The Lego Group

2592 Words11 Pages
The LEGO Group is recently experiencing a problematic phase, which has situated the organization with a deficit of 1.8 billion DKK. The problems experienced by The LEGO Group can be attributed to not being able to manage as well as stabilize a strategic supply chain. Successful SCM is crucial for a manufacturing firm in order to harmonize the production process and internal information with demand for the product. When considering the importance of supply chain management, organizations need to study its effect on other major business processes as well as how it will influence the organization as a whole. Supply chain management may directly or indirectly influence major process such as inventory, capital investments, distribution…show more content…
LEGO purchased a plastic injection molding machine in 1947 to create the plastic version of LEGO bricks (they were originally wooden), and then expanded to pursue the idea of a toy system where various toys would be included in a line of related products. Items such as doll furniture were also developed as LEGO Group looked to enter different markets. During the 1970’s the foundation of the company’s manufacturing facilities and research and development department were established to keep the manufacturing methods up to date. A LEGO production plant was opened in Enfield, Connecticut in the United States. This growth enabled The LEGO Group to continue expanding their product offering over the decades to eventually land at 6 product segments by 2007: pre-school products, creative building, play themes, licensed products, mindstorm NXT, LEGO Education, and LEGO games. The consolidated portfolio was meant to reflect the need for more challenging stimulation as children grow and develop.

Key Problems

This expansion was not well managed and a host of factors developed leading to the decline in 2004. First was a loss of confidence in the core product, the LEGO brick, as the company continued to diversify its product portfolio. Significant forecast errors driven primarily by unpredictable seasonal demand fluctuations led to inventory issues where LEGO lacked one component or held too many of another in stock. The global toy
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