LEGO 2

[robharris]

What are they key challenges in maintaining a relationship like the
one between LEGO and Flextronics?

[rddiaperman]

The number one challenege is communication. When two companies are
from such different industry backgrounds it is critical the two
communicate their exact intentions and expectations. Naturally that
should have been done at the very beginning of the partnership between
a toy producer and an hi-tech electronics producer. A second major
challenge is this case was the complexity of the supply chain for
LEGO. When a company has almost 11,000 suppliers in their supply chain
the diversification, complexity, and inefficiencies need to be
streamlined before the company begins a new outsourcing venture. LEGO
failed to complete all the streamlining before and that made the
challenge even more difficult. The focus on larger retailers,
distribution centralization, and production methods were addressed
before the outsourcing but LEGO still rushed into the outsourcing
venture.

[erzim...@yahoo.com]

Building on what Mark said, another challenge is just being prepared
for changes. LEGO demand uncertainty fluctuates +/- 30%. Along with
active communication, they need flexible systems in place to support
those levels of fluctuation.

> > one between LEGO and Flextronics?- Hide quoted text -
>
> - Show quoted text -

[Curtis Lucas]

To continue what Mark said a key component of the communiction is
documentation. While Lego has a great deal of core compentencies
surrounding the processes they outsourced their documentation and
standards where lacking. In order for this relation to generate the
outcomes that Lego wanted a great deal effort had to be spent creating
proper documentation in order to communicate their processes.
On Nov 20, 11:30 am, "erzimme...@yahoo.com" <erzimme...@yahoo.com>
wrote:

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[Brent Bascom]

Eric makes a great point. With demand fluctations of such strong
magnitudes, it is imperative they further develop their communication
and processes to maintain adequate levels of production to accommodate
these demands. Simplying their supply channels is one way they would
achieve this goal overcoming a daunting challenge

[JMB]

I have to agree, communication is by far Lego's key challenge in
maintaining a relationship with Flextronic. These two companies are
in two vastly different industries and both lacked the communication.
Lego's was caught up in cutting costs, that it went straight to
outsourcing and did not weigh its options and ended up outsourcing its
core competencies, molding and packaging. I have to agree with Eric
as well, about Legos fluctuation.

Jodi Baynum

[Curtis Lucas]

My question is simple Do you think that LEGO would have participated
in this collaboration if they would have been able to streamline their
supply chain? I feel the reason they choose to go this way is that
they were overwhelmed and simply thought that an outsider could fix
their problem. What are your thoughts.

On Nov 19, 9:26 pm, rddiaperman <rddiaper...@gmail.com> wrote:

[Curtis Lucas]

> > achieve this goal overcoming a daunting challenge- Hide quoted text -

[rddiaperman]

Great question Curtis but I say the answer is LEGO really wasn't
looking for Flextronics to fix their supply chain. LEGO was simply
driven by the almighty dollar or in this case the almighty Danish
Krone. Anyone else? Your thoughts? Was it just money or did LEGO want
Flextronics to help correct the overall supply chain?

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[tiffany neff]

I completey agree with you Mark. LEGO was looking for the almighty
dollar. They wanted to cut cost and thought Flextronics was the
company that was going to help them drive profits, while cutting cost.
However I do believe in the meanwhile when they learend that
Flextronics was not the best fit they benefited from they outsource
for their organization as a whole. Cost saving was the main reason
they went to outsource but the restructuring of their processes,
review and organization as a company benefited from the failure of
outsorucing.

[Gini Stieger-Lawson]

I agree with Tiffany and Mark. LEGO was looking for assistance with
their manufacturing and distribution. They thought they could save
money by utilizing an outside vendor for manufacturing. The problem
they had was that they were the experts in these manufacturing
processes and farming out these processes didn't give them the cost
savings they were seeking.

[r_nei...@yahoo.com]

All comments to this point have been great, as I think that 90% of any
problem between any companies is communication. I would go a little
further to say that Flextronics needed to have current trends
experienced by Lego at any given period of production. Legos could
have taken the process a step further by providing a forecast to
Flextronics in order to adjust production schedules accordingly.
Either way, communication is still the key for this relationship to
have a fighting chance to succeed.

