N E W S PA P E R S U P P LY C H A I N S

A D D I T I O N . . . B Y A D D I T I O N

A discussion of opportunities to add subscriber, advertiser, and 
bottom‐line value to an optimized circulation distribution system. 

P3L, LLC
Post Press
Packaging &
Logistics

7707 Nature Trail

Lakeland, FL 33809

863-604-6123
news@p3logistics.com
www.p3logistics.com
© 2006 P3L, LLC
 ADDITION BY ADDITION—
AGENDA

Improving profitability for newspapers has meant a great

deal of subtraction in recent memory. Whether it’s the size
of the actual paper, or the staff available to produce it, ad-
dition by subtraction has become the rule. The goal of this
document is to serve as a catalyst for discussion of how
newspapers can leverage their leaner, better defined, opera-
tions and assets to bring more natural growth and profit . . .
ADDITION . . . BY ADDITION!

• THE MATURE NEWSPAPER SUPPLY CHAIN

• DEFINITION

• RESOURCES AVAILABLE

• RESOURCE UTILIZATION OPPORTUNITIES

• VEHICLES ONLY

• BULK DISTRIBUTION OPERATION

• ENTIRE DISTRIBUTION OPERATION

• PULLING IT TOGETHER
• DECISIONS & DIRECTION

• MANAGEMENT

© 2006 P3L, LLC 2

 ADDITION BY ADDITION
T H E M AT U R E N E W S PA P E R S U P P LY
CHAIN—DEFINITION

The mature newspaper supply chain is

defined by the following:

• It meets the service goals of the circulation department.

• It is able to report on its activities.
• Through time, it has demonstrated the ability to identify, quan-
tify, and eliminate barriers to efficient operation.
• All cost and service trade-offs within the system have been
quantified, allowing for informed management decisions to
guide their disposition.
• All drivers and equipment operate within safety regulations, in-
cluding vehicle weight capacity and hours-of-service regula-
tions.
• A balance between pay-scale, working conditions, and turnover
has been achieved.

© 2006 P3L, LLC 3

 N E W S PA P E R S U P P LY C H A I N S —
R E S O U R C E S AVA I L A B L E

In order to
ensure they
get the steak,
newspapers
buy the entire cow.
• The optimum balance of service, control, and cost has histori-
cally only been available by owning the distribution channel.

• Both private operations and dedicated third-party operations

represent total channel ownership.

• Even at optimum, the nature of newspaper distribution ensures

an underutilized distribution system.

Typical Newspaper Operations Timing Typical Commercial Operations Timing

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

6am-6pm

6pm-6am

Combined Weekday Total Operations Value Building

Operations

© 2006 P3L, LLC 4

 N E W S PA P E R S U P P LY C H A I N —
R E S O U R C E S AVA I L A B L E [CONT.]

Core Newspaper Operations

5
2 3 4
Newspapers buy the cow for this
6 prime cut of meat. Time sensitive,
8 7
1 highly controlled, seven-day delivery
requires the best. But, what is left
over?

1. Commercial Vehicles—Fully paid for and mostly unused during prime

commercial hours.

2. Transportation Management—Ready for the emergencies 24/7. Under-

utilized during daylight hours.

3. Full-Time Drivers—Hard to get and keep. A larger workforce adds to

flexibility, efficiency, and control. If you’re not full-time, are you legal?

4. Part-Time Loaders—Premium pay due to short and inconvenient shifts.

Can we add work while lowering cost per unit to meet marketplace need
for weekly pay?

5. Dock Facilities—Fully paid for and mostly unused during prime commer-
cial hours.

6. Distribution Centers—Fully paid for and mostly unused during prime

commercial hours.

7. Field Circulation Management—Essentially downstream transportation/

delivery managers. Can they be better utilized, or differently focused?

8. Carriers—Underutilized, underpaid, disappearing. Can we leverage the

only seven-day-capable, door-to-door, delivery service in the marketplace
to our advantage?

© 2006 P3L, LLC 5

 R E S O U R C E U T I L I Z AT I O N
OPPORTUNITIES—
C O M M E R C I A L V E H I C L E S O N LY

COMMERCIAL VEHICLES—
The highest valued depreciating
asset and most visible portion of the
newspaper delivery network—the
bulk distribution fleet. Paid for in
full.

Whatever form your bulk distribution fleet takes, the chances are that more
than half (usually much more) sits idle during normal business hours.

As with any opportunity, the amount of potential gain is related to the value
driven and associated risk. Using the vehicle only is a low-risk, first-step into
maximizing return on the asset laden newspaper distribution system.

VEHICLE ONLY UTILIZATION OPPORTUNITIES

• Advertising—are you using this space, or can it be sold to others?

• Vehicle Rental—Rent your idle fleet for use by local businesses or adver-
tisers. (at a below market rate of $50/day, each vehicle can generate $12,500/year in
extremely low risk revenue)

• Vehicle Sharing—Can your idle fleet meet flexible needs for a local busi-
ness, while that business’s core fleet serves your weekend needs?

