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Supply and demand is alive and well in the British toy industry

With sales at a four-year high, is it all fun and games for the British toy industry? 

Toy Fair is the only dedicated toy, game and hobby trade exhibition in the UK. Through Jan 20-22 London’s Olympia opens its doors to the UK and European toy trade, as more than 260 companies debut their wares to retailers, buyers, and the media.

The British toy market has increased by 4.4 per cent in 2014, its best result since 2010 (+8 per cent), to reach £3 billion at retail, an increase of £130 million.

According to the global information provider, The NPD Group, 2014 was boosted by a comeback of collectable brands where unit sales rose by over 12 per cent to 416 million toys, as sales under £5 increased by 9 per cent. This comes after a flat performance was recorded for 2013.

“This is a tremendous result for the British toy industry during a year of challenging trading conditions. The industry continually evolves to remain relevant to the demands from children and their families and this innovation combined with many consumers’ desire to prioritise their children’s playtime has undoubtedly had a positive effect on the year,” commented Roland Earl, Director General of the BTHA.

For the first time ever, toy sales during Black Friday week increased by as much as 10 per cent as consumers snapped up big ticket items and electronic toys. This resulted in Black Friday sales exceeding those of the week prior to Christmas, traditionally the largest selling week in the toy market. Overall, the Christmas season was strong with an overall increase of 3 per cent year-on-year for December.

Dog eat dog

It’s not just the supplier trying to keep their costs down, and losses at a minimum.

Despite the health of the British toy market, there are pitched battles being fought in the retail space, as Brian Simpson – Buyer and General Manager of the family-run SMF ToyTown observes:

“Our industry is set on slaughtering each other, with most of the majors trying to be the cheapest on every line and leaving the rest of us to try and shift the stocks we bought at cost price or below.”

Simpson continues: “Don’t get me wrong there is plenty of good stuff happening in 2015… but we really need another craze that captures kids minds. I know that sales of other items reduced because of the Loom craze, but I don’t see things being balanced with the natural uplift of other items to cover off the demand from Looms, it will be an interesting Q1 for us to see what trends there are… I’m finding my attention is increasingly drawn towards trying to see which products I feel will be price-slashed at Christmas, and therefore my approach is far more defensive.”

Peering into the crystal ball – Jonty Chippendale from The Toy Shop in Cumbria comments: “[2015 needs] better margins, lower carriage paid enabling me to order frequently, and lower volumes to thereby range better.” 

Coiledspring Games - a UK success story with Robot Turtles

Coiledspring Games: a UK success story

Coiledspring Games are completely UK-based (Twickenham to be precise), but the moderate-sized distributors are growing rapidly. Coiledspring has now amassed a portfolio of a few hundred games, and to-date it has shifted over three million Rory’s Story Cubes. Last year Coiledspring Games had three of the Guardian’s top 5 new games for 2014…

Coiledspring told us that they’ve started to turn their attention to manufacturing their own games and products. Why? For profitability of course.

There are two ways of achieving this: either buy a game that’s already available in another terror and rebrand it, or in the case of Dodekka (otherwise known as Numberwang) take preexisting elements to carve a new theme.

Dodekka was a cross-collaborative effort. Coiledspring initially (and remotely) worked with an artist in the States, a UK-based designer helped with the rules, before Coiledspring started talking to manufacturers about box sizes, texture of the card, as well as card quality.

This has proved a good process to run through – so much so, that Coiledspring plan on bringing their first full-sized board game to market later in 2015.

WowWee demoed the MiPosaur at Toy Fair 2015

Is WowWee’s football playing dinosaur the saviour of toys?

From Coiledspring’s humble beginnings to a Hong Kong-based behemoth that designs, develops, markets and distributes its own brand of breakthrough consumer technology.

In 2014 WowWee’s MiP proved to be one of the world’s most popular consumer robots – shifted 750k units, capping-off a truly successful year.

For 2015 WowWee toyed with different forms, maybe a dog, maybe another different robotic form. They settled on MiPosaur – a highly intelligent, gesture controlled, robotic creature that can sense its own surroundings and environment.

