Managing an Award Winning Supply Chain

Topics: Supply chain management, Supply chain, Lego Pages: 19 (739 words) Published: October 28, 2014
Managing an Award Winning Supply Chain 
Transformation Programme –
The Lego Story
The Lego Story

Presented by Egil Møller Nielsen, Vice President, 
Global Distribution Logistics LEGO
Global Distribution Logistics, LEGO

12 October 2010

Short introduction to the LEGO story
The Supplier of choice

In October 2008, LEGO won the prestigious European Supply Chain Excellence Award in the "Logistics and Fulfillment” category. The award recognized the supply chain changes that had been accomplished and which were seen as one of the key enablers of LEGO’s astonishing turnaround. LEGO had lost money for four out of seven years from 1998 to 2004, and with only 62 per cent of orders being delivered on time, its logistics capability had been shattered. The turnaround highlights both the organizational and operational issues that arose in reviving its distribution and logistics system and turning its supply chain operations into a distinct competitive advantage. Transforming a supply chain operation is equivalent to performing open heart surgery and the transition proved anything but smooth. This webinar will emphasize the importance of keeping communication lines open, open as well as obtaining an introduction to common outsourcing issues, issues ranging from supplier capability assessment to culture differences.

The turnaround also explores the strategic issues surrounding supply chain transformation and its role in and d iintegration
t
ti with
ith overallll company strategy.
t t
Key topics for discussion include:
1. Understanding the market is key in making the strategy and turnaround plan 2. Collaborating across value chain and optimizing on total costs/lead time etc. 3. Having an organization and people reflecting the strategy is key for success

PAGE 2

Agenda
The Supplier of choice

• Introduction to the LEGO Group
• Logistics
L i ti tturnaround
d 2004
2004-2008
2008
• Where are we today?
• Strategic Initiatives – our ambitions 2015

PAGE 3

LEGO, an unique 74 year old brand
The Supplier of choice

p



Founded in 1932



Family owned



One brand



Universal and timeless idea



400 billion LEGO bricks moulded, 15 bn a
year, you own an average of 70 bricks



Your children contribute to the 5 billion
hours, children around the world invest
every year

PAGE 4

Sharp contrast to survival ‘Must-Win-Battles’ of 2004

The Supplier of choice

Must win battles
1. Set a crisp and clear direction and change the way we do
business ((tools,, capabilities,
p
, mindset))
a. Trade profitability
2. Restore competitiveness by focusing
on our retail customers

b. Delivery, right and on time
c. Portfolio relevant and balanced

3. Reduce the level of risk by right sizing our cost base,
asset base and business activities to a low turnover

PAGE 5

Logistics Turnaround, our situation in 2004
The Supplier of choice

LEGO Logistics by 2004

High

Service
Leader

Cost & Service
Leader

Low

Value ad
dvantage

“Martin Christopher, Cranfield”

Commodity
Market

Cost
Leader

Low

High

Organization
Structure

Organizational Structure
• In-house
I h
““old
ld ffashion”
hi ”

Capabilities
• Detailed and operational, limited strategic
• Limited commercial understanding

Capability

Processes

Costs
• 3 layer DC structure
• 80% fi
fixed
d capacity
it costs
t
• No transparency towards main cost & - drivers

Processes
• No standards defined (all local processes)
• Several
Se eral WMS IT and all o
outdated
tdated

Cost advantage

Culture

Service
• Order fill rate 70 is g
good))

Superior
customer
value at
less costs

Value ad
dvantage

1.

Cost advantage
“Martin Christopher, Cranfield”

PAGE 16

Small insight into our innovative strategy for the future
- addressing the challenges in the future marketplace
The Supplier of choice

Green Box

48 Hrs

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