{"id":26068,"date":"2017-11-15T21:54:10","date_gmt":"2017-11-16T02:54:10","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/lets-get-digital-digital\/"},"modified":"2017-11-15T21:54:10","modified_gmt":"2017-11-16T02:54:10","slug":"lets-get-digital-digital","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/lets-get-digital-digital\/","title":{"rendered":"Let\u2019s Get Digital, Digital!"},"content":{"rendered":"

Mattel, Inc. \u2013 the one-time world leader in the design, development, and marketing of a broad variety of children\u2019s toys \u2013 is confronted with the dual challenges and opportunities associated with digitalization. While digitalization has broad implications for the entire traditional toy industry, its effects may be most clearly crystallized in the example of Mattel, which uniquely operates thirteen company-owned plants and employs up to 40,000 supply chain employees.[1]<\/a> [2]<\/a><\/p>\n

First, the emergence of digitalization has placed new demands on the organization\u2019s product development capabilities. It would be of no surprise to any resident of a developed nation that children are spending increasing amounts of time engaging with digital products. In fact, approximately 85% of U.S. children, aged 3-5 have access to a tablet.[3]<\/a> Consequently, Mattel is now pressured to develop new, tech-enabled products that can hold a child\u2019s attention. Having achieved its past success through expertise in injection molding and die-casting, this capability gap reflects a significant departure from its core product development capabilities.<\/p>\n

 <\/p>\n

\"\"<\/a>
Can Barbie get back into “great shape”?<\/figcaption><\/figure>\n

However, digitalization can also serve as an enabler to Mattel\u2019s supply chain, by enhancing demand planning and speed-to-market. Traditionally, Mattel\u2019s supply chain faces significant pressure to deliver new products. Given the highly seasonal and fashion-driven nature of the business (i.e., each year has different \u201cmust-have\u201d toys), the company annually develops 6,000 new products with a typical lifecycle of under two years.[4]<\/a> Accordingly, digitalization presents a massive opportunity for Mattel to improve its speed-to-market, demand planning, and inventory management. Using digital design and modeling, Mattel can rapidly prototype new toys and design the products with automation in mind. Once designed, a digitalized supply chain can improve the level of visibility \u2013 from factories to demand planners \u2013 to more effectively deliver products to market. In incorporating these elements of a digital supply chain at scale, Mattel could create a massive competitive advantage in an industry with typically long lead times.<\/p>\n

In the short-to-medium-term, Mattel has addressed these issues in several of ways. First, Mattel has attempted to both buy and partner to access the relevant tech-oriented product development capabilities. In early 2015, Mattel strategically acquired the companies Fuhu and Sproutling, providing capabilities in product development; data analytics; and software, hardware, and firmware engineering skills.[5]<\/a> Additionally, Mattel also announced a partnership with Google to revive its classic View-Master<\/em> toy, revamped with virtual reality technology.[6]<\/a> Using some of these capabilities, Mattel has launched several tech-enabled products (see: Hot Wheels AI, Hello Barbie, Hello Barbie Dreamhouse, Ultimate Justice League Batmobile). Next, to digitalize the broader supply chain process, Mattel announced JDA Software Group as its strategic supply chain partner, with the objective of driving \u201cimprovements across its end-to-end supply chain processes, [\u2026] demand planning, [\u2026] and customer collaboration.\u201d[7]<\/a> While these initiatives have made minimal contribution to the firm\u2019s growth in the short-to-medium term, they indicate a willingness to evolve that will be critical to the firm\u2019s future viability.<\/p>\n

 <\/p>\n

To more fully address the dynamics of digitalization, Mattel still has ground to cover. As Mattel slowly shifts its product<\/p>\n

development\u00a0capabilities towards a digitally-enabled offering, cascading new complications arise. For instance, in engaging with a child end-user, data security and privacy become increasingly important concerns for Mattel. Almost two years after kid-friendly electronics company VTech announced a major data breach (including child user data), Mattel announced that it would no longer bring its Aristotle<\/em> product \u2013 an \u201call-in-one voice-controlled smart baby monitor\u201d \u2013 to market, due in large part to concerns about privacy and Mattel\u2019s intentions with collected data.[8]<\/a> [9]<\/a> Given the gravity of these new obstacles, Mattel must continue to build out the relevant product development capabilities to both create a digitally-enhanced line of products and improve its overall supply chain performance.<\/p>\n

\"\"
Mattel’s discontinued “Aristotle” product<\/figcaption><\/figure>\n

Of course, questions remain as Mattel\u2019s supply chain grapples with digitalization. Namely, can a seemingly old-fashioned company recruit and sustain the talent required to develop a tech-enabled product portfolio? Additionally, will the introduction of more technology into toy offerings further shorten the product lifecycle and, thereby, further stress Mattel\u2019s supply chain (i.e., obsolescence risk is higher in technology than in toys that maintain an open-ended play pattern for kids)?<\/p>\n

(782 words)<\/p>\n

[1]<\/a> Mattel 2017 Investor Day \u2013 Chief Supply Chain Officer Remarks (link<\/a>)<\/p>\n

[2]<\/a> This value reflects approximately a 50-50 split between owned and outsourced manufacturing by volume (link<\/a> @1:36:00 mark).<\/p>\n

[3]<\/a> Mattel 2017 Investor Day \u2013 CEO Remarks (link<\/a>)<\/p>\n

[4]<\/a> Mattel 2017 Investor Day \u2013 Chief Supply Chain Officer Remarks (link<\/a> @ 1:34:28 mark)<\/p>\n

[5]<\/a> Mattel Bolsters Digital And Smart Technology Capabilities With Pair Of Strategic Acquisitions (link<\/a>)<\/p>\n

[6]<\/a> Google Partners with Mattel to Bring VR to the Iconic View-Master (link<\/a>)<\/p>\n

[7]<\/a> Mattel Selects JDA to Power Digital Transformation Across Its Supply Chain (link<\/a>)<\/p>\n

[8]<\/a> Security Breach at Toy Maker VTech Includes Data on Children (link<\/a>)<\/p>\n

[9]<\/a> Mattel cancels plans for a kid-focused AI device that drew privacy concerns (link<\/a>)<\/p>\n","protected":false},"excerpt":{"rendered":"

Can Mattel adapt to the digital age?<\/p>\n","protected":false},"author":10378,"featured_media":26154,"comment_status":"open","ping_status":"closed","template":"","categories":[2123,1959],"class_list":["post-26068","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digitalization","category-mattel","hck-taxonomy-organization-mattel","hck-taxonomy-industry-consumer-products","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nLet\u2019s Get Digital, Digital! - 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\/lets-get-digital-digital\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Let\u2019s Get Digital, Digital! 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