ScottManDeath Posted October 30, 2006 Posted October 30, 2006 Found here: http://www.spiegel.de/wirtschaft/0,1518,445412,00.html (German) Summary: supply fails to meet demand, expected + 5% in revenue for FQ3, while demand could sustain twice that much caused by restructuring of company and underestimated demand Police and StarWars shortages possible Quote
Hobbes Posted October 31, 2006 Posted October 31, 2006 I read that, too, yesterday, and it seems it came as... caused by restructuring of company and underestimated demand ... a total surprise to TLC that we'd have "another" christmas this year :-| Wasn't last year's supposed to be the last? WHAM says so every year... And if you follow certain online communities there's been supply shortage all year long. Around christmas more people will notice, though... Quote
snefroe Posted October 31, 2006 Posted October 31, 2006 this is old news really. they've always had supply shortages, especially from october onwards. the reason is simple: no shop wants a full catalogue of Lego during the entire year because they can't sell it all. they're all telling Lego to supply them with sets from October to december. That part of the year is highseason, making more than half of Lego's turnover. My small toyshop has already received a letter from Lego not to expect new supplies before February next year... to be fair, nobody expected an increase of the traditional toy market this year. the evolution of this section has been going down for quite some time now and it's more or less a mystery why consumers suddenly want their classic toys instead of other stuff, like multimedia, games, ... i think it's just that European consumers are spending far more money than ever before in the EU and our market for children has had a serious boost in the last 10 years. Even 8 year olds are now solid consumers with a budget of their own... they're also victim of their own success. They have been producing lots of high quality sets. Quote
L'Exocet Posted October 31, 2006 Posted October 31, 2006 I'm not really a business person, but personally I think the reason for the shortages are caused by two main reasons. Firstly, TLC, like any company, likes to keep it's stock small and relies on short logistics chains both in quantity and time. They do that kind of on purpose, it's better to stay on short supply then have tons of unsold products on stock. Of course the shortage can be partially caused by structural changes in the production. Secondly, and maybe even more importantly, TLC has basicly had a really bad decade, and they do not dare to response on the potential growth of demand. In the meanwhile, those of us who were kids and played with Lego in the "golden era" of System are becoming parents (hitting our late 20's to mid 30's), and we want to buy Lego to our kids, too, because it's a safe and dear brand for us. With my own and very subjective experience I'd say traditional toys are making a strong comeback to childrens rooms - the parents of today know a lot more about the computers, games and internet then the parents 10 years ago, and will think twice before plugging the kids into the cyberspace. Hence, they buy, and guide their kids with their own spending money to buy, more traditional toys like Lego sets. Quote
Dino_Bot Posted October 31, 2006 Posted October 31, 2006 ...No. Video Games and that sort of crap have killed the golden era of action figures, and toys in general. Hell, there's videogames for babies now. And I will not let this SW lego shortage concern me. I will have my tanks. Quote
snefroe Posted October 31, 2006 Posted October 31, 2006 Firstly, TLC, like any company, likes to keep it's stock small and relies on short logistics chains both in quantity and time. They do that kind of on purpose, it's better to stay on short supply then have tons of unsold products on stock. Of course the shortage can be partially caused by structural changes in the production. From what i know, it's been quite the opposite, honestly. they used to transport lego through Holland to Belgium. No doubt, the shortest way. Now, they're shipping it to the UK, they go all the way to Dover I guess, take the train or boat to France or Belgium and supply Belgian shops. the reason is simple: wages in the UK seem lower than in Holland and Belgium so they're using British companies... In any case, it's a mess... In the meanwhile, those of us who were kids and played with Lego in the "golden era" of System are becoming parents (hitting our late 20's to mid 30's), and we want to buy Lego to our kids, too, because it's a safe and dear brand for us. With my own and very subjective experience I'd say traditional toys are making a strong comeback to childrens rooms - the parents of today know a lot more about the computers, games and internet then the parents 10 years ago, and will think twice before plugging the kids into the cyberspace. Hence, they buy, and guide their kids with their own spending money to buy, more traditional toys like Lego sets. i was under the impression that games were taking even more ground than last year and in most cases, I don't even see parents when kids go out and buy this stuff... Quote
natelite Posted October 31, 2006 Posted October 31, 2006 i think i have gotten everything i wanted for this year except for sailbarge and vader's ucs tie. i dont think lego is short on supply...my local tru is stocked to the brim with lego sets. similarly target has lots in stock too. Quote
JINZONINGEN73 Posted October 31, 2006 Posted October 31, 2006 I read that, too, yesterday, and it seems it came as...... a total surprise to TLC that we'd have "another" christmas this year :-| Wasn't last year's supposed to be the last? WHAM says so every year... Yeah, but they also said that the very next day, they gave it away. I'm not suprised. The Walmart near me never got in Harry Potter (which had good parts I wanted in this last wave) and the other lines they did get, only got 1 or 2 models from them (like Spongebob... my wife wanted the set with the Patrick minifig lol). Bionicle was the only "full" line they carried. ...and even then, some stuff vanished and never got restocked. Bleh... Quote
