Lego Group Sales Disaster

In: Business and Management

Submitted By joeljohnson0224
Words 1152
Pages 5
This article was about LEGO Group and a deal gone wrong with DHL. LEGO Group was founded in 1932 by Ole Kirk Kristiansen in Billund, Denmark. They had around 70 years of exceptional business, before an abrupt stop in 1998. It was not specified why the craze had such an immediate break, but I believe the progression or advancement of technology, computers, and just cell phones alone were the demise of the toy blocks. For the first time in the 70 years; staff reductions were made and LEGO began to lose money. It was time for a new plan, after four years of innovative and creative designing with new products to release in 2002. With high hopes for the Christmas season, it looked to be a positive year. But with the inventory and receivables up, bad news was to come and the LEGO Group braced for another bad year. Sales dropped an astonishing 26% in 2003 and a whopping 20% the following year 2004. Needless to say heads were spinning. The leadership at LEGO Group knew the supply chain needed immediate and extreme improvement. The supply chain needed to be flexible and able to adapt to the seasonal marketplace the toy could sell in. The first method implemented was the just-in-time delivery. This method failed by less than 67% of total sales being partial cartons and only 62% being delivered on time, or “just -in-time”! The company worked out of four main Regional DCs. Two were in France and were operated by third party companies. They mainly served the UK and S. Europe. There was another in Germany and was operated by LEGO Group. This one was for Central and Eastern European markets. The last was in Denmark and was also operated by LEGO Group. They served Scandinavia and Benelux. The last two alone had over 14,000 customers and employed over 200 people. Finished product was stored in a 30,000m warehouse. The warehouse was operated by a third party as well. Product…...

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