Spin Master Toys Case Study
Final Exam
IS 8100
Renu Ramnani

Q1. What is the history of Spin Master toys? In April 1994, Spin Master business was founded by three university friends, Anton Rabie, Ronen Harary and Ben Varadi, who were graduated from the University of Western Ontario. These three friends decided to find out an opportunity in the corporate world and made Early Bird, and in just six months company sold 1.5 million of them, which was a great hit during that time period. Early Bird was a nylon stocking filled with sawdust and grass seed mounded into head, and after its immersion in water, the grass seed was sprouted which gave a head a crop of grass hair. In 1995, the company launched Spin Master Devil Sticks, which was made up of two hand-held sticks and was used to control the third one. This product was also a great success for the company and later on, the company was named after it, that is Spin Master Toys. By this time, the company covered the major retail segments in North America and also believed that the reason behind their success was avant-garde, grass root marketing savvy and a two tier distribution network. Also, for the following three years, the company produced products for the Canadian market with the use of very low technology and high margin toys. Spin Master never reached to the same success ratio as the Earth Buddy's sales. Later on, Spin Master mainly focused to build relationships with their retailers and investors and create research and development department. In 1996, the company joining with other toy companies approached the concept for compressed-air-powered toy plane which was designed by using plastic soft-drink bottle with wings that were attached to it. Spin Master bought all the rights related to this concept, but it didn't work out well till the next two years. Spin Master decided to roll out its Air Hogs line of compressed-air-power-planes and engineering expertise like China. In 1998, Air Hogs became the top selling toy for Christmas season in North America. After achieving a great success of Air Hogs, the company decided to develop products by compressed air. Spin Master's head office at Toronto had around 50 people working and in Hong Kong, the company opened office which was managed by the project managers. The company was expanding rapidly by using its innovative marketing strategy. In 1994, the revenue earned by Spin Master was $525,000 and reached by $45.8 million by the year 1999. During that period, the company was ranked tenth on the Profit 100 Canada's Fastest-Growing Company list.
Q2. What do you think was one of the biggest problems with developing the E-Chargers?
E-Charger:
E-Charger was an electric airplane toy which came into two parts , i.e., a battery pack holding four AA dry-cell batteries, and a plastic foam airplane containing a small capacitor connected to an electric motor. E-Chargers was one of the high-performing and easy to use airplane as it was available with chargers which charged batteries for kids in just 10 seconds. Spin Master sold E-Chargers six different types of airplane with very reasonable price.
Stages for E-Charger Production: The concept of E-Chargers was sold to retailers who could place orders by 7th December, 1999, as required by the spring planogram shelving period. As shipping as per the order date, Spin Master was able to get an advantage for special shelf space. The planning for E-Chargers delivery was started by the retailers which included many different stages. The first stage was rough engineering model, this stage was the design stage where design should met the specification of airplane, as given by the manufacturers. As per the Spin Master's calculation, the design work should be completed by June but it was completed by July 2nd, which was a week behind as per the schedule for production. The next stage was engineering models, where the team was researched and decided that E-Chargers had to weigh 17 grams. The third stage was tooling, where all the work updates were sent by phone or fax. Also, this stage includes all the details of toy to be produced in mass quantity and Perez estimated that the first test sample should get ready by 8th of September. The fourth stage was engineering pilots where two pilots were testing the molds and other tools. Later on, factory took almost three weeks to run the engineering pilots and which was required to be completed by October 8th. The next step was final engineering pilot, where the final molds and other tools were finished, and as per the planning it was supposed to be completed in one week that is by October 21st, but it took two weeks. The last stage before the production starts was the production pilot stage, where by November 22, the production pilot tests and the final quotes had to be approved. And lastly, for the final production stage it was required to two weeks prior the shipping date, i.e. by November 22 to start the production as to ship it by December 7, as it will help to meet retailer's demand.
Problems:
As per the detail description of E-Charger's production and launching dates and data, it highlights that they were working in a very tight schedule. Schedule management was one of the problems for developing E-Chargers. As per PMBOK, the production team required to work on project schedule which helps to obtain commitment of the organization and also provide track of the project and manages its update status. Next, was the time management as such the delivery date for E-Charger was 7th of December, the production should be started at least two weeks before, so the product could ship on time. But, the team was unable to fulfill the requirement, so there was a risk of losing the shelves for planogram. Another problem, for E-Charger was the risk of engineering, that is as per the different engineering models, it was very necessary to make an airplane that weigh 17 gram, not more or less than 17 grams. Also, the actual time required to make such product must be around 8 weeks but the deadline given to production team was only 3 weeks which can create problem like risk of quality. Another problem was in the production stage of tooling where different tools are required to produce any toy in mass quantity. Generally, this process needs approximately four weeks, but the time given was only 3 weeks. Lastly, one of the biggest problems for Spin Master was the risk to select their supplier. They had two option, first one was Wai Lung Company, which did not had any experience to manufacture electronic products; and the next one was Wah Shing, where there was no communication between the higher and lower level management team.
