Cutting costs, not corners: Optimising key processes in your media organisation

"If a tree falls in a forest and no one reads the news story, does it need to be written?"

I’m being facetious of course but it amazes me how many media organisations produce so much content that drives little or no engagement with their audience. For many media companies the Pareto principle holds true that roughly 80% of their content drives roughly 20% of their audience engagement (and vice versa). This chronic case of over-production is just one example of where process inefficiencies are hampering media organisations in both their digital growth and their overall profitability.

In my previous article, No margin for error: Plotting your path to profitability, I wrote about the unenviable challenges facing the media industry. Declining referral traffic, decreasing broadcast viewerships and print readerships, and shrinking advertising revenues, are being compounded by rising labour costs, supply chain disruptions, and escalating technology expenses.

In the face of such headwinds, media organisations need to become slicker, simpler and more streamlined for success. This article delves deeper into three specific areas where media organisations can realise significant savings and operational enhancements, namely, reducing production costs; increasing distribution and supply chain efficiencies; and implementing quality controls and waste management.

1.1 Optimising Production Schedules:

Efficient production schedules are crucial for minimising wastage and avoiding costly overruns. By leveraging advanced analytics, media organisations can forecast demand more accurately and plan production accordingly. This proactive approach not only reduces unnecessary expenditure but also ensures content is delivered on time, meeting audience expectations.

1.2 Negotiating Better Supplier Rates:

Suppliers play a vital role in content creation, and negotiating favourable terms with them can yield substantial cost savings. Media companies should aim to build long-term relationships with key suppliers, leveraging volume discounts and other cost-saving incentives. Periodic reviews of supplier contracts can also ensure that the organisation continues to receive the best possible rates.

1.3 Adopting Efficient Production Technologies:

Investing in modern production technologies can streamline content creation processes, reducing both time and costs. Automation tools, for instance, can handle repetitive tasks, freeing up human resources for more creative and strategic activities. Additionally, digital production solutions can enhance collaboration, allowing teams to work more efficiently across different locations.

2.1 Implementing Just-in-Time Inventory Systems:

A just-in-time (JIT) inventory system minimises excess stock and reduces associated storage costs. By aligning inventory levels closely with actual demand, media organisations can avoid overproduction and the financial burdens of holding unsold stock. This approach also promotes a more responsive supply chain, capable of adjusting quickly to market fluctuations.

2.2 Optimising Logistics and Distribution Networks:

Efficient logistics are key to reducing transportation expenses and ensuring timely content delivery. Media companies should conduct regular audits of their distribution networks to identify inefficiencies and potential improvements. Strategic route planning, consolidation of shipments, and the use of cost-effective transportation modes can all contribute to lower distribution costs.

2.3 Renegotiating Contracts with Distributors:

Similar to supplier negotiations, revisiting and renegotiating contracts with distributors can lead to better terms and cost savings. Media organisations should explore opportunities for collaborative partnerships, where mutual benefits can be derived from improved efficiencies and shared resources.

3.1 Rigorous Quality Control Measures:

Stringent quality control processes are vital for reducing errors and rework, which can be costly. By implementing robust quality checks at every stage of content creation and distribution, media companies can ensure that only high-quality content reaches the audience. This not only saves costs but also enhances brand reputation and audience trust.

3.2 Effective Waste Management Strategies:

Minimising waste through effective management strategies can lead to significant cost reductions. Media organisations should explore recycling and reusing materials wherever possible. For instance, digital assets can often be repurposed across different platforms and campaigns, reducing the need for new content creation. Additionally, sustainable practices such as reducing paper usage and energy consumption can contribute to lower operational costs and improved environmental compliance.

Overview:

The Financial Times (FT) successfully transformed its print operations into a lean, highly profitable, and sustainable business model. This transformation focused on three main areas: reducing production costs, increasing distribution and supply chain efficiencies, and implementing quality controls and waste management.

Key Achievements:

1. Reduced Production Costs:

Over a decade of strategic optimization efforts led to a 58% reduction in print costs from FY2008 to FY2018. The FT achieved an average yearly reduction in print costs of 10-15%, resulting in over £30 million increase in print contribution during the same period. These savings were realised through:

Process Optimisation: Streamlining production schedules and adopting modern printing technologies allowed for significant cost savings.

Vendor Negotiations: Renegotiating supplier contracts to secure better terms and bulk purchasing agreements.

Automation: Implementing automated workflows in editorial and content management to reduce manual intervention and associated costs.

2. Increased Distribution and Supply Chain Efficiencies:

FT's efforts to centralise and optimise its distribution operations have resulted in a highly efficient supply chain. Key strategies included:

Centralised Printing Operations: By consolidating printing facilities, FT reduced redundancies and achieved economies of scale.

Optimised Logistics: Adopting Just-In-Time (JIT) inventory systems and optimising logistics reduced storage and transportation expenses by 10%.

Stable Revenue Streams: Ensuring a variation of less than £700k in print revenues over the last three years, demonstrating robust and stable supply chain management.

3. Implemented Quality Controls and Waste Management:

Implementing rigorous quality control measures and waste management strategies further reduced operational costs and improved profitability:

Quality Control: Enhanced quality control processes minimised errors and waste in production, ensuring high standards and reducing rework.

Sustainable Practices: Adopting eco-friendly practices in waste management contributed to cost savings and environmental sustainability.

Waste Reduction: Streamlining processes to minimise waste and using sustainable materials wherever possible.

Impact: These strategic interventions have not only improved FT's financial performance but also enhanced its agility and resilience in a challenging market environment. Print circulation has become profitable in its own right, even before considering advertising revenue.

In conclusion, media organisations must prioritise process efficiencies to navigate the current economic and market challenges successfully. FT Strategies' 'Path to Profitability' offering provides a robust framework to achieve these efficiencies, focusing on reducing costs in content creation, supply chain management and quality control.

By implementing these targeted strategies, media companies can streamline operations, enhance productivity, and significantly reduce expenditure. Moreover, they will be better equipped to adapt to industry changes, meet audience demands, and achieve long-term financial sustainability. The path to profitability is clear: it lies in the meticulous optimisation of every aspect of the media production and distribution process, ensuring that resources are utilised effectively and costs are kept in check.

If you would like to learn more about FT Strategies' Path to Profitability solution to help drive sustainable growth and enhance profitability for your business then please get in touch here.

George has over 15 years experience in strategy consulting and in-house advisory. Leading strategy development, service design and digital transformation teams, he has advised senior leadership across both the public and private sectors. He has an ACII and a Masters from the London School of Economics.