LEGO

docx

School

Northern Illinois University *

*We aren’t endorsed by this school

Course

654

Subject

Business

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by kentricefrison

LEGO: AN OUTSOURCING JOURNEY KENTRICE FRISON FEB. 24, 2022 OMIS 680 DR. HEYLAND

LEGO Group: An Outsourcing Journey LEGO’s main expectations from the relationship with Flextronics was to create a partnership that would reduce costs. With Flextronics being a more efficient manufacturer, LEGO wanted to do a turnaround in order to survive the largest internal financial crisis in the company’s roughly 70 years of existence. With a deficit of DKK1.8 billion in 2004, cutting costs all over seemed to be the best to make a turnaround. Flextronics has the low-cost production capacity that LEGO was looking for, in contrast to LEGO’s owned and operated production plants. LEGO learned the importance of identifying strengths and weaknesses to create a better production. Transparency was developed during documenting the things going well and wherever there was room for opportunity. LEGO has more factors to observe when considering outsourcing, due to cost reduction. Inventory management and strategic decision making is key to LEGO’s success. Key challenges in maintaining a relationship like the one between LEGO and Flextronics is trust, time, and communication. LEGO needed flexibility with designs like Harry Potter and Star Wars, and Flextronics wanted a more stable need in operations. It’s difficult to make accurate forecasts with an unpredictable demand. Both businesses wanted to be profitable, so reaching an agreement that benefits them both is difficult. Communicating was challenging when laying out a plan for training, to meet quality standards. The necessary product info wasn’t shared in a timely manner and couldn’t be properly executed. Proper documentation of what each party is looking for within the relationship can build a stronger relationship between the two.

LEGO can handle the supply chain complexity to improve knowledge sharing, flexibility, and coordination by having a more strategic plan for processes, sales, operations training, and education. Investing in more resources to help with planning, can help LEGO achieve a higher level of performance. Flextronics can work accordingly with LEGO to help build a better production capacity and quality. Setting up processes for sharing information is important for cooperation for both companies. Key considerations when outsourcing or offshoring production is ensuring that the right products are in stock. In LEGO’s case, a high number of molds require a bigger investment. Another consideration is inventory because there are seasonal demands and particular limited editions that have to be created within a short window of time. The total cost of outsourcing must be considered even though; in-house production may be expensive. Outsourcing can have stressors like lake of training, low-product quality, and delayed shipment times due to other partnerships. There is a competitive environment in the industry, and it relates to LEGO’s strategic choices. Toy companies have manufacturers all over the world, however, China is the main hub for the development of products. Because LEGO doesn’t have a production plant there, other toy competitors have the advantage of having lower manufacturing costs. With LEGO being a market leader, they can withstand the competitive market with branding and mainstream opportunities. 2

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

FNSFMB412 - Jessica and Mick - Role Play (Scenario Instructions) V1.0.docx

LEDU 358 PJ1.docx

Module 5 Assignment journal.docx

Midterm Exam #1 Debrief Fall 2023.pdf

Organizational Issues and Solutions.pdf

CASE STUDY_ FIDELITY.docx

MT219 Unit 3&4 Assignment.pptx

BSBUS401 ACTIVITY- 2 (4).docx

DTP-A GROUP 1.docx

Sample-Midterm-1.pdf.pdf

HLSS322_Final Assignment_HoskinsOlivia.edited.docx

Unit 2 IP.docx

Recommended textbooks for you

Purchasing and Supply Chain Management

Operations Management

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Cengage Learning

MARKETING 2018

Marketing

ISBN:9780357033753

Author:Pride

Publisher:CENGAGE L

Principles of Management

Management

ISBN:9780998625768

Author:OpenStax

Publisher:OpenStax College

Marketing

ISBN:9780357033791

Author:Pride, William M

Publisher:South Western Educational Publishing

SEE MORE TEXTBOOKS

Recommended textbooks for you

Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
MARKETING 2018
Marketing
ISBN:9780357033753
Author:Pride
Publisher:CENGAGE L
Principles of Management
Management
ISBN:9780998625768
Author:OpenStax
Publisher:OpenStax College
Marketing
Marketing
ISBN:9780357033791
Author:Pride, William M
Publisher:South Western Educational Publishing