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Leapfrog supply chain ROIs with strategic partnerships

leapfrog supply chain case study

Supply chains have gained overdue boardroom recognition over the last five years. According to a survey conducted by McKinsey, 93% of senior supply-chain executives intend to make their supply chains far more flexible, agile, and resilient. But what drives this change in mindset today? The aftershocks of COVID-19 in supply chains.

After the pandemic exposed operational and macroeconomic vulnerabilities, companies returned to the drawing boards to rethink supply chain strategies. Despite heavy technology investments and redesigning business processes to bolster supply chain capabilities, the promise of a resilient, networked, and autonomous supply chain is still a distant reality. C-suite leaders struggle with whether technology investments will pay off. How do they align with and enable company strategy? Do the promised technological capabilities enhance core strengths?

Orchestrating entire supply chains isn't a one-click solution. It involves tough decisions on which capabilities to add to your company's digital core and how well they will fit together. Depending on the complexity, process maturity, workforce stability, functional expertise, IT capability, and funding in your organization, elevating supply chain performance requires substantial investment in holistic transformation initiatives, not just technology. The demand for techno-functional expertise is high. And to respond to these needs faster, more and more companies are externalizing their supply chains to strategic partners.

Harness partner capabilities to bridge talent and technology gaps 

Externalizing supply chains isn't new. Contract manufacturers, subassembly companies, and third-party logistics providers are essential to an outcomes-driven supply chain model. External partners often provide flexibility, allowing companies to scale their operations to speed up go-to-market without bank-breaking investments. And sharing supply chain responsibilities can help navigate and manage risks to protect you against global disruptions, market fluctuations, or geopolitical uncertainties.

But that's not all. Today, supply chain leaders use external capabilities to bridge the talent gap that's increased because of the disconnect between how fast institutes train people and what skills the industry needs now. By the time people pick up the skill, the technology is old.

Out-of-date working methods and legacy products add to the problem. According to a report from Dell, more than 70% of software used by Fortune 5000 companies was developed 20 or more years ago. So why would you go to the refrigerator and eat moldy bread every day when strategic partnerships offer a healthier option?

Three strategies to achieve results through externalization 

The buy-versus-make approach of externalizing supply chains refines operations, reduces change management efforts, accelerates decision-making, and improves investment outcomes. When you bring in the expert, you take the pressure off your company to quickly acquire and train employees. This approach enables plug-and-play actions that help companies speed up user adoption of tools and technologies at a lower cost without relying on tribal knowledge.

Once you've analyzed your current state of operations, it can help to break down these operations into functions and phases of implementation. This way, you can work with your partners to define concrete success parameters and know when and how much to invest for faster visible impact.

Here are three ways you can drive outcomes quickly and effectively using a supply chain partner:

  • Use real-time data, advanced analytics , and generative AI (gen AI) to scale up scenario planning and bring decision recommendations to end users
  • Enable end-to-end process visibility for accurate forecasting across customer demands, inventory, working capital, and capital expenditure
  • Absorb new sources of data like the internet of things (IoT), leverage unstructured data, and consume insights to elevate supply chain performance

Through externalization of operations, you can get access to newer technologies and systems, such as tracking tools and supply chain management software, which might be more budget-friendly than developing them in-house.

The power of partnerships in action

A digital supply chain for a leading audio equipment manufacturer 

Challenge: A US-based global manufacturer and seller of audio equipment lacked visibility into its supply chain while new product introductions failed 50% of the time. These challenges trickled down to other departments, such as sales and marketing, resulting in high operational costs. This was the trigger for revamping its entire supply chain process.

Solution: We dug deep into the workings of the firm's supply chain to get to the root of the systemic issues that hindered its operations. And we implemented a whole stack of advanced analytics to solve these pain points, enabling a forecasting methodology based on machine learning that is now run as a managed service, solid supply-network planning, and inventory management.

Result: Forecasting accuracy for new products improved by 65% and could be generated 30% faster. With crystal-clear visibility into the supply chain, the firm reduced planning time by 40% and inventory levels by 15%. The right combination of people, processes, and technologies was key to the project's success. 

Building the networked, autonomous supply chains of tomorrow now

In a world of everything as a service and cutting-edge technologies creating value faster, there's an urgent need to bridge the learning gap. Fifty percent of respondents in a recent survey of 300 supply chain executives see talent shortage as a significant challenge over the next 12 months.

