{"id":23563,"date":"2017-11-15T19:54:08","date_gmt":"2017-11-16T00:54:08","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/super-mario-zelda-and-a-broken-supply-chain\/"},"modified":"2017-11-15T22:54:36","modified_gmt":"2017-11-16T03:54:36","slug":"super-mario-zelda-and-a-broken-supply-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/super-mario-zelda-and-a-broken-supply-chain\/","title":{"rendered":"Super Mario, Zelda, and a Broken Supply Chain"},"content":{"rendered":"

On March 3, 2017, Nintendo released Switch<\/em>, an innovative video game system that provided both mobile and living-room gaming access [1]<\/span>.<\/p>\n

https:\/\/www.youtube.com\/watch?v=CdWd8fUC71g<\/a><\/p>\n

Video: Nintendo Switch<\/em> [2]<\/p>\n

Only weeks after the release, Switch<\/em> was out of stock at most retailers [3].\u00a0\u00a0Nintendo cited the shortages were due to multiple issues with their supply chain ecosystem [4].\u00a0Can Nintendo rebound and address these critical problems before their next product release?<\/p>\n

No Digitalization = No Mario For You<\/strong><\/p>\n

A supply shortage is not a new concept for Nintendo. In 2016, Nintendo released the NES Classic Mini<\/em>, which was an instant gem in the gaming community. However, Nintendo failed to forecast properly, resulting in massive supply shortages, and forced the product to be discontinued in 2017 [5].<\/p>\n

\"\"
Above: Classic Mini [6]<\/figcaption><\/figure>Fast forward just a few months later, and Nintendo found themselves in the same exact position<\/u><\/strong> with the release of Nintendo Switch<\/em>. On the horizon, in the Fall of 2017, another Nintendo release has been scheduled, the SNES Classic<\/em>, which analysts predict will suffer the same fate as the NES Classic Mini<\/em> and the Switch <\/em>[7].<\/p>\n

\"\"
Above: SNES Classic [8]<\/figcaption><\/figure>Nintendo\u2019s problems stem from their inaccurate forecasts of demand and their inability to track supply and demand signals across their network. This translates to poor turnaround from their parts\u2019 manufacturers [9]. If Nintendo can\u2019t digitalize their supply chain, then the company will never have a successful launch of a product. As evident by the NES Classic Mini<\/em>, Switch<\/em>, and SNES Classic <\/em>releases, these inefficiencies result in reduced sales and low customer satisfaction.<\/p>\n

Root Concerns and Nintendo\u2019s Response<\/strong><\/p>\n

One of the key issues stems from multiple bottleneck chokepoints with their suppliers. Alps Electric, which provides components for Switch<\/em> controllers, is struggling to respond to the immediate and surprising requests from Nintendo for parts [10].<\/p>\n

Nintendo is also directly competing against other companies, such as Apple, for the same manufactured parts.\u00a0 Toshiba, for instance, provides flash memory to many industry-wide competitors.\u00a0 The competition can offer better terms to the manufacturers since their orders are of higher volume than Nintendo\u2019s. This, coupled with Nintendo\u2019s lack of transparency on orders, results in inefficient turnaround from suppliers [11].<\/p>\n

Additionally, Nintendo struggles to understand the demand for their products. After the launch of Switch<\/em>, Reggie Fils-Aim\u00e9, president of Nintendo of America, said:<\/p>\n

\"\"
Above: Fils-Aime [13]<\/figcaption><\/figure>\n

<\/h1>\n

\u201cBut what I don’t know is what the demand is going to be. And there is a potential that demand is going to outstrip supply.\u201d<\/em> [12]<\/em><\/strong><\/h1>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

These scary words stem from Nintendo using historical data to predict future demand. This is a slippery slope as they have had mixed historical performance over the years. For instance, in 2012, Nintendo launched the Wii U<\/em>, which significantly under performed. Relying on data from these types of launches will inevitably lead to incorrect demand predictions [14].<\/p>\n

Nintendo\u2019s short and medium-term plans appear to be the same: They are continuing to work on improving their data collection, forecasts of demand, and relationships with their suppliers. Yet, this has been their approach for years, with multiple flawed launches. What else can be done to address these issues?\u00a0<\/strong><\/p>\n

Recommended Path Ahead<\/strong><\/p>\n

Nintendo\u2019s short-term goal needs to immediately integrate data across the supply chain. It is evident by the aforementioned product releases that this is NOT<\/strong> currently happening. Rather, each division is acting independently within their own silo, increasing the amount of time it takes for information to flow throughout the chain. With this digital supply chain, as soon as customer demand shifts, planners within Nintendo can assess the impact and share it with their suppliers immediately<\/u><\/strong> to reduce component manufacturing bottlenecks [15]. \u00a0Additionally, if Nintendo can make the communication seamless with their suppliers, it will promote a healthy relationship that will perhaps give Nintendo a competitive edge over competition when trying to get parts.<\/p>\n

\"\"<\/p>\n

Their medium-term goal should focus on their poor supply and demand predictions. Nintendo MUST adopt predictive analytics in demand planning.\u00a0 This strategy will allow the company to analyze thousands of demand-influencing variables, ranging from trends on social media networks to sensor data. The collection of this data may take time, hence a 2+ year deadline. With this information, Nintendo can model the complex relationships from the derived data and create an accurate demand plan, reducing forecasting errors by 30 to 50 percent [16].<\/p>\n

\"\"<\/a>
[17]<\/figcaption><\/figure>As Nintendo ramps up for their 2018 launches for Game Boy and N64 Classic [18], they need to embrace Supply Chain 4.0 by improving the visibility across their supply chain and using data analytics to better understand their demand. Without these changes, Nintendo is limiting the world\u2019s exposure to Mario, Zelda, and the rest of the gang.<\/p>\n

