QUESTION FOUR [30] Read the following text and answer the question that follows Supply Chain challenges at LeapFrog LeapFrog which describes itself as a leading designer, developer and marketer of innovative, technology-based educational products and related proprietary content, had introduced a new educational product called the LittleTouchLeapPad. 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 problematic because the demand for toys is concentrated around the November/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 to through the supply chain and to retailers shelves. In effect, toy companies had one chance to get it right. In August 2013, the first inkling that the LittleTouchLeapPad was a hit came when major retailers such as Target and Toys R Us showed sales of 360 units. LeapFrogs forecasting models indicated that if the trend continued, holiday demand for LeapPads would be approximately 700 00, 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 within a few months. Within days of developing the revamped demand forecast, LeapFrog started to work with Capable Toys to identify what steps would need to be taken to increase production levels. They found that several constraints had to be removed: Production moulding - To manufacture the required plastic parts used by the LeapPad, Capable Toys had designed and built two sets of mould tools capable of producing 3 500 LeapPads each day. In 60 days, 210 00 additional units could be produced far short of the quantity needed. Material - Capable toys and LeapFrog faced a limited supply of key components, including custom designed electronics and Tyvek, a special waterproof paper. Logistics - Even if Capable toys was able to produce the additional toys required, LeapFrog had to consider how best to get the units from China to the retail shelves in the US. Traditionally toys produced in China travelled by ship. To resolve these constraints:

Capable Toys designed two additional mould sets which improved on the design and allowed Capable Toys to increase its production of LeapPads from 3 500 to 6 300 units per day. This went online on in October. Capable Toys called on its first-tier suppliers to help identify additional sources for the specialised chips, membranes and other electronics used in the LeapPads. For the Tyvek paper, LeapFrog had to contract with an American company for the printing. Because of the short lead time, LeapFrog was forced to use air shipping and special fast shipping to get the units to the stores in time for the holiday season. In the end, the decisions LeapFrog made to respond to the surging demand for LeapPads turned out to be the right one. The company used its success with the LeapPad product line (discontinued in 2008) to launch a wider range of educational toys that incorporated even more sophisticated electronics.

QUESTIONS

4.1 Draw a map of the supply chain for LeapFrog, indicating clearly upstream and downstream supply chain partners and first and second tier suppliers. (10) 4.2 Discuss ways in which the responsiveness of the toy supply chain can be improved. (15) 4.3 Agility is described as an enduring trend in operations and supply chain management. Assess whether LeapFrog demonstrated agility in responding to market demands.