Building capabilities internally is time-consuming and can lack clear direction. Tapping into a broader ecosystem of skills and services to build hyperconnected and autonomous supply chains will open gateways to better risk management, planning, and forecasting while allowing businesses to focus on their core activities. The process of externalization has its share of complexity if there's a mismatch of expectations. You need to choose partners whose long-term vision and expertise align with your company's needs to help navigate the future. Keep in mind your partners' cultural DNA – it cuts down change management friction in the long run.

A strong partner can help you avoid the challenges of selecting technology providers, implementation costs, and technology adoption challenges. After all, there are no lone geniuses in business, only genius partnerships.

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Page 1: Supply Chain Challenges at Leapfrog

ANSWERS PROVIDED BY EstaNoer, MikoVargas, PricsilliaMailoa, ShintaKusumasari

SUPPLY CHAIN CHALLENGES AT LEAPFROG CASE STUDY

Operations & Supply Chain Management

Page 2: Supply Chain Challenges at Leapfrog

1. 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?

* Retailers includes but not limited to the names listed

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, LeapFrog’s 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.)

2. What data ultimately led to LeapFrog’s 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?

On August 11 2003, the nationwide sales of LeapFrog’s 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

Page 3: Supply Chain Challenges at Leapfrog

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.

3. What part of the production process limited output levels at Capable Toys?

How did Capable respond to the challenge?

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

i. Molds that make the plastic parts can pump out only 1 unit every 40

ii. The need to find more raw materials & custom made parts

iii. The plant’s need to hire more workers

Out of the three, the first issue brought on the most strain in increasing output

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 LittleTouch’s 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%.

4. What were some of the material sourcing challenges facing LeapFrog and

Capable Toys? How did they resolve these problems?

Material sourcing challenges that LeapFrog and Capable Toys were facing:

Page 4: Supply Chain Challenges at Leapfrog

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 child’s touch into a signal for the toy’s “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

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 company’s long-term image was important for them.

5. 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

AIR FREIGHT

Air transport is suited for valuable goods and high-speed shipments

- 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 company’s

profit on those LittleTouch shipments to almost nothing.

Page 5: Supply Chain Challenges at Leapfrog

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

- No stopovers within 14 days from Hong Kong to Lost Angeles.

- Environmentally friendly

- Large transport volume

- 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 Leapfrog’s 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 would’ve

chosen to ship the products by sea freight from Hong Kong to Los Angeles with

added standard stopovers in order to minimize expenditures.

Page 6: Supply Chain Challenges at Leapfrog

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Supply chain challenges and opportunities

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LeapFrog Home

California Transparency in Supply Chains Act Disclosure

Last updated: august 9, 2023.

LeapFrog (together with group of companies of VTech Holdings Ltd.) makes this disclosure pursuant to the California Transparency in Supply Chains Act of 2010, a law designed to increase the amount of information manufacturers and retailers make public regarding their efforts to address the issue of slavery and human trafficking in their supply chains.

At LeapFrog, we are committed to conducting our business in a lawful and ethical manner, and we expect the same from our suppliers. As part of this commitment, we have no tolerance for slavery or human trafficking in our supply chain.

LeapFrog has taken the following steps to eradicate slavery and human trafficking from its supply chain:

Verification.  LeapFrog strives to establish and maintain close working relationships with its suppliers. LeapFrog does not rely upon third parties to verify its product supply chains in order to evaluate and address risks of slavery and human trafficking.

Supplier Audits.  LeapFrog's own factory in China is audited frequently by major U.S. retailers, partly for the purpose of establishing compliance with applicable laws, as well as their own corporate policies on employment and workplace standards. LeapFrog also has a program to conduct announced audits of its suppliers by its in-house designated team including Quality Assurance Team.

Certification.  While LeapFrog does not require its suppliers to certify that materials incorporated into their products comply with the slavery and human trafficking laws of the countries where they are doing business, LeapFrog's standard purchasing agreement includes requirements that our suppliers comply with all applicable laws, including laws that govern slavery, human trafficking, and other exploitative labor practices.

Internal Accountability.  All LeapFrog employees are required to comply with our written, company-wide ethical code, which promotes honest and ethical conduct, as well as legal and regulatory compliance. LeapFrog’s ethical code requires all employees to follow all applicable laws, including those prohibiting forced labor or trafficking.

Employee Training and Accountability.  We provide training on human rights for our employees. Employees that interact with suppliers are expected to report any potentially unlawful or unethical conduct that comes to their attention, including the presence of slavery or human trafficking in LeapFrog’s supply chain. Under our Whistleblower Policy, any such report will be promptly and appropriately investigated.

More From Forbes

A paradigm shift in supply chain strategies for ai-driven industries.

