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NewsNewslettersThe Stockout

The Stockout: Toymaker freight flowing, just not fast enough

High toy demand could potentially lead to shortages. News reporters are discussing toilet paper stockouts in places such as Iowa where cases are soaring. While less serious, there is another group of products that could potentially be limited as we head into the end of the year, toys. 

Toy companies have begun to warn that their supply chains may not be able to keep up with a surge in demand for their products. 

“And while our supply chain is fully operational, we are chasing extraordinary growth in demand. Mattel’s Chairman and Chief Executive Officer, Ynon Kreiz, answered in Mattel’s 3Q2020 earnings call. “We gave you guidance and we do expect to meet our gross sales guidance, but we cannot be certain we will fully meet the surge in consumer demand.”

Interestingly, in Mattel’s earnings call, executives said that the coronavirus is not contributing to the stress on the supply chain which has wreaked havoc on global supply chains since the beginning of the year. 

Chessboards are experiencing higher demand associated with the success of Netflix’s hit, The Queen’s Gambit. 

“Ever since The Queen’s Gambit launched, our chess sales have increased triple digits,” said Spin Master’s Vice-President of Marketing, Elizabeth LoVecchio

(Chart: FreightWaves SONAR. National Outbound Tender Volume Index).

Truckload tenders have soared this week while tender rejection levels have stabilized, indicating that volumes are strengthening as we head into Black Friday and the Christmas spending season. 

Due to high import volumes and port and intermodal congestion on the West Coast, importers have faced delays in bringing goods on shore this holiday season. Companies such as Peloton have had to pushback delivery dates for their products due to shipping logjams on the West Coast

DIYers have infiltrated the mason jar market. COVID lockdowns became widespread in the U.S. in March, and many Americans have been working at home ever since. Not surprisingly, with bars, restaurants, and other entertainment venues closed, DIY (Do It Yourself) projects became far more popular. What wasn’t expected was that there would be such a large jump in demand for mason jars. 

Mason jars are vital for CPG companies, both large and small, who need to package their goods in a safe way to sell to consumers. 

CPG companies across the country who depend on mason jars for their business are having trouble finding these jars or they are having to pay an extreme upcharge off of third-party websites such as Amazon. 

“We’d normally get them from huge manufacturers, pallets at a time, but those places ran out,” Ashley Rouse, founder and CEO of Trade Street Jam, said regarding the lack of mason jars available for purchase. “I’ve never seen that happen.”

Newell Brands, the number one maker of mason jars in the United States, has assured the public that they are making changes in order to meet consumer demand. In October, Newell told CNN that they were increasing glass production, finding new lid manufacturers, and expanding their facilities

COVID made supply chain service and agility top priorities for executives. The coronavirus has without a doubt been extremely influential for supply chain change and adaptation. In a recent study, Bain & Company and Microsoft teamed up to find out how much the coronavirus has truly impacted decision making. 

While over 90% of retail and consumer packaging companies plan changes to their supply chain, how they are focusing on the changes is more telling. In the twelve months before coronavirus, 76% of companies rated cost efficiency and service levels as their top two supply chain priorities compared to just 63% since the pandemic. 

Agility in their supply chain experienced the most drastic increase in importance, soaring from just 17% of companies rating it as top two on the supply chain priority list to 41%. The second-largest increase was the speed of the supply chain, which jumped from only 24% of companies seeing it as a top two concern to 27%. 

Source: Microsoft and Bain & Company

Executive leaders are starting to realize the value of including top supply chain managers in decision-making.The number of companies who reported that supply chain managers are providing input for all or most major strategic decisions increased by 17% after the pandemic. It appears that retailers and CPG companies are determined to be more prepared for the next Black Swan.