Case study: Reader's Digest Association - Williams Lea

Case study: Reader’s Digest Association$450M savings over the life of thecontract, with $130M delivered in the first3 yearsBackgroundReader’s Digest Association (RDA) is theworld’s leading direct marketer ofmagazines, books and music. With directmail as their only route to market and apresence in 31 countries, they spend $220million per year on attracting and retainingcustomers.Procurement of direct mail is a core businessactivity for RDA. As such, RDA had alreadyachieved significant savings on print throughthe deployment of specialist productionteams, innovative processes and robustprocurement practices leaving minimalvisibility of further significant savingsopportunitiesIn March 2007, RDA was acquired by aprivate equity firm, who introduced animmediate focus on increasing long termprofitability. A primary component of thestrategy was reducing costs in key spendcategories.The challengeHaving already conducted a significantnumber of cost improvement initiatives, thechallenge was to build a solution thatdelivered further significant savings.A short opportunity assessment revealedthat over time, cost reduction initiatives hadreduced RDA’s spend in the market. Thisimpacted their leverage and their ability tonegotiate further cost reductions.A contract spanning 19 countries with a managed cost base ofmore than $1 billionFor more information, visit www.williamslea.com

Case study: Reader’s Digest AssociationSimilarly, buyers had no visibility of directmail spend in other divisions or markets,limiting their ability to proactively co-source.The existing model included over 100 inhouseprint buyers holding significantintellectual property. This represented a keyrisk of change. Furthermore, RDA's printbuyers were incentivized against overallbusiness performance, rather than againsttheir individual performance as it impactedthe company's costs.The solutionThe solution was to build a global print utilityunder a single reporting structure.RDA’s $218 million print spend wasaggregated with Williams Lea’s $800 millionspend creating the largest independent printsourcing entity in the world. This enabledRDA to benefit from unprecedentedleverage.All 100 print buyers were retained andaugmented with an additional 70 fundedthrough savings. This significantly reducedrisk in the change management processwhile providing the extra resources requiredto focus on process enhancements.By re-aligning the reporting structures anddeploying a leading edge campaignmanagement and print sourcing tool, staffwere incentivized to collaborate andproactively plan production. The increasedvisibility will enable buyers to co-source andbuy press capacity in advance.Staff remuneration was changed linking theirbonuses to savings delivery, therebyincentivizing the team to drive long termsavings.Results• Contractually guaranteed savings of $130million over the first three years• $450 million in savings over the life of thecontract