Forbes Business Development Council

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Marc Barnhill, Chief Executive Officer at Smith .

In the wake of the chip shortage that plagued industries over the past few years, many companies have a new appreciation for the critical importance of supply chain management strategies. The lessons learned from the scarcity of chips prompted a paradigm shift, where businesses are crafting a Plan A for optimal chip availability and preparing for potential future shortages.

Simultaneously, a surge in demand for AI-driven technologies is propelling the semiconductor industry into a transformative era. The need for high-performance chips is escalating rapidly as AI infiltrates sectors such as healthcare, automotive, finance and manufacturing.

In essence, the amalgamation of these approaches reflects a comprehensive and forward-thinking strategy. Companies can no longer react to shortages as they come. They must actively shape a supply chain that can adapt to the evolving landscape of the semiconductor industry and meet the rising demands of growing technologies, such as AI.

To fortify their supply chains against future disruption, companies must take more proactive measures than ever, building on the experiences gained during the latest chip shortage. These proactive measures include:

WWE Raw Results Winners And Grades On May 13 2024

The risk of losing big on gamestop and other meme stocks, netflix sets ‘that ‘90s show’ part 2 and 3 premiere dates, maintaining taskforces and collaborative efforts.

Across the board, companies are more directly involved in procuring electrical components by setting up task forces for obtaining chips and establishing diverse supply sources for growing demand. While this is a positive for those looking to get their supply chain back on track, it can also be disruptive. With many task forces searching for chips, it can lead to things like putting redundant orders into multiple suppliers.

Implementing reliable and flexible logistics improvements can help avoid the unnecessary stockpiling of chips and ease potential disruptions caused by supply chain complexities like material scarcities and production bottlenecks. Arming your company with the necessary information, such as access to data about supply, lead times and pricing, ensures a deeper understanding of where your supply chain stands.

Strengthening Partnerships

Collaboration with other industry players, formed during scarcity periods, will remain a cornerstone of the strategy to address challenges and share resources. Collectively building on lessons learned strengthens partnerships that will extend beyond mere transactions, evolving into strategic alliances that can weather the uncertainties of the semiconductor industry.

Certification Of New Suppliers And Distributors

Finding reliable alternative sources of semiconductors has its challenges, though. Avoid small, unverified brokers and instead pursue independent distributors with extensive quality control regulations and certifications. Companies can vet suppliers by looking into how long they have been in business and whether they are certified with standards for quality and authenticity. As we sit in an excess environment across multiple sectors of the supply chain, the best companies will continue to vet “backup” suppliers to ensure the ability to source reliable parts in a shortage without having to wait for the approval process to take place.

Bracing For AI Demand

In the case of escalating demand for AI-driven technology, distributors must proactively predict and prepare for supply chain complexities. Before the global chip shortage of 2021, companies relied on subcontractors to maintain chip supply. Many companies work more directly with suppliers to stay ahead of the mounting requirements of today’s AI applications than in previous years.

Future-proofing your supply chain means maintaining a dedicated task force committed to overseeing a steady supply of chips directly involved in procuring and efficiently sourcing electrical components. Recognizing the need for diversified sources, taskforces should be proactively certifying new suppliers and distributors. This forward-looking approach aims to mitigate delays and bottlenecks in the supply chain during times of increased demand or shortages. By certifying additional sources now, businesses can create a buffer against potential disruptions, ensuring a smoother procurement process in critical times.

Final Thoughts

Following setbacks from the previous chip shortage, companies have realized the urgency of revamping their supply chain strategies. Learning from scarcity, planning for optimal chip availability and preparing for potential future shortages are imperative.

Companies have seen it’s no longer feasible to wait to react to a shortage. It’s critical to shape and adopt a proactive and forward-thinking supply chain approach to meet AI application demands in 2024.

Forbes Business Development Council is an invitation-only community for sales and biz dev executives. Do I qualify?

Marc Barnhill

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COMMENTS

  1. Leapfrog

    Case Study Supply Chain Challenges at LeapFrog Introduction. 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.

  2. Leapfrog supply chain ROIs with strategic partnerships

    Three strategies to achieve results through externalization. The buy-versus-make approach of externalizing supply chains refines operations, reduces change management efforts, accelerates decision-making, and improves investment outcomes. When you bring in the expert, you take the pressure off your company to quickly acquire and train employees.

  3. Leap Frog

    LeapFrog and its manufacturing and logistics supply chain partners had the challenge of finding a way to produce an additional 350, LeapPads and distribute them to retail stores within a few months. The provided information did not specify the exact timeline for when LeapFrog started discussing increasing production levels with Capable Toys ...

