Learning From Toys: Lessons in Managing Supply Chain Risk from the Toy Industry

by M. Johnson



The toy industry faces relentless change and an unpredictable buying public, which creates immense challenges in anticipating best sellers and predicting volume. Like the high-technology industry, toys also suffer from many supply chain ailments including short product life, rapid product turnover, and seasonal demand. Coupled with long supply lines and ongoing political and economic turmoil in Asia, toy makers face an unusually complex set of risks. Managers in many businesses can learn valuable lessons in managing uncertainty from toy makers. This article describes supply chain lessons focused on reducing risk by actively managing both demand and supply variability. These lessons include product variety strategies based on product extensions; rolling mix strategies; leveraged licensing agreements; coordinated outsourcing strategies; and hedging against political and currency risk by producing in many different countries.

California Management Review

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Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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