While modern companies focus on providing exceptional service, Nintendo continues to focus on extraordinary products with a Customer-Centric approach.
In our last post, we began exploring the reasons behind Nintendo’s history of not meeting consumer demand. Many of its gaming consoles, software, peripherals and promotional items in the last 20 years have seen instances of scarcity across its North American and European markets. Limited supply, inflated grey market prices, and angry consumers have been the result.
Nintendo’s latest console, the Switch, launched a few months ago with similar supply shortages. Some customers and press accused the company of intentionally limiting production to drive sales given the familiarity of the situation.
What’s behind the latest supply issues is the company’s customer-centric philosophy, not artificial scarcity.
Artificial Scarcity Isn’t the Problem
On the surface, Nintendo’s selling practices may seem to favour artificial scarcity to drive sales. The problem with this theory, is that artificial scarcity is only ever a short-term solution for luxury products. Artificial scarcity only generates demand because of perceived scarcity. The actual value of the product isn’t considered, meaning that the company doing it has little incentive to innovate the product. After a certain point, and despite a company’s attempts, there will be too much of a product in circulation for it to maintain its price.
Nintendo is a nearly 140-year-old multi-national company, iconic and influential in its industry. If it followed the same strategy as the former Beanie Baby empire, it would’ve folded decades ago.
The ‘problem’ with Nintendo’s management and supply chain strategies, is that they’re very customer-centric.
Customer-Centric: An Old but Effective Model for Nintendo
Newcomers like Amazon, Uber and PayPal have been disruptive to many industries. However, their biggest contribution is the latest trend of customer-focused strategies. Many companies are now trying to streamline their services to better improve the customer experience.
Ken Ramoutar of Avanade Insights, highlights what a customer-centric focus involves:
- Anticipate your future needs looking at behavioural patterns, market trends, leveraging data from inside and outside the organization
- A unique and memorable experience; seamless across your interaction channels
- Analytics to inspect call logs and problem reports to feed changes in supply and production
None of these describe Nintendo’s business practices or product design philosophy. In fact, the company is notorious for being especially conservative in an industry that’s in constant flux.
Nintendo and Unique Gaming Experiences
Nintendo’s focus throughout its long history, is on creating products that provide a unique experience in and of themselves. Unlike its past (Sega) and current competitors (Sony and Microsoft), the company never bothered to chase the latest technological, marketing or business trends. This historically had both good and bad results for the company at different points in its history. However, it has allowed it to remain strong in the face of ever ballooning industry costs. Sony and Microsoft may have millions of dollars to throw behind their development and marketing strategies, but Nintendo has its Blue Ocean Strategy.
That’s it for this week’s post. In the final entry of this three-part series, we’ll describe how Nintendo’s Blue Ocean Strategy and customer-centric approach has led it to continue to be a dominating force within its industry.
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Beloved entertainment giant Nintendo has a long history of trouble getting their products to the right hands.
Almost two months ago, video game giant Nintendo released its latest console—the Switch. Although it received a lot of positive coverage, a familiar problem has been marring the consumer goodwill; extreme product scarcity.
The company’s sales forecasts were off. They were so off that additional Switch consoles had to be flown to their North American and European distributors. Although Nintendo took a drastic action and its been two months since the launch, the consoles are still hard to find. Some are even claiming that it’s a case of artificial scarcity.
Before we can begin to answer the question of Nintendo’s possible motives, there’s a few basics that need to be gone over.
Make it Rare, Make it Wanted
The scarcity of a commodity or a service is an important element of the business model. If there’s a lack of supply, the price will likely go up. If there’s overproduction, the price will start going down. While scarcity is a natural and fundamental part of a free market, artificial scarcity is not.
Artificial scarcity happens when an individual, company or organization creates a scarcity either through technology, production or law, where there would otherwise be the capacity for an abundance.
A classic example would be the Beanie Babies during the 90s. Ty Warner, the person behind the craze, “would retire specific animals at whim, creating scarcity in the market and inspiring collectors to pay up to $5,000 for a plush toy that originally retailed for $5” writes New York Post contributor, Larry Getlen:
Ty’s website further fueled the phenomenon, as the company used it to make retirement announcements and to speculate on possible retirements, dropping hints that drove collectors to buy or sell different lines. Some sellers even began changing prices throughout the day based on website updates
In the end, the Beanie Baby empire came crashing down. Collectors became overwhelmed by all the new product lines and regular customers got tired of fighting with scalpers. The rise and fall of Beanie Babies is a lesson in how even the hottest products can tank if consumers aren’t respected.
