Eastern International University

Group Case Study

Spin Master Toy Case

Lecturer: Mr. Quang Le

Course: SCLM 439 - Purchasing and Supply Chain Management
Date: December 2 2021

Group 6
1 Nguyễn Thị Ngọc Mai 1832300242

2 Phạm Thu Hằng 1832300228

3 Lê Thị Diệu Linh 1832300006

4 Phạm Thị Như Lan 1832300298

5 Nguyễn Thị Thu Sương 1832300110

Quarter 1, 2021-2022
1. Problem identification
a. Current situation
Spin Master Toys is one of the leading toy manufacturers located in Ontario with over
50 people working their office, and recently they opened a new office in Hong Kong.
Following their success with Spin Master Devil Stick - a really resounding success, Anton
Rabie, Ramen Harary, and Ben Varadi, who are founders, incorporated Spin Master into its
name.
In 1998, the Air Hogs line, developed by Spin Master Toys, became a best-selling toy
for Christmas in North America. The company had to double production after the first
shipment to meet the growing demand due to product shortages in the first few months.

b. Their concerns and goals

Operations managers have to decide what suppliers to purchase production and design
of the company's newest toy, an all-electric aircraft called E-Chargers. There were potential
suppliers in China: Wah Shing Electronics Co. Ltd. (Wah Shing) and Wai Lung Plastics Mfy.
Ltd. (Wai Lung). Although there was a lack of information and postpones and due to the
short time to launch a product, operations managers need to create and develop the
appropriate criterias and evaluate carefully so that they can make quick decisions to choose
one of these suppliers.
Although Spin Master Toys achieved rapid expansion by combining speed to market
and innovative marketing, there were some problems happening with manufacturing and
delivering when they released the new toy.

2. Comparison between 2 companies (Wai Lung and Wah Sing)

a. Background information
❖ Wai Lung
● Owned by Eric Lee
● Previous projects with Spin Master Toys – Flick Trix and Finger Bikes
● 2000 workers within its 100,000 square-foot factory at Shenzhen
● Using only 40% capacity
❖ Wah Shing
● Be a subsidiary company of a Hong Kong public toy manufacturer with revenue
of $40 million
● Previous cooperation with Spin Master Toys - products provided on time and
within quality specifications.
● 3500 workers within its 100,000 square-foot factory at Shenzhen
● Use 70-80% capacity

b. Criteria
Criteria Wai Lung Wah Sing

Reputation Low High

It had lost a significant portion It had been one of the suppliers
of its business during a of choice for major toy

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 disagreement with a large toy
company.
Capability Over 60% out of 2000 workers
in its 100,000-square-foot
factory (1200 workers)
Quality levels High quality toys.
​Capability in Recently hired 3 engineers.
engineering Less experienced.
Speed to market 1 hour from Hong Kong.
Costs FCL: HK$ 14,318.12 per 1,000
toys
LCL: HK$ 15,438.62 per 1,000
toys
Tooling time More time to develop with new
needed equipment because it hasn’t
produced toys with electronic
components.
​Attention to your High
company Provide personal attention
Top of its priority list (Returned
calls promptly and answered all
questions during the critical
production period.
3. Solutions evaluation
Company Benefits
Wai Lung ● Provide high quality
products and be able to
sharply increase production
● Highly committed staff and
employees
● Finger bike association is a
competitive product in the
market.
● Offer favorable credit terms
to Spin Master Toys
● Shorter lead time – 1 hour
companies such as Tiger and
Hasbro. Perez had a good
experience with Wah Shing 4
years ago.
20 – 30% out of 3500 workers in
its 100,000-square-foot factory
(700 - 1050 workers)
Products within quality
specifications.
Already have 6 engineers.
Experienced.
5 hours away from Hong Kong.
Provide products on time.
FCL: HK$ 28,7459 per 1,000
toys
LCL: HK$ 28,4783 per 1,000
toys
Taking less time because it had
been one of the top suppliers in
electronic toys.
Low
Unable to meet the owner during
his company visit.
Their capacity is 70 – 80%
Disadvantages
Having small workforce and be
a new player in the market
(even had lost some of the
offers previously)
→ Lack of experience in
electronic component
manufacturing
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 drive from Hong Kong by
car/train
● Cheaper production cost

Wah Sing ● Expertise in electronic toy Changes in lower management

manufacturing industry
● Have a good reputation
while charging comparable
prices in the toy industry.
● Very high committed upper
and lower management
● Had achieved several
successful large and
sophisticated orders
● Positive cash flow
could reduce communicating
performance between the upper
and lower management.
→ may lead to lesser
commitment (compared with
previous projects)
Longer lead time: 5 hour from
Hong Kong by car/train

4. Risk management’s consideration

Spin Master needs to deliver the E-charger on 7th December. This was the first time
that Spin Master Toys would ship products for a planogram, which helps them to keep more
space in the shelves. The late delivery would cause a loss in spaces on the shelf. At the very
first stage which is the Rough Engineering Model, they are already a week behind schedule
for the start of production although they have sped up the process. Therefore, the risk of
losing the shelves’ spaces is high.
Besides, one big competitor in the market is also producing the same kind of
E-charger. If they can not release the products before them, they might lose the market share.
Another great concern is about the weight of the E-charger. It requires a perfect weight at 17
grams. If it is heavier, it will affect the performance of the E-charger and the E-charger even
can not fly if the weight is 18.5 grams. The design work takes shorter time (from 8 weeks to 3
weeks) and also another step has to lessen its time to run with the schedule. This can cause a
problem in the quality of a product. The need to find a supplier who has experience but also
works at high speed has emerged to catch up with the planned schedule and ensure the quality
of E-chargers. However, both companies have their pros and cons. Wai Lung although have a
small workforce and they do not have much experience, they are very consistent in
production and they are easy to communicate with. On the other hand, Wah Shing is a bigger
company with reputation and expertise but their management seems to have problems with
less communication between upper and lower management than there used to be.
To sum up, Spin Master faces a huge problem with their time management and
E-chargers’ weight. The suppliers’ risks are also rising since both companies can not meet all
the requirements needed. We need to find a strategy to overcome this issue.

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5. Recommendation
We selected Wah Shing as manufacturer, because:
● Wah Shing has an excellent market reputation
● They have expertise making electronic toys that the Spin master toys company needs
at the moment.
● They give excellent quality and the capacity to produce items on schedule.

However, there are certain Wah Shing concerns that must be addressed. First and
foremost, lower management had changed, and communication between high and lower
management was not as strong as it was. Wah Shing is an on-time delivery manufacturer,
according to Perez's experience, however the last interaction was four years ago. As a result,
we are concerned that on-time delivery will be impossible. Therefore, we decided to insert a
penalty provision in the contract, and the supplier will be required to pay a penalty for late
shipments. Furthermore, it is a good idea to provide additional incentives to companies who
deliver sooner than promised since it would motivate the supplier to provide the items on
time.
Wah Shing would be the ideal choice since we require a provider with engineering
knowledge. However, its warehouse only has 20-30% usable capacity, and we only have a
four-month design-to-delivery timeframe. As a result, we must negotiate with Wah Shing to
increase their available capacity by leasing or building another warehouse, or our items must
be stocked first.