You are Meera Kapoor, three weeks into the job as Division President of Northwind Mobility, a car-seat and stroller maker in London, Ontario. Your flagship seat, Aurora, is due on retail shelves on 25 November. Before Thursday's board meeting you must decide what kind of problem its latest test file is.
The situation
Aurora carries 40% of the division's planned growth and CA$62 million of first-year revenue. It has passed every mandatory regulatory sled test. It has also failed Northwind's own, stricter margin-of-safety standard in three of forty high-temperature trials, all at the hot end of the range. The cause is a late switch to a cheaper side-impact foam, made to hit the board's margin target, which saved CA$1.8 million. As built, the seat is legal to sell.
Fixing it means a new foam supplier and re-tooling: CA$4.2 million and a seven-week slip, past the holiday shelf window. Finance puts the cost of missing that window at about CA$22 million of first-year sales, plus a likely lost end-cap slot at three big-box retailers that have already taken pre-orders. Finance also sizes a recall-and-reputation event, if the seat ships unfixed, at CA$30–80 million. A remediation budget of CA$6.0 million sits uncommitted.
Northwind (CA$310 million revenue, 9% EBIT margin, 1,400 people) made its name as the safety-first challenger: "beyond the minimum". Eighteen months ago a value-oriented holding company bought it and installed a cost-reduction programme, and its board appointed you, an operations leader known for hitting dates without cutting shop-floor corners, to protect margin. Your Head of Engineering & Quality, whom you barely know, put the results in writing rather than mention them in a corridor. The board chair's assistant has already asked for fifteen minutes on Thursday.