Nintendo Has a History of Underestimating Demand
While misjudging demand is something many businesses go through, Nintendo is a special case. Pretty much every piece of hardware released by the company has met with supply problems.
Just to list a few, here are some examples:
- NES Classic Mini. Retailed for $60 USD, now on Ebay for $250+ and climbing.
- Amiibos, RFID-enabled collectable gaming peripherals originally sold for $12.99. Some of harder to find ones ended up selling on the grey market for over $100 USD.
- New 3DS XLs were impossible to get a hold in NYC when they released earlier this year according to an article from The Verge.
Just from these examples (there are many more), it’s safe to say that the company has a history of seriously understating the demand for it’s products. Many potential customers are turned-off from buying Nintendo products for this very reason.
Is it a problem with Nintendo’s supply chain or management? What if the problem is intentional, the supply intentionally restricted as many consumers suspect? The answer to these questions require nuance which is why we’ll leave off answering them until the next blog post. Check back again soon for the second part of this two-part topic.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Earlier this month, Research and Markets added to their “Third Party Logistics (3PL) Market Analysis By Service, By Transport (Roadways, Railways, Waterways, Airways), By End-Use (Manufacturing, Retail, Healthcare, Automotive), By Region, And Segment Forecasts, 2014 – 2025” report.
Experts are estimating the 3PL market to reach USD $1.24 trillion within the next decade. That’s a massive increase considering that the current market is estimated to sit at USD 721 billion according to Armstrong & Associates, Inc. There are eight reasons why this is the case. That’s why this month we thought we’d focus our infographic on the top market growth predictions for 2025 when it comes to the third-party logistics industry.
Third-Partly Logistics Market Growth Predition for 2025
As business around the globe continue to expand their operations, the 3PL market will continue to parallel its growth. The Research and Markets updates highlight how this will affect revenue and coverage. Overall, it looks like the next few years will be a good time for the 3PL market.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Shipping containers are great for transportation, but did you know they can also fulfill an important construction role?
If there’s an item synonymous with shipping, its shipping containers. Whether they are moved through land, air or sea, shipping containers play a crucial role in supply chains. In 2014 alone, the number of these containers moved globally was estimated at 560 million. That’s around 1.5 billion tons of cargo moved all together according to science magazine Nautilus.
There is one not so little problem however. With the increasing complexity and growing level of global integration of supply chains, their numbers keep increasing. Because of the demands of frequent travel, each is built to last. So, what do you with the ones that need to be retired?
Fast Facts About Shipping Containers
Shipping containers are an industry staple, they can carry anything from clothes to cell phones. Key commodities like petroleum, coal and various metals are regularly occupy these containers when they need to be shipped.
Some interesting trivia from Billie Box shows how ubiquitous shipping containers have become for transportation.
- The life of a shipping container can last between 18-25 years provided it’s well-maintained.
- A standard 20′ shipping container can hold 1,170 cubic feet and the max gross weight is 30T with a tare weight of 2.2T. A 40′ high cube contains 2,700 cubic feet and the max gross weight is 32.5T with a tare weight of 3.8T.
- 95% of the world’s cargo is moved by ship.
- Around 10,000 containers are estimated to be lost at sea annually. Of this number, many incur damage from waves and sink quickly. The problem is when they float just below the surface of the water. When this happens, they pose a danger to sailing vessels.
Repurposing Old Shipping Containers
Photo Credit: Noah Sheldon/The Wall Street Journal
Many used containers are finding a new purpose as building materials this Wall Street Journal article explains. Shipping container architecture, also referred to as ‘cargotecture’ or ‘arkitainer’, is growing in popularity, showing up in restaurants, homes, theme parks and even prison cells.
According to the article, about 1 million containers are sold annually for inland use. 70 thousand containers were sold by Maersk Like alone. That number is double what it was in 2015.
