Ref: IMD-6-0316

Case study

Reference: IMD-6-0316

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Lego: Consolidating distribution (B)

Carlos Cordon
Ralf W. Seifert

By Professor Carlos CordonCarlos Cordon, Professor Ralf W. SeifertRalf W. Seifert and Edwin Wellian

By the end of 2006, LEGO had to make a key decision: continue with the closure of the remaining regional logistics operations and transfer responsibility to DHL in the Czech Republic, or find an alternative solution.

Costs were spiralling and the partnership with DHL was on the brink of a divorce. None of the solutions would be simple to implement, but did LEGO and DHL really have any other choice?

This is a follow-up on the A-case and describes the actions taken by LEGO and DHL to ultimately create an efficient and flexible logistics process, more advanced than any of its closest rivals and one that will especially demonstrate its strength and true value during turbulent times.

Learning Objective

Both partners were initially looking at the entire process from their own perspective, creating a situation that, at first sight, appeared irresolvable. It took them a year before they realized that a solid partnership can only be developed on some common ground. After that, both parties became more open-minded and agreed to make concessions. Often, a simple event between two parties, like a dinner or good heart-to-heart talk can make a breakthrough. In this case it was a secret hotel meeting that did the trick. With the pieces of the puzzle now more easily falling into place, the partnership grew stronger and LEGO and DHL now share the same objectives and targets. Not satisfied with only creating a standard centralized logistics process, LEGO pushed hard for new and inventive logistics solutions and services. The results, by the end of 2008, was that they had built a world-class process with a gain/pain sharing program, real-time performance measurement data, lean workshops, regular customer feedback surveys and additional value-added customer logistics services.
Keywords Change Management, Operations Management, Outsourcing, Partnership, Production Management
Settings Asia, Europe
Type Field Research
Copyright ©2009
Language English
Related material Teaching note, Video
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Reference: IMD-6-0316

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