WowWee’s product is all made overseas [in China], the stock is then imported, and stored domestically ready for distribution.

We spoke to a WowWee representative at the show: “We [WowWee] were the pioneers of robotics, it’s definitely a more-cluttered space these days. Spin Master is obviously a big competitor with tech stuff. But still think we deliver top quality product in the space, and it’s nice, it’s nice to have competition. It expands the category as well; it’s a very growing category in a lot of retailers. With regards to cutting corners: for someone to knock us off – the amount of technology in here [MiPosaur] is huge – I’d tip my hat to them.” 

“WowWee’s goals for 2015 will continue on its path of providing great innovation with proprietary technology and methodology that will deliver fantastic experiences at affordable prices within the field of robotics and youth electronics,” said WowWee Canada President Richard Yanofsky.

2015 will also see the launch of REV (Robotic Enhanced Vehicles).

Extreme Fliers will launch Micro Drone 3.0

The Drones are (still) coming

As regular readers will know this isn’t the first time the humble Drone has entered our airspace… Companies are increasingly looking towards Drone technology to provide logistics solutions – see Amazon, DHL, and more.

Of course kids need Drones too, so we were thrilled to see the Olympia’s skies awash with buzzing machines – some big, some small, and some even smaller.

But with Drones being in vogue, are there any worries that the market will soon be saturated?

We spoke to Extreme Fliers (the folks behind the Micro Drone) – a palm-sized Drone whose development dates back to 2010. They told us that when it comes to sourcing the highly specialized parts a lot of their competitors will elect to buy 1000 units (from China) to help drive costs down. Micro Drone differs because it’s taken a great deal of research and investment to get to this point – added to that; the company uses Makerbot 3D printers to build its toys. The investment spans a five-year period – and the end result is clearly not something that just happened overnight.

The third iteration of the popular flyer will incorporate HD camera-toting skills, a micro gimbal (for a smooth and stable flight), and support for the Google Cardboard VR Headset. All of that has been achieved at one of the most-affordable price points on the market – the Micro Drone 3 is expected to retail below £100 (competing models come in anywhere between £200-300+).

What are the biggest global challenges in 2015?

WEF summit to look for answers to major global challenges.

Water crises, interstate conflict and climate change number among the top risks that the world will face over the next twelve months. This is according to the Global Risks 2015 report that the World Economic Forum has readied ahead of its summit on 20 Jan.

Emerging technologies were also cited in the forward-looking document, an area that’s come under considerable scrutiny of late owing to the numerous cyber attacks (hacks) made against major organisations.

The report was put together (in part) by Marsh & McLennan Companies – a representative commented: “As a company you are not protected [against cyber attacks] unless your supply chain is protected.” 

We’ve compiled a collection of tweets around the highlighted issues (as well as some educated guesses) that are all expected to come out of the 2015 discussions.


The Oil Crisis for Dummies

I’m sure like me, most of you have watched with interest the price of oil plummet from well over $100 a barrel to below $50 a barrel in the space of just a few months. I’m quite sure that, like me, most of you have been in the dark as to why this is the case.  So I thought I’d do some research into the matter and try to uncover what is driving this price collapse, and what it means for you as an individual as well as a procurement professional.

While fluctuations in the price of oil are not particularly rare, ones as significant and unpredicted as this certainly are.  We’re talking about the largest fall in the price of oil ever, and one that, even as it was beginning, was discarded by most analysts as a small correction ahead of yet another uptick. Even when the price of oil was in the 80’s in October, analysts at Barclays noted, “It seems extremely unlikely that oil prices will remain below $100 for very long.”

So why has everybody been so wrong about predicting the price of oil, and why has it continued to fall while most analysts have continued to remain bullish on the price of Brent (the global oil benchmark)? If there’s one short answer to this – it’s OPEC – but more on that later. Instead we’ll begin by looking at two strong causes behind the slump.

Cause Number 1: US Oil Production

With rapid advances in drilling technology (particularly in extracting from shale), oil production in the US has increased by more than 50 percent in the last 2 years.  For anyone who’s done Year 7 economics, you’ll know that when supply increases and demand remains steady, prices come down.

