Sanoma Case

The Customer:
Sanoma is a worldwide player in the publishing business active in thirteen countries with more than 300 magazines, more than 18000 employees and a turnover of 3 billions Euros. Sanoma Belgium, a subsidiary of Sanoma magazine, publishes magazines like Flair, Libelle, Humo, TeveBlad, Story, etc. and has a local market share of 38%. The magazines are sold as subscriptions or through the retail network of +/- 5000 stores.

4C Consulting started its relationship with Sanoma Belgium with a relatively small project in the field of customer analytics based on magazine subscription data. The retail counterpart, the Circulation Division, wanted to review their system for calculating the amounts of magazines to be delivered in the  +/- 5000 retail stores and involved 4C Consulting in this process as well.

The project scope:
Retailers are allowed to return unsold magazine to the publisher. Hence the risk of printing too many magazines remains with the publisher. Circulations is responsible for making demand estimates for each magazine, for each store and distribute the total circulation order as efficient as possible in the market. The main challenge is to distribute just enough magazines so that returns are as low as possible and no sales are missed due to under delivery. At first, the main objective was to build a system with equal performance but on a new platform that could be supported by IT and with more flexibility to control the output. However, Sanoma took the opportunity to investigate to which extend circulation efficiency could be improved by applying more advanced analytics compared to their legacy system.

The solution:
Since this challenge is typically a Stochastic Inventory Problem, 4C Consulting suggested building the new system on the analytic platform of SAS. After a proof of concept it was demonstrated that state of the art demand forecasting combined with inventory optimization resulted in substantial printing cost reduction. 4C Consulting built an end user intranet application with SAS as analytic engine. The new circulation system complies with the objectives set by Sanoma in terms of user control, maintainability and distribution efficiency gains. In addition, the system is designed such that new algorithms resulting from new insights can be implemented and launched without changing the architecture or user interface.

Domains of expertise:
The project was supported by a senior and junior Business Intelligence/Customer Intelligence Consultant and an HTML expert for building the user interface. Project management was done by a 4C Consulting and a Sanoma project manager. Senior circulation managers provided 4C Consulting with the necessary Sanoma specific business knowledge.

Although implementing and launching a new core circulation system is not without risk, the project was finished within the calculated budget and time limit. Today a team of 4 people is using this system to distribute all magazines of Sanoma into the Belgian retail market.