Case Synthesis Operations Planning Process Improvement Revenue Streams Recommendations

Working on reducing the error

Enhance the efficiency of
rate, lead time, etc.
Supply Chain
Meeting the unmet
Demand Installation of Reactor at Pune
Capacity Enhancement Plant for PVC Production
50% capacity enhancement at Toy
Manufacturing plants
Increase Revenue
Other Avenues of
Monetization
Exploring ecommerce
Improving the Sales
Better Toy Segmentation Social Media Presence
Strategy
Reducing Shelf Own Dedicated Website
Availability Issues
How can Sigma Packaging Costs, Taxes, and
Price – Increase the cost Freight Charges
Toys Improve its per toy
Profitability? Utilization Cost Better organizational structure
for improved productivity
Fixed Costs Reduce Manufacturing Developing SOPs for QA
Cost Department

Training & Manpower Reduction in attrition rate

costs
Defective Toys Management
Reduce Costs Reduction in Defective Strategy
Toys cost Cross-functional quality
Variable Costs processes deployment

Reduce Logistics Cost Toy Distribution - Network

Planning
 Case Synthesis Operations Planning Process Improvement Revenue Streams Recommendations

Optimal Logistics Solution to meet current demand & reduce costs Demand (in MT)
MS Excel Solver used to arrive at the best possible outcome of demand match, maximum utilization of
resources and reduce the costs, thereby increasing revenue Current Demand of toys
Objective: Minimizing Total Logistics Cost at Distribution Centers 11743184 234864 192000 216000
where, Total Logistics cost = (Transportation Cost from Toy Manufacturing plants to Distribution (2020) (from Exhibit 11) PVC Required PVC currently PVC manufacturing
Centres w.r.t Lead Time + Packaging cost per toy) * Number of Toys to be transported Demand currently met manufactured at actually possible at
9580889
through existing scenarios 80% capacity 90% capacity (max.)
Proposed ideal number of toys to be transported
Demand Planning - Forecasted at 15% CAGR
Toy Manf. Location Delhi Chennai Kolkata Goa Mumbai Jaipur Bhopal Shimla
Year Toys PVC Inference:
Noida 3229340 0 946048 0 1626938 587172 0 0
Nagpur 0 0 0 0 1728010 0 0 0  At the current operating capacity of the
Bhubaneshwar 0 0 0 0 0 0 0 0 2021 13504662 270093 reactor at the PVC manufacturing plant, it
Lucknow 0 0 0 0 0 0 0 587130 is not possible to meet the current
2022 15530361 310607
Rajkot 0 880737 0 440389 755086 0 0 0 demand for toys, let alone the future
2023 17859915 357198 demand.
Total Toys Demand met by max. possible utilization = 10780850  The existing organizational structure and
Toy Manf. Location Number of toys to be manufactured 2024 20538902 410778 performance of equipment at Rajkot and
Noida 6389498 Lucknow needs to be relooked at to
2025 23619738 472395 minimize the error rate %.
Nagpur 1728010
Bhubaneshwar 0
Lucknow 587130 Recommendations:
Rajkot 2076212  Utilization of reactor R1 to be increased to 90% capacity.
 Setting up a second reactor R2 to supplement the work and produce enough PVC on
shared basis for current as well as future purposes, considering the demand for the next
Key Points:
5 years.
1. This solution serves the current scenario of one reactor and demand as of 2020 as per the case.
PVC produced in R1 + R2 = 432000 MT per annum
2. Toy manufacturing location Bhubaneshwar to be left unused/at minimal running capacity for atleast
a year, due to high transportation costs from the location and error rate.
 As the demand increases over the years, R1 and R2 will be able to produce required PVC,
3. Distribution center Bhopal to be shut down completely due to exorbitantly high logistics cost. but the capacity of toy manufacturing plants has to be increased as well to ensure shelf
4. It is ensured that all the toys manufactured (except for those with errors) reach the required DCs, continuity.
hence no underutilization.  Inter-organizational training and knowledge transfer from the management of Noida &
5. Cost of transporting PVC from Pune to Toy manufacturing locations is given constant as per the case. Nagpur to that of Lucknow and Rajkot to incorporate best practices to minimize error%
 Case Synthesis Operations Planning Process Improvement Revenue Streams Recommendations

Defect Toy Management Strategy based on both Profit & Health consciousness of children
Opportunity Loss at Current Scenario Total Defective Toys Total Quality Index (TQI) = QI Without Defects- Aesthetics Defects-Function Defects-Reliability Defects-Durability Defects
= 100-(10x1+y1+0.1z1)- ( 10x2+y2+0.1z2 ) – (10x3+y3+0.1z3) – ( 10x4+y4+0.1z4)
12.26 Crores 272614 Where xn , yn , zn are the number of defects w.r.to Critical, Major, Minor respectively

