Mattel certainly knows its way around toys. But what's less well known is how sophisticated it has become in using technology. Mattel (MAT) is one of the companies profiled in BusinessWeek's Web Smart 50, a guide to innovative uses of Web technologies within corporations. During the past three years, it has gone full bore at adopting Web technologies, deploying collaboration services that bring together far-flung designers, factory managers, and licensees to cut costs, increase sales, and boost productivity. Internet Editor Heather Green spoke with Mattel Chief Information Officer Joe Eckroth about some of their projects. Following are edited excerpts of their conversation:
Q: So what has been your approach toward using Web technologies to get a competitive edge?
A: I have been with Mattel over three years. Focusing on the Web was one of the first things we looked at after I joined. I have a goal of digitizing the enterprise. That means translating things from atoms to electrons.
The way we have evolved was first we tried to figure out how you transition the culture to getting used to doing business on the Web. There wasn't a unity around that. We started with creating a portal called MyMattel. It's a workbench for employees, letting them know what's happening on any given day.
The cool thing is, we have digitized around this. We built kiosks, so that employees in our big distribution centers and manufacturing centers could be Web-savvy. Mattel employees can use this to manage their benefits and career. For instance, there's a big e-learning initiative we have been at for two years, with computer-based training on the Web. We have deployed that in a big way.
Q: So that's a portal. That got you on your way. But then what did you do?
A: We started working on Web collaborative technologies. We launched the Mattel Online Approval system at the beginning of this year. We're a big licensor of our brand, from Barbie to Hot Wheels. [Reporter's note: For instance, Mattel may license the Barbie image to a company that makes lunchboxes.] This is one of our fastest-growing business segments. We have more demand than we can keep up with.
The pure Web-based approval system allows us to approve over the Web how licensees want to use our brands. Instead of them sending us a physical product to approve, now it becomes paperless. Our people can mark up the design, and it can be sent back and forth for final approval. That allows us to get a lot more approvals done with the same amount of people.
[In a subsequent e-mail, Eckroth estimated that the approval cycle time has been cut from 14 weeks to 5. Around 25% of licensees use the online system now, and 100% should be using it by yearend 2004. With $2 billion in retail sales for licensees, Mattel expects the online system to enable an increase in licensing agreements of around 10%.]
Q: What other collaboration systems have you put in place?
A: We also focused on the design and development side, which is the heart and soul of our innovation. What the Web has enabled us to do is move that process closer to where we're making our products. We put a collaboration process in place with the design guys in Asia and U.S. This allows us to develop products digitally.
So we have gone from paper design and sketching to digital design. Then the guys in Asia can look at it and make changes based on their manufacturing needs. That has cut weeks out of our cycle time and on tooling, which is a big aspect of this. [In an e-mail, Eckroth estimated that the system helped cut the cycle time by 20%.]
Q: You mentioned using the Web for e-learning. What are some of the interesting ways you do that?
A: We focus on using the Web for best-practices sharing. In operations, we have distribution centers and plants. Our plants are highly innovative. We have to keep the efficiency at its peak, so we created an operations university.
When one factory innovates, such as coming up with a new way to make Hot Wheels' wheels, they post it to the Web, and every other manufacturing entity in the world gets alerted to that innovation. They're asked to figure out how and when they can adopt this innovation. And if they can't, they have to say why they can't. It creates competitiveness across our plants.
Now we're expanding that idea into other areas of the business, including technology, and design. We didn't do a lot of best-practice sharing four years ago. This creates a collaborative space for us to do that in.