ATextbook Fulfillment Case

Back-to-school season occurs at least three times a year for Follett Higher Education Group. The Oak Brook, Ill.-based retailer and wholesaler supplies 800 company-owned college bookstores plus an estimated 300 independent stores with new and used textbooks.

The unique business model of a college bookstore offers lessons in logistics that all multichannel retailers can learn from. For starters, inventory selection is absolutely driven by local demand, and product procurement is predicated by the professors at each college campus. About two months prior to the start of a new semester, professors submit “adoptions,” the industry term for course materials that will be used in the coming semester, to Follett.

Based on these adoption plans, Follett determines what inventory will be needed for the next semester. This also lays the foundation for identifying which used textbooks are eligible to be purchased from current students, at what price, and new books that have to be ordered based on revised editions, increased enrollment or additional classes.

Recently Follett completed the implementation of a new, fully customized inventory-management system that addresses the unique challenges of procuring and replenishing course materials each semester. The system is expected to deliver savings and productivity improvements for the stores while also improving the customer experience. Follett’s course-materials management system, which was developed in collaboration with Chicago-based Clarity Consulting, fully integrated all the bookstores served or managed by Follett into a seamless click-and-mortar strategy.

“This new CourseTracks system has reinvented course-materials management for us,” explained Elio Distaola, director of public and campus relations at Follett. “It allows us to have visibility from a home-office level to all the adoptions and to the inventories that exist at each of our stores in the United States and Canada. It enables us to easily locate extra copies of textbooks and move them to where they are needed, which effectively answers the inventory woes that plagued college bookstores in the past.”

Follett’s previous course-management system provided the retailer with snapshot views of store inventories, but it did not enable the corporate office to take a high-level, comprehensive view of inventories across all the stores served.

CourseTracks is a robust system that supports inventory tracking, ordering and receiving, as well as in-store book buybacks, and data and system connectivity. The solution, which leverages Microsoft technologies and a service-oriented architecture, gives Follett’s corporate office an enterprisewide view as well as reporting capabilities that facilitate perpetual inventory management throughout the portfolio. On an average day, Follett processes some 2.8 million records.

However, the genius of the click-and-mortar strategy is that it provides exceptional customer convenience and service. Students can place orders at www.efollett.com , which automatically links them to the Web site of their respective college bookstore, and the orders are filled by the local bookstore, where they can be picked up by the student or shipped to the student’s residence.

“Our Web site functions like another cash register in the store,” noted Distaola. “The online business is growing exponentially and has moved into double digits as a percentage of our total sales.”

In addition to books and course materials, Follett stores carry some 1.2 million SKUs of general merchandise such as athletic apparel, dorm decor, snacks and school supplies. Although the primary demographic is the 18- to 26-year-old student enrolled in four-year or two-year schools, the stores also cater to the schools’ alumni and fans.

The privately held, family-owned retailer does not release sales figures, which are estimated to be near $2 billion, but Distaola said in the fall of 2007 the company had more than 200,000 unique course-material SKUs. For the current fiscal year, Follett has purchased $160.5 million in used books from students through the buy-back program and has distributed 7.6 million used textbooks.

Follett operates a primary distribution center in River Grove, Ill., which manages replenishment of used textbooks to the stores. New books drop-ship direct from manufacturers to the stores. A second company-owned DC in Westmont, Ill., processes shipments of convenience items such as writing utensils and paper.

Looking ahead to the next chapter in course-materials management, Distaola noted, “We are constantly renovating our Web site to meet the expectations of more savvy shoppers, and we’ll keep pushing the infrastructure for ease of use, visibility and response times.”

Additionally, Follett is monitoring trends such as the emergence of digital content, e-books and new educational formats such as distance learning that continue to impact their business model.