The LEGO Group took multiple key areas into consideration when making the decision to outsource their product. First, LEGO took into consideration that they urgently needed to make transformations in all major areas of the supply chain, before they could decide whether or not to outsource. The company came to the conclusion that they needed to simplify the LEGO sets. A LEGO senior director even noted that, “This excessive complexity of shapes and colors of LEGO elements that was coming from the development was badly hitting the supply chain.” The over complexity of their product had caused a significantly high raise in costs, so before they could decide on outsourcing the product they needed to lower cost and simply product design. By doing so, the company would be prepared for new scenarios of the newly outsourced production set up. In addition to simplifying the LEGO Design while lowering cost, LEGO also took into serious consideration in the decision to outsource was …show more content…
Lego’s main issue begins when they decide to produce several types of custom products. Although, the custom products give the customers a variety to choose from, it actually serves the company more harm than good. Custom products require higher cost and the use of more suppliers. This is where the flexibility and coordination sufferers. Lego had numerous amounts of suppliers across the globe. The vast amount of suppliers made managing and keeping track of products very difficult. If the products were standardized then Lego would be able to cut down on most of their suppliers. Not only will cutting down on suppliers decrease total cost but it will also improve the line of communication. Coordinating the supply chain will be much easier with fewer components. Tracking and documenting products will be fluid and communication will be more
Knudstorp changed everything upon his arrival. He completely reworked the supply chain; he reached out to his top retailers, and rearranged things to cut costs substantially. He saw that innovation was what Lego lacked and realized the importance of unconstrained creativity. This is when Legos product design changed; Knudstorp started to really look into market research, and placed a greater emphasis on user feedback (Starvish). He made big impressions with massive changes; he started with his management team and ended up firing five of his seven manufacturing executives (Stavish). From there, he started anew and made sure his managers were on the same page with regards to the vision he desired for the growth and future of Lego.
The two primary stakeholders are the company’s customers and employees/suppliers who are directly involving in the company’s business. The two secondary stakeholders who do not engage directly with the business are the general public and environmental activist groups.
. G. Toys is a leading supplier of high quality dolls that are manufactured in two plants within Illinois, one in Chicago, one in Springfield. These dolls are sold in retailors throughout the United States and have an established, loyal customer base due to their high quality and popularity (Campbell & Kulp, 2004). In the last few years, due to rising production costs, their most popular doll, Geoffrey, has seen a decrease in profit margin. In this evaluation we plan to address G.G. Toys existing cost system and offer recommendations on whether management should change the costing system in both the Chicago and Springfield plant. We will calculate the costs of the Geoffrey doll, the specialty branded doll #106 and the cradles using the cost
With all of the designing that was happening in the company, it helped to shrink its profits. Lego City was a popular toy for children but the redesigning shrank the sales and attention the product was once getting. A worker of Lego said it well when he said, “Management was to blame, the same people who were doing crappy products then are making world-class products today” (Greene). Essentially the managers and higher up executives didn’t communication what direction the company should be going. They didn’t have a strategy to follow and tell their employees. With no clear strategy and communication in place, things were a free for all. This lead to the declining profits and stability of the company. Lego assumed that if the designers were able to create whatever they saw fit, that somehow it would lead to a breakthrough in the toy maker’s product line. However, this ideology backfired with high production costs and low profit margins.
Yet, although there was a notable increase in sales in 2012, the company income statement for 2012 also showed a rise in the company’s expenses. Total expenses rose from 13,065DKK in 2011 to 15,489DKK, suggesting both promotion and production of the new line incurred higher expenses for LEGO. The increase was of 18.6%, and although relevant, comparatively smaller than that of revenue. It can be presumed that the firm has benefitted from economies of scale. Introducing new product lines in the same company benefits from its already established operations. In this case is due to a variety of reasons: because of the law of variable proportion where fixed costs are spread over a larger quantity of units, or as a result of having an established reliable supplier and benefitting from discounts by buying in
of the sessions familiar to put their client at ease. As discussed previously, impairment in social functioning causes difficulty in communication which is necessary in typical counseling interventions. According to Woods, Mahdavi, and Ryan (2013), Lego therapy, a type of play therapy, is highly effective in improving social skills between pairs or small groups of children aged 6-11. Legos are an appealing toy to children with ASD as they are a methodical and predictable toy that are easy to control. Therapists are also faced with the difficulty of ASD children regulating emotions and behavior, which is often a typical reason parents seek therapy for their child in the first place (Samson, Hardan, Lee, Phillips, & Gross, 2015). It is encouraging
Social interactions are another area of focus of LEGO therapy (2004). Social interaction comes naturally to those who do not have social communication deficits. Observing and imitating at an early age enables one to gain the social skills required in basic everyday interaction, as well as allowing one to gain confidence when socialising (Densmore et al., 2007). However, children with autism may lack in social interactions. Autistic children may require additional assistance in social interactions as they have difficulty in things such as: forming peer relationships, group play, maintaining eye contact, sharing, use of body language, use of facial expressions, participating in imaginative role play and much more; these skills are the fundamental base of effective social interactions (Gammeltoft and Nordenhof, 2007). Lack of social skills and communication skills overlap one another, having a “knock on” or “dominos” effect thus it is important that children with autism are supported in the development of these areas.