Industry leaders cited in the article claim that building with containers can be 20% cheaper and 40% faster than using traditional building materials. However, this doesn’t necessarily mean all the buildings in your neighbourhood will be replaced any time soon. Costa Paris writes:
Containers must be cut when stacked to widen the living space or to create windows and doors, and need to be insulated from the inside and reinforced with steel beams in multistory structures. And after they are put together, conversions or expansions are difficult and expensive
Shipping containers won’t replace traditional building materials, but they are filling an important niche. As supply chains become more complex, the number of containers that need to be retired will also grow. Thankfully, across the world they are providing alternative housing, storage and venue solutions.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Mexico continues its rise as an important global logistics hub with the opening of a new container terminal at the Lázaro Cárdenas port, earlier this month. There are ten reasons why this is important to companies with supply chains in South America.
Lázaro Cárdenas is Mexico’s busiest port and considered one of Latin America’s most important. With the improvements, it’ll also be the continent’s most modern port. According to the World Bank, Mexico’s imports have grown more than 30% since 2010. Container volumes are also up 60% in just the last three years. These statistics, along with the fact that it has more than 45 free trade agreements, is the reason behind Mexico’s meteoric rise as an important global logistics hub.
That’s why this month we’re going to be focusing on how this new port is something to be very exited about for cross-border logistics and supply chain professionals looking south of the border!
10 Reasons to be Excited About the New Lázaro Cárdenas Container Terminal
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With many career options, interest in logistics and supply chains is growing as more people want to know where their purchases came from. But did you know how large and varied the entire logistics and supply chain industry is? When thinking about career options, there’s a whole world or responsibilities awaiting this industry.
Technology such as RFIDs, barcodes and the internet have allowed for products to tell their rich histories to consumers. It’s not surprising then that more people are becoming interested in how things get from A to B. That interest may even grow to become an active step towards a career in the logistics and supply chain field.
However, the industry is much more encompassing than most people realize. It can even seem overwhelming if you haven’t done your research. To get a better understanding of the field, we’ve compiled a list of three things to know before you make the jump.
1. It’s a Bigger and More Varied Industry Than You Think
The logistics and supply chain industry is big, very big. In the U.S alone in fact, over 55 million tons of freight was moved daily in 2013. The freight was valued at $50 billion. Both numbers have since grown. As of 2015, U.S business logistics costs alone sat at $1.48 trillion.
These numbers aren’t surprising. Although the industry goes mostly unnoticed by most people, it’s responsible for every step of a product’s journey from the manufacturer to the customer’s hands. The process isn’t simple, it involves a lot of moving parts and planning. Various stages of delivery and transportation are involved to ensure they reach the right location at the right time.
With companies becoming bigger, more international in reach and scope, the demand and complexity of supply chains grows as well.
2. Logistics is Not the Same as Supply Chains
There’s a distinction between supply chain and logistics, although the two terms are sometimes used interchangeably.
Quora contributor Anastasia Kelm, outlines the differences clearly in this discussion thread.
Logistics — That part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements.
Supply Chain — The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.
3. There’s Plenty of Opportunity to Grow the Career That You Want
According to a Fortune.com article, the logistics industry will need to fill 1.4 million jobs by next year. That estimate is conservative when you remember the explosive growth of e-commerce in recent years.
The truth is, even if you don’t have a relevant degree (or a degree at all), there’s still plenty of opportunities for you. Logistics is a vast industry and functional supply chains are a building block of any successful business. Not everyone looking to start a career in this field needs to be an operational manager or a truck driver either. There’s many jobs in warehousing, material handling, packaging, and management software. That’s to say nothing of support functions like HR, marketing and communications.
To learn more, check relevant job statistics on sites like Glassdoor and see what enrollment would be like at your local post-secondary school. Regardless of the avenue you plan on taking, do your research and determine for yourself if this dynamic field is right for you.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Dongguan Win Win Industrial, a Chinese shoe factory that makes high-quality shoes for large American chains, is looking to the U.S to source its manufacturing. Wall Street journal writer Andrew Brown wrote about the story on Tuesday as the growing trend of nearshoring for outsourcing solutions develops.
The case Brown looks at isn’t isolated. Other Chinese manufacturers have also built factories in the U.S. In November of last year, clothing manufacturer Tianyuan Garments Co. acquired a metal fabrications plant in Arkansas. Even Hasbro Inc. has decided to source from the U.S. Play-Doh products are again being manufactured locally; something that hasn’t happened since 2004.
