What has happened?

Spin Master has previously manufactured their toys from different manufacturers in China. Spin Master isalready operating as the manufacturers of low technology toys, but now Spin Master is considering launching the high-tech and high-quality toy airplanes.

Problem:

The great success of Air Hogs in the toy airplane market forced the management of Spin Master to examine the production of such items. Spin Master finalized the idea to produce the Air Hogs into a new innovative way which they termed as E-Chargers, which will be driven by electricity and can fly up to ninety meters which is considered to be quite high. However, the biggest problem is the manufacturing of the E-Chargers. There aremany producers that manufacture the toys of Spin Masters. The original manufacturer of the toys of Spin Master is the Kin Seng, but Kin Seng is currently working in full capacity and does not have further resources to carry on the production of E-Chargers. So, Spin Master does not want to consider Kin Seng as a potential supplier for E-Chargers.

Finding the qualified and affordable provider is always such a critical task for Spin Master. It is expected that the demand for E-Chargers will be at its peak from March to mid-May.To avail this lucrative opportunity, it is essential for Spin Master to deliver the E-Chargers to the customers before late Decembers. It seems to be quite difficult to achieve the necessary production level from the suppliers because there is a small time in meeting this deadline. Furthermore, the main competitor of Spin Master will also launch their productshortly which is quite similar to E-Chargers; it is vital for Spin Masters to begin the production of E-Chargers before the launching of the product by competitors to avail the advantage of thefirst comer in this segment.

For the successful working of the E-Chargers, it is necessary that E-Charger only weighs 17 grams if it is more than 17 grams, it will not work and will not be able to fly properly. E-Chargers seems to be quite sensitive, the threat of the failure of the product is higher because the supplier which usually produces the toys are operating at full capacity. The new supplier may do not have the required expertise to build the complex product accurately.

Possible Options:

There are three possible actions for Spin Master to cope with this situation, the first is choosing Wai Lung and the other one is WahShing, and Spin Master can choose both the suppliers simultaneously.

Wai Lung:

Wai Lung is owner managed factory, the Owner of Wai Lung is Eric Lee. The company is relatively new on the market and does not have high reputation due to the low number of customers. However, Wai Lung is considered to be the high-quality manufacturer of toys which is also acknowledged by Spin Master in their previous association with Wai Lung when Wai Lung produced Flick Trix and Finger Bikes. But it can be argued that Wai-lung does not possess enough expertise to develop this kind of sensitive skill which is essential for the production of E-Chargers. On the other hand, the speed of delivery might be good because of the less distance between the production line and Hong Kong……………….

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