Lego group outsourcing journey case

LinkedIn The latest travel adventures years had taught the fifth largest toy manufacturer in the world — LEGO Group — the importance of effective management of the global supply chain. In order to survive the largest domestic financial approximately 70 years of crisis, the direction was, among many initiatives, decided to relocate and outsource most of its production to Flextronics.

Lego group outsourcing journey case

They were servile issues they went through with outsources the company to Flextronics. They had branched out into new business opportunities which confused the customers and employees.

They had issues with making sure that the right components were in stock. They saw that they were producing too many parts in far too many shapes and colors which was increasing their stocking levels and reducing their profit margins. The increasing variety of colors and shapes LEGO elements was a threat.

The challenge is to ensure that the right components were constantly in stock. Inventory piling due to forecast errors and seasonal demand fluctuations. High number of components required heavy investment in molds. The solution was made to limit growth in number of product components.

Lego group outsourcing journey case

The US production capacity was shifted to Mexico. Also outsource the production capacity to subcontractors like Greiner or Weldenhammer.

Radical changes took place within LEGO organization that drew the company near bankruptcy. Lego Company has over 11, suppliers and pursuing a strategy which was based on growth by focusing on totally new products. This was one of the causes for dropping the revenue and about losing confidence of its core product, LEGO bricks.

Furthermore the diversification had resulted in vast complexity and inefficiency with confused the customers and employees. This at the same time faced difficulties in more competitive and dynamic market. In the area of distribution the analysis uncover the need for the major changes in how the company approached its retailers.

Lego decided to focus on the large retailers to sell its products.


This helped drive down the cost of distribution and provide a more overview of the demand. Reduced supply chains complexity by centralizing DC.The parties jointly decided that the LEGO Group will take over LEGO production from Juárez, Mexico and Nyíregyháza, Hungary.

A long and expensive journey. Besides the direct quality and production costs, imagine the number of meetings, the hours of engineering and executive time, and the loss of employee morale that was sunk into this fiasco.

Unit 6: Implementation Case Study Analysis Paper: Prepare a case study analysis of Case LEGO Group: An Outsourcing Journey found in the Cases section of your digital book.

Closely adhere to the Case Study Analysis Template by clicking on the hyperlink. Please utilize this . The student will collect appropriate articles related to the topic from Weeks 1 to 10 at the same time while organising and designing the poster during the tutorial student will take the other group members comments.

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Lego group outsourcing journey case

LEGO Group – An Outsourcing Journey Presented by: Achintya Arun Avishek Manish Pankaj Prashant Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising.

In this assignment the LEGO Group are examined by using a PESTEL analysis (Turner, S., ,), Porter’s Five Forces framework and TOWS matrix, based on the information from the case study “The LEGO Group: working with strategy” by Anders Bille Jensen, University of Southern Denmark, and sources from internet.

Case study analysis of Case 12 LEGO Group An Outsourcing Journey