Mattel has gotten to the heart of one of its problems: Too many reds aren’t a good thing. The company’s designers until recently could choose from about 150 types of red when making Barbie dolls, Hot Wheels cars or other toys in its stable. Each variation added storage costs and downtime at factories for cleaning equipment to swap out shades. “Complexity is really a killer,” said Mattel’s chief supply-chain officer. Mattel has chopped the choices of reds by more than 1/3 and is doing the same for other colors, part of a broad edict to simplify the company’s supply chain. The goal is to improve, modernize and ultimately tame a sprawling supply chain that operates 13 factories, employs 35,000 people and delivers toys to 375,000 retail locations world-wide, reports The Wall Street Journal (Jan. 2, 2020). “Supply chain had become one of our handicaps,” adds the CEO. Mattel says it plans to keep factories that are “strategically important” or that can make certain products at a better quality and lower cost than a third party could, while consolidating plants that are underused. The company already changed how it sells and fulfills orders to retailers. In Europe, Mattel implemented an automated, online ordering system for wholesale orders, eliminating the need for its sales team to manually process orders. It also increased the minimum order size so that it wasn’t shipping orders valued at just a few hundred dollars into a fragmented retail market. More broadly, Mattel is using new algorithms to tie its manufacturing output more closely to demand, helping the toy maker to gauge the right number of toys for the holidays. Mattel also will be making fewer products. The company is planning to cut the number of items it sells by 30%, targeting the 45% of the items it sells that only make up 6% of its revenue. Link to the Wall Street Journal article: https://www.wsj.com/articles/mattel-puts-a-lid-on-excess-colors-11577976645?mod=djemlogistics_h Discussion questions: Why does Mattel have so many plants? So many colors? What inventory strategy is Mattel using to cut SKUs (ABC analysis / Inventory Record Accuracy (IRA) / Cycle Counting)? note: this is not a writing assignment, you just need to answer it briefly
Mattel has gotten to the heart of one of its problems: Too many reds aren’t a good thing. The company’s designers until recently could choose from about 150 types of red when making Barbie dolls, Hot Wheels cars or other toys in its stable. Each variation added storage costs and downtime at factories for cleaning equipment to swap out shades.
“Complexity is really a killer,” said Mattel’s chief supply-chain officer. Mattel has chopped the choices of reds by more than 1/3 and is doing the same for other colors, part of a broad edict to simplify the company’s supply chain. The goal is to improve, modernize and ultimately tame a sprawling supply chain that operates 13 factories, employs 35,000 people and delivers toys to 375,000 retail locations world-wide, reports The Wall Street Journal (Jan. 2, 2020). “Supply chain had become one of our handicaps,” adds the CEO.
Mattel says it plans to keep factories that are “strategically important” or that can make certain products at a better quality and lower cost than a third party could, while consolidating plants that are underused. The company already changed how it sells and fulfills orders to retailers. In Europe, Mattel implemented an automated, online ordering system for wholesale orders, eliminating the need for its sales team to manually process orders. It also increased the minimum order size so that it wasn’t shipping orders valued at just a few hundred dollars into a fragmented retail market.
More broadly, Mattel is using new algorithms to tie its manufacturing output more closely to demand, helping the toy maker to gauge the right number of toys for the holidays. Mattel also will be making fewer products. The company is planning to cut the number of items it sells by 30%, targeting the 45% of the items it sells that only make up 6% of its revenue.
Link to the Wall Street Journal article: https://www.wsj.com/articles/mattel-puts-a-lid-on-excess-colors-11577976645?mod=djemlogistics_h
Discussion questions:
- Why does Mattel have so many plants? So many colors?
- What inventory strategy is Mattel using to cut SKUs (ABC analysis / Inventory Record Accuracy (IRA) / Cycle Counting)?
note: this is not a writing assignment, you just need to answer it briefly
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