Welcome to Thomas Insights — every day, we publish the latest news and analysis to keep our readers up to date on what’s happening in industry. Sign up here to get the day’s top stories delivered straight to your inbox.
If you or your kids grew up collecting Hot Wheels or Barbie dolls, you’re no doubt familiar with the sheer delight felt from trying to collect them all.
Today the range of Mattel toys available is increasingly varied. One thing that has been decreased, however, is the range of colors used in these products. Last month, the world’s largest toy manufacturing and entertainment company announced it would be reducing the number of shades of red – and other colors – available to its toy designers by more than a third.
Fifty Shades of Red
Founded in 1945, Mattel is known for producing some of the world’s most-loved toys and games, including Hot Wheels, Barbie, and UNO, as well as merchandise for massive Warner Bros. franchises such as Harry Potter and Batman. Until recently, Mattel’s designers were able to choose from around 150 different shades of red but this recent decision reflects something psychologists have been telling us for years: too much choice isn’t good for us.
In fact, it turns out that being spoiled by choice is not just something making the modern-day consumer miserable, it’s actually bad for business.
Simplifying Supply Chains
Supply management professionals are forever looking for ways to de-clunk their supply chains and improve processes. What can they learn from the Mattel model?
“Complexity is really a killer,” said Roberto Isaias, Mattel’s Chief Supply Chain Officer and the one responsible for making the color cut. There are several ways this decision is helping to support the company’s ongoing mission to simplify its supply chain and save hundreds of millions of dollars.
Having an excessive number of color choices, plus the option to have each one in different ink types, such as glossy and waterproof, is expensive. It’s costly to store the colors and wastes time in factories when workers have to clean the equipment more frequently between color swaps.
Mattel currently runs 13 factories that employ up to 35,000 workers during the busiest periods to supply products to more than 375,000 locations around the globe. Reducing color options will support the consolidation and closure of some of these plants, keeping only the ones that are deemed to be strategically important.
The Future of Mattel Product Development
Reducing the color options available to toy designers means Mattel will be able to produce products more efficiently and design toys in response to trends and consumer demand. As Isaias highlighted, designers simply don’t need the number of colors currently available and, of course, most consumers are unlikely to notice the reduced number of shades used.
Mattel is also making changes in other areas to drive operational efficiency and cut costs across its sprawling supply chain:
- In Europe, an automated, online ordering system for wholesale orders has been established, which negates the need for employees to manually process these orders. Additionally, Mattel has set a higher minimum order size to ensure high shipping costs aren’t being paid for low-value orders.
- The company is using algorithms to analyze consumer demand and manufacture its products accordingly. This is particularly useful during the holiday season because Mattel can estimate the number of units it needs to produce any given product. Integrating this kind of technology provides the much-needed increased supply chain visibility. Interestingly, while 94% of supply chain leaders advocate digital transformation for this purpose, only 25% have a strategy in place.
- Mattel intends to reduce the number of products it produces by 30%. In particular, it will halt production on items that make up the smallest proportion of its revenue. This decision will make it easier for Mattel to implement the updates to its color catalog.
Simplifying your processes in the age of increasingly global and complex supply chains takes time and effort. Companies must interrogate all aspects of their supply chain and scrutinize every process to make the marginal gains that eventually contribute to major savings. Given that companies with global supply chains typically have a cost base of which 90% is caused by supply chain expenditure, it’s a time commitment worth making.
Image Credit: Image courtesy of SmLyubov / Shutterstock
