Outsourcing helps Universal Music dance to a new beat

Justin Bieber Belieber pic

A Belieber in the power of outsourcing: Universal Music.

We recently profiled an end-user organisation that sees real impact and benefit from its use of ICT. And we’ve also recently had a sober look at what the best use of the outsourcing option may be in the current economic climate. So it’s great to be able to talk so soon about another company that’s found a transformational impact to a tech adoption, and one that is also a nice outsourcing success story.

In this case, this is a tale of how a logistics solution has benefited the distribution service of Universal Music, the world’s largest music publisher and owner of the recording industry’s largest family of record labels.

"There was no specific ‘problem’ we were trying to fix – nothing was ‘broken,’" its supply chain manager Clive Smith, told CBR. "But by outsourcing something non-core we’ve still been able to realise real benefits and improved our processes at the same time."

What have Smith and his team done specifically, then? By working with a business process outsourcer called arvato, they have replaced an inefficient paper-based system for internal stock movement with a new ‘paperless-movement’ system centred around using radio data terminals and barcode scanning. It’s part of an outsourcing partnership that means, in Smith’s view, Universal can "take advantage of the expertise, scale and resources of an experienced supply chain specialist".

The aim was to improve the next-day delivery service for UK and Ireland orders, which the pair did by implementing a new warehouse management solution, linked to the customer’s internal sales order processing system. This was further enhanced by a so-called dynamic prioritisation system, which automatically directs warehouse operators to the next most important task, as well as incorporating a range of new technologies to streamline distribution operations, including pick-by-voice, which improved the speed and accuracy of order processing.
 
That’s not all. Universal’s Import Music Service has also been expanded to include over 1,000 more titles by offering customers 24-hour stock turnaround from Universal’s European supply centre in Germany. This move alone, says Smith, has significantly reduced stockholding and delivery costs in the UK alone. "A further 2,000 titles are expected to be added during 2011," he says.

However, as Smith stresses, this is not a product/solution story alone; it’s an outsourcing partnership. The two told us that 100% of all service level agreements throughout 2010 in areas such as goods receipt, order processing and returns crediting have been met, and that the speed and accuracy of order compilation has been increased by over 15% during 2010. Meanwhile the volume of products processed by goods inwards in the fourth (busiest) quarter has shot up by 30% without the need to increase resource (compared to the same period in 2009).

Other listed benefits of the contract, in Smith’s view as head of the supply chain side of the business, include a much enhanced consolidation process to reduce the number of individual parcels sent to the customer, speeding up deliveries and cutting packaging materials, while he is convinced the deal has meant Universal can "focus instead on our core business of development and promotion of artists [A&R]."

All in all, a success story of new technology in the hands of an experienced outsourcing partner adding real value. Please – let’s hear some more.

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