We provide an update our mid-November Supply Chain Matters commentary, Nintendo Supply Chain Facing Big Challenges in the Coming Holiday Season. Readers may recall that a late product introduction of the new Wii U gaming device was expected to provide supply challenges during the prime holiday buying season. Nintendo had to delay the availability of some online services and its Nintendo T Vii TV service until sometime in December. In our commentary we noted indications that the supply chain was pressured to make units available sooner. The company indicated at the time that it expected to sell upwards of 3.5 million new Wii units during the holiday season and a total of 5.5 million units by the end of March. Much was at stake, including market presence and delivery of some level of respectable profitability for the fiscal year.
An update appearing on CIO and syndicated by IDG New Service now reports that the Wii U console had a tough holiday launch but managed to sell 3 million consoles worldwide through the end of the year. The console, as expected, initially sold-out but stocks have since recovered. Unfortunately, the company had to cut its fiscal year revenue target by 17.3 percent. Operating profit is expected to be negative but currency factors may yield some profits for the year. The goal of selling 5.5 million units by the end of March was reduced by one million units.
Supply chain teams often describe the dynamic discussions and back and forth that occur within the sales and operations planning (S&OP) process. Picture finance and sales teams charging the supply chain and product management teams to accelerate new product launch to take advantage of the prime buying period and to set plans in motion to insure supply of over 3 million units. After the supply chain scrambles to make the plan, a corporate decision is made to cut overall output plans for the coming quarter by 27 percent.
Does this dynamic strike a chord within your organization?
Once again, another example of the dynamic factors related to today’s management of global supply chains and product demand planning. The message is not one related to consternation over the accuracy or consistency of the plan but rather the realities of today’s dynamic aspects of business.