Defects Hazards Action Plan Aesthetics Functions Reliability Durability

Chemical/
Flammable Burning Recycling
Category 1
Very High
(Critical)
10x1 10x2 10x3 10x4
Damage to child
Violate regulations or can
Choking cause serious harm to the
Manufacturing Child
• Weightage : 10
Laceration
Defective Toys Category 2 y1
Sold to (Major)
y2 y3 y4
Scrappers
Cuts Likely result in product
returns from customers but
Medium do not represent a safety
Design Damage to child risk to the user
Strangulation • Weightage : 1

Category 3
Tipping (Minor) 0.1z1 0.1z2 0.1z3 0.1z4
Defects that don’t affect the
product’s function and aren’t
likely to result in product TQI Price Range (INR)
Non - Minor returns.
Patching -10 & Beyond 50/-
Regulatory Accidents • Weightage : 0.1
-10 to 5 100/- - 200/-
Can be rectified &
sold for 500/- per toy Greater than 5 300/- - 400/-
 Case Synthesis Operations Planning Process Improvement Revenue Streams Recommendations

Explore New Revenue Channels Product Mix Transformation Strategies based on Current Market Trend
From a new wave of nostalgic goods inspired by the 1990s to the growth of STEAM products with
modern technology, trends in the toy business are being driven by millennial parents' attitudes. So,
e-Commerce Portals: Partnering with popular e-commerce
we are proposing transformation strategies for the current product mix of sigma toys based on never
platforms for listing products form Sigma toys
fading trend.
Why?
150M online shoppers in 2020 (11% increase)
220M online shoppers by 2025
Over 60% shoppers purchase toys online

Social Media Presence: Sigma toys handles on

Instagram, Facebook, etc., to boost customer engagement
and visibility of the brand through contests for kids,
giveaways, virtual story telling by toy characters etc.
Why?
NOSTALGIC MOVIE & TV
Drives more traffic towards the website and other online FAMILY-FRIENDLY STEAM FOCUSED
purchase avenues. Customers will be able to resonate with COLLECTION FRANCHISE
With the advent of STEAM-focused toys
e brand and build a connect. COVID 19, families tend In the memory of our Sigma toys can begin a
have been popular in movie, TV-based toy
to spend more time terrific childhood and
Interactive Website: Sigma toys’ own creative recent years, and with line catering to the age
with each other as a gift to the present
website displaying their range of collection, videos, more space-related generation, this new group of 3-8 years, as
resulting in more activity taking place,
interactive games for kids, customer testimonials and range should evoke a they are more
demand for board we're witnessing a
features to make purchases games which are fun pleasant nostalgia. interested and 70% of
Why? surge in interest in Sigma Toys can bring toys manufactured by
for both kids and toys that get kids
In this digital era, the credibility of every entity is adults, combining luck, back classic popular sigma cater to this age
excited about space group. This can allow a
judged by their digital identity. Hence, it is important strategy, humor, and games with a modern
exploration, twist to bring back the child to fantasize about
to maintain an up-to date website with right even some toyetic ISRO,NASA, and alien real fun! taking on the role of a
information and engaging content elements into the life!
gameplay. heroic character.

If Sigma Toys invests in a trend and that trend fades, being left with too much inventory at the conclusion of that trend might wipe out all the profits. So, keeping
an eye on trends isn't just important for product development; it's also important for sigma Toy's mission to thrive throughout its life.
 Case Synthesis Operations Planning
Recommendations Impact
Enhancement of Toy
Manufacturing Capacity 100% increase in revenues and
by 50% in the next 5 profitability improvement
years
• Demand fulfillment at DCs
Installation of Reactor in
• Better equipment utilization
PVC Plant
• Increased shelf availability
• Reduced variable cost
Minimal Usage of • Lesser defective products
Bhubaneshwar plant • Better efficiency of other plants
• Increase in revenue
Defective Toy
• Lesser wastage
Management • Good will of customers
• Saving training and manpower cost
Reduction in Attrition • Healthy retention rate
Rate
Process Improvement Revenue Streams Recommendations
Implementation Strategy Risk Challenges
MS Excel Solver enables capacity planning results
• Demand Fluctuation • Managing the productivity of
1. Reallocation of demand based on minimization of overall
• Requirement of cash reserves Sigma toys
costs
• Change in Governmental policies • Catering to sudden surge in
2. Targeting specific toy manufacturing plants to increase
demand – Change management
manpower, thereby increasing production levels
• Managing two reactors
Developing activity sequence chart -> Installation -> • Wear & tear of other equipment
simultaneously
Commissioning -> Utilization • Over production of PVC
• Human error during operation
1. For the initial one year, the plant will be utilized at zero or
• Increased load on the other plants Effective utilization of existing
least capacity
• Fluctuation in manpower requirements
2. As demand increases over the years, this plant can be manpower & resources
reutilized as required
• Preparation of a SOP outlining the new processes. Right error percentage
Recycled waste management
• Categorization of defect on error percentage basis determination & mapping
Collaboration with new suppliers
• Conducting exit interview to understand employees who
resign Impact of company’s brand image Difficult to monitor attrition rate
• Alignment of best practices in shorter spans of time