Lego supply chain case study. Manufacturing Supply Chain News: Lego, the of the had to Reinvent the Supply Chain to Save the Company 2019-01-06

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Lego Case Study

lego supply chain case study

Only the best was, and is, good enough. Up to that point, The Lego Group had used 55 transportation providers for inbound and outbound shipments to its 11 warehouses in Europe. However, this will help the company to expand its product line into more countries around the world. Like his father, Godtfred paid careful attention to every aspect of the business, applying, for example, his knowledge of material science and production technology to the brick-manufacturing process. Was the Lego Group too diversified? Correspondence may be edited for clarity or for length. In your opinion, which actions were the most effective? The traditional retail channels were changing dramatically from small mom and pop toy shops to the major big box retailers — sound familiar? Team members tracked the progress of key initiatives, resolved bottlenecks as they arose, and settled a variety of issues. So it's not so much innovation, but following directions.

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Changing shopping habits are messing with Lego’s supply chain strategy

lego supply chain case study

The leadership team also clarified decision rights to ensure that schedules made sense for the enterprise as a whole. We invite you to share your thoughts and opinions about this article by sending an e-mail to? This list shows those product lines that sells the best in 2010 and 2011. They have demonstrated strong product design power over the past 50 years. I think one of the greatest values of Lego as a product is that it lasts! The bulk of Lego sales—especially Christmas purchases—are in Europe and North America. When it is not possible to use recycled fibres, the company will use materials that have been produced in a sustainable manner. In fact, the answer is like this. The gains are more than operational.

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LEGO's game

lego supply chain case study

Our class activities will be posted here for references of our class. Although he was not a Kristiansen by birth, Knudstorp's management style and business ideals closely mirrored those of its founding fathers. The team started by halting the time-honored practice of making every machine available to produce any element, an approach that necessitated constant, costly retooling. Globally recognized brand name as a leader in creative and imaginative toys. Using a hypothesis-driven approach, the team would debate how to change and improve processes.

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HBS Cases: LEGO

lego supply chain case study

Knock off products from China were coming to market at lower cost. The English-speaking countries are, however, still the most significant growth drivers and have all exceeded the expectations for the year. Because of this, it could take years for a new product to go to market. Many kids were spending more time with video games than traditional toys. The Lego Group paid as much attention to the thousands of stores that together generated only one-third of its revenue as it did the 200 larger chains that accounted for the other two-thirds. Also contributing to this article was Booz Allen Hamilton Senior Associate Georgina Grenon. Also - like in all markets - the internationalization has affected the strategy of… 1362 Words 6 Pages Lego Case Study Analysis Pallav Mathur Q 1.


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Lego Group: An Outsourcing Journey

lego supply chain case study

The medieval city, known for its elegant architecture and vibrant arts scene, also offered a larger pool of skilled labor than other Eastern European locations. It has also become the global brand as the company has spread several operations of the business at international level. Each team worked out its cross-functional plans through lengthy workshops. Chief Purchasing Officer Niels Duedahl was tasked with overseeing the process, supported by a team of analysts who built detailed cost models. At its helm they placed Chief Financial Officer Jesper Ovesen — a clear signal that this initiative was of the utmost importance.

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LEGO's game

lego supply chain case study

It has released thousands of product lines since it is founded. Lego had also fallen behind to companies that operated with much greater supply chain sophistication, analyzing and optimizing every cost driver to provide just-in-time service to the new retail giants. The sourcing team analyzed the prices of the raw materials and worked with a narrowed roster of suppliers to stabilize pricing. To rebuild profitability, the company had to refashion every aspect of its supply chain. Without clearly defined service policies, the company spent a disproportionate amount of time and effort serving small shops, which drove up the costs of fulfillment substantially. On the supply chain side, he did away with many of the unique brick components added during Plougmann's tenure, and eventually decided to bring brick manufacturing back in-house to ensure quality control.

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Lego Group: An Outsourcing Journey

lego supply chain case study

By committing to a steady volume of shipments to certain markets, Lego gave the transportation providers a base on which they could expand their services between the Czech Republic and other countries. They also created a cost matrix, clearly showing the price associated with each change. They knew that management by decree would never work well in a close-knit, family-owned company. Database plays the role of the terminal server, can be used to store or access data. More importantly, the success of the sourcing project created a sense of optimism and the momentum to move ahead with other changes. It frequently sourced unique and therefore higher cost materials, and did little to leverage its total buying power. .

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Lego Case Study

lego supply chain case study

Assigning clear responsibility in this way avoided the all-too-human tendency in organizations to point fingers rather than solve problems. First, the number of its logistics providers was cut from 26 to three or four — enough to ensure resilience and gain greater economies of scale while still encouraging competition among the suppliers. In many cases, that required the sales staff to describe in detail the obligations included in service-level agreements. UnitedStates represent the largest market share for a single country. Reviews and mentions of publications, products, or services do not constitute endorsement or recommendation for purchase.

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Rebuilding Lego, Brick by Brick

lego supply chain case study

Take, for example, toy maker Lego , Dec 13, Wall Street Journal. The company leadership knew it had to address those problems, and that the supply chain posed the most immediate opportunity for improvement. Please see for further details. To address this, executives decided to go with near total transparency — strategies and potential changes were widely communicated throughout the company. The company used its leverage as a large-scale shipper to obtain lower freight rates, but it wasn't the only one that benefited from those deals.

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Lessons learned from the LEGO turnaround

lego supply chain case study

Sales dropped 30 percent in 2003 and 10 percent more in 2004, when profit margins stood at —30 percent. Lego Group has handed from father to the son and now it is owned by a grandchild Kjeld Kirk Kristiansen. The ability of the Lego Group to continuously make innovation in the products helps to attract more customers and increase the brand recognition. Unlike Plougmann, his turnaround attempt succeeded. Inventory turns have improved by at least 12%.


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