Traditionally, Dansk Designs followed a strategy of differentiation. When a firm follows this strategy, they create differences in the firm’s product or service by creating something that is perceived as unique and valued by customers. Differentiation can take many forms, including prestige or brand image, which Dansk decided to implement. Their product line consists of eight product categories, which include flatware, china, linen, glass, decorator cookware, and wooden bowls and trays. Their products are of high quality and are highly priced. Dansk was able to achieve a differentiation advantage because their price premiums exceeded the extra costs of being unique. Dansk is able to create these unique products because of the talented designers they employ, including Jens Quisrgaard, Niels Refsgaard, and Gunnar Cyren. Another competitive advantage of a strategy of differentiation is the ability to deal with supplier power. There is a certain amount of status associated with being the supplier to a producer of differentiated products. Dansk’s principal supplier, Richard Nissen, has enjoyed working with Dansk because he believes they have been able to “preserve the handcrafted nature of the products”.
Nintendo, which is one of the largest video game companies, follows several steps and goes through different stages to create a value for its customers. To produce a video game controller, Nintendo outsourced the key components, which are needed for the production such as controller chips, from a number of different manufacturers. Nintendo formed partnerships with those manufacturers to supply them with the required components. The process of outsourcing the components from different manufacturers is considered as a good practice and cost effective because it reduces the production costs that Nintendo might have if they produced the components by themselves. As it is mentioned in the case, “Nintendo is not a technology company – it is a toy company” so, by outsourcing Nintendo als...
The second way is to achieve low direct and indirect operating costs is gained by offering high volumes of standard products and offering basic no-frills products. Production costs are kept low by using less parts and using standard components. Limiting the number of models produced to ensure larger producti...
It is suggested for any organization to review, reassess any existing supply chain management or any delivery techniques, before developing a new supply chain method so that any exposure to high risk of failure is reduced. Somerset as a company taken advantage of outsourcing and transferred it product manufacturing to China leveraging low cost labor and raw material. The labor cost and other cheap material reduce Somerset overhead cost, but there is always the risk of not delivering product on time due to the foreign country political climate, change in tax and tariff and local
Outsourcing labor and materials in a global market can significantly stretch the supply chain structure. This can have both positive and negative effects. Looking to different countries provides the opportunity to access different markets and find the lowest possible manufacturing costs. Many companies also embraced the Toyota Motor Corp. model of just-in-time inventory and other lean manufacturing techniques that emphasized speed and cost reduction (Bosman, 2006...
Mattel required that factories in its supply chain use paint and other materials provided by certified suppliers. The company claimed that it did not put undue price pressure on suppliers, particularly as it related to paint. (p.3)
Very few associations go for in-house fabricating. They depend on sourcing and creating sellers with involved frameworks to check and control quality. Indeed, even firms which choose in-house fabricating regularly don't go for assembling full scope of items to take care of aggregate business sector demand yet settle on halfway sourcing. Settle on and-purchase choices have a huge effect on the expense structure of an organization's items.
The Company's manufacturing processes utilize modern technology and automatization to reduce costs and accelerate its execution. In addition the "contractor system" allows Benetton to keep its production costs significantly below some of its competitors because the small supply companies have lower costs themselves. Secondly, Benetton is able to allay the effects of the demand fluctuations: in fact the Company can adjust its supply chain, absorbing so all the changes without feeling the full effect.