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Introduction

The way in which companies have conducted, managed, controlled and integrated their business operations have experienced dramatic changes during the last couple of years – this is especially true in the worldwide recording and music industries. Rapid advances in technology and increasing regulatory freedom have changed the rules of operation and competition. Businesses are now competing globally and traditional barriers between industries are breaking down. To cope with these and other changes and achieve superior performance, business leaders are moving towards new business paradigms that allow their companies to work more closely together with their traditional and new business partners (which include all clients and suppliers up and down the supply chain), in order to adapt to the rapidly changing marketplace.

Problem statement

The South African recording industry provides a unique and compelling case for creating value through outsourcing – and ultimately through the total integration of supply. The local industry’s dramatic history of growth, its sheer pace, the magnitude of change and increasingly complex and global supply chains have created huge challenges for all participants. Traditional channel structures and behaviours in the industry’s supply chains have not kept pace with these changes. In the markets of the future, comprehensive management which collaborate the supply chain as a whole is needed to fulfil the new demands set by players and consumers alike.

Data analysis

All data were analysed in order to determine its relevance, validity and importance to this study. Data were gathered by circulating questionnaires to record companies, their clients and suppliers as well as to supply chain management companies – details of the respondents are discussed in Chapter 5 under point 5.4.3.2. The questionnaire is attached as Annexure I at the end of the thesis. Personal interviews were conducted with various players in the local recording industry (refer to Chapter 5 point 5.4.3). In conjunction to this primary information, literature sources (text books, academic journals and magazines, scientific publications, websites and others) were studied in order to obtain relevant secondary information (refer to the list of References at the end of the
thesis).

Research steps
Following a set of systematic steps is vitally important to the planning, order and execution of any scientific research process. The research in this study was executed by following seven basic steps, which are listed below in chronological order:  (a) Determining research objectives and the scope of the study  The topic to be researched was identified early in the research, and was registered as: A Supply Chain Model for the South African Recording Industry.