Questions to Consider<\/strong><\/p>\n

*Is Nintendo strategically limiting their supply to increase demand, thereby creating more of a buzz around their product?<\/p>\n

*Will increased transparency be enough to compete with Apple and other companies for premium access to suppliers?<\/p>\n

Word Count: 796<\/p>\n

 <\/p>\n

\n

[1] Needleman, Sarah, \u201cNintendo’s switch hit: Game console is in short supply ahead of holidays,\u201d Dow Jones Institutional News, August 2017, http:\/\/search.proquest.com.ezp-prod1.hul.harvard.edu\/docview\/1932698613?accountid=11311, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[2] YouTube, \u201cNintendo Switch Super Bowl LI Commercial-Extended Cut,\u201d https:\/\/www.youtube.com\/watch?v=CdWd8fUC71g<\/a>, accessed November 2017.<\/p>\n

[3] Needleman, \u201cNintendo’s switch hit: Game console is in short supply ahead of holidays\u201d<\/p>\n

[4] \u201cNintendo (NTDOY) Falters With Preorders for SNES Classic,\u201d Zacks Investment Research, August 2017, http:\/\/search.proquest.com.ezp-prod1.hul.harvard.edu\/docview\/1931289630?accountid=11311<\/a>, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[5] Ibid.<\/p>\n

[6] BGR, \u201cNES Classic Edition Back In Stock on Amazon for Five More Cities,\u201d bgr.com\/2016\/12\/15\/nes-classic-edition-amazon-more-cities\/, accessed November 2017.<\/p>\n

[7] \u201cNintendo (NTDOY) Falters With Preorders for SNES Classic\u201d<\/p>\n

[8] YouTube, \u201cSNES Classic Edition (aka Super NES Mini) Announced By Nintendo -Talk About Games,\u201d https:\/\/i.ytimg.com\/vi\/NrzH4LAPO5E\/maxresdefault.jpg<\/a>, accessed November 2017.<\/p>\n

[9] Needleman, \u201cNintendo’s switch hit: Game console is in short supply ahead of holidays\u201d<\/p>\n

[10] Bradshaw, Tim, \u201cComponent Bottlenecks Hit Nintendo\u2019s Switch,\u201d Financial Times, September 2017, https:\/\/www-ft-com.ezp-prod1.hul.harvard.edu\/content\/7bafad44-95cd-11e7-a652-cde3f882dd7b, via Financial Times, accessed November 2017.<\/p>\n

[11] Mochizuki, Takashi. \u201cNintendo Fights a Parts Shortage,\u201d Wall Street Journal, May 2017, https:\/\/search-proquest-com.ezp-prod1.hul.harvard.edu\/businesspremium\/docview\/1903693833\/abstract\/B9861BE051A34271PQ\/1?accountid=11311<\/a>, ABI\/INFORM via ProQuest, accessed November 2017<\/p>\n

[12] Bradshaw, \u201cComponent Bottlenecks Hit Nintendo\u2019s Switch\u201d<\/p>\n

[13] https:\/\/www.dualshockers.com\/wp-content\/uploads\/2016\/06\/Reggie2.jpg<\/a><\/p>\n

[14] Lewis, Leo, \u201cSwitch success drives huge jump in Nintendo profits,\u201d Financial Times, October 2017, https:\/\/www-ft-com.ezp-prod1.hul.harvard.edu\/content\/04bac110-bd69-11e7-b8a3-38a6e068f464, via Financial Times, accessed November 2017.<\/p>\n

[15] Schrauf, Stefan and Phillip Bertram. \u201cIndustry 4.0: How Digitalization Makes the Supply Chain More Efficient, Agile, and Customer-Focused,\u201d https:\/\/hbs.instructure.com\/courses\/3724\/files\/247334\/download<\/a> ?verifier=YDmBuPuFfQiqyNZsKti91mspjDiMTFLb8J3xztwC&wrap=1, accessed November 2017.<\/p>\n

[16] McKinsey & Company, \u201cSupply Chain 4.0 in Consumer Goods,\u201d https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/supply-chain-4-0-in-consumer-goods, accessed November 2017.<\/p>\n

[17] Leahey, Mark. Unpublished document, 性视界 University.<\/p>\n

[18] Morris, Chris, \u201cNintendo Might Be Working on a Gameboy Classic Edition,\u201d Fortune.com, September 2017, http:\/\/web.a.ebscohost.com.ezp-prod1.hul.harvard.edu\/ehost\/detail\/detail?vid=2&sid=911def19-68d6-4767-9c07-c7a24fc1d052%40sessionmgr4006&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#AN=125605549&db=bth, Business Source Complete, EBSCO accessed November 2017.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

On March 3, 2017, Nintendo released Switch, an innovative video game system that provided both mobile and living-room gaming access [1]. Video: Nintendo Switch [2] Only weeks after the release, Switch was out of stock at most retailers [3].\u00a0\u00a0Nintendo cited […]<\/p>\n","protected":false},"author":9547,"featured_media":23587,"comment_status":"open","ping_status":"closed","template":"","categories":[3235,2123,437,3707,3708,940,17,2164],"class_list":["post-23563","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-supply-chain","category-digitalization","category-japan","category-nintendo","category-super-mario","category-supply-and-demand","category-supply-chain","category-video-games","hck-taxonomy-organization-nintendo","hck-taxonomy-industry-video-game","hck-taxonomy-country-japan"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nSuper Mario, Zelda, and a Broken Supply Chain - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/super-mario-zelda-and-a-broken-supply-chain\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Super Mario, Zelda, and a Broken Supply Chain - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"On March 3, 2017, Nintendo released Switch, an innovative video game system that provided both mobile and living-room gaming access [1]. 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