  4. Supply Chain

    College of Engineering Master of Engineering Management (MEM) MEM 511 Operations & Supply Chain Management Spring 2018 Supply Chain Challenges at Leapfrog Chapter 1 - Case study Submitted to: Dr. Raid Al-Aomar Introduction Introduction LeapFrog Enterprises Inc (commonly known as. Get started for FREE Continue.

  5. Case-STudy-final

    The case study, however, doesn't cover the forecasting methods LeapFrog used that gave them 700,000 as the forecasted demand for Leap Pad for the holiday period. Body 1.LeapFrog Supply Chain Map. 2.Data to increase the production According to the case study, the increase in production levels of the LeapPads is based on the 2 critical data ...

  6. Supply chain challenges at Leap Frog

    Draw a map of the supply chain for LeapFrog, including the retailers, capable toys, and suppliers of key materials (i.e. Tyvek). ... View SCMT255 Leapfrog Group Case Study.pdf from SCMT MISC at Southern Alberta Institute... Related Textbook Solutions See more. Principles of Microeconomics. Mankiw.

  7. Chapter 1 LeapFrog case study.docx

    CASE STUDY: Supply Chain Challenges at LeapFrog Introduction 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 ...

  8. CASE STUDY

    CASE STUDY - Leapfrog - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Leapfrog

  9. Question: CASE STUDY NO. 1Supply Chain Challenges at LeapFrog

    CASE STUDY NO. 1. Supply Chain Challenges at LeapFrog. Here's the best way to solve it. Powered by Chegg AI. Share Share. Introduction: LeapFrog, a leading global toy company, faced significant supply chain challenges in t... View the full answer. Previous question Next question.

  10. LeapFrog Case Study

    CASE STUDY Supply Chain Challenges at LeapFrog Supply chains consist of networks 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. Few cases illustrate this better than the situation faced by LeapFrog back in August of 2003.

  11. Supply Chain Challenges At Leapfrog Case Study Example

    We have on this case study "Supply Chain Challenges at LEAPFROG" five question to deal with. Firstly we will answer and discuss the partners who are in upstream and who's in the downstream, also we will talk about the first supplier and second supplier. Order custom essay Supply Chain Challenges at Leapfrog with free plagiarism report. Secondly ...

  12. Case Study

    In 2020 Leapfrog to Value and USAID partnered to make the case for applying value-based care to addressing India's TB epidemic. USAID India Mission subsequently invested $8M in an ambitious 3 year program to test our core hypothesis: a human-centered approach to TB care can produce better outcomes at a better cost.

  13. (PDF) Supply Chain Challenges at Leapfrog

    ANSWERS PROVIDED BY EstaNoer, MikoVargas, PricsilliaMailoa, ShintaKusumasari. SUPPLY CHAIN CHALLENGES AT LEAPFROG CASE STUDY. Operations & Supply Chain Management. 1. Draw a map of the supply chain for LeapFrog, including the retailers, Capable Toys, and suppliers of key materials (such as Tyvek). Which supply.

  14. LeapFrog case study answers

    View Homework Help - LeapFrog case study answers from ECON 101 at Radboud Universiteit Nijmegen. 1) Draw a map of the supply chain for Leapfrog, including the retailers, Capable Toys, and suppliers

  15. BUS 370 Exam 1 Case Studies

    Quiz yourself with questions and answers for BUS 370 Exam 1 Case Studies, so you can be ready for test day. ... supply chain, one day delivery ... concentrated around Nov-Dec - 2003- retailer toys r us shared their sales info of leapfrog which told them they would be 350,000 units short for the holiday production molding constraints- made more ...

  16. Global Supply Chain

    LeapFrog has taken the following steps to eradicate slavery and human trafficking from its supply chain: Verification. LeapFrog strives to establish and maintain close working relationships with its suppliers. LeapFrog does not rely upon third parties to verify its product supply chains in order to evaluate and address risks of slavery and ...

  17. Case Study

    Conclusion - For Supply chain, use as reference only, do not rely. SCMT Northcutt Group 6 - For Supply chain, use as reference only, do not rely. SCMT255 Leapfrog Group Case Study and Rubric; Activity 4-1 Price Elasticity of Demand and Supply; Leap Frog - Case Study 1 - SCMT; Supply Chain Challenges at Leap Frog

  18. A Paradigm Shift In Supply Chain Strategies For AI-Driven ...

    In the case of escalating demand for AI-driven technology, distributors must proactively predict and prepare for supply chain complexities. Before the global chip shortage of 2021, companies ...