ACKNOWLEDGEMENTS
CHAPTER 1 SUPPLY CHAIN MANAGEMENT – A BASIC OVERVIEW
1.1 Introduction
1.1.1 Problem statement
1.1.2 Supply chain management
1.1.3 Objective of the research
1.2 Research methodology
1.2.1 The business research process
1.2.1.1 Research attributes
1.2.1.2 Research steps
1.3 Managing existing business paradigms
1.3.1 Discontinuous business change
1.3.2 Changing the mindset
1.3.3 The impact of change on logistics systems 13
1.3.4 Maintaining a competitive advantage
1.3.5 Complete transformation
1.4 Evaluating channel strategies
1.4.1 Logistics management
1.4.2 Forecasting
1.4.3 Static and strategic components
1.4.4 Benchmarking
1.5 Contents of the thesis
1.6 Summary
CHAPTER 2 MAJOR PLAYERS OPERATING IN THE LOCAL RECORDING INDUSTRY
2.1 Introduction
2.2 Record industry terminology
2.2.1 Music publishing
2.2.2 Copyright
2.2.3 Publishing revenues
2.3 South African governing bodies
2.4 The artist
2.4.1 The individual artist or band
2.4.2 The signed artist or band
2.4.3 Artists’ governing bodies
2.5 The record company
2.5.1 Main functions
2.5.2 Types of record companies
2.5.2.1 The Majors
2.5.2.2 The Independents
2.5.3 Record company governing bodies
2.6 The trade
2.6.1 Wholesalers
2.6.2 Dealers
2.6.3 Retailers
2.6.4 Independent stores
2.7 The consumer
2.8 Summary
CHAPTER 3 MODEL A: THE CURRENT LOCAL SUPPLY CHAIN
3.1 Introduction
3.2 The manufacturing process
3.2.1 Just-In-Time manufacturing
3.2.1.1 Just-In-Time principles
3.2.1.2 Information technology
3.2.1.3 Customer service
3.2.2 Management Information Systems
3.2.3 Compact disc manufacturing
3.2.3.1 Principles of CD manufacturing
3.2.3.2 Compact Disc Technologies
3.2.3.3 Sonopress SA
3.3 Warehousing and distribution
3.3.1 Receiving
3.3.2 Picking
3.3.3 Physical distribution
3.4 Marketing
3.5 Selling
3.5.1 Sales executives
3.5.2 Music For Pleasure
3.6 Debt collection
3.7 Management of receivables
3.7.1 Ad Valorem duty
3.8 Piracy
3.8.1 Piracy definitions
3.8.2 The effects of piracy
3.8.3 The Counterfeit Goods Act
3.9 Summary
CHAPTER 4 OUTSOURCING TO A THIRD PARTY
4.1 Introduction
4.2 Adding value through outsourcing
4.2.1 Outsourcing methodology
4.2.2 Collaborating with strategic business partners
4.2.3 Third-party logistics
4.2.4 Outsourcing integration driven by management
4.2.4.1 Management capabilities
4.2.4.2 Key success factors
4.3 Integrated supply chain management
4.3.1 Collaborating the supply chain
4.3.1.1 Present channel inefficiencies
4.3.1.2 Possible success factors
4.3.2 Supply chain integration
4.4 Outsourcing pitfalls
4.5 Summary
CHAPTER 5 RESEARCH METHODOLOGY
5.1 Introduction
5.2 The business strategy framework
5.2.1 Competitive and corporate strategy
5.2.2 Strategic decisions
5.3 Properties of the research
5.3.1 Rational and empirical thinking
5.3.2 Different thinking styles
5.3.3 Hypotheses
5.3.3.1 The role of a hypothesis
5.3.3.2 The hypothesis statement
5.4 The research methodology
5.4.1 Identifying the topic to be researched
5.4.2 Exploration and judgement of the situation
5.4.3 Designing the research study
5.4.3.1 Information sources
5.4.3.2 Primary sources of knowledge
5.4.4 Sampling and data capturing
5.4.4.1 Major players
5.4.4.2 Measurement scales
5.4.5 Evaluation and interpretation of the researched information 1
5.4.6 Writing the thesis
5.5 Summary
CHAPTER 6 RESULTS, CONCLUSIONS AND RECOMMENDATIONS:THE PROPOSED OUTSOURCED SUPPLY CHAIN (MODEL C)
6.1 Introduction
6.2 Contracting the artist
6.3 Manufacturing
6.3.1 Procuring components from strategic partners
6.3.2 Lead times
6.3.3 Costs of holding inventory
6.3.4 Benefits of holding inventory
6.3.5 A re-ordering model
6.3.5.1 Determining the re-ordering criteria
6.3.5.2 Calculating the quantitive value
6.3.5.3 The re-ordering formula
6.4 Warehousing
6.4.1 Distribution Resource Planning
6.4.2 Quality control and protection of intellectual property 143
6.4.3 Pro-active warehouse management
6.4.4 Designing a functional warehouse
6.4.4.1 Preliminary planning steps
6.4.4.2 Physical lay-out
6.4.4.3 Vertical space
6.4.5 Outsourced warehousing
6.4.6 Geographic location
6.4.6.1 Factors influencing location
6.4.6.2 Factors influencing delivery lead-time
6.5 Marketing
6.5.1 The business plan
6.5.2 The four marketing questions
6.5.3 The marketing plan
6.6 Sales
6.6.1 Selling skills
6.6.2 Types of buyers
6.6.3 Sales management formula
6.7 Inventory management
6.7.1 The Management Information System
6.7.1.1 MIS functions
6.7.1.2 MIS development
6.7.1.3 MIS advantages
6.7.2 SAP supply chain management
6.7.3 Order processing
6.7.4 Invoicing
6.7.5 Shipment reporting
6.8 Physical distribution
6.8.1 Outsourced distribution
6.8.2 Emergency shipments
6.8.3 A competitive advantage
6.9 Debt collection
6.9.1 Management of receivables
6.10 Royalty payments
6.11 Summary

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A Supply Chain Model for the South African Recording Industry