18 MARTI N O VALUE THOUGHORMATIONS AND SUPPLY CHAINS CASE STUDY Supply Chain Challenges at LeapFrog introductory weekend, Leapfrog knew about the weekend less While units might not seem like a lot Leapfrog's forecasting models indicated that if the trend continued, hol day demand for LeapPads would be approximately 700.00 more than double what Leapfrog had requested the produced by Capable Toy Teplog and its manufacturing and logistics supply chain partners would have to find a way to produce och Leap Pasand move them to retail stores, all Introduction A supply chain consists of network of companies linked together by physical information and w eary When wyly chain work together they are com plish things that an individual firmwild find ful l impos to da few cases illustrate this better than tha by leap Leapin which describes a leading designer developer and marketer of n ative technology-based edu c alducts and related pric e s induced a new educational product called the Little Touch Leap Pad The distinguishing feature of the Leap Pad whoe martwater that it coined hoch materials and sophisticated electrost create an interactive " h t that made appropriate sounds when a child tosched While Leapfrog was confident the boy w heppular no one including the retailers, Leapfrog and Capulile Toys. the Chinese manufacturer who had primary responsibility for producing the Leap Pads knew whatual con sumer demand would be such uncertainty, which is typical for the toy industry, can be particularly problematik because the demand for si concentrated around the November and December holiday season, giving supply chain partners like time to react. Furthermore, to companies planning for holi day sales have traditionally had to place orders anymonths 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 com e s had to right to company ordered to low copes of a particular toy in February March, customers in November and Decem ber went away disappointed and the company loss cant events if a toy company ordered to many, the result was leftovers that had to be sold at a steep discount or loss. By 2003, however, Leapfrog had developed now approach that used sophisticated forecasting systems, fast information flows and cooperation between supply chain part: men and flexible manc ing base to improve the respon siveness of the toy supply chain. Here's how it happened Supply Chain Constraints W ithin days of developing the revamped demand forecast teapfrog started to work with Capable Tovs todentify what steps would need to be taken to increase production levels They found that several constraints had to be resolved Production molding constraints. To manufacture the required plastic parts used in the LeapPad, Capable Toys had designed and built two sets of mold tools capable of producing the equivalent of 1.500 LeapPadi each day. if these mold tools were run for 60 days, they could produce only 1000 210.000 additional units car short of the end Material constraints. Capable Toys and LeapFrog faced a limited supply of key components, including custom designed lectus and Tyvek special water del paper Logistics constraints. Even if Capable Toys was able to produce the anal toys required. Leapfrog had to consider how best to get those u s from China to US retail shelves Traditionallytoys produced in China trav cled by hip Although this option was relatively slow, it Lept down on But with production crewing into Sep tember and October. Leapfrog had to consider other more options How did Leaprox and its supply chain partners resolve these constraints? First Capable Toys put its in-house engi noors to work designing two additional mold sots. The third mold set, which went online in October and m oved on the design of the earlier w a llowed Capable Toys to increase its production of Leaplads from 100 100 units per day increase At the same time, Capable Toys called on its first-tier sup pliers to help identify additional sources for the specialized chips membranes, and other electronics used in the LeapPads. Finding a source for the Tyvek paper was a little bit trickierto gain access to this key material. LeapFrog had to contract with us company for the printing While this added to the prod. cos, Leapfrog management felt that was a better alter native than running out of units and alienating retailers and Ecommerce Relationship Management and Forecasting nagement and Forecasting The first inkling that the LeiteTouch Leaphed was hit came in early August 2001 when major retailers such as Target and Toys"RUs showed sales of units during the intro ductory weekend in previous years, these retailers might. have hesitate to share sich detailed sales information with ty company. By 2001, however retailers realized that increase the toy company's odds of meeting surging market There was that by the Monday following the with the production capacity and innerial constraints resolved. Leapfrog had one final problem getting the units CHAPTER 1 INTRODUCTION TO DODATIONS AND SUPPLY CHAN MANAGEMENT 19 to the stores in time short lead time, Leap rach LeapPad 1 LeapPad, which sold for ores in time for the holiday season. Because of the time. LeapFrog was forced to use air shipping and al fast shipping, which added $10 to $15 to the cost of Pad. These additional costs ate into the profit of the which sold for $35. but as with the Tyvek paper, Leap- nagement felt that the long-term satisfaction of retail and customers outweighed the additional costs the end, the decisions LeapFrog made to respond to the ne demand for LeapPads turned out to be the right one capFrog struggled financially in recent years in 2013 company made $84 million on sales of $553 million and che company has used its success with the LeapPad product line ontinued in 2008) to launch a wider range of educational is that incorporate even more sophisticated electronics wh i tely led to teapFrog's decision to increase production levels of the Little Touch Leap Pads? Where did these data come from? How long after inter- preting 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 lev- els at Capable Toys? How did Capable respond to the challenge? 4. What were some of the material sourcing challenges LeapFrog and Canable 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 mighe Leap Frog have used? 6. In the chapter, we described agility as an enduring trend in operations and supply chain management in your opinion did LeapFrog and Capable Toys demonstrate agility in responding to the new market demands Questions Draw a map of the supply chain for LeapFrog, including she retailers, Capable Toys, and suppliers of key materials Tyvek). Which supply chain partners are upstream of TrapFrog? Which are downstream? Which partners are first-tier suppliers? Second-tier suppliers? REFERENCES Banks and Articles Blackstone, H ed. APICS Dictionary, 15th ed. 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