Tuesday, 27 January 2015

Toy Supply Chain Management Practices: What are the Special Features that Distinguish the Toy Industry from other Industries?

The toy industry is special features that make the industry different from other industries are as follows:
  • Sales seasonality. The sale of toys is concentrated into short selling windows as around 60-70 percentage of toys are sold during the last quarter of the year with seasonality factor of five to ten, according to toy manufacturers. In order for toy manufacturer to produce according to actual consumer demand, they will need five to ten times larger capacities.
  • Short life cycles. The attention span of children is now shorter resulting in shorter toy life cycles. The sales window for movie related toys used to be four to six months but now it is two months or less. The trend of play being inspired by characters and stories means toys are often popular for shorter periods of times to only while the craze lasts.
  • Competition in innovation and costs. Toys innovativeness is very important as most toys tend to fail in the market so creativity is a must for the designers as well as pricing. For some toy manufacturer, the falling price has forced them to produce more retro toys due to the already established brand awareness and lower marketing investment required.
  • Supply & demand unpredictability. The frequent changes in consumer’s preferences such as impulse buying, seasonality and price competition all contribute to the uncertainty of consumer demand thus many retailers and manufacturer order less than the actual consumer demand.
  • Intense vertical competition. Price competition has been increased thanks to higher purchasing power from discount stores and hypermarkets.

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