Toy Maker Tries to Keep Up With Demand

Discussion
Nov 13, 2003
George Anderson

By George Anderson

One of the hottest products this upcoming holiday season may be LeapFrog Enterprises’ line of educational toys including LeapPad and Leapster for kids, ages of infant to high school. It may also be one of the most difficult to find on retail shelves as the toy maker struggles to catch up with the greater than anticipated demand for its popular line of products.

A piece on the Baseline Web site blames Leapfrog’s inability to meet the orders of its retail customers on an earlier decision by the company to hold off an intended upgrade to its supply chain software.

“We started the implementation in the first half of this year but didn’t complete it,” said LeapFrog spokesperson Cherie Stewart. “We’re just moving into pilot right now.”

Leapfrog expects to have its new system, developed by Manugistics, fully operational in 2004.

Not everyone shares Baseline’s view that LeapFrog necessarily made the wrong decision by delaying implementation until after the manufacturing season for the winter holidays.

“Supply chain is a complicated thing so stalling the implementation probably isn’t such a bad thing,” said Chad Eschinger, an analyst at Gartner Consulting. “You don’t want to be distracted and trying to implement something that can be very painful during your busiest time of the year.”

Mr. Eschinger did add, however, LeapFrog “is eventually going to have to tie into some of these retail goliaths (Wal-Mart, Target, Toys R Us and Amazon) with their supply-chain and demand-forecasting models. It’s going to be the only way to do business going forward.”

Moderator’s Comment: What are your thoughts on the supply chain situation faced by LeapFrog? Are there any bigger picture supply chain issues this story
raises for you?

In a classic example of damned if your do and if you don’t, LeapFrog found that its decision to wait on the new supply chain software meant it couldn’t
keep up with orders from its biggest customers including Wal-Mart, Target, Amazon and Toys R Us.

Of course, there’s no telling if the company would have met demand if the system had been in place (kinks do often need to be worked out with new software)
but it makes for good copy when heavyweight investors such as Larry Ellison say lower than expected performance was directly attributable to not having the needed supply chain
systems in place.
[George
Anderson – Moderator
]

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