Read the LeapFrog Case and answer the following questions:

Draw a map of the supply chain for LeapFrog, including the retailers, Capable Toys, and suppliers of key materials (such as Tyvek). Which supply chain partners are upstream of LeapFrog? Which are downstream? Which partners are first-tier suppliers? Second-tier suppliers?

What data ultimately led to LeapFrogs decision to increase production levels of the LittleTouch LeapPads? Where did these data come from? How long after interpreting these data did LeapFrog start talking with Capable Toys about increasing production levels? Days, weeks, months?

What part of the production process limited output levels at Capable Toys? How did Capable respond to the challenge?

What were some of the material sourcing challenges facing LeapFrog and Capable Toys? How did they resolve these problems?

What type of logistics solutions did Leap Frog 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?

Introduction executive Kevin Carlson checked his nationwide weekend English or Spanish. sales numbers and got a surprising glimpse of Christrmas Winglish or Spanish. future. Stores had sold 360 of his company's LittleTouch hunting for an educational toy for infants and toddlers cubicle in LeapFrog's California headquarters, Mr. Carlson were reaching for the new gadget, which makes noises crunched the Little'louch sales numbers through four when a child touches parts of an jllustrated book. That computer models. They are designed to weed out unusual small number had huge implications. Forecasting software explantion and TVertising to where in stores the product was told Mr. Carlson that he would need about 700,000 units to displayed. In the case of LittleTouch, he couldn't find planned to ship. an anomaly: It was a genuine hit. During the next five Sohiscompany,LeapFrogEnterprisesInc.,didsome-LeapFrogsothertopsellersduringtheirownintroductoryweeks,LittleTouchsalestookoff,surpassingthoseof thing unusual. At a time when other toy companies were LeapFroges unloading their final Christmas shipments from cargo ships periods. unloading their final Christmas shipments from cargo ships periods. six weeks on the market, LittleTouch retail sales a huge new order for LeapPads. Its factory, privately held reached 5,000 units at LeapFrog's four major accounts. Capable Toys Ltd. of Zhongshan, China, scrambled for extra Based on that rate, forecast models were predicting sales plastic molds, custom-designed electronics, and scarce baby- of more than 700,000 in 2003, double LeapFrog's initial drool-proof paper and pumped out LeapPads around the clock. LeapFrog's frantic race against the holiday deadline Global Sourcing, Capacity Decisions, shows how technology and global supply chains are meeting a great business challenge. For years, toy makers would and Manufacturing Processes place their entire holiday orders in January and February, toys. LeapFrog eventually would want to make the same blindly betting on demand for their products. By Christmas, number again in just four months. In Zhongshan, an they would have shortages of their hit products and huge industrial town 60 miles north of Hong Kong, managers at stockpiles of their duds. In 1984 , parents camped outside the Capable Toys factory had expected to wrap up producstores for Cabbage Patch Dolls, followed by Teenage Mutant thon of LittleTouch for the year in early fall. But soon after Ninja Turtles in 1988 and the Little Mermaid in 1989 . In the sale projections emerged in August, "every day the 1993, executives at Bandai Inc. were slow to react to the pop- Leaplrog marketing people said to us, 4Can we have a few ularity of Mighty Morphin Power Rangers. Only 600,000 of more?'s says Capable's chief executive, Kenneth So, 51 . As an estimated demand for 12 million made it to stores by the requests grew larger, Mr. So set up a special task Christmas. In 1996 , Tyco Toys Inc. was also caught short on force that met daily to prepare for an all-out LittleTouch Tickle Me Elmo. The company rolled out about 1 million emergency, million more. of the toy can pump out only about one piece every 40 secElectronic Commerce, Relationship Management, onds. The factory needed to find more raw materials and The shift that let LeapFrog make its August forecast came The plant needed to hire more workers. Not long ago these just a few years ago with the Internet, as major retailers, issues would have made a last-minute request to increase including Target, Kmart, and Toys " R" "Us-which sell production hopeless, Mr. So says. But Mr. So's factory isn't CHAPTER 1 Introduction to Operations and Supply Chain Management like the simple sweatshops that first sprouted up in China and still breathes. LeapFrog needed something that would in the 1980 s. To compete against low-cost, low-end com- be drool-resistant and still absorb ink. The only way to get petitors today, he markets his factory as a specialist in design the material was through a third-party supplier-a book- and supply chain efficiencies that can dramatically speed up manufacturing processes. the mechanical-design studio, where about 50 uniformed added 50 cents to 60 cents per book in production costs. technicians and engineers use computer-automated-design but it was worth it to preserve the company's long-term software to create and improve toy parts and manufacturing image, Mr. Murer says. processes. Here engineering supervisor Huang Hengbin, 32, made a breakthrough on the molds for the toy's plastic parts. Logistics hit. A week later LeapFrog approved the making of a fourth set of tools. Work on those was started in mid-October, when the third set was ready. Mr. Huang's contribution was not only to produce the extra sets, which take weeks to cialized materials and parts they needed. Each toy is equipped with a mini-speaker and three microchips, as 3. What part of the production process limited output well as a specially designed electronic membrane that translates a child's touch into a signal for the toy's "brain." challenge? The Capable Toys factory initially had trouble finding a 4. What were some of the material sourcing challenges facsupplier for touch-sensitive membranes, but then Mr. So's these problems? staff tapped its network of suppliers to hunt down a second 5. What type of logistics solutions did LeapFrog use to get vendor. Another material that caused headaches was the the toys to the stores on time? What are the strengths and clothlike paper called Tyvek sed in the LittleTouch books weaknesses of these solutions? If it had been August andmadebyDuPontCo.Homebuildersusethematerialaspartoftheinsulationprocessbecauseitiswater-resistantratherthanDecember,whatotheroptionsmightLeapFroghaveused