Chapter 1 Mini Case Operations Management

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Toys Inc. has been in business for 20 years and has built its reputation on quality and innovation. Despite the strong history in the toy business, sales have seemed to level off and even fall below where they once were. As a consultant called in for advice, I see several problems in the company’s production as well as quality control. The decline has less to do with “the economy” and more in Toys, Inc’s approach to their management of quality. As Stevenson (2012) reminds us, “top management has the ultimate responsibility for quality” (pg. 377).

The recent moves to make cuts in production costs and layoffs in the design and development departments are going to do more harm than good to the company’s profits. These actions may reduce costs but they will have little to no impact on sales and without sales, there is little profit to be achieved let alone increased. Combine this with customer complaints on the quality and performance of one of their product lines and Toys Inc. is in the midst of experiencing all the consequences of poor quality. Poor designs or defective products can result in loss of business. Failure to devote adequate attention to quality can damage a profit-oriented organization’s reputation and lead to a decreased share of the market (Stevenson, pg. 379).

Toys Inc. needs to get back to doing business the way it did to build the brand and reputation it is now on the verge of losing. To do this they need to focus the money they cut on production costs and invest those funds into prevention costs. These costs would include quality control procedures, and focusing more on the design and production phases to decrease the probability of defective workmanship (Stevenson, 2012). Instead of layoffs, Toys Inc. needs to promote quality at the source. Stevenson (2012) says this refers to the philosophy of making each worker responsible for the quality of his or her work (pg. 392). Total Quality Management (TQM) problem solving can also be implemented...
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