Q3. What were the strengths of
a. Wai Lung Wai Lung was a privately owned manufacturing company. Wai Lung, as a manufacturer had a very highly committed staff and employees. Wai Lung's performance with Finger Bikes proved his high quality performance as a supplier for Spin Master. As per Harary's observation, Wai Lung's factory was at 40 percent of capacity, and also had another source to access capacity to utilize. The factory was of 100,000-square-foot located in Shenzhen, which was easy to commute as it is one hour away from Hong Kong. Lee, who built up the Wai Lung factory was completely attentive to his factory and was providing flexible credit terms to Spin Master toys and cheaper cost of production. Thus, Wai Lung had the ability to achieve development and expand its business.
b. Wah Shing Wah Shing was a subsidiary company of a Hong Kong public toy manufacturer. Wah Shing's annual revenue was around US $40 million. It was also a supplier of electronic toys for major companies like Tiger and Hasbro. This shows that Wah Shing had a good expertise for electronic toys and also had implemented other successful orders. Wah Shing was a 100,000-square-foot factory, with 3500 workers and six engineers in staff. Thus, Wah Shing had a good experienced staff. Thus, the factory was able to develop and re-engineer toys. Also, the factory had 70-80% of capacity at its Chinese factory. Wah Shing, also had a good cash flow.
Q4. What are the weaknesses of
a. Wai Lung Wai Lung had a very low reputation, with a very less engineering capabilities. Also, Wai Lung had approximately 2000 workers in Shenzhen, but in toy factory it had only 600 workers. During that time period, Wai Lung was a new entrant in the market so did not had much projects to work on. Spin Master was looking for a manufacturer to develop its E-Charger product, which was an electronic toy, but Wai Lung did not had any experience in manufacturing any other electronic product.
b. Wah Shing Wah Shing was five hours away from Hong Kong, which does not show an easy commute for daily purpose. Also, there credit terms were not flexible. Less communication between the higher and lower management, and also lower management is changed. Such changes in new management team can bring less commitment as compared to its previous project work.
Q5. What were the important factors to be considered while selecting a manufacturer? There are many important factors that must be considered while selecting a manufacturer, but the main factor is that how much the supplier is able to fulfill our demand or the company's requirements. It is very important to specify our technical as well as commercial requirements before selecting a manufacturer. Then comes the quality of the product, as any customer who buys a product, wish to get a good quality product. Also, the quality of product directly reflects the company rather than the supplier, so it is very important for the supplier to serve a good quality product that can attract more customers and is also helpful to compete the market. Another important factor is how fast manufacturer delivers the product. This shows suppliers time management as well as his familiarity with the supply chain management of the product. Customers are always expecting on time delivery, and to maintain long term relationship with customers it is very important to deliver product on time. Next factor is the cost of the supplied product. Some customers does not understand the point of reliability in such terms, they pay less for the supply transaction of the product and expect that they will get a reliable delivery, with good quality of product and also good service. But, it is not always reliable good quality service in terms of low payment of cost. Also, innovation is one of the factor. It is very important for supplier to use new innovative technology to meet customers' demands and also helps the supplier to easily manage their business. Thus, as per the Spin Master Toy's case, the important factor to select their manufacturer were as discussed above that is the quality levels of the supplier, their speed to market that is delivery services, costs, tooling time needed as per the E-Charger project, supplier who highly pays attention to Spin Master's demand, a reputed supplier who has a good experience for manufacturing electronic components, and also the capacity as well as capability of factories' Chinese markets.
Q6. Which company would you go with if you were Spin Masters Toy case? Why? In the Spin Master toys case, both the manufacturing company that is Wai Lung and Wah Shing, have some of the weaknesses. But, if I have to select from both of them, I would go with Wah Shing, because its weaknesses like 5 hour distance from Hong Kong and new lower management are manageable. Also, comparing to the strength of both the company, Wah Shing can work in high speed to ship the product as per the required delivery date. Wah Shing have the ability to manufacture correct product as per the required time frame that the Spin Master needed. Spin Master wanted to take decision considering some important factors as discussed in the above question, and Wah Shing has mostly all the factors. Wah Shing has a good reputation and also has an expertise in manufacturing electronic products. Also, there cost are comparable to others in toy industries and had worked for many major companies. There management are committed to the deals which they signed up for and also offer a good cash flow. Thus, as required by Spin Master, Wah Shing has the ability to develop and design their electronic toy, and consider them as a top priority as well as ensure to meet their demands that the product should be shipped by 7th December.