Onshoring is the Right Fit for K'NEX
Company Speeds Time to Market through U.S. based
Product Assembly at EchoData Group
Background
For nearly two decades, K'NEX construction toy sets have inspired creativity, built self-confidence, and encouraged interaction among children and parents around the world. K'NEX Brands, L.P. was founded in 1992 out of The Rodon Group, a state-of-the-art, custom injection molder of high quality plastic components, which has been in business since 1956. The plastic bricks, rods, and connectors that form the basis of K'NEX innovative products are manufactured at Rodon's 125,000 square foot facility in Hatfield, PA. Today, K'NEX is the world's fastest growing construction toy company with products distributed in over 30 countries.
Sophisticated Products Require Precision Packaging Operations
K'NEX offers a large group of products, ranging from thrill ride, robots, race cars, Sesame Street themed construction toys, and many others. The company has also established a reputation as an innovator in new product design and development, bringing to market several exciting new toys annually.
All of K'NEX's core product sets feature an extensive series of unique toys, each which are made up of hundreds, and in some cases, thousands of individual plastic parts. When you consider that the K'NEX 6-Foot Ferris Wheel building set includes 8,550 colorful parts, the sophistication and scope of the company's offerings becomes clear. Delivering construction toys with this level of intricacy requires high quality, labor-intensive product packaging operations. For each product, individual parts must be hand picked in a precision manner and packed together with supporting instructions to provide children everything they need to assemble the finished toy.
For many years, K'NEX has successfully pursued a strategy of offshore labor for the assembly and pack out of its products prior to delivery to the marketplace. After component parts are manufactured at Rodon, they are shipped to China, where that country's extensive labor pool provides K'NEX with a highly cost effective solution for product assembly. While this outsourcing strategy has provided K'NEX with cost savings they ultimately can pass on to customers, it doesn't come without drawbacks
The total turnaround time - beginning with manufacturing and ending with the availability of K'NEX products on store shelves - is typically just over 5 months. For K'NEX, the challenge is to strike a balance between keeping its retailers' unsold inventories low, while speeding time to market when product demand soars.
Onshoring with EchoData: Bridges the China Gap
In 2009, K'NEX management set out to establish a short, responsive local supply chain in Pennsylvania to complement its continuing efforts in China. The initial goal was to bring assembly and pack out operations for one of its popular core product lines onshore; and put it into the hands of a proven outsourcing partner who could shorten the current time to market window.
For K'NEX, the clear choice for a local supply chain partner was EchoData Group. For over 25 years, EchoData had established itself as a fulfillment and logistics partner with a reputation for operational excellence. Above all, EchoData had demonstrated the ability to manage the complex requirements of its customers' programs at the highest level of precision and care.
To support K'NEX, EchoData has set up a dedicated assembly and pack out operation for 11 products within K'NEX's Collect and Build product set. After parts are manufactured at Rodon in Hatfield, they are shipped to EchoData's Coatesville facility at 735 Fox Chase. There, highly trained EchoData employees perform the final assembly and packaging of the finished product. EchoData's scalability also enables it to seamlessly support K'NEX during periods of peak demand, when requirements can grow as high as 4000 product assemblies a day. All products are shipped back to K'NEX's warehouse in Hatfield where the company fulfills shipments to retail store locations, and direct to end customers who have made purchases on the K'NEX website.
Local Supply Chain Speeds Time to Market, Improves Customer Responsiveness
The onshoring decision has brought measurable benefits for K'NEX. EchoData has helped K'NEX to dramatically shorten lead times in its supply chain, reduce transportation costs, and improve overall responsiveness to the time-sensitive needs of U.S. retailers and customers. Whereas total lead time from manufacturing to product availability in the offshore model is 158 days, EchoData has cut K'NEX time-to-market window by more than half - to 72 days. Moreover, the partnership between K'NEX and EchoData connects two long standing PA-based companies, bolstering the state economy and keeping jobs at home.
"EchoData has been everything we wanted in an onshore partner and more" commented the Senior Vice President of Operations at K'NEX. "They do exactly what they say they will do - with a can-do attitude and a dedicated focus to customer care. Most importantly, their quality support translates to measurable economies of scale for our business and maximum efficiency in our local supply chain".
The success of the K'NEX-EchoData partnership in just the first year has the two companies discussing an expansion of their relationship, including: moving more product assembly operations to EchoData; and the utilization of EchoData's core fulfillment services for end customer and retail channel distribution of K'NEX's products.
