AS WORLD’S COLLIDE:  Managing the Physical and Digital Supply Chains

An interview with CapGemini Executive Mark Landry

Consulting companies are all about great people; without the right ideas and communicators even the most established firm, with the most expansive global resources, will fail to provide the sustainable results that are required to maintain a company's position in its markets.

Mark Landry, VP of Media and Entertainment, for Capgemini's West Coast operations, is one of those people -- one of 75,000 employees, in fact, at the 40- year old, international consultancy.  As the lead for Capgemini’s M&E practice, with a primary focus on serving the major studios in Los Angeles, Landry has experience in supporting studio-based product distribution: theatrical, home video, and television. He also leads projects on studio operations, TV production and rights management.

Landry has over 22 years of experience in technology and consulting services; a former Ernst & Young partner, he joined Capgemini when the firm was acquired seven years ago as part of a period of accelerated global expansion for the company. The acquisition of Ernst & Young Consulting in 2000 actually tripled the size of Capgemini’s operations in North America—the world’s leading market for IT services—and strengthened the company’s position in Europe as well. Led by CEO Paul Hermelin since December 2001, Capgemini has since become one of the top five IT services and consulting companies worldwide.

Not surprisingly, Landry's M&E group has been strategically aligned with the company's telecom, cable and wireless business groups to capitalize on the convergence of technology and the many new channels of distribution being afforded by the digitization of content.

The company was also recently named title sponsor of the Second Annual Entertainment Supply Chain Academy (ESCA), scheduled for June 27-28,2007 at the Century City Plaza Hotel in Los Angeles, California, which will focus on the operational challenges of today’s physical and digital home entertainment supply chain.

"Studios are actually a group of disparate business units; they all have different customers and different operating models, and divergent businesses, without much interdependency.  As digital starts to emerge as a real business, the interests of these groups will begin to collide, causing organizational shifts and, at times, internal skirmishes over who gets to lead on the new opportunities," he explains.

Who will control the new digital video streams to the consumer?  Will it be the traditional home video divisions, theatrical or television?  Landry explains that each of the studios has addressed the changing landscape with the appointment of a digital media executive who often finds himself playing referee between the various factions.

"While the home video divisions own the relationships with the major customers (i.e., Wal-Mart), the traditional television distribution companies know all about licensing, contracts and intellectual property, which is integral to managing these new digital businesses, as new distributors and retailers all want to get their hands on the content," he says, adding: "Digital is all about building relationships and working out licensing."

It's helpful that Capgemini's work within the Hollywood community involves experience with all studio groups -- providing their customers with a holistic picture of their own organizations as well as emphasizing their growing interdependencies. 

Current Capgemini M&E projects include:

-- Helping two studios build out their international theatrical distribution systems.

-- Supporting a film studio as it moves from physical print management to digital cinema distribution.

-- Aiding a home video studio as it restructures its supply chain relations around the world.

-- Supporting a television programmer as it adapts its intellectual property and negotiates agreements for digital distribution.

Based on the sizable contributions that the home video groups make on today’s studio bottom line, much of Landry's current work also involves providing end-to-end consulting for their physical media businesses, helping them evaluate their supply chains from the replicator to the retail floor.

Landry identifies three "mega supply chain processes" that have to be managed at optimum levels by every DVD content holder:

-- Product Lifecycle Management: "A lot of third parties are involved in the authoring, compression, manipulating, packaging and manufacturing of the DVD," he says.  "It is a very complex process and it is critical to understand the true costs as well as help studios hit their street dates.  Problems in the supply chain often begin here and can result in increased, unbudgeted expenses in the preproduction period, often leaving replicators with less time to react and compressing the entire release cycle."

-- Supply Management:   "All the studios are really in the business of planning and working with the retailers to see what their commitments are going to be; they are relying on the replicators and the distributors to manage the supply chain for them.  For this “outsourcing” to work, there needs to be a collaborative supply chain with true transparency between the studios and their partners  -- and they need to start treating them as their partners -- so replicators can get a better overall view of what is going on."

-- Order to Cash Processing:  "Creating more efficient relationships with the customers, streamlining the exchange of goods and capital to the betterment of both parties, is essential,” he explains.

Will the physical media supply chain integrate with its digital counterpart?  What is the fate of physical media suppliers as the studios venture forth into the great, digital unknown? What are the inherent differences between the physical media and digital media supply chains?

"Refining the physical media supply chain is what it's all about today -- optimizing the organization to drive out all the unnecessary costs," he says. " In digital, it's all about inventing ‘the process.’ We are helping studios understand how to identify the digital capabilities of their respective organizations and focus them on their individual strengths."