University of California
Type of paper: Thesis/Dissertation Chapter
Otis Toy Trains Explores the Supply Chain
The value proposition of Otis Toy Trains of Minneapolis is to offer well designed, detailed, evocative and luxurious toy trains and their accessories to middle-aged and senior adults. The traits for its critical customers are mainly two aspects. First, the critical customers’ age generally range from 35 to 55 (born from the 1960s to the 1980s). Second, the critical customers should have fairly high income to afford buying and collecting luxurious toy trains. The toy trains have many order winners, such as its high brand recognition among critical customers, its attractive and evocative train series due to those experienced designers and its wide selection of related accessories. However, Otis Toy Trains still has some order losers. For example, the Otis Toy Trains’ critical customers are so narrow (only adult born from the 1960s to the 1980s), and the toy trains do not have much attractiveness among other groups; therefore, it is hard to expand market and easy to lose market. In addition, the Otis Toy Trains does not have a method to efficiently produce and deliver its toy trains to customers, which means the cost of production and delivery is relatively high.
As a consultant, I will highly recommend the Otis Toy Trains to accept the proposal because it can cut about half of the manufacturing cost, and the outsourcing will also emancipate the Otis Toy Trains from maintaining its facilities (factories). However, outsourcing will make the quality of toy trains out of control. For example, the Mattel recalled back over nine million toys because its outsourcing factories in China used paint which was hazardous for health. Therefore, my recommendation is to send managers to Chinese factories and keep track of the manufacturing to make sure the quality is under the Otis Toy Trains’ control.
Trail Frames Chassis
Trail Frames Chassis’ value proposition is to offer customized, timely fashionable and technologically advanced motor home chassis for manufacturers who place orders for small quantities. Its order winners include its brand recognition, timely fashionable designs, advanced technologies which are incorporated with its design perfectly and highly customized products which satisfy each customer as much as possible. In contrary, its order losers are the high cost and price, unconformity to the schedule. These two order losers also make TFC’s chassis not available to many potential customers due to its low scale of orders. For proposed TFC chassis, it also has the brand recognition, timely fashionable designs and advanced technologies as order winners; furthermore, it has some additional order winners such as the relatively low price, conformity to the schedule and large scale of orders. In terms of order losers, the proposed TFC chassis does not have the high cost and price and unconformity to the schedule; however, the lower flexibility of responding to customers need may cause more defect on products which will influence the company’s reputation and profit.
Therefore, both the original and proposed TFC chassis will focus on doing research on fashion and new technologies. I would recommend TFC to accept the proposal and get into the new market. The reason is that it is more difficult for TFC to change its operational capabilities, but it can simply target a new group of customers, which means entering the market of low-end chassis market especially when the current market is saturated. In terms of facilities, TFC does not need to do much amendment on its existing operational capabilities because what it has to do is just using less-expensive components. In order to increase sales, I think TFC should outsource its manufacturing of low-end chassis just like what TFC’s major potential competitor BMW had done. The reason is that the low-end chassis do not need to be customized, so it is easier for TFC guarantee the quality. Furthermore, TFC does not need to have more fixed cost (building new factories), so it can keep the low-end chassis at a lower price.
“Mattel Issues New Massive China Toy Recall.” Msnbc.com. N.p., n.d. Web. 07, May 2014. http://www.nbcnews.com/id/20254745/ns/business-consumer_news/t/mattel-issues-new-massive-china-toy-recall/#.U2rT6Yfz2So “BMW: Outsourcing Assembly and the ‘Modular Industrial’ Strategy:.” Abubakrag. N.p., n.d. Web. 07, May2014. http://abubakrag.wordpress.com/2012/11/19/bmw-outsourcing-assembly-and-the-modular-industrial-strategy/