Question 1

2-nd tier suppliers 1-st tier supplier Product Retailers

Mini speaker Toys R Us
Microchips LittleTouch Target
Capable Toys
Tyvek LeapPads Kmart
Electronic membrane Wallmart

The "upstream" flow refers to the movement of a number of elements, such as

material goods, to the supplier, that is, the "source" of the product supply chain.
Hence, LeapFrogs suppliers are its upstream partners. "Downstream" refers to
movement in the direction of the customer, or even the consumer. Thus,
downstream supply chain management refers to retailer and may also be parents
(main consumers.)
Question 2

On August 11 2003, the nationwide sales of LeapFrogs LeapPads totaled to 360

units in its introductory weekend. With this data, Mr. Kevin Carlson Toy
Executive- made various extrapolations from the sales through four computer
models designed to eliminate any unusual explanations for the sudden increase in
sales. There turned out to be no anomalies whatsoever, deeming the spike in
demand genuine. According to the forecasting software, the projected holiday
demand was 700 000 units, 50 percent more than what was planned to ship. It
took only a matter of days ( a week at most) for LeapFrog to arrange the increase
in production with Capable Toys, having had already the additional set of tools
ordered in late August. This fast reaction to growing demands is all made possible
by technology and global supply chains. Nowadays retailers are less guarded on
their market data and allow suppliers to have access to sales databases overnight,
making data tracking and demographic analysis much easier and convenient.
Question 3

There were 3 issues that limited the increase in production levels:

1. Molds that make the plastic parts can pump out only 1 unit every 40 seconds
2. The need to find more raw materials & custom made parts
3. The plants need to hire more workers
Out of the three, the first issue brought on the most strain in increasing output
levels.
Capable Toys specializes in design and supply chain efficiencies that
dramatically speed up manufacturing processes. What the factory did was, first, to
determine the limitation of the product design, which were LittleTouchs 41 metal
molds called tools. One set of tools produces a maximum of 1750 units per day. The
factory originally had 2 sets of tools running (producing a total of 3500 per day) but in
order to increase the movement of production a third set was added in late August and
the fourth set a week later. Mr. Huang, the engineering supervisor of Capable Toys,
not only produced the extra sets but also increased output to 6300 units per day when
the third set was installed- a 20% improvement. In addition, the improvements made
to the mold designs reduced the toys fail rate from the initial 5% to 0.3%.
Question 4
Material sourcing challenges that LeapFrog and Capable Toys were
facing:
Finding the specialized materials they needed for toys they
produced. Each toy was equipped with a mini-speaker and
three microchips that could translate a childs touch into a
signal for the toys brain. However,
Capable Toys faced a trouble finding supplier that could
provide them touch-sensitive membranes.
LeapFrog needed something that would be drool-resistant and
still absorb ink. The material called Tyvek, was made by
Dupont Co. Usually, homebuilders use Tyvek as a part of the
insulation process because it is
water-resistant and still breaths.
Nevertheless, LeapFrog and Capable Toys managed to resolve the
problems above by:
Tapping their network of suppliers to seek a second vendor
that would provide them touch-sensitive membranes.
Hiring the US company to do the printing, so that they can
get Tyvek through a third-party supplier or a book-printing
firm. This option added 50 to 60 cents per book in production
costs, yet it was worth it because maintaining the companys
long-term image was important for them.
Question 5
AIR FREIGHT
Air transport is suited for valuable goods and high-speed
shipments Strengths:
Fast speeds, frequency and security
Little capital tie-up
Low risk of theft and damage
Cost-efficient transport of light parts
Weaknesses:
High transport costs for bulk goods; at $10- $15 per
lightweight, but bulky, toy, air shipping sliced the
companys profit on those LittleTouch shipments to almost
nothing.
SEA FREIGHT

Ocean shipping is suited for the intercontinental shipment of bulk

cargo, bulky goods and dangerous materials such as oil and gas
over large distances
Strengths:
No stopovers within 14 days from Hong Kong to Lost
Angeles.
Environmentally friendly
Large transport volume
Weaknesses:
High capital costs
Slow Tied to the water network
Due to the critical nature of delivering the products at an immediate
time in order to save declining sales that was due to the scarcity of
the product- the company was forced to spend on the most
expensive yet fastest means of shipping, air freight. This squeezed
Leapfrogs profits despite the ever-growing demand in the month of
December. To put into perspective, if it were August, where demand
was only slowly picking up and an abundant stock of the LittleTouch
toy available (350 000 units were made initially); LeapFrog wouldve
chosen to ship the products by sea freight from Hong Kong to Los
Angeles with added standard stopovers in order to minimize
expenditures.