On Nov 18, 4:31 pm, robharris <rob.harris....@gmail.com> wrote:

[Emily Hackett]

Yes communication is a major issue, but what about nepotism and doing
business with people because you know and like them, despite the lack
of strategic convergence? The CEO that led LEGO into the financial
crisis was family...and he simply probably didn't have the buisness
acumen that his ancestors did. Besides, how much can you learn
jumping into a position like that in a business you have been
surrounded with for your entire life? That's why the outside CEO made
the necessary changes. He just did them too fast.
And I got the sense that this new CEO and Flextronics were connected
somehow, like an old business pal or something... like if Express
Scripts started to use City Dash because Curtis thinks Neil and I are
so awesome, even if it isn't what Express Scripts really needs for its
business. Am I just making this up? Or over-analyzing?

[Patrick Casey]

I also agree with the almighty dollar comment. I think both of these
cases seemed like the decision makers grabbed onto a flashy business
trend (outsourcing/copying Walmart) that was supposed to allow them to
rake in the dough. I am not positive but I think those might be
chapters 1 and 2 in Business for Dummies, lol. Lego was manufacturing
product in expensive countries, Flextronic was not, but was
outsourcing the best decision? Apparently not, they have broke off
the relationship, built new plants in cheaper countries and are doing
better. It is hard to say if a lesson was really even learned here as
they likely would have reached the same conclusion if they were not
involved with Flextronics. I wonder if Emily is on to something with
the old college roommates idea... Obviously communication was an
issue here, but maybe the lesson is that once you realize the mistake
has been made, you can still right the ship if you act quickly.

On Nov 21, 6:30 pm, rddiaperman <rddiaper...@gmail.com> wrote:

[rddiaperman]

Pat I agree as for once someone seemed to notice they had made a bad
decision and instead of staying with the bad decision they actually
admitted they were wrong and did the back sourcing. This whole concept
of outsourcing really gained speed over the past decade but several
companies have experienced backlash from their customers over the
moves. This includes P&G as we outsourced most of our back office work
to various other companies. Since the original outsourcing the work
has been moved again to new companies and a few of those are back in
the U.S. The reason was customer service was NOT up to previous
standards. Management heard the complaints and acted on them. FAR too
many times in the current business world those who get to make major
directional decisions make them strictly based on money. The problem
is the decision makers stand to personally make millions from their
decision and conflict of interest has become an issue. Greed is an
ugly thing.
Mark

[Jonathan Nutter]

Definately agree managment at Lego made the correct call and
terminated the relationship.

To stick with the relationship theme, and to answer Rob's Question of
what it takes to work. 1) time 2) undestanding - just like any
relationship and neither of those get built overnight. You do not
purpose marriage based on a match.com profile. Does anyone else
remember that social awkward friend in college who finally went on
their first date as a freshman, who after their first date proposed
undieing love? That was Lego in this case. They had no experience
with outsourcing, and instead of going on a thousand tiny dates to get
to know a company and how outsourcing worked, they dropped to one knee
and offered Flextronics everything they had. Whether love or money,
that does not work out well in the end. Lego needed to build to that
point over time, and develop understandings of the outsourcing world.
that would have made their first lesson much less costly.

[Stephanie Kruthaupt]

I'm curious to know, what do you people see as Lego's long term growth
strategy? Seems like "kids these days" are more into the technology
that is on the rise, than playing with their actual hands and toys?
How can Lego compete with an IPAD? Where do you see the future of
LEGO going with children?

[Patrick Casey]

So, one thing that Lego is doing is developing games and cartoons with
Lego characters. There is a Lego Star Wars cartoon, and video games.
My kids watch the show, play the games then want to buy the legos to
build their own stories. I am not sure Legos ever go away as kids
just like to build things. They are easy to duplicate though, there
are more competitors now than when I was younger, and a lot of them
are compatible. I wonder how they will continue to differentiate
themselves from these blocks. This takes me back to a post Priscilla
and Mark were talking about. Did their desire to differentiate, or
their forecasts about the future of technology have anything to do
with their decision to outsource to a technology company. Were they
trying to gain some insight into the other market....hmmm?!?

[moh.ra...@gmail.com]

1. How can LEGO handle the supply chain complexity to improve knowledge sharing, flexibility and coordination?

[moh.ra...@gmail.com]