Spin Master Toys (A): Finding A Manufacturer for E-Chargers
1.) Executive Summary:
• Spin Master Toys core competencies are marketing and bringing creative toys to market. • Alex Perez should choose Wah Shing and utilize their core competencies of manufacturing electronic toys. • Electronic components can be difficult to acquire therefore Wah Shing’s relationships with suppliers will be beneficial. • Speed to market is key, therefore Wah Shing has the best capabilities to meet Spin Master delivery commits • Building long-term supplier relationship with Wah Shing is imperative if Spin Masters decides to stay in the electronic toy industry.
2.) My assessment of the process Spin Masters has used to get to this point is, they are really good at developing good relationships with retailers, investors and have in-depth knowledge of research and development of various toys. Spin Masters has expertise in developing low technology “fad” toys and distributing them to retailers quickly. Spin Masters lacks engineering and manufacturing capabilities and therefore it’s necessary to outsource both. The company used their own “grassroots marketing” campaigns to stimulate interest in their toys.
Spin Master’s has a “botched” process when it comes to the manufacturing and delivery of their toys. This end process appears to always be a “scramble” especially as they enter the electronic toys market. Since electronic toys are new to Spin Master, they should have utilized an early supplier involvement strategy. A company like Wah Shing early on could help them with the engineering and development from an early stage and then manufacture the plane for Spin Master Toys. Spin masters is good at marketing and bringing creative toys to market, whereas a company like Wah Shing has expertise in engineering and manufacturing of electronic toys. In short, it’s best to take one company's weaknesses and mate them up with another company’s core competencies.
3.) As Alex Perez, of the two potential suppliers, I would choose Wah Shing. Wah Shing’s core competencies include the engineering and manufacturing of various electronic toys. Spin Masters needs to find a manufacturer who is capable of providing high quality products in a short time span. Wah Shing has a very large facility which includes 6 engineers, 3,500 total employees and is the preferred electronic toy manufacturer for some of the largest companies in the toy industry. With that said, Wah Shing has a reputation for the manufacturing of high quality electronic toys. One of the biggest obstacles I currently face is getting E-Chargers to market on time to obtain the first mover advantage. Wah Shing has only 20% of its manufacturing capacity available but that is still a lot of freed up space for E-Chargers. The company could possibly devote a total of 700 employees (20% of 3,500 employees) to focus only on the manufacturing of E-Chargers. Currently, Spin Master needs a total of 20,000 units therefore each employee would be responsible for a total of 29 E-Chargers. Since many of the smaller components are sourced from other companies, this appears to be an achievable milestone to meet for the December deadline. In considering Wah Shing as a supplier for E-Chargers, cost and financial risk needs to be taken into account. Wah Shing has annual revenues of nearly $40 million, which is over $10 million more than other Hong Kong competitors. Without knowing any further details, it is safe to assume Wah Shing is in good financial health due to their proven track record with Hasbro and Tiger. There does not appear to be any indicators that Wah Shing has or will have any financial burdens in the near future. In terms of cost, Wah Shing appears to be slightly more expensive than Wai Lung. The per unit difference is about $.32-$.37 (HK$2.45-HK$2.83) depending on the container load. Wah Shing also includes critical components such as...