Johnson Toy Company

6 June 2016

Introduction Efficiency and success of any organization is measured by the effect of its policies to successfully manage its operation. Lack of policies creates confusions among employees and impacts the effectiveness of the organization. As a result of its failing return policy, Johnson Toy Company is challenged with major revenue losses and is considering measures to correctly deal with the problem. Purpose of Paper

The purpose of this paper is to propose a new policy that Johnson Toy Company can adapt to handle product returns. The paper will highlight detailed instructions for its distribution and accounting departments to handle returns. Additionally, the paper will recommend a short-term policy proposal to immediately deal with the Jungle Jim dolls crisis and handle the large returns from its venders and retailers. Overview of Paper

Johnson Toy Company Essay Example

Failing investments can create crisis for companies and huge revenue losses and can wipe out all of their profits. Johnson Toy Company was challenged with such situation when its investment of the Jungle Jim dolls failed because of a sexual incident caused by the television actor who portrayed the Jungle Jim the Jogger dolls. The company realized that its current return policy is ineffective and incapable of handling the large stocks of Jungle Jim dolls returns. The company is taking immediate measures to overcome the problem and effectively deal with its large stocks of returns appearing at its warehouses. A new return policy is recommended by developing a new customer service department to strictly deal with product returns while maintaining customers’ satisfactions. Main Body

It is clearly that Johnson Toy Company’s return policy was not working and the company has to adapt a policy that is clear, organized and easy to follow by its employees and customers. Return policies are not about making a profit for the company; rather it is an important part of the company’s overall customer service. It should always focus on establishing excellent relationship with customers. To establish a solid return policy the company must first selects the appropriate policy that is suitable to its specific situation and insures the satisfactions of its customers. The right policy should be clear and easy for employees and customers to understand. It should also be clearly posted in places that are easy for customers to see. A good return policy will cost you but it will insure your customers are happy and are coming back for more purchases.

Remember, bringing a new customer may cost you way more than just satisfying a loyal customer. Another fact is that customers are not always 100% sure about the product they are about to purchase and a good return policy will provide an assurance and encourage them to purchase your products. This approach will lead to increases in sales and helps the company pays for the costs of its return policy while maintaining customer’s satisfactions. Kim & Wansink (2012) confirm that hassle-free return policy improves consumers’ evaluation of company products performance. Many customers build their purchase decisions based on how convenience the company’s return policy. To attract more customers’ base and insure satisfactions of customers the following policy is recommended for Johnson Toy Company: The company should start by appointing customer services employees to manage returns. Setup a space in company warehouses specifically for returned items. Make sure returns are not mixed with other inventories. Develop a procedures outlined the process of receiving and handling the returns.

Make sure customer service employees are well trained on the process of receiving merchandise, warehouse, inventory and handling of returns. Maintain a computerized system to track the process of returns to enable managers at all time to track and manage the returns. This process will allow managers will make wise decisions on how to dispose and recycle returns. After the development of the return policy the company should advertise its return policy to its customers and use it as a sales tool to market its products. This should generate more sales, increase your profit margin and creates enough funds and make up for costs of the returns. Your customers and suppliers will appreciate your product assurance, purchase more products and continue to be loyal. This will lead to strong partnerships with your suppliers and customers alike and promote your business.

The company should insure its employees are well knowledgeable about the company’s vision to support easy and convenience returns and make the returns pleasurable experience. Additionally, employees should also be trained on how to effectively accept the returns and reduce customers’ waiting time to insure customers are not frustrated with the process. Remember, customers are already unpleasant to come back to the store to exchange or return items. They are losing money and time by driving back and force to the stores to facilitate the returns. Employees working at the return department must be motivated with a smile in their faces to keep customers happy and better deal with frustrated customers. Unmotivated employees don’t know how to create pleasant experiences for annoyed customers. Untrained employees will create a back log and make customers wait for long times and add to their frustrations. They will end up losing your valuable customers. Evanschitzky, Sharma & Catja (2012) found that employee attitudes and motivation pays a positive impact on customer satisfactions and establishing a long-lasting profitable relation between the company and its customers.

Company department and staff managers should be well trained on company return policy to correctly support and properly enforce company policies. The company distribution department plays an important role in the success or failure of the company’s return policy. The written return policy should describe the entire process step-by-step staring with accepting returns from customers, warehousing and inventory returns. The return policy should be clearly written and easily understood by employees. Efficient process will help managers make rapid decisions to reuse or dispose returns. Reducing the cost of inventory is dependent on the company’s ability to track and properly dispose returns. Van, Salomon, Dekker & Luk (1999) believe increases in time returns spent in warehouses raises the total inventory costs and manufactures should attempt to reduce the time inventories are maintained in warehouses to reduce overall system costs. Returned inventory should be recorded and information should be automated and entered into databases accessible by management.

Financial and accounting managers use this information to make financial decisions and prepare financial statements. Financial reports are evaluated by top management to determine company’s financial position and make intelligent financial decisions. Johnson Toy Company must accept the fact that this year the company will lose money because of the unexpected Jungle Jim dolls crisis. This is an unusual circumstances and the company’s investment decision was impacted by the action of the television actor who portrayed the Jungle Jim doll as a result of involving in a widely publicized sexual incident. This incident allowed management to recognize the ineffectiveness of its return policy and it was considered as a wakeup call for the company to rebuild its return policy. Top management should empower a team of managers to process the returns of Jungle Jim dolls and negotiate with retailers and venders on the best way to collect the returns at the lowest cost possible.

This will facilitate a discussion with retailers to determine best possible way to complete the returns at the lowest costs possible for the company. Venders and retailers will be encouraged to work with company staffs to reduce the costs of returns and delivery charges. Retailers will be pleased with company’s approach to help collect back unsold dolls from their shelves and warehouses and it will leave a long lasting impression. Successful collections of the dolls will encourage retailers to come back to the company for more sales. This policy will help build strong relationships and create partners with retailers and suppliers. Duran, Jose & Fernando (1999) found that cooperation between venders and its suppliers is the basic principle for cost reductions and it will help improve product, create trust and improve communications with suppliers.

The entire process will create a good experience and leave a positive impression on its customers. The management team will be responsible for working out the details of the returns by selecting the proper shipping methods and companies at the lowest costs possible. In some cases products may be collected at certain locations near retailers and venders and consolidated for shipments to company warehouses to reduce shipping costs. After the collection of all Jungle Jim dolls the company is now ready to account for all dolls and make decisions on how to recycle or depose them to recover some of the production costs. Additionally, the dolls can be donated to needy children to obtain tax credits and help recover some of the production costs. A decision must be made as soon as possible to avoid inventory costs associates with warehousing and handling of the returns. A good solid proactive return policy will increase efficiency, speed services, reduce inventory costs and insure customers’ satisfactions. Conclusion – Summary of Main Points

Johnson Toy Company was challenged with receiving large amount of returns as a result of its investment failure in the production of the Jungle Jim dolls. The crisis wiped out the company’s revenues for the entire year and caused huge losses. Management was able to recognize its ineffective return policy and is taking immediate measures to correct the problem. A team of managers is assembled for short term resolution to handle the Jungle Jim dolls crisis and collect the returns from retailers and venders. A recommendation is provided to management to establish a new customer service department strictly responsible for all company returns in order to reduce company’s inventory, cut costs and insure customers are satisfied.

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