Jipay Posted October 31, 2006 Posted October 31, 2006 I am a logistical ingeener (my real job), and this is what I've been told about the toy business (don't know if it applies to lego though). Toys companies are the only one who don't use stock the same way others do. In fact they are mass producing series of toys in order to meet Xmas demand. So they have a huge stock about one year in advance and must stick to this stock for almost the whole year. Some productions might be launched later (middle of the year) in order to re stock, but those are short runs. This policy is coming from a simple calculation between your producing capacity and the under use of this capacity during the year, and over use during Xmas period. It's all about balancing. Hence the problem and the shortages when demands has not been well calculated. Next episode : how to calculate an accurate demand forecasting, and why TLC suck in the supply chain management from A to Z Quote
natelite Posted October 31, 2006 Posted October 31, 2006 i think that in general the toy industry is also very finicky. what is a huge hit this year may not be a hit the following year. it is extremely difficult to forecast what will be a hit with the general consumer. take tickle me elmo for eg. when it first came to the market, no one, not even the toy company forecast that it will be in such huge demand. it was oversold literally overnight and suddenly every kid in the world wanted one. as one part of the world wanted one, more parts of the world wanted one too. the buzz grew, there was a media frenzy about the hot toy. some kids who didn't want it before suddenly wanted one now. throw in your average speculators and scalpers and you create even more demand for it. take 6212 for eg. i didn't actually wanted to get one initially but when i saw that it was the top 2 hotseller list, and how the sets were selling like hotcakes in the stores, i panicked and bought one at retail. :-P my opinion is that sometimes the scarcity of the set drives the demand. and producing an accurate forecast is made virtually impossible with this catch-22 logic. (ie, produce too many and demand drops, produce too few and you can't keep up with the demand). Quote
Jipay Posted October 31, 2006 Posted October 31, 2006 Well actually their marketing survey should help to create accurate forecast. But wait, weren't those also the ones that brought all the bad sets we had to deal with during the dakr age of lego ? :-D Seriously, a little bit of methodology should definitly give a good insight on the forecasted demand. We now have many references that has been analyzed and we know what could bring success or not for a product. Back on the supply chain, also think that now with the production delocalized partially in Asia, you need at least 1 or 2 months to bring back the sets produced there to Europe. Quote
ScottManDeath Posted November 1, 2006 Author Posted November 1, 2006 Now for our non-German non-minority ;-) http://www.cbc.ca/money/story/2006/10/31/legoproduction.html Quote
snefroe Posted November 1, 2006 Posted November 1, 2006 I am a logistical ingeener (my real job), and this is what I've been told about the toy business (don't know if it applies to lego though).Toys companies are the only one who don't use stock the same way others do. In fact they are mass producing series of toys in order to meet Xmas demand. So they have a huge stock about one year in advance and must stick to this stock for almost the whole year. Some productions might be launched later (middle of the year) in order to re stock, but those are short runs. This policy is coming from a simple calculation between your producing capacity and the under use of this capacity during the year, and over use during Xmas period. It's all about balancing. Hence the problem and the shortages when demands has not been well calculated. Next episode : how to calculate an accurate demand forecasting, and why TLC suck in the supply chain management from A to Z Lego also seems to be using a weird program. if you, as a shop, want to order sets, you need to order for a serious amount of Lego sets at once, i believe for about 15000 euro, which is quite a lot for smaller shops and you have to choose between two different programs, 1 program has lots of smaller sets and several big ones, the other has fewer small sets and more larger sets. It seems they're doing that to make sure they won't get stuck with sets nobody wants. That way, they're protecting themselves against the risk of next year when it turns out that one particular set/theme does not reach expectations. Quote
Jipay Posted November 1, 2006 Posted November 1, 2006 Indeed, it sort of ensures them to "force" shops to have all the sets from smaller ones to bigger one. Which is why their logistics sucks. We are now in the 21st century, the era of IT's and customer service level. And hearing a company forcing shops to order a certain quantity of certain sets is not ok at all. Forcing them to order for a certain amount is normal, but adding a constraint about what type of set is wayyy too much IMHO. Quote
JINZONINGEN73 Posted November 1, 2006 Posted November 1, 2006 Well actually their marketing survey should help to create accurate forecast. But wait, weren't those also the ones that brought all the bad sets we had to deal with during the dakr age of lego ? :-D I can honestly say I despise marketing surveys lol. Some of the worst ideas in toy history has come from them. Don't tell a Lego rep that though, they'll argue with you for hours with the statement, "But surveys show what people really want!" No... no, they don't. You as a company have to be SMART and get people in your employ who KNOW what makes things cool. Then you advertise it on the basis of it's coolness, not spinoff tangents like non-Lego McDonald's figures, rock band affiliations and other unrelated garbage. Quote
Jipay Posted November 1, 2006 Posted November 1, 2006 I could hardly agree more. And there are some (real, effective) marketing tools that allow you to measure the level of coolness of your product. People don't know what they want. Some don't even know what they need in every day life. Plus you always want what you can't have and what you wouldn't have imagined. Quote
Chuck Posted November 2, 2006 Posted November 2, 2006 Just a quick update for this topic: The only location in the world where there will be a lego shortage will be Scandinavia. Due to an error by the press, the mass-media (as always) screws everything up. Everywhere else has a normal stock of Lego for Christmas. -l2k- Quote
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