Toy Manufacturing Isn't All Fun and Games
By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE
The holiday season is in full swing, but one trade group predicts gift givers aren't done with their shopping yet. That means this will be a very big shopping weekend, according to the National Retail Federation (NRF).
"There's no question that the shortened holiday season has put both retailers and consumers in a rush to make the most out of the time that's left before the big day," says NRF President and CEO Matthew Shay. "Consumers will definitely be doing their homework before committing to any gift purchase, however, making it even more important for companies to compete on value, price, and digital offerings."
Like many companies, Lego's holiday sales represent a large portion of the Denmark-based toy company's yearly revenues. The Wall Street Journal reports that Lego must accurately predict and track buying patterns during December because the company packages its bricks for individual markets. Specific play sets contain many of the same bricks but some unique to the kit.
"It increases the importance of getting very good data, so we can supply the retailers with the right products at the right time," said John Goodwin, Lego's chief financial officer. "We have to be as close to the ultimate purchase as possible in order to respond."
Lego's holiday purchases are mostly in Europe and North America, but the company is looking to Asia for growth. Without the ability to see every child's wish list, Lego must rely on data and senior executives to get children and parents exactly what they want.
The magic of S&OP
When I think about how leaders at Lego and companies like it make these important decisions for the holiday sales season, my mind automatically turns to the benefits of sales and operations planning (S&OP). Consider the following definition of S&OP from the APICS Dictionary, 14th edition: "A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain …"
What's on your holiday list for 2013? Maybe it's time for you and your company leaders to learn how S&OP can make a big difference in your revenues all year long. APICS partners with the Institute of Business Forecasting and Planning to present the Best of the Best S&OP Conferences. We're excited to showcase this event in Amsterdam, Netherlands, May 15–16, 2014. Next, June 12–13, 2014, Best of the Best comes back to Chicago. Visit here for more information.