Over the last decade, an increasing number of manufacturing jobs having been returning from abroad back to North America. While the political climate plays a part, other factors are driving the change.
Looking at the Numbers
To say that offshoring producer jobs has been popular over the last few decades, would be an understatement. Just between 2000 to 2003, around 220,000 American jobs were shipped overseas annually according to the Reshoring Initiative.
2014 was a turning point. For the first time in over 20 years, there was a net gain of 10,000 jobs brought back to American shores. Combine that with the fact in 2016 alone, Chinese companies invested over $20 billion into the U.S. That figure was practically non-existent just a decade earlier.
The trend is set to continue. The 2016 Global Manufacturing Competitiveness Index predicts that the U.S will be the most competitive manufacturing economy in the world by 2020.
Factors Contributing to Reshoring
There are several contributing factors that is changing global supply-chain economics:
Rising Wages in China
Rising labour costs in China shouldn’t come as a surprise, especially with some years seeing a 15%-20% annual increase.
“In 2004, the cost of manufacturing on the east coast of China was approximately 15 percentage points cheaper, on average, than in the United States. In 2016, that gap was down to about 1 percentage point” report Justin Rose and Martine Reeves in this Harvard Business Review article.
Automation Technology
The rise in robotics technology has led to greater automation of tasks, further reducing the cost advantage of offshoring. It’s estimated that up to 50% of the work done in a plant today could be replaced through robotics technology.
Changing Customer Expectations
We’re now in the age of e-commerce. Industry giants such as Amazon are already cutting deep into their profit margins to keep up with competitors. The only advantage left is speed. Customers want their items arriving the same day or even hour as when they order. This means it’s becoming more practical for items to be manufactured in-country rather than ship it overseas.
It’s too early to say how the growing trend of nearshoring will affect the American job market. Companies like Walmart have already pledged themselves to investing in more local sources. However, that doesn’t mean all the jobs lost will be returning. Customer expectations are pushing supply chains toward greater automation at home, not necessarily more jobs. What is certain, is that as global supply chains grow in complexity and cost, more companies will be looking closer to home to manufacture their items.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Few people appreciate what goes into having an item made and delivered to their home. For most, they simply order an item, wait the estimated time and then receive the package. It might as well be magic that made the delivery possible as far as they’re concerned. We explore the complicated business of pizza delivery from a logistics and supply chain point of view.
Those of us in the logistics and supply chain industry understand the level of work and coordination that goes into each successful delivery. Giant retailers like Amazon and Wal-Mart spend millions in technology, infrastructure and personnel just so their customers can get their packages a days earlier. It’s gets even more complicated for those involved in the food delivery industry.
Getting warm food to a customer without it getting ruined, is a complicated task. Just ask the dabbawalas.
It’s no surprise then that as the number of deliveries grows, the logistical systems in place become more complex. One company stands as a shining example of food delivery logistics. Not only has it reinvented itself, but it is also pushing the envelope of innovative technology—all in the name of better customer service.
There is a Western company that has not only mastered the art of hot food deliveries, but is also pushing the envelope for what’s possible. That company—is Domino’s Pizza
Domino’s is Dominating Innovation
If you lived in the right place in New Zealand, you could have a pizza delivered to you via aerial drone.
On August of last year, Domino’s Pizza partnered with Flirtey to test the first commercial drone pizza delivery model.
Up until then, the only companies dabbling in unmanned drone delivery were e-commerce giants like Amazon and Alibaba and a few others. Having a pizza business adopt similar technology may seem like overkill. That is, until you realize that it’s only the latest effort by Domino’s to become a leading innovator. The company is even investing in artificial intelligence, autonomous vehicles, DRU and voice technology to further improve its delivery services.
The Goal—Excellent Delivery
Prior to 2010, Domino’s was just like any other pizza delivery chain. It’s one highlight being that it had particularly bad pizza.
It wasn’t until Patrick Doyle became CEO of the company that things started to change. For Doyle, it was about seeing the bigger picture. Domino’s was always a pizza company, but its also in the business of delivery. It needed to excel in both areas to be successful.