© 2006 P3L, LLC 6

 R E S O U R C E U T I L I Z AT I O N
OPPORTUNITIES—
B U L K D I S T R I B U T I O N O P E R AT I O N

PEOPLE, PROCESS, TOOLS, & OVER-

HEAD—Whether or not you’ve outsourced
your distribution, you’re paying for the best
people, the most valuable appreciating asset
in your supply chain.

You pay for the systems, the reports, the office space,
the buildings, utilities, and supplies necessary to run the most time sensitive
seven-day delivery system in your marketplace . . . Just for you!

This asset backed expertise is unrivaled in your marketplace. Why not lever-
age this investment with your advertisers, subscribers, and the business mar-
ketplace in general?

Because virtually no additional investment is required, the profit

potential of such an endeavor is high, especially in the long-
term, while loss risk is low.

In general, a third-party logistics provider would expect to generate about

$100,000 in annual ‘dry’ (sans fuel) revenue from each fully managed and
driven vehicle as a part of a larger fleet.

A great deal of these operations function

from 6:00am to 6:00pm, Monday through
Friday.

Providers would expect to make about

$10,000 in annual profit from such an
engagement. Their cost includes paying
for the truck, the manager, the insurance,
and a great deal more overhead than is
already in your budget. Your only incremental cost may be the fuel.

© 2006 P3L, LLC 7

 R E S O U R C E U T I L I Z AT I O N
OPPORTUNITIES—
E N T I R E D I S T R I B U T I O N O P E R AT I O N

While the first step to making better use of a newspaper

distribution system is to fully utilize the capabilities of
the big trucks, this is only the tip of the iceberg.

In the same ratio as a newspaper’s carrier expense to its

bulk distribution cost, the revenue and profit potential of
creating a cohesive door-to-door, seven day delivery ser-
vice from the foundation of
newspaper delivery
is enormous.

Without question, From plant to

DC to Carrier to
this type of change can Reader

add to the infra-

structure needs of
the distribution system,
thereby adding cost.

The key is organic growth driven

by bulk distribution partnerships, and market-
place demand.

On an “as-developed” basis, depending on marketplace, neighborhood, and

volume, this challenge can be addressed on a route-by-route basis. Some
routes may remain on a newspaper-only contractor basis, while some may
warrant the investment into a full-time delivery force that can net better con-
trol and lower cost.

The barriers are larger, but the principles don’t change. A robust delivery net-
work, equipped, prepared, and challenged to grow itself as its own product,
with the newspaper as its base, needs little investment to position itself to pro-
duce profitable revenue.

© 2006 P3L, LLC 8

 ADDITION BY ADDITION—
PULLING IT TOGETHER

DECISIONS & DIRECTION

Lead or Follow?

Lead—Total Operations Ownership Follow—Complete divestiture of

(as current) augmented
with complementary
partnerships to maxi-
mize asset utilization
Lead—Internal Potential
• Local Business
Delivery
• Subscriber Benefit
• Advertiser Partnership
entire Transportation
System
Lead—External Potential Follow—Potential Providers
• Furniture • US Postal Service
• Appliances • Express Delivery
• Electronics Companies
• Home Improvement
(i.e. FedEx, UPS, DHL, etc)
• Heavy Industry

Lead—Staffing
• Augment Current
Driver Hours Only
• Two Circulation Driver Shifts
• Outside Work—Inserts—Depart
• Mains—Outside Work—Depart
Marketplace Options
• Two Driver Shifts • Risk versus Reward
• Circulation Exclusive “as-is” • Does the market meet our preferences?
• Outside Work Exclusive • Reassess value of opportunities versus
preferences?

Since this process will vary by newspaper operation, marketplace potential, staff-
ing potential, and newspaper management preferences, the process will repeat as
marketplace opportunities are matched with operational potential and manage-
ment preferences.

© 2006 P3L, LLC 9

 ADDITION BY ADDITION—
PULLING IT TOGETHER
MANAGEMENT

While some newspapers are prepared to manage the

more complex operation that will result from any trans-
portation partnership, most would find it frustrating.

That is where third-party logistics providers bring value.

If you are currently outsourced to a third-party provider,

are they simply doing what you used to do?

If you’ve considered outsourcing before, but found no value, this type of lev-
erage may provide the financial and operational benefits necessary to justify
shedding your transportation system. Challenging operations are why third-
party providers exist.

FAQ:

Q: I’m already outsourced, or I’ve considered outsourcing. Why shouldn’t I

just propose such an arrangement or study with our current or suitor pro-
viders?

A: Three major reasons:

1. The provider will dictate the financials and take a percentage of

any gain in perpetuity.

2. The provider will own the partnership, making future competitive

bidding on the operation extremely difficult, or impossible.

3. Different providers specialize differently. Having the entire pro-

vider population bid on the best match for you in your marketplace
will demonstrate provider strengths and weaknesses.

© 2006 P3L, LLC 10