Mattel, Inc. – the one-time world leader in the design, development, and marketing of a broad variety of children’s toys – is confronted with the dual challenges and opportunities associated with digitalization. While digitalization has broad implications for the entire traditional toy industry, its effects may be most clearly crystallized in the example of Mattel, which uniquely operates thirteen company-owned plants and employs up to 40,000 supply chain employees. 
First, the emergence of digitalization has placed new demands on the organization’s product development capabilities. It would be of no surprise to any resident of a developed nation that children are spending increasing amounts of time engaging with digital products. In fact, approximately 85% of U.S. children, aged 3-5 have access to a tablet. Consequently, Mattel is now pressured to develop new, tech-enabled products that can hold a child’s attention. Having achieved its past success through expertise in injection molding and die-casting, this capability gap reflects a significant departure from its core product development capabilities.
However, digitalization can also serve as an enabler to Mattel’s supply chain, by enhancing demand planning and speed-to-market. Traditionally, Mattel’s supply chain faces significant pressure to deliver new products. Given the highly seasonal and fashion-driven nature of the business (i.e., each year has different “must-have” toys), the company annually develops 6,000 new products with a typical lifecycle of under two years. Accordingly, digitalization presents a massive opportunity for Mattel to improve its speed-to-market, demand planning, and inventory management. Using digital design and modeling, Mattel can rapidly prototype new toys and design the products with automation in mind. Once designed, a digitalized supply chain can improve the level of visibility – from factories to demand planners – to more effectively deliver products to market. In incorporating these elements of a digital supply chain at scale, Mattel could create a massive competitive advantage in an industry with typically long lead times.
In the short-to-medium-term, Mattel has addressed these issues in several of ways. First, Mattel has attempted to both buy and partner to access the relevant tech-oriented product development capabilities. In early 2015, Mattel strategically acquired the companies Fuhu and Sproutling, providing capabilities in product development; data analytics; and software, hardware, and firmware engineering skills. Additionally, Mattel also announced a partnership with Google to revive its classic View-Master toy, revamped with virtual reality technology. Using some of these capabilities, Mattel has launched several tech-enabled products (see: Hot Wheels AI, Hello Barbie, Hello Barbie Dreamhouse, Ultimate Justice League Batmobile). Next, to digitalize the broader supply chain process, Mattel announced JDA Software Group as its strategic supply chain partner, with the objective of driving “improvements across its end-to-end supply chain processes, […] demand planning, […] and customer collaboration.” While these initiatives have made minimal contribution to the firm’s growth in the short-to-medium term, they indicate a willingness to evolve that will be critical to the firm’s future viability.
To more fully address the dynamics of digitalization, Mattel still has ground to cover. As Mattel slowly shifts its product
development capabilities towards a digitally-enabled offering, cascading new complications arise. For instance, in engaging with a child end-user, data security and privacy become increasingly important concerns for Mattel. Almost two years after kid-friendly electronics company VTech announced a major data breach (including child user data), Mattel announced that it would no longer bring its Aristotle product – an “all-in-one voice-controlled smart baby monitor” – to market, due in large part to concerns about privacy and Mattel’s intentions with collected data.  Given the gravity of these new obstacles, Mattel must continue to build out the relevant product development capabilities to both create a digitally-enhanced line of products and improve its overall supply chain performance.
Of course, questions remain as Mattel’s supply chain grapples with digitalization. Namely, can a seemingly old-fashioned company recruit and sustain the talent required to develop a tech-enabled product portfolio? Additionally, will the introduction of more technology into toy offerings further shorten the product lifecycle and, thereby, further stress Mattel’s supply chain (i.e., obsolescence risk is higher in technology than in toys that maintain an open-ended play pattern for kids)?