Doyle’s plan for success, was to remove customer barriers. Anything that would impede a customer’s ability to select, place and request an order needed to be removed. Thus, the entire business model and company were restructured.
Invest in Your Customers and They’ll invest in You
Almost overnight, Domino’s saw a return on their efforts after they announced their plans through a series of bold commercials. The company stock jumped 15% by the end of quarter and it continued to grow. It’s now worth 18 times what it was six years ago. Domino’s reach has also grown as its stores can be found in more than 80 countries across 12,500 locations. The company’s commitment to better customer service paid off big time as it’s now the second largest pizza chain in the world.
The lesson that Domino’s teaches us is simple, but often forgotten: invest in your customers, and they’ll invest in you.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
Transparency has been the promise of many CEOs and businesses in recent years. That’s for good reason, customers want to know where the products and the parts came from.
“Consumers, governments, and companies are demanding details about the systems and sources that deliver the goods. They worry about quality, safety, ethics, and environmental impact” writes University of Oxford’s Saïd Business School professor Steve New, in the Harvard Business Review.
However, ethics isn’t the only reason that a logistics provider should commit to a transparent supply chain. The benefits of transparency affect consumers, but it also has a positive impact on how a company does business and the operation of the company itself.
Infographic: How Improving Transparency is Beneficial to Your Supply Chain
Several studies indicate that transparency is an asset. What many don’t realize is that it goes beyond marketing. Transparency helps your business on three levels: with consumers, with business, and with every day operations.
Making a supply chain entirely transparent takes work and commitment. However, the result is a net benefit for all involved.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.
The direction the big logistics companies are moving towards for their R&D is split between drone delivery and autonomous technology investments. We explore how each are developing in the industry.
Earlier this week, FedEx revealed its interest in using autonomous vehicles to make deliveries. FedEx’s chief information officer Rob Carter, says the company is considering using small robot vehicles that could drive around neighbourhoods and make deliveries on their own. The company has partnered with Peloton Technology to achieve this goal, firmly believing this path will be the future of package delivery.
Competitors such as UPS and Amazon disagree. They have spent the last few years developing their own aerial delivery drone programs. Their aim is to have packages reach their destination through the air, instead of on the road.
Flying to New Heights
The idea of delivery drones was initially met with disbelief when Jeff Bezos, CEO and founder of Amazon initially unveiled the technology back in 2013. After a long approval process, Amazon finally received permission from the Federal Aviation Administration (FAA) to conduct trial runs in early 2015. The approval was likely a response to the Chinese online giant Alibaba, a major competitor, conducting its own drone delivery tests.
This event led the way for other companies to develop their own drone delivery programs, and experts weighing in on the potential benefits.
“Allowing drones to be flown for business purposes in the U.S. may produce $100 million or more in economic benefits” says Bloomberg writer Alan Levin, reporting on a FAA document. Enhanced delivery speed and eco-friendliness are other benefits expected from these programs.
Critics have been vocal about cons as well. Namely, in the areas of privacy, potential for theft of packages and the drone itself, and public safety.
Amazon conducted its first delivery through its drone program late last year. Whether the pros or cons win out is now a matter of waiting and seeing.
Driving Towards New Delivery Solutions
FedEx isn’t the first big business to invest in autonomous technology, far from it. Intel for example, is expected to have $1 billion invested in this field by 2020. Uber has jumped onboard with its acquirement of Otto, the company responsible for the successful testing of self-driving tracker trailers.
However, Carter is promising that FedEx’s program will have several distinct advantages over drones. For starters, the vans are expected to be more energy efficient than their aerial counterparts. The maximum cargo delivery limit is also greater. Finally, ground vehicles won’t have to content with the FAA for regulations and flight path approval for urban areas.
Peloton Technology’s current semi-autonomous technology isn’t far off from FedEx’s goal. It can electronically link trucks into small caravan groups called platoons. The lead truck can then control the brakes and gas of the convoy, lowering wind resistance and saving fuel.
Logistics is a multi-trillion-dollar global industry. FedEx is betting of self-driving robots as the future of cargo delivery. Given the company’s size, that’s 220 countries whose way of receiving parcels and movement of large fleets would be affected. Time will tell if FedEx’s robots will be able to streamline, automate and accelerate the supply-chain industry.
That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.