Sep 23, 2008

Rebuilding LEGO: A Success Story

Here's an admittedly wonkish article about the improvements to LEGO's supply chain in recent years. (After all, we can't rhapsodize about the NXT until we can actually GET the NXT, right?). :)

Some key points of the piece (for those who'd rather pass on the complete article):

Through a series of management moves, LEGO:

1) Reduced its number of vendors and made larger, more regular purchases from each one, enabling it to leverage the company's scale with suppliers.

2) Better coordinated the production within its mold machines, resulting in better utilization and increased capacity.

3) Decreased fulfillment costs at their distribution centers by bundling orders in larger shipments.

4) Rationalized their production cycles into 4-to-12-week increments (instead of making every machine available to produce any element at any time).

5) Relocated its factories near its most important markets (e.g., Europe), thereby decreasing its distribution costs.

All of this means that, when dealing with LEGO, you'll (hopefully) get what you want when you want it.

3 comments:

Will said...

The link doesn't want to work. This looks life a good move for TLG; treir qualityt was taking a nosedive as of late.

Rick Rhodes said...

Will,

I'll have the permalink up in a few minutes.

Rick

Rick Rhodes said...

The permalink is now up for this story, which should make it accessible for most folks. (If it isn't, try clearing the cache in your browser).

It's an excellent and well-written article, for those who have the time to plow through it.

11:03 AM

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