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Lego presentation


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  • 1. LegoUnderstanding the travel ofLEGO
  • 2. Agenda1. Origins of raw materials2. Components of LEGO3. Final products of LEGO 4. Distribution Strategy The Travel Of Lego
  • 3. Agenda5. Rationale of supply chain 6. Difficulties of Implementation7. Overcoming difficulties 8. Conclusion The Travel Of Lego
  • 4. Raw Materials: Where are the originsof raw materials used to make Lego? The Travel Of Lego
  • 5. Plastic Rubber •Processed from crude oil •Main producers are Malaysia and•Produced in Saudi Arabia, Kuwait Thailand •Processed in countries like •Processing required Singapore, Korea etc •Shipped to rubber trading centers •Transported to LEGO •Then reaches LEGO manufacturing factory manufacturing factory
  • 6. Components: Where are the components manufactured? Arecomponents produced or bought? The Travel Of Lego
  • 7. Final Product: Where is the finalproduct manufactured/assembled? How is it distributed? The Travel Of Lego
  • 8. Productionprocess of LEGO Distribution Packaging Painting & Decorating Moulding Design & Development
  • 9. Design & Development Designers come up with concept of designs for LEGO SETS Competitive advantage: interlocking bricks 8 pieces of brick = 900 combinations
  • 10. Moulding Every tile comes with specific mould Mould created based on needs of shape of the tile Mould can cost up to $250,000 Currently produces 7000 different components The Travel Of Lego
  • 11. Painting & Decorating Mainly manufactured in Billund, Denmark 60 tonnes of plastic granules used per day Holds a week’s supply of raw materials on-site The Travel Of Lego
  • 12. Painting &Decorating 500 bricks per second 300,000 per minute 21 billion per year Only 12 out of 100,000 bricks are faulty The Travel Of Lego
  • 13. Packaging Machines deployed for efficiency Bricks produced packaged into boxes that are stored in holding area Each product requires different combination of bricks The Travel Of Lego
  • 14. Packaging Bricks are packaged into bags by product need Packages checked for accuracy based on the weight 50,000 packages produced in a day The Travel Of Lego
  • 15. Distribution Final products packed into boxes and shipped to distribution centres Cranes sort 500 boxes in an hour Partnership with DHL to form single warehouse The Travel Of Lego
  • 16. Distribution Single warehouse is a competitive advantage Entire process from moulding to distribution takes 10 days The Travel Of Lego
  • 17. Threat: Highly mechanized, vitalthat plant does not malfunction The Travel Of Lego
  • 18. Distribution: How is the product distributed to customers? The Travel Of Lego
  • 19. Warehouses: Distribution Centre: The Travel Of Lego
  • 20. Reaching the end consumer Specialty retail Ordering onlineOffices in 29 stores in 5countries countries & other retailers The Travel Of Lego
  • 21. Supply Chain Strategy:Rationale, Difficulties & Implementation The Travel Of Lego
  • 22. Past operations of LEGOContinual profit loss from 1998 to 2004 Loss of profit up to -30%In 2004, decided to cut logistics by 20% Previous strategy focused on small retailers The Travel Of Lego
  • 23. Current Supply Chain Strategy Productdevelopment, Sourcing, Logistics & Distribution, Delivery The Travel Of Lego
  • 24. Product SourcingDevelopment Long term Simplification contractsLogistics &Distribution Delivery Single Extended delivery Distribution interval Centre The Travel Of Lego
  • 25. Implementation: Difficulties and Solutions The Travel Of Lego
  • 26. Difficulties in Implementation 1. Outsourcing logistics strained relationship with DHL 2. Lower than forecasted delivery frequencies 3. Relocation of distribution centre to Prague The Travel Of Lego
  • 27. Conclusion: Any questions?  The Travel Of Lego