractive and marketable but also environmentally sustainable, economical and will fit on retail shelves.

There is consensus among studio participants that packaging is too big and less environmentally friendly than it should be, Miron said. However, he noted that although studios are looking an alternative packaging, packaging suppliers are not going to build capacity for different products unless the industry comes to an agreement that it’s needed.

Other studio panelists included Akin Ceylan, executive VP of supply chain and operations at Lionsgate; Rick Eiberg, executive VP of operations and chief technology officer at Image Entertainment; Tom Emrey, executive VP and chief operating officer, Universal Studios Home Entertainment; and Tony Korkunis, senior VP of retail operations and category management at 20th Century Fox Home Entertainment.