17,000 devoted fans, family members and fellow entertainers congregated at the Staples Center in Los Angeles today to say goodbye to the King of Pop, Michael Jackson. The event was staffed with over 3200 police officers at a cost of $3.5 million to the city of Los Angeles. Those attending today’s services were just a few of the 1.6 million fans who entered the lottery for tickets to the event. And those who entered the lottery are just a small fraction of the population around the world paying tribute to Michael on the Internet. There are countless blogs, tweets and web sites dedicated to what many consider the greatest entertainer of all time. The number of people who have “friended” Michael Jackson on Facebook has skyrocketed from just 80,000 before his death to over 6.4 million. Sales of Michael Jackson merchandise have skyrocketed as well. In a matter minutes following his death related merchandise went from stable, slow-moving items to the most volatile, high demand SKUs in the market.
Demand for the Merchandise – You can’t Beat It!
Much of the demand for Michael’s music has been fulfilled by digital downloads. Tonight Apple’s iTunes site is reporting that Jackson holds 8 of the top 10 music videos; 3 of the top 10 albums and 3 of the top 10 ringtones. But the record-breaking demand is not limited to digital content. Sales of physical product have enjoyed tremendous success as well. Amazon.com is reporting tonight that Jackson holds 5 of the top 10 DVDs; 5 of the top 10 apparel items and all 10 of the top CDs. In fact, Amazon reported that all of Michael’s solo CDs and those of the Jackson 5 sold out within minutes of the news of his death. Demand for Jackson’s music titles is breaking new records in countries around the world ranging from Poland to New Zealand and from Japan to the UK. Even the post-death sales of albums from Elvis and John Lennon who both experienced unexpected deaths can’t Beat It.
Of course, what intrigues me about these types of celebrity life events are the supply chain challenges. Products which have historically stable sales patterns experience a near instantaneous surge in demand catapulting them to the top of the charts. For retailers and entertainment labels the death of a popular celebrities can represent a tremendous sales opportunity. But developing a plan to respond to these types of market opportunities can be quite complex. Even the Paparazzi would be challenged to provide accurate sales forecasts for CDs, DVDs, books, apparel and related merchandise in advance of unexpected celebrity deaths. It is almost as if sales patterns for Michael Jackson’s music were sent back in time to the period just after the albums were released, forcing manufacturers and retailers to do a Moonwalk back to earlier inventory levels.
Inventory Levels – Don’t Stop ‘Til You Get Enough
No one can plan for unexpected events such a celebrity’s death nor do I propose they should. But retailers and manufacturers should develop agile supply networks that can respond to the types of rapidly changing demand patterns that result from the aftermath of such an event. Of course, the ability to share information between all parties in the entertainment value chain is a critical success factor in the execution of such a demand-driven supply network. Retailers, duplicators, 4PLs and brand owners must all be able to share up-to-date sales, inventory and logistics data with one another in near real time. With such a model suppliers can respond rapidly to changing demand patterns ensuring that out-of-stocks are avoided and excess inventory is not perpetuated.
In the entertainment industry it is common to use a Vendor Managed Inventory (VMI) model in which the supplier (or a designated 3PL) stocks the inventory in the stores. The process works as follows. Each night after the stores close, all the retailer’s point-of-sale transactions are consolidated and sent in batch files to the key suppliers. Suppliers compare the day’s sales to previous estimates of inventory on-hand at each location to determine which SKUs require replenishment. An order is then sent by the supplier to a CD duplicator which burns the appropriate number of each title, packages the media into a jewel case and ships it to the appropriate store. The process minimizes inventory while also mitigating the risk of out-of-stocks.
Forecasting Sales – It’s Close to Midnight…
B2B e-commerce is one of the critical technologies that enable demand-driven supply networks to respond to rapidly changing sales patterns. Point-of-sale data, inventory, order and logistics data is transmitted between parties using EDI, XML and Managed File Transfer (MFT) technologies. One of the key challenges is the very large file sizes associated with sales transaction data, which can often paralyze even the most robust of B2B infrastructures.
The following is a lyrical description of the VMI process I composed to the tune of Thriller:
It’s close to midnight and all the stores are getting pretty dark
Under the moonlight, you get the POS file transfer ready to start
You try to stream, but the file’s so large it starts to choke your router
Screen starts to freeze as horror looks you right between the eyes
File’s paralyzed
‘Cause this the thriller, thriller night
And no one’s going to save you from potential out-of-stocks.
I know it was Bad, but entertaining hopefully…
3 Responses to “Michael Jackson – Can your Supply Chain do the Moonwalk?”
Well written, Steve. Surprisingly fun to read. I say “surprisingly” because it’s difficult to write fun B2B copy. Love the lyrics for “Thriller.”
Are you ever in the UK, Steve? Would like to get you opinion on what to do with a batch of Lady Diana t-shirts I’ve been trying to shift for a bloody decade. Really need the garage space.
It’s good to see you on the bandwagon! Love the section titles and the supply chain parody of “Thriller”. All that aside, you raise a good point about not minimizing the complexity of acheiving the level of collaboration required to truly optimize a supply chain around unexpected events. All of the pieces have to be in place ahead of time. The relevance of MJ’s death to supply chain B2B – who knew?