The rush before Christmas

7 December 2010
This summer we set 12 purchasers a series of challenges in our ‘Battle of the Buyers’ event. One of the tasks was to source a plastic toy not manufactured in the Far East. It didn’t take long for each team to go to the Lego department of Hamleys toy store. Lego makes its toys in Mexico for the US market, and the Czech Republic, Hungary and Denmark for Europe. It is an unusual model, because as our cover feature on toy supply chains found, about 80 per cent of these goods are made in China. But there are potential perils with the approach taken by the majority. In some cases the industry decides what it wants on the shelves in time for Christmas up to a year in advance. When it puts in orders with manufacturers thousands of miles away, it does not know what will top children’s wishlists months later. As the seasonal peak nears, it must be tempting to put pressure on suppliers to turn things round quickly. This risks factories breaking codes of conduct or reducing quality to rush orders through. And even if they can get it done, there’s then the high cost of air freight to contend with. In some cases, it just isn’t feasible. The electronics industry is facing severe shortages this season after it decided not to invest in inventories this year. There were warnings from some quarters that lead times have hit dangerously high levels – an average of 50 days. Lego, on the other hand, says it can react swiftly to replace stocks. Claus Pejstrup, vice-president, global planning and US supply chain, told us: “We produce close to our markets, and this gives us the ability to react within two weeks.” That sounds like an enviable turnaround time to me. This is the last issue of Supply Management for 2010, the next edition will be out on 6 January. In the meantime, you can find news and other updates online at www.supplymanagement.com. Until 2011, merry Christmas and a happy New Year to all, from the SM team.
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