Toy story

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(Khatuna Khutsishvili/ITP)

The economic growth of the Middle East has turned the region into an exciting playground for Toys"R"Us. But what tricks does the global retailer have up its sleeves to manage its increasingly complicated supply chain?

One could be forgiven for assuming that supply chain management for toy retailers is fun and games. After all, the operations are largely unburdened by the stringent requirements of a pharmaceutical cool chain, for example, or the transportation of hazardous cargo.

However, the logistics challenges facing today's toy retailers actually lie within the fickle nature of the market itself.

The latest gadget being coveted by millions of children one day can easily be forgotten and replaced with a completely different alternative the next.

With the industry relying heavily on anticipating what toys are going to sell best, and to what extent or volume, further issues, such as short product life, speedy product turnover and seasonal demand, can also present challenges for the supply process.

The silver lining to all of this is, of course, the big booming business that toys bring along with them - and in this respect the Middle East region has been thriving. According to sources, the UAE is ranked eighth in the top ten toy importing countries in the world.

With the Middle East toy market itself estimated at a hefty US$1.5 billion per year, with an impressive 11.8% annual growth rate, setting up a successful toy shop in the region promises very healthy returns indeed.

This lucrative lure has not gone unnoticed by global toy seller Toys"R"Us, which has been operating in the region under the prestigious eye of the Al-Futtaim Group since 1995.

As one of the leading companies in the UAE, with many well-known global brands under its belt including Toyota, Panasonic, Marks & Spencers, IBM and Ikea, Al-Futtaim Group knows a thing or two about smooth logistics operations in the region.

Coupled with the reputation of Toys"R"Us for successful logistics operations in the US and Europe, running a smooth supply chain in the region should be plain sailing for the retailer.

"We buy merchandise from all over the world and deal with more than 300 manufacturers to get the best possible prices for our customers," explains Devrim Anadol, buying and logistics manager at Toys"R"Us.

"We plan our ranges according to worldwide trends, movie releases, seasonality, and consumer behaviour and fashion in the GCC. And of course we take into account our sales targets and financial objectives."

The retailer currently operates in the UAE, Bahrain, Qatar, Oman and Egypt, with products for the stores coming mainly from China, Europe, UK and the USA. For this reason, it relies on immaculate support from its chosen third party logistics partners to ensure an efficient toy supply chain.

"Considering the number of countries and the number of vendors that we deal with, our operation requires a flawless process and great teamwork," Anadol emphasises. "To ensure the smooth flow of the supply chain, it is imperative that the logistics ‘parts' work together."

In terms of these logistics 'parts', Toys"R"Us relies on major 3PL players to help them deliver their successful operations, including Agility, UPS, DHL and Aramex. For those critics who may argue that ‘too many partners spoil the supply chain', Anadol is keen to explain how it works in practice.

"The first step to getting the merchandise is, of course, processing the purchase orders and we get support from UPS worldwide consolidation services on this," he says.

"UPS operates in 224 countries and supports us by origin coordination, which means timely shipments, assisting on consolidation and follow up with the suppliers on ship windows and documentation. Basically, UPS gets the containers to our central warehouse in Jebel Ali, Dubai."

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