Océ Case Study

Romancing a just-in-time model at Harlequin Océ and Harlequin Enterprises In North America and around the world, romantic fi ction is the single biggest genre in modern literature, and Harlequin Enterprises is the biggest publisher of romance novels. Claiming 30 to 50 percent of the market, Harlequin maintains its leadership position through continuous business process improvements and a focus on using advanced digital technology to improve the economics of publishing books.

Founded in Winnipeg, in 1949 as Harlequin Romance, “We direct-ship to retailers like Target or Wal-Mart and ship to Harlequin Enterprises is a global publishing powerhouse and the wholesalers on a well-defined schedule to ensure that products number one publisher of romance novels. Harlequin’s series books hit the market at the same time. Our schedule is a little more are shorter romance novels, typically about 225 pages long. structured than other publishers because of our monthly release schedule for series romances and the sheer number of titles we They’re numbered, branded (historical, inspirational, etc) and release every month. released in chronological order through retail bookstores and book clubs that mail books to subscribers every month. Series “We are very much a frontlist business, although our backlist is titles have a shelf life of anywhere from four to five weeks, are growing,” Robinson adds. “We publish 1,300 new titles a year. Like held in inventory for a short time, and then made available many other publishers, we print fairly large offset runs and like other through the company’s website, www.eharlequin.com. Harlequin publishers, there’s been a tendency to overproduce books that end up single-title romances are longer romance novels that average from in a warehouse and never see the light of day. Books that are returned 288 to 600 pages and are released individually. The single-title are recycled, destroyed or resold to other buyers.” category includes popular best sellers authored by well-known writers like or Linda Lael Miller. Faced with rising supply chain costs, Harlequin wanted to eliminate inventory and storage issues, cut waste by printing Harlequin issues 115 new titles every month, prints 500,000 books in short runs, reduce costs and minimize environmental books a day and close to 140 million books a year. While half impact. Harlequin was convinced that digital book printing of the company’s global sales are in North America, Harlequin technology offered an important opportunity to control serves an audience around the world that, in aggregate, matches distribution and reduce the number of books that were being its North American readership. As evidence of the global overprinted. “Our first priority is to satisfy the market,” Robinson popularity of the Harlequin romance, the books are translated says, “so if we reduce the length of our offset runs, we have to be into 26 languages and sold in 96 markets around the world. able to supplement them with something. Our vision was to print shorter offset runs and make up the difference on digital printers Challenge: throwing away millions of books a year to more closely align supply with demand.” One of the most difficult challenges modern publishers face is accurately estimating how many copies of a title will sell and Harlequin also wanted to be able to serve profitable niches then producing the right number of books to meet demand— where the customer base is very small, but very loyal. “We have without overprinting or coming up short. The catch-22 of customers who like specialized genres like medical novels or traditional book printing has meant printing longer runs to books with larger print. Some of these books would never be keep unit costs down. The outcome is typically costly overruns, printed because demand was so small and it was too expensive overstocked warehouses, returns, remainders and waste. This is to print a run of 5,000 books on an offset press. We wanted to the issue Harlequin Enterprises faced. The publishing giant, a be able to serve this market by printing 2,000 or 3,000 copies on division of ’s Torstar Corporation, has done its printing digital printers.” and central distribution work in Depew, New York for 30 years. The company relies on Quebecor World, located just across the Jim Robinson had a very specific solution in mind: a fully street, to print large runs of books on offset presses. automated, end-to-end digital book factory where plain paper went in one end and fully completed books emerged at the other. Given the challenges of the traditional publishing model, The objective was to produce a book using the same substrate Harlequin found that it was throwing away more than a million and files, and with the look and feel of offset—using a digital books a year. Jim Robinson is Vice President of Operations and production line. Harlequin considered a variety of manufacturers Administration for Harlequin Enterprises. “We manage our and digital book production solutions, but hit a brick wall when own distribution on a very predetermined basis,” Robinson says, he told them what he wanted. The response from each vendor 2 Harlequin’s Automated Book Manufacturing System

Muller Martini KTI 3-Knife Dual Roll Trimmer Unwinder Shuttleworth Palamides Buffer Signature Muller Accumulator Martini Conveyor

