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Question: A supply chain consists of a network


A supply chain consists of a network of companies linked together by physical, information, and monetary flows. When supply chain partners work together, they are able to accomplish things that an individual firm would find difficult, if not impossible, to do. Few cases illustrate this better than the situation faced by LeapFrog in August 2003.
LeapFrog, which describes itself as a “leading designer, developer and marketer of innovative, technology-based educational products and related proprietary content,”12 had just introduced a new educational product called the Little Touch LeapPad. The distinguishing feature of the LeapPad, whose target market was toddlers, was that it combined high-tech materials and sophisticated electronics to create an interactive “book” that made appropriate sounds when a child touched certain words or pictures.
While LeapFrog was confident the toy would be popular, no one—including the retailers, LeapFrog, and Capable Toys, the Chinese manufacturer who had primary responsibility for producing the LeapPads—knew for sure what actual consumer demand would be. Such uncertainty, which is typical for the toy industry, can be particularly problematic because the demand for toys is concentrated around the November and December holiday season, giving supply chain partners little time to react. Furthermore, toy companies planning for holiday sales have traditionally had to place orders many months in advance—in February or March—to allow enough time for products to work their way through the supply chain and to retailers’ shelves. In effect, toy companies had one chance to get it right. If a toy company ordered too few copies of a particular toy in February or March, customers in November and December went away disappointed, and the toy company lost significant revenues; if a toy company ordered too many, the result was leftover toys that had to be sold at a steep discount or loss.
By 2003, however, LeapFrog had developed a new approach that used sophisticated forecasting systems, fast information flows and cooperation between supply chain partners, and a flexible manufacturing base to improve the responsiveness of the toy supply chain. Here’s how it happened. E-Commerce, Relationship Management, and Forecasting The first inkling that the LittleTouch LeapPad was a hit came in early August 2003, when major retailers such as Target and Toys “R” Us showed sales of 360 units during the introductory weekend. In previous years, these retailers might have hesitated to share such detailed sales information with a toy company. By 2003, however, retailers realized that sharing sales information in real time with LeapFrog would increase the toy company’s odds of meeting surging market demand. The result was that
by the Monday following the introductory weekend, LeapFrog knew about the weekend sales figures.
While 360 units might not seem like a lot, LeapFrog’s forecasting models indicated that if the trend continued, holiday demand for LeapPads would be approximately 700,000, more than double what LeapFrog had requested be produced by Capable Toys. LeapFrog and its manufacturing and logistics supply chain partners would have to find a way to produce another
350,000 LeapPads and move them to retail stores, all within a few months……………

Required:
1. Draw a map of the supply chain for LeapFrog, including the retailers, Capable Toys, and suppliers of key materials (i.e., Tyvek). Which supply chain partners are upstream of LeapFrog? Which are downstream? Which partners are first-tier suppliers? Second-tier suppliers?
2. What data ultimately led to LeapFrog’s decision to increase production levels of the Little Touch LeapPads? Where did these data come from? How long after interpreting these data did LeapFrog start talking with Capable Toys about increasing production levels? Was it days, weeks, or months?
3. What part of the production process limited output levels at Capable Toys? How did Capable respond to the challenge?
4. What were some of the material sourcing challenges Leap- Frog and Capable Toys faced? How did they resolve these problems?
5. What type of logistics solutions did LeapFrog use to get the toys to the stores on time? What are the strengths and weaknesses of these solutions? If it had been August rather than December, what other options might LeapFrog have used?


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