US Crude Oil & Natural Gas Production 1970-2015
US Crude Oil & Natural Gas Production 1970-2015

Cause Number 2: A lack of intervention from OPEC.

Traditionally, when there’s a slump in the price of Brent, OPEC (Organisation of Petroleum Exporting Countries – fundamentally an oil cartel) bands together to cut supply and therefore prop up the price of oil.  In this case, for whatever reason, they decided not to step in.

The technological advances that I mentioned earlier don’t come without a cost, so by deciding to let things play out, OPEC basically condemned a lot of new shale explorers to bankruptcy, as their production cost per barrel sits at anywhere between $50-$70.  With the Brent Crude Oil rate sitting below this, it has become no longer financially viable for these ventures to continue exploring and drilling new wells . 

Production Cost Per Barrel of Major Oil Producers in 2020
Production Cost Per Barrel of Major Oil Producers in 2020

Why hasn’t OPEC stepped in?

Well basically they’re driving all of this new shale competition out of the market.  This reduces total global oil production temporarily, and when they’ve effectively bankrupted all the new kids on the block, OPEC can start manipulating the price back up to historical levels.

How long until they decide to intervene?  Suhail al-Mazrouei, The UAE’s Energy Minister, said a few weeks ago that OPEC would wait “at least three months before considering an emergency meeting”.  Good news – you can expect some very cheap petrol at the pump for at least the next few months. (You might even get some cheap flights in too, although the aviation industry strongly hedges their AVGAS purchases, so it might just be a pipedream)

So what does this mean for you?

I’m going to come at this very simplistically and from the point of view of someone in a developed country. It’s a good thing.  Consumer spending accounts for approximately 60 percent of GDP in most western countries, and cheap oil means two things.  First of all, you’ll have more disposable income as a result of a decreased cost of transportation – and secondly you can buy more with this disposable income, as the cost of goods is likely to fall. On the other hand, if you live in a country that is heavily reliant on oil production, like Russia or Venezuela, it’s not good news.

As a Procurement & Supply Chain professional, I won’t go out on a limb and give you an unequivocal answer as to the impact this will have on your job – I’m certainly not qualified enough to answer this – but I think some of the articles mentioned in this Procurious post might give you a good idea.

I hope this gives you a better understanding of the situation, and if you have any comments or thoughts on the matter (or if you think I’ve got it completely wrong) please comment below!

2015 will be about innovations in the logistics world

Looking ahead to 2015, KPMG’s global head of post and express predicts that the New Year will be about co-operation and relationship building. Not only that but understanding and utilising big data; drone and driverless deliveries and creating marketplaces to sell last mile solutions. 

Justin Zatouroff begins:  “Co-operation is likely to be a critical feature for successful supply chains in 2015. Logistics companies and retailers, both on the high street and on the web, will have to develop close relationships so that they don’t keep repeating the annual trauma of delivering the Christmas peak.

Those that haven’t developed relationships and are only after lowest cost solutions may face opportunist pricing or even find that they can’t access any additional capacity as they try to manage during peak periods. The challenge is to create robust networks that have flexible cost bases and capacity that can be enhanced to manage varying loads.”

Zatouroff continues: “Technology will also be key. Reliable forecasting from e-tailers including demand planning will focus attention on big data and the power of real time data analytics. Better understanding of available information and utilising data analytics tools will increase the efficiency of parcel networks and in turn improve the capacity issues faced in the system.” 

And what about the role of technology… How much of an impact will new solutions (such as drones) have on the network?

Zatouroff offers: “Much has been made of the impact of the recent EU changes to HGV driver training but as only 1% of drivers are under the age of 25 this is clearly a problem that has been building for many years. In the long term, technology may help solve this problem too.

Whilst drones are unlikely to be part of the solution in urban areas, they will be effective in less industrialised landscapes and in areas with less developed infrastructure. We’ve already seen DHL use a ‘parcelcopter’ to deliver pharmaceuticals to a German Island to become independent from weather and ferry schedules.”

