As a result, the company was able to sidestep many potential production glitches. With nearly 1,000 parts in any one box, that does not seem to be the case. Some observers speculated that the Lego Group had overdiversified its product line with moves into such areas as apparel and theme parks. Have you finished your Christmas shopping yet? Many new products cost the company money. Therefore, make it problematic for the company to completely distinguish its product lines from those of the competitors offering. The reduction in labor costs was only one of several reasons for those savings.
If their lead time is relatively long, their pooling strategy starts to fall apart if they need to get the goods to retailers in time for the holidays. The sourcing team analyzed the prices of the raw materials and worked with a narrowed roster of suppliers to stabilize pricing. Because the adoption of a single distribution hub would profoundly affect its delivery patterns, the company opted to make some changes in its carrier base prior to any relocation. By the end of 2003 Lego was already facing crisis owing to dipping profits and declining market pool for toys. Adding more bricks made products harder to assemble, forecasts harder to determine, and inventory harder to manage. Speedy attention to the supply chain, the leaders reasoned, would not only buy them time to deal with the other challenges, but could help set in motion a virtuous circle of improvements that would support subsequent changes in the rest of the company.
The toymaker found itself needing to turn around its turnaround. The toymaker's bold decision to serve Europe and Asia from the Czech Republic cut logistics costs by 20 percent. 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. Once the costs of innovation were clear, designers were urged to use existing elements in new ways, rather than devise new elements requiring new molds and colors. The kids love having 1,000 parts. That is partly why Lego earlier this year said it would shut its packaging operations in Denmark by 2015 and focus its processing and packaging at its factories in Hungary, the Czech Republic, and Mexico, which supplies most of North America. 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.
It was a bold move: No other major company had consolidated its regional distribution in Eastern Europe; in fact, none other has done so to date, says Egil Møller Nielsen, vice president of global logistics for Billund, Denmark-based The Lego Group. It also was a potentially risky decision, Møller Nielsen acknowledges. Explain why distributed architectures are flexible. In a sense he blended digital developments with analogue developments, and together with focus and relentless simplicity, the company survived and has gone from strength to strength since 2005. It has also become the global brand as the company has spread several operations of the business at international level.
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. While Lego has demonstrated that companies can effectively address deforestation in their supply chains, the hesitant responses of the other companies leave little hope for widespread change in the toy industry. Our class activities will be posted here for references of our class. The team took a deliberate approach, building on the resin-sourcing work to analyze the true costs of each element and identify those whose costs were out of line with the rest of the stock. Yet, if the move to Eastern Europe has proved to be so successful for Lego, why haven't other companies followed suit and beaten a path to the Czech Republic and neighboring countries? Once the new transportation structure was in place, careful planning helped Lego achieve its goal of more efficient line hauls. In tandem with the planning and consultative processes, the leadership ordered a pilot program designed to make sourcing more strategic.
The price of colored resins, always a major expenditure for the company, was highly volatile. Reining in the creative process was part of a larger push by Knudstorp to reduce overall complexity within the organization. The first tier, a client interface which a browser type running on either a laptop, desktop or mobile device. Publication Date: September 13, 2011. The company ran one of the largest injection-molding operations in the world, with more than 800 machines, in its Danish factory, yet the production teams operated as hundreds of independent toy shops.
If you have children at home, then you probably also have Lego plastic bricks. The Lego brick is the most significant creation of the company. At its helm they placed Chief Financial Officer Jesper Ovesen — a clear signal that this initiative was of the utmost importance. Affordability was still a consideration as a sub-trend, and this sub-trend will persist in 2012 as parents and other shoppers have really come to expect big play value at affordable prices. For instance, the toymaker found that it was not achieving complete cube utilization of truck shipments because some customers wanted special-sized pallets that hindered efficient stacking. Re-engaging with customers was also taken to another level.
Which actions were the least effective? It has gone from being well behind the competition in supply chain excellence to what it believes is a slight competitive advantage already in some area. The has extended its product offerings that not only includes the some new product, but also the computer games, website, movies and amusement parks. Initially there was some discussion within Lego about which party should handle various aspects of carrier management, says Møller Nielsen. Furthermore, introducing new products every year is not necessarily a bad thing, but the Lego Group did not align its supply chain with that business strategy. Access to case studies expires six months after purchase date. Godtfred's cautious nature extended all the way to the profit margins: he championed slow, steady growth.