{"id":18942,"date":"2016-11-18T17:27:37","date_gmt":"2016-11-18T22:27:37","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/greetings-from-hallmark\/"},"modified":"2016-11-18T17:29:11","modified_gmt":"2016-11-18T22:29:11","slug":"greetings-from-hallmark","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/greetings-from-hallmark\/","title":{"rendered":"Greetings from Hallmark"},"content":{"rendered":"

Over the last few years, paperless substitutes and online competitors have posed challenges for greeting cards companies. [1]<\/p>\n

In this context, the story of Hallmark Cards is the story of a market leader that has lasted over 100 years old whilst having its business and operating model disrupted by technology. It has not always been easy; between 1999 and 2008, Hallmark laid off over a quarter of its workforce. [2]<\/p>\n

A business model transformed<\/h2>\n

Hallmark Cards is best known for its greeting cards, and before the 1990s, its customer promise would have been supplying greetings cards to retailers that appeal to consumers. This required designing a limited amount of designs (given limited shelf space in a store) that resonated with the broadest customer base possible.<\/p>\n

Today, Hallmark Cards has interests across general merchandise, specialty retailing, CPG and entertainment, including Crayola, LLC and the Hallmark Channel. If you asked them, they would say they have transformed their customer promise to \u201ccreating a more emotionally-connected world\u201d. [3]<\/p>\n

Their business model centres around facilitating expression that feels personal, at scale, though this may sound like a contradiction. With this in mind, \u2018access to niche markets\u2019 is identified as the key contributor of success within their industry. [2] It implies a need to be less generic in their product. This shift in business model has been made possible by interesting shifts in their operating model.<\/p>\n

Information Flows in the Supply Chain<\/h2>\n

\u201cHallmark\u2019s business is based on its ability to help people worldwide communicate their feelings\u201d states Tony Marshall, their decision support specialist. \u201cIn this kind of business, you need information systems to keep the company in touch with its customer base.\u201d [4]<\/p>\n

Traditional Supply Chain:<\/h5>\n

\"snip1\"<\/a>Over the last few years, the company implemented a cloud-based, retail-as-a-service solution, that included a point-of-sale (PoS), real-time inventory management and a web portal ordering service. [6]<\/p>\n

Having services provided through the cloud was cost effective (little capital investment per store), gave the company the flexibility to add capabilities as needed in the future, as well as allowed for rapid scaling.<\/p>\n

Their new supply chain:<\/h5>\n

 <\/p>\n

\"snip2\"<\/a><\/p>\n

This reduces the \u2018bullwhip effect\u2019. Much of the greeting cards demand is seasonal, making it particularly susceptible to having minor signal variations from the retail end being amplified at the production order stage, creating significant distortion.<\/p>\n

Predictive analytics using real-time data, allows the team to better determine how to market to various consumer segments during holidays and special occasions, and optimise production.<\/p>\n

Big Data<\/h2>\n

Keeping in mind the importance of predictive analytics, Hallmark Cards has created a veritable data warehouse. 13 million loyalty program members who purchase thousands of different greeting card SKUs are combined with a POS database with over 4 billion rows of data, and other data sets. [7]<\/p>\n

It is often difficult to quantify the value that data has within in an operating model. In Hallmark\u2019s case, a fascinating court-case in 2014 gives us some insight. A four-year old powerpoint presentation based on just a fraction of Hallmark\u2019s data, was determined to have stolen by a PE firm. The compensatory damages awarded by the court? $21.3 million. [8] [9]<\/p>\n

Production Efficiency<\/h2>\n

It is not just on the retail end where facilitating information flows has value. On the design and production end, take the example of determining the priority of orders.<\/p>\n

The Process Before Digitizing the Flow:
\n\"snip3\"<\/a><\/h5>\n
After:<\/h5>\n

\"snip4\"<\/a><\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

[10]<\/p>\n

Greeting the future<\/h2>\n

Hallmark is home to a 4 billion dollar industry that releases 10,000 new card designs each year. Industry revenue is expected to decline 3.2% annually. [11] However, there is room for Hallmark to leverage its brand:<\/p>\n