Elsewhere, another innovative use of technology commanded column-inches in 2014… Will driverless cars roar onto our roads and highways during 2015? Zatouroff thinks not:

“We’re also likely to see developments in driverless deliveries. In the UK, manufacturers have been given the green light by the Government for testing driverless cars as early as January 2015. Bristol, Greenwich, Coventry and Milton Keynes will all host autonomous driving projects that will run for between 18 and 36 months starting. It shouldn’t be too long for lorries and trucks to join the party.

Self-driving vehicles will have the ability not just to transport goods but also to combine other process steps such as loading and unloading in order to increase efficiency of processes. In addition to providing efficiency gains, self-driving vehicles can also significantly increase safety in transport and loading processes.

Finally, how disruptive can the small innovative tech solutions be to the established logistics industry?  Zatouroff can only ponder:

“Will we see more players join the disintermediation of big parcel companies by creating innovative web based companies, like Uber and Shutl, creating a market place style websites linking the provision of last mile solutions direct to the retailer?”

 

Santa’s supply chain: the challenge to build a new logistics solution

Operation Santa Claus: the results from 2014’s Unbelievable Challenge are in!

The Unbelievable Challenge is an open architectural design competition open to young architects and designers to find the best idea for a logistics centre for Santa Claus.

The competition was organized jointly by Ruukki Construction, the City of Oulu, Helsinki Design Week and the architecture and design office Snøhetta.

The competition sought unique, innovative ideas and solutions for a logistics centre for Santa Claus, who was the competition’s imaginary investor. It was his wish to find from among the competition entries a functioning centre to meet his growing logistics needs and increase the attraction of the area.

Evaluation criteria included energy efficiency, sustainable, values, usability, architectural values, suitability to the given surroundings and an ability to enhance the attractiveness of the area.

The competition attracted a total of 243 entries from 59 different countries (that’s almost as far-reaching as Procurious!)

And why is a new logistics solution so important? Well as per Morgan McKinley hypothesis “with today’s global population clocking in at 7.125 billion people, we can estimate that there are approximately 2.375 billion children currently at present receiving age. Given that the Christian population of the world works out at 32 per cent, that’s approximately 760,000,000 children.”

Christmas logistics

The winning project was titled “Nothing is impossible”, from an idea by Alexandru Oprita, Romania and Laurentiu Constantin.

The judges’ commented: “It is feasible and innovative but not futuristic. It is also well thought through – from land use all the way to detailing.

The entry presents an idea of making the most visible façade and the front of the building a magical element that could both integrate the building into its surroundings, and highlight whatever aspects of the building or its functions are desired.”

They continued: “The idea could be realised without sacrificing any of the practical or economic aspects of the logistics centre. It provides understandable solutions for energy efficiency and attempts to introduce a lot of good thinking about how to utilise this within the building. It also has a good understanding of the local situation. The entry seeks to embrace and enhance the function of the building as a hub for new technology in addition to the logistics centre – it connects well with Oulu as a city.”

Here’s a couple of the runner-up entries:

Santa's supply chain

 

Santa's logistics

Think you could do better? Put your thinking cap on, and keep an eye on unbelievablechallenge.com for a chance to enter next year.

Get your Christmas logistics fix with this Euro Truck Simulator

Father Christmas is looking for logistic professionals who want to help out with Santa’s substantial delivery backlog. 

Despite what fable tells us, Father Christmas/Santa/St. Nick is secretly a long-haul truck driver. The reindeer and sleigh are just a cover… sshh let’s keep this between us eh?

Now you can make like Santa and get in on the logistics game from the comfort of your own home with Euro Truck Simulator 2.

The wildly popular truck simulator has just been gifted a sizeable update in time for Christmas – the Polar Express 2014 event adds a selection of icy new truck designs to proceedings, unlockable through completion of a festive-themed challenge. The challenge? Ferrying the  pallet of ‘Christmas Gifts’ across Europe (or more specifically, the distance between the game developer’s offices and The North Pole).

Is there humour in your supply chain?

“Comedy is acting out optimism.” – Robin Williams

“Humour is everywhere, in that there’s irony in just about anything a human does.” – Bill Nye

We’ve probably all been exposed to Jim Carrey showing the funny side of a supply chain risk in the classic Ace Ventura… But here’s a few other examples you might not have seen.

