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Nintendo Co.
Programmed by: Bianca Leyvi and Mallory Logan
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This is your map of the game. In order to beat the game you must pass all 6 levels. Click Level 1 to begin.
Level 1
Popular Nintendo Products
Nintendo Company History
Game Boy
Nintendo DS
Wii
Nintendo Switch
Timeline
1985
2006
1952
Released Nintendo DS
Entered the US market with the introduction of the Nintendo Game System
Changed company name to Nintendo Playing Card Co. right as business began to boom in the postwar era
Nintendo Timeline
Released Game Boy
Released Nintendo Switch
Developed its first video game system in cooperation with Mitsubishi Electric
Founded as Marfufuku Co., a producer of playing cards for the Japanese game of Hanafuda
1889
1975
1989
2017
Level 2
Nintendo Supply Chain
Vertically-integrated
+
Blue-Ocean Strategy: simultaneous pursuit of low-cost and diversification
Content Providers: In-house, Akamai Technologies, AWS, CDNetworks, Limelight Networks
Software Developers: In-house + Third Party
Software Publishers: In-house + Third Party
Platform Provider: Nintendo
Manufacturer: Foxconn
- Hardware: IBM, Toshiba, Nvidia
Distributors: Vast Inc. + Online
Retailers: Game Stop, Best Buy, Walmart, Costco, etc
Traditional Video Game Value Chain
Level 3
Supply Chain Gaps
Jump over these gaps to collect extra coins
& move onto the next level
Gap 1: Component Capacity Shortage
- Tough competition for parts against phone companies (Apple), data centers, and other Chinese producers
- Parts manufacturers prioritize larger volume sizes and higher margins, whereas Nintendo's lack of transparency causes order inconsistencies, shipping delays, and unpredictable changes
- Bottleneck choke-points with console hardware: NAND flash-memory chips, liquid-crystal displays, and remote motors
Gap 1
Gap 2: Agility
Gap 2
- Poor demand management propagated by insufficient contingency planning and inaccurate forecasting
- Forecasts are based on historical console sales, which is considered a strategic misfit for newly-launched products like the Switch
- Notoriously undervalue sales estimates, causing reactionary measures
- Deep adjustments (+/-500K units)
- Expedited shipments
- Perpetual stock-out at stores; leaving experts and conspirators to believe it is artificially-created scarcity?
Level 4
Nintendo's Demand Management
Nintendo faces a production shortage due to its inability to track supply and demand across its network
In 2016, when Nintendo released the NES Classic Mini, it failed to forecast properly, resulting in major shortages, ultimately forcing the product to be discontinued in 2017
- Its inaccurate demand forecasts result in poor turnaround from part manufacturers when Nintendo must find ways to ramp up production
- The company struggles with multiple bottleneck choke points with suppliers
- Alps Electric, a Nintendo supplier, struggles to respond to the company's immediate and surprising production requests
- Nintendo faces heavy supplier competition with companies such as Apple, and must pay the high expedited transport costs when it faces shortages
Nintendo was in the same position just a few months later with the release of the Nintendo Switch
Level 5
COVID-19 Response
Demand for The Switch has surged due to "Animal Crossing: New Horizons" and an increase in gaming during the pandemic, leaving Nintendo unable to meet the high demand
The price of the Nintendo Switch has skyrocketed from its retail price of $299 to nearly $560 through 3rd party retailers
- Production problems began in February 2020, when there were no consoles produced due to factory shutdowns
- Most Switch devices are manufactured by Foxconn
- Although these factories have began to reopen in April, it will still take some time to meet demand
- Parts of production had preemptively moved to Vietnam in 2019, but still rely on second-tier sourcing and production from China
- Nintendo could not meet demand before the pandemic due to forecasting issues, so this disruption brings especially difficult circumstances and calls for a change
The console is not expected to return until June, but Nintendo has plans to produce 22 million units this year, a 20% increase from previous projections
Level 6
Recommendations
You did it!!
Now Nintendo is ready to collect that coin!
Prize 1
Solution 1: Diversify Production Network
In mid-2019, Nintendo established a Vietnamese assembly partner factory to primarily serve the U.S. market - the question is why move out of China?
- Nintendo Switch console production moved to evade rising U.S. tariffs imposed on Chinese-made electronics; anticipating impact of the trade war
- In the midst of a trade war and virus-imposed closures, the decision has retroactively paid off and can be signs of reducing component supply risk by using new sources and prove other Asian countries as feasible options for server factories
- Vietnam is the company's first attempt at partnering with a contract manufacturer outside of China and can be one way of negating the constraints of limited capacity
Prize 2
Solution 2: Adopt Better Forecasting Methods
Nintendo has turned supply disruptions into a marketing ploy - but how can the real problem be fixed?
- Disruption discovery visibility systems can help reduce stockouts in the US market, which carries 43% of the company's revenue in its core gaming business
- Use of predictive analytics for demand planning: complex forecasting strategy that compiles historical data, thousands of demand-influencing variables, and predictions
- The ability to forecast more accurately will contribute to order consistency, allowing Nintendo to create better relationships and deals with its suppliers in the event of production bottlenecks
Prize 3
Solution 3: Digitize Supply Chain
A consumer electronics manufacturer is lagging in technological advancement - seems counter-intuitive?
- While close competitors use CD-ROM, Nintendo continues to sell cartridge-based games which are more expensive, hold less data, and take longer to develop
- From a retail perspective, the company should focus on its online channel for game releases in order to circumnavigate production and shipping costs, as well as returns
- Supply Chain 4.0: advanced analytics, real-time planning, data transparency, IoT
- Results in a more agile and customer-centric value chain
Sources
Please send your questions, comments, and concerns to the discussion board for our review.
Topic
- https://www.nintendo.com/corp/history.jsp
- Tomaselli, Fernando & Luiz, Tomaselli & Di Serio, Luiz & Luciel, Serio & de Oliveira, Luciel. (2008). Value Chain Management and Competitive Strategy in the Home Video Game Industry.
- https://digital.hbs.edu/platform-rctom/submission/super-mario-zelda-and-a-broken-supply-chain/
- https://www.bloomberg.com/news/articles/2020-02-17/nintendo-is-likely-to-suffer-global-switch-shortages-from-virus
- https://www.mckinsey.com/business-functions/operations/our-insights/supply-chain-40--the-next-generation-digital-supply-chain
- https://www.cnn.com/2020/04/10/tech/nintendo-switch-shipment-pause-shortage/index.html
- https://finance.yahoo.com/news/covid-19-pandemic-caused-global-170931860.html
- https://www.businessinsider.com/nintendo-switch-production-increasing-animal-crossing-2020-4
- https://www.cio.com/article/2434123/nintendo-wii-shortage--shrewd-marketing-or-flawed-supply-chain-.html?page=2
- https://variety.com/2019/gaming/news/nintendo-switch-sales-forecast-dropped-1203124480/
- https://www.supplychaindive.com/news/Nintendo-SOP-supply-chain-problems-recovery/503812/