If you’re like me and have a tween daughter, you know the name “Justin Bieber” all too well. He is the cute little 16-year old pop singer that has young girls going gaga. Not gaga in a Lady Gaga way, just gaga.
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While thoughts of the mop-haired one evoke images of screaming girls and bubblegummy thoughts, there’s actually a lot of stress in the supply chains for Justin Bieber merchandise such as his dolls. Demand is high and that calls for some creative supply chain management.
Using excerpts from a November Washington Post article, here are three lessons we can learn from the Justin Bieber doll
#1. It’s Not Always About Total Cost, It’s About Profit. The article indicates that retailer Toys ‘R’ Us opted against traditional ocean shipping for the dolls in favor of more expensive, but faster, air freight. Citing the cultural excitement about Bieber, a VP for the company was quoted as saying “With this type of opportunity, we knew we wanted to capitalize on it.” Prices for the doll begin at $16.99. Let’s say that the manufacturing cost for each doll was $8, the cost to ship each doll by air was $1, and the cost for ocean shipping was $0.15 each. If the doll arrives by ocean three weeks before Christmas, it will sell 3,000,000 units. But if the doll arrives five weeks before Christmas, it will sell 5,000,000 units. The result is that the retailer would make $10 million more in profit by getting the dolls earlier, despite paying more for freight. As I’ve said before, good procurement isn’t just about lowest total cost of ownership.
#2. Standardization Has Benefits. The rapid rise to fame of Bieber combined with the upcoming Christmas shopping season left those in Foreman, the Bieber doll manufacturer, struggling to figure out how to meet demand. The article reveals their solution: “A factory that Foreman works with in China had a mold for a male body on hand, speeding up the process.”
#3. Speed, Cost, and Specification Compliance Need To Be Balanced. Engineers will always insist that their specifications are not negotiable. But sometimes they should be. Consider that the reports that “there wasn’t enough time to give Bieber brushable hair instead of molded plastic,” so the manufacturer had to change the specification to ensure timely manufacture and save the brushable hair for next year. If anyone still cares about Bieber then, that is.
You never expected to learn anything about supply chain management from Justin Bieber did you?