Outsourcing Your Distribution: The RFP Process Made Simple

A Step-by-Step Guide to Effective Evaluation of Potential Partners

This article was originally published in Book Business Magazine on October 1, 2009 and has been updated accordingly.

The first step in the request for proposal (RFP) process is to identify the companies you wish to consider as potential bidders for your distribution business. You basically have two options: specialist firms that provide distribution services to book publishers, and book publishers who handle distribution for other publishers. Each of these options has its pluses and minuses. Consider both—the broader you cast your net, the better your options, as well as your understanding of the range of services available. Regardless of the players you consider, your RFP should be sent to a minimum of four bidders, and you should allow ample time (four months, minimum) for the entire process from RFP creation to final vendor selection.

Protect Your Information

Before you exchange any information, all prospective bidders should be required to sign a nondisclosure agreement (NDA). The NDA should not only include prohibitions against divulging confidential financial and operational information provided by either party, But should also contain a clause clearly prohibiting the discussion of the RFP with unauthorized parties within the publisher’s organization. Moving to a third-party-distribution business model is a significant step, and until the decision is finalized and a transition plan confirmed, the details of the effort should be shared only on a need-to-know basis. Beyond the potential anxiety and disruption to your business, your negotiating leverage is diminished if your effort is plagued by information leaks.

Part One: Your Needs and Expectations

An RFP should have two major sections. Section 1 should contain information about your existing operations and your expectations for your business over the three to five years following the transition to the third-party provider. The latter is particularly important—especially if you see your organization embracing the operational opportunities presented by print-on-demand (POD) and short-run digital printing. As POD pricing continues to decline to near commodity levels, and printing technology improves and inventory becomes virtual, the demands on distribution facilities will undergo dramatic change. All of these factors should translate to reduced operating costs for publishers. Section 1 should also include, at minimum, quantitative details for your business’s last full, fiscal year, including:

Be Accurate and In-depth

The quality and quantity of the information you provide will have a direct bearing on the accuracy of the bid and the quality of the working relationship between you and your distribution partner. It is a good idea to include a multi-year view of the information listed above that illustrates both historic trends and prospects for the future.

Part Two: Ask the Right Questions

Section 2 of the RFP provides the prospective distribution partners with detailed questions regarding their organizations, the services you would like them to provide and, of course, the associated costs. The RFP should, at minimum, request the following:

A Service Indicator

A carefully crafted RFP is essential to effectively evaluating the potential value of third-party distribution. The time you invest in it will be time well spent. No less important is the quality of the bidder’s response; a detailed proposal—one that answers your questions directly and with a minimum of marketing fluff—is a good indicator of the quality of the service the publisher can expect.

David Hetherington is the vice president of global business development for Books International, a leading provider of U.S. and international book manufacturing, print, and digital distribution services for the book publishing industry.

Mr. Hetherington’s portfolio reflects a broad range of responsibilities including vice president of manufacturing, and he was subsequently appointed vice president of financial planning for Simon & Schuster’s Higher Education Group. In addition, Mr. Hetherington held other key responsibilities in finance, operations, and sales at Reader’s Digest, Wolters Kluwer Health, Columbia University Press, and Baker & Taylor.

Prior to joining Books International, Mr. Hetherington served in senior roles in the book publishing software industry including chief operating officer of Klopotek North America and as chief marketing officer for knk Software LP.

In addition to his current role at Books International, Mr. Hetherington serves as an adjunct professor and member of the advisory board for Pace University’s Graduate School of Publishing, sits on the board of directors for the Book Industry Study Group, and serves on the program committee for the Book Industry Guild of New York.

Mr.Hetherington is a frequent speaker at publishing industry events across the globe and has written articles for Book Business Magazine as well as Springer’s Publishing Research Quarterly.

In the event you have any questions about the material contained in this article, please feel free to reach out to Mr. Hetherington at d.hetherington@booksintl.com or contact him directly at (908) 458-5928.