These videos all use comedy to highlight (and in some cases, solve) problems in the supply chain – taking in everything from sourcing to logistics.

Supply chain blackhole? Better check the stock room…

A group of MBA students use skills learned in their Supply Chain class to point out the inefficiencies of the latest “green” bathroom remodel at ASU’s WP Carey School of Business.

Like any good MBA students, they don’t just point out the problem, they offer solutions…

Greg tries to outsmart Diego and find a cheaper Less than Truckload (LTL) freight solution in the pilot episode of Logistically Challenged.

Have you come across any other humorous examples? Highlight your video picks in the comments below.

Amazon’s Christmas logistics robot army

The robots are coming… and they’re bringing Christmas presents!

In its latest bid to boost productivity and expedite delivery, Internet retailer Amazon is deploying a robot army – yep, just in time for Christmas.

Various sources are reporting that squat, orange, robots have entered several of its U.S. warehouses. The addition of these wheeled droids will save workers having to traipse the factory floor and scour long aisles chockful of Amazon goodies (sometimes up to 20 miles a day).

The addition of the robots is expected to bring in an impressive productivity boost – making picking and scanning 300+ items an hour a reality (compared to 100 previously).

Amazon founder Jeff Bezos told investors earlier this year that in total the company hoped to move 10,000 robots onto the factory floor. Such a move was only made possible after Amazon bought Kiva Systems’ material handling solution in 2012.

Would you use a social network that pays you to post?

Tsu (pronounced ‘sue’) is a social network and payment platform that shares up to 90 per cent of its revenues with users. With a $7 million investment behind it (led by Sancus Capital Prive), Tsu has already attracted the gaze of 50 Cent, Timbaland, and NBA’s Carmelo Anthony – but sadly no sign of a Kardashian or Grumpy Cat yet…

Tsu the new social network that pays you to post

What is Tsu?

So by now you’re probably wondering just what is this Tsu that I’m hearing so much about?

It’s a new type of social network (hang on, we’ve heard that one before… ello, Ello?), but this one’s differential lies in its modus operandi. You see, you (the member) own the content you post, not only that but Tsu will pay you for the privilege.

Get paid to use social network(s)

Yup, that’s the jist. While it’s something of an incendiary headline, the New York Times led with “The Social Network That Pays You To Friend”.

The more people looking at your content, the more sales revenue Tsu makes from ads served. If this were Facebook or Twitter any wealth generated would only serve to line their pockets – Tsu will instead give back a slice of the pie.

It’s a ballsy business model that’s for sure.

Tsu Tmi?

Too much information? Tsu also provides detailed analytics to its users, so they can chart follower count, views, likes, and comments on posts made. This is in stark contrast to the news that a researcher from University of Illinois has created a browser plug-in that removes all trace of numbers (or metrics) from Facebook. Why? To show (or perhaps prove) that when not hell-bent on seeking others approval, the quality of posts and comments improved, as did enjoyment levels.

Download Facebook Demetricator

Tsu does move to ban users who spam in order to preserve the community, and that stretches to invites too. Don’t go thinking you can bombard your Facebook, Twitter, or LinkedIn friends with your member short code (required to sign-up and access the community), Tsu wants you to instead nurture ‘meaningful’ relationships through the network proper.

It’s not for me, but it might for Tsu…

There is now a playable warehouse and logistics simulator…

The game (available on PC via Steam) sees you progress through various timed-based scenarios to move goods around a supermarket, warehouse and production facility.

But this isn’t just any old logistics simulator, oh no. The official website makes a big deal of the Jungheinrich affiliation – that’s an actual Jungheinrich forklift truck you’re controlling.  The company is based in Hamburg, Germany and one of the leading international companies in the material handling equipment, warehousing and material flow engineering sectors.

The game offers would-be forklift operators a variety of quests, different game modes, and realistic physics. A handful of comments from YouTubers come from those within the forklift industry itself –  complete with lighthearted observations… The simulator is presumably designed to train-up new operators right?

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