Information technology is revolutionising the world of manufacturing by creating a continuous move from push to pull, from standardised to customised, and from just-in-case to just-in-time operations.
Dell Computers doesn’t try to sell you a computer it has already made. It only makes what you ask for, once you have specified exactly what you want.
On most car production lines these days, the numbers of parts lying around waiting for the next car is frighteningly small. That’s because car companies know that inventory costs time and money; that just-in-time is far better than having bits of stuff lying around just in case you need them.
Yet, in comparison, the world of information itself is still in the dark ages. Millions of newspapers are printed and distributed every day – yet most of their articles are never read by the people who buy them. They are there just in case we might be interested. Likewise, in the US, 50 per cent of all books that are printed end up being pulped – but they are still printed just in case someone wanders into a bookshop and asks for one.
Last year, a record £14.3bn was spent on advertising in the UK. But most of it reached people who weren’t interested in its message. Yet it still had to be done, just in case they might be. With response rates hovering around two per cent, the direct marketing industry must be one of the biggest just-in-case waste machines invented – and the most sophisticated targeting hasn’t cracked the problem. A serious and sustained move from push to pull, and from just in case to just in time, is now overdue.
The opportunities are enormous – far bigger than in manufacturing. Take a juicy example from the rarefied world of art whose bible, the 34-volume Macmillan’s Grove Dictionary of
Art, sells at the modest price of £4,900 in its book form.
Richard Charkin, chief executive of Macmillan’s reference publishing section, estimates that 75 per cent of this £4,900 is accounted for not by the costs of gathering and processing the information itself, but the cost of publishing and retailing this information in just-in-case form: the 34-volumes which have to be printed on paper, freighted, stored and so on.
Now, by going digital he can offer individual subscriptions at £275 a year. Big difference: subscribers don’t buy the whole caboodle just in case they might want to look up a single example, they buy the right to pull down the information they want, when they want it. In future, promises Charkin, individuals will be able to buy Grove “by the drink” – article by article. As a result, an elite niche poised for mass-market potential.
Consider something more prosaic: glossy car brochures. The traditional approach is to print, say, 10,000 just in case somebody asks for them, and then to store them somewhere, where they get out of date. And when somebody actually asks for one, the brochure is packed full of irrelevant information just in case you might be interested in it.
Now Honda, using a digital printing technique developed by Shere Arts, is producing customised, on demand, just-in-time brochures. If a customer expresses interest in a red Accord with leather trim and lives in London SW18, a brochure is printed and sent that day – and it is all about a red Accord with leather trim, and the Honda dealer serving SW18. No just-in-case costs are incurred. And the customer gets the information he wants, when he wants it.
Now, what about the sexy end? Here’s the fantasy. I can’t watch the big match, but could you page me if anyone scores? And I’m thinking about buying M S shares if they drop below 350p, but I haven’t got the time to spend all day tracking the share price. Could you alert me if it happens? In fact, could you send me information I specify, when I want it, where I want it? As of June 28, a new mass-market Personalised Information Broadcasting service, from MicroStrategy and Partners, will offer just that.
Here’s how it works. The user specifies the fields of information he’s interested in, plus the desired delivery channel – e-mail, Web, mobile phone, fax, and so on – and MicroStrategy does the rest. Using a mega global data warehouse called Telepath, linked by satellite to local servers dealing with local data (say, Catalonian cuisine in Spain), it filters many information sources twice – at the level of the information itself and at the delivery level – to deliver it in “a stress-relieving, highly convenient way”.
Initially, the service will cover finance, news, weather and sport, but it should soon expand to include shopping, healthcare, travel and entertainment-related information. All personalised, of course. If you are a diabetic the only information you’ll get is about diabetes. “Subscribers define their preferences: what they want, how they want it, when they want it, how often they want it. And they can change these preferences as many times as they like,” explains Micro-Strategy co-founder and vice-president of international operations Eduardo Sanchez.
Next step? To send advertising messages, but only those ads which directly address the preferences previously stipulated by the subscriber: something which Sanchez hopes will transform advertising from “a bother to a value-added insight”.
It is often said that pollution is a resource in the wrong place. Today, the media, including the marketing communications industry, is a major information polluter. The more information it throws at us, the less we (as organisations and individuals) can cope. The win-win opportunities in tackling this pollution are huge. Organisations can strip out huge costs while increasing the relevance of their communications.
Consumers can benefit from lower prices, saved time, improved convenience, and less stress. The race to seize these opportunities has started.