MBO Folder LaserMax Cutter

WEKO Océ VarioStream 7650 CX 7650 VarioStream Océ Remoisturizer

Shuttleworth Conveyors Muller Martini Perfect Binder Océ VarioStream 7650 CX

was virtually the same—they could provide a digital solution The process begins with a KTI® dual roll unwinder/self-splicing that would print book blocks on demand, but all the finishing, system that feeds paper continuously to an Océ VarioStream® binding and trimming would have to be done offline. 7650 CX Twin digital press. One side of the paper is printed on the first engine, inverted with a turnbar, and then passed to “We saw a great opportunity with digital technology,” recalls a second print engine, which prints the other side. The paper Robinson. “The challenge was that in the mass-market paper- web then passes through a WEKO™ remoisturizer to restore back market, nobody was doing it. We were in new territory. the moisture lost in the paper during the fusing process. This We researched vendors, looked at pricing, and we identified ensures that the printed books lay flat. Next, the web is sent to our most important criteria—a short-run book manufactur- a Lasermax Roll Systems™ cutter, which cuts the continuous ing production line, not a POD system. We wanted to be feed web into lengths suitable for creating signatures of 12 or able to print on the same paper we use in the offset world and 16 pages. produce a book that would be indistinguishable from offset. Other vendors struggled with our concept. We wanted to send The signature sheets go through two MBO™ folders, which plain paper in one end and deliver finished books at the other. fold the sheets into multi-page signatures. From the folders, Océ was the only vendor who could deliver what we needed.” signatures are gathered in a Palamides™ Signature accumulator as individual book blocks, which are transported on a series of The solution: the Océ Digital Book Solution Shuttleworth™ intelligent conveyors to a Muller Martini™ post- In the spring of 2006, Harlequin installed the first fully processing system. The individual book blocks are clamped and integrated Océ Digital Book Solution in its Depew distribution passed over a spinning, milling blade, which prepares the spine center. Given the fact that it was the first end-to-end digital for binding. Hot glue is applied to the spines and covers are book factory of its kind to be installed, the production team clamped onto the book blocks. Once the covers are applied, the encountered some initial hardware integration challenges. bound books are transported through a conveyor to a three-knife There were also some initial issues with training warehouse and trimmer, trimmed on the head, foot and face, ready for boxing distribution center staff to operate sophisticated digital printing and shipping. The result? An offset-quality, digitally produced, equipment—something they had never done before. The Océ trimmed and bound book ready for sale. product management and support teams worked closely with Harlequin to resolve the issues and fine-tune the system. Today, the book production line hums along smoothly, with the ability to print some 6,000 192-page books per shift. 3 The print operation today Result: streamlined production, more ROI, less waste Today, at the 400,000 square foot North American distribution Since installing the Océ Digital Book Solution, Harlequin center in Depew, New York, Harlequin Enterprises uses the Océ Enterprises has achieved many of the benefits it hoped to achieve at Digital Book Solution to print fill-in orders that would not be the start. “From a financial perspective, our goal was to generate a economical to print on Quebecor’s offset presses. Rather than return on our investment within three and a half years. I can tell you overprinting runs by several thousand books as the company did now that we will do significantly better than that,” says Robinson. in the past, Harlequin has realized its vision of printing smaller quantities on the offset presses and making up the shortfall on the “One of the reasons the transition worked is that we had good senior digital book line. The digital print operation runs two eight-hour management support and people who recognized a great bottom line shifts a day, five days a week to meet growing customer demand, opportunity,” Robinson adds, “but we had our own internal skeptics churning out an average of 45,000 books of various page counts who told us it would never work, not to change the system, that it per week in short, economical runs. wouldn’t be reliable. Now the digital book factory has succeeded so well that those same people want us to use it in ways that it wasn’t “Historically, we would get a market forecast for 50,000 books,” intended—to cover a year’s worth of inventory or to print longer says Robinson. “Our offset printer would deliver 51,000 or runs of books. It’s an interesting turnaround.” 52,000, we would sell 46,000 and the remaining 5,000 would be destroyed. Now we look at that forecast for 50,000 books and we “We still have work to do in refining how we manage inventory,” might cut the run down to 46,000 or 47,000 based on the overrun says Robinson, “but now that we have a high level of confidence history. If we need another 500 or 1,000 books, we print them on in printing short runs, we can get more aggressive in reducing our the Océ digital production line.” offset runs. This means knowing where there are opportunities to cut and to replenish inventory.” In addition to fill-in orders, Harlequin uses the Océ Digital Book Solution for cost-effective galley production—printing the As for the future, Robinson has ambitious goals. “Our goal,” says unedited, advance reader editions of books that are sent out to Robinson, “is to save 5 million books from being printed on offset buyers and reviewers to promote books before they are published. per year. We don’t expect to get to zero waste, but we do think we “The quantities for advance readers are typically fairly small, can save 3.5 million books a year. And that’s an impressive story.” anywhere from 100 to 600 or 700 at most. The digital technology helps us save money on this important marketing initiative.”

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