Well, it is “earnings season” where publicly-held companies report their financial performance for the recently concluded quarter. I love checking out news coverage of the releases to see where credit goes for successful performance and where blame goes for performance that fell short of expectations. Often, there is a supply chain reference in these articles.
Such was the case with recent earnings reports from giant toy makers, Mattel and Hasbro.
Last week, Mattel announced that its second quarter earnings doubled from the year-ago period on an increase in sales. Today, Hasbro announced a more modest earnings increase of around 10% despite a drop in revenue.
Both mentioned supply concerns, which could impact earnings in the near future.
An article on Market Watch indicated that Mattel’s executives feel that tight supply is an even bigger concern than weak demand from retailers who are keeping inventories lean. In China, Mattel’s big source of production, “shipping containers are in short supply, labor is tight, and freight is moving slower.” In addition, “input costs are expected to go up for the remainder of the year.”
Are Hasbro’s procurement strategies more effective?
While an article on Comcast Finance indicates that “toy makers are facing rising costs for commodities like oil and rising wages in China,” it goes on to note that “Hasbro said that it agreed with its vendors on costs for the next year, so higher costs for labor will show up mainly in 2011.”
What a great example of the fact that procurement is extremely strategic and a source of competitive advantage!
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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