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Otis Toy Trains Explores the Supply Chain

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Otis Toy Trains Explores the Supply Chain
Otis Toy Trains of Minneapolis, Minnesota was a landmark company since the 1900s, which had to go through a change in target market that lead to the problem of high labor cost. JLPTC offers Otis Toy Train a deal to take over a huge portion of production, promising a decrease of 40 to 60 percent of manufacturing costs.
Otis should take the deal because it serves as the best solution for the company’s current issue. However, the company must do so with great caution. I have decided to complete a SWOT analysis to see the gains and risks. The Strengths given by choosing JLPTC is lowering of manufacturing cost which will enable distribution of resources to other department. Weakness that I see is the additional expenses and risks that the company might run into while working with JLPTC. Opportunities can be brought in by our business partner who has a better understanding of foreign market that we can expand into and the new ideas that might be brought in.
Threat is the reason why the company must be very careful. When we think in terms of logistics, language barrier, quality of good, and reliability, there are a lot of risks in this decision. Logistics risk is huge change of the supply chain within the company. The company should do or hire a professional to construct a well organized logistics planning. Language barrier is a big part when domestic company decides to partner with foreign company because of the lack of communication or even misleading information flow. The company should set a branch office in China and hire employers who are able to speak both languages. Otis Toy Train do not want to run into situation like Mattel in 2007 with concern over lead useage or quality control. Quality standard should be strictly followed and monitored by the branch offices in China and should be mentioned in the contract.

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