Today is Star Wars Day. And everyone is running around saying “May the Fourth be with You.” So I thought I would publish a post on what I consider to be one of the best supply chain stories of all time. The story is how the toy company, Kenner, confronted with the ultimate challenge of forecasting demand for a new product launch then developed an ingenious solution which ensured it did not miss out on the lost sales due to out of stocks.
A long time ago in a galaxy far far away a small toy company named Kenner had licensed the rights to produce toys for the upcoming theatrical release of a film called Star Wars. With numerous production delays and budget overruns, few associated with the film expected Star Wars to be a success. Consequently, Kenner had not bothered to manufacture any merchandise in time for the release. However, the strategy proved to be a mistake. The film was a smashing success breaking box office sales records and creating a loyal fan based of millions seemingly overnight.
As a result, Kenner had to develop a merchandising strategy to capitalize on the film’s widespread popularity. Kenner decided to quickly develop a line of action figures to sell to the growing community of Star Wars fans. However, Kenner faced a time-to-market challenge with the product development lifecycle. The development of plastic toys required over a year. The action figures needed to be designed, sculpted and tested. Expensive and time consuming steel molds needed to be created to support the manufacturing activities. Starting in mid-summer, Kenner would not be able to get the products to market in time for the all-important Christmas holiday season. So although Kenner held the license rights to the biggest movie in history, it could not get its merchandise to market fast enough.
Star Wars Early Bird Certificate
Confronted with the ultimate dilemma of massive demand and non-existent supply, Kenner arrived at a rather ingenious solution. To capitalize on the peak holiday demand, Kenner introduced an advanced purchase option for its forthcoming action figures. Consumers could purchase a cardboard certificate in retail stores, which could be redeemed a few months later for the first four 3.75″ action figures in the Star Wars line. The certificate, which cost $16, included a plastic display stand, a Star Wars club card and a handful of stickers. The bundle, which included Luke Skywalker, Princess Leia, Chewbacca and R2-D2, shipped within 2 months of submission of the certificate.
Back of the Early Bird Certificate
In early 1978, Kenner introduced a broader set of action figures which could be purchased individually in retail stores. The broader line, which sold for $1.49 each, included Obi-Wan Kenobi, Han Solo, Darth Vader, C-3PO, Jawa and Sand People. Unlike the Star Wars action figures sold in toy stores today, the original line had a limited range of motion and less sophisticated parts such as vinyl capes and telescoping lightsabers that extended from the character’s arms. Over 42M Star Wars action figures were sold in the first year after release. A total of $250M were shipped in the 8 years as an expanded set of figures were introduced along with the Empire Strikes Back and Return of the Jedi films.
Verticalogy by Steve Keifer 