What do you do when selling a product that’s just too popular?
This is exactly the question Nintendo is asking it’s supply chain team internally after the past months of lacking supply via retailers who have seen rampant customer demand.
The gaming console in question is Nintendo’s newest console, the Nintendo Switch. Reported in an article by the Wall Street Journal, it was stated that consumer demand for the Switch was filled with so much anticipation, that the company sold out of it’s supply within the first month of release. 524,000 consoles were sold in Japan during the initial release, but only 492,102 over the next three months combined.
In answer to the lack of supply, Nintendo’s supply chain is ramping up production, “ preparing to produce up to 18 million units to meet demand, and are addressing problems with parts, among other constraints” (Supply Chain Dive 2017).
Nintendo’s woes are a classic case of underdeveloped forecasting of consumer demands in relation to production.
Supply Chain Dive’s article regarding the matter has an ominous pessimism that surrounds the solution of Nintendo’s supply chain problems, and with good reason. Production times have caused a chasm in the sustainable progression of the console’s sales trends.
Nintendo managed to double their sales between May and June, from 128,000 units sold to 294,000 units sold. While this shows that Nintendo has managed an enormous task of ramping up production by 100%, they have a long way to go if they want to meet projected sales figures.
If Nintendo wants to get back on track to sell 10 million units within the year, their going to have to test the boundaries of supplier’s capacity, and sell (on average) 833,000 units a month globally.
This case highlights the importance of production forecasting in relation to consumer demand, and developing agile plans to be able to manage unforeseen changes within actual sales.
Nintendo has handled the situation professionally, despite consumer angst. It’s hard not to root for them in exceeding sales goals for the year, but it’s a tall task that stands before their organization, suppliers, and retailers involved in the collaboration.