'The Lego Case\r'

'1. What were LEGO’s main expectations and learnings from the affinity with the Flextronics? Expectations: a. salvage price by bysourcing to low-cost countries: prior to outsourcing, LEGO owned and operated proceeds devicets mainly in relatively high labor-cost countries, such as the United States, Switzerland and the South Korea. The main land for this is that LEGO built plants close to its main markets to maintain transportation cost.But LEGO finally realized that the trim labor cost in most labor-intensive countries outweighed the reduced transportation cost. wherefore they specifyd to out denotation to Flextronics who has output signal talent in low-cost regions; b. Subcontracting to Flextronics allowed LEGO to reach the rescue of scale as well as reduce production complexity by combining its production with that of other Flextronics’ clients; c. spying production to Flextronics so-and-so function LEGO crush out the risk of production price fluctu ations. Learnings: a.LEGO well-educated from Flextronics the importance of documentation and standardization of the production, which form LEGO Group transparency and often encourage LEGO manage the challenges of complexity and to identify the stronger and weaker split and links of the production network. b. LEGO should realize more(prenominal) factors beforehand they outsourcing. Things like Flextronics’ subprogram style, the cost and sequence of providing engineering incarnate and fostering, and unsettled select time incurred by spherical sourcing are really small for nark decisions. 2.What are the key challenges in maintaining a relationship like the one amid LEGO and Flextronics. The key challenge in maintaining a relationship between buyer and provider is how to reach an placement that benefits both parties. get into LEGO and Flextronics for example, it’s a big trouble for LEGO to solve the conflict between its sine qua non for flexible and Flextronics’ more stable and certain operations. LEGO had wide range of products, including many authorize products like Harry Potter and protagonist Wars, and each of its products consisted of different unique bricks.And it’s difficulty for LEGO to take away a fine forecast with fluctuating demand. These two points do LEGO over-dependent on flexible production, which is totally against Flextronics’ operation style in which economies of scale is a key phrase. Since both LEGO and Flextronics require a profitable business model, it’s a great challenge to reach agreement that benefits both parties with difference emphasis. Also, LEGO has to consider how to transport withFlextronics pertaining to making a clear plan for training and educating their staff so that they stinkpot be able to get LEGO’s efficiency requirement quickly. 3. How derriere LEGO plough the supply chain complexity to rectify knowledge sharing, tractability and coordinat ion? LEGO introduce a civilise planning system called gross revenue and operations planning (SO&P) to its daily operation. SO&P can benefactor LEGO varan and coordinate different parts in supply chain and provide LEGO the visibleness of its global operation, which ordinarily involve many outsourcing partners.Besides, to maintain a good relationship with provider over the vast term, it’s reasonable to invest some resources to encourage the supplier achieve the level of surgical operation required by LEGO. Through training and educating staff in Flextronics, LEGO can help Flextronics to build production capacity to meet the requirement of flexibility. Also, LEGO can put fibre swan personnel in milling machinery to monitor production railway line and sustain quality variation. And frequent communication most production progress, updating issue and feedback is essential for improving coordination and knowledge sharing.Building a sophisticated information system is of great help to improve supply chain flexibility and coordination, by conveying information seamlessly, it allows the supplier to get the visibility of sales and catalogue and adapt their own production to these information. This can eliminate the situation of overstock and out of stock. 4. What are the key considerations when outsourcing or offshoring production? Discuss them. To make a make versus buy decision, fellowship should first consider the total cost of outsourcing.This cost should allow in not only the quotation from supplier but also the cost of observe the relationship, cost of providing training, education and engineering support to the supplier and cost of dealing with heathen and operational difference. Outsourcing globally is also master to ethical and milieual violations. Buying conjunction should conduct a comprehensive investigating of the supplier’s production and think issues like child labor, below-minimum wage and galosh producti on. If the supplier violated any of these laws, it is usually the buying company that became the target of friendly media and NPOs.A company’s reputation can be greatly damaged collectable to the noncompliant supplier. If a buying company outsourcing its production, it may become over-dependent on supplier for production and finally lose the production ability, which may turn out to be a great disadvantage. Company should locate smartly which part of its business is fascinate for outsourcing. Besides, company should consider the variable lead time which is often impossible to control with outsourcing on global scale. Above all, it’s critical for buying company to make a comprehensive cost-benefit analysis to decide in-house production or outsourcing. . Describ the competitive environment of the industry and how it relates to LEGO’s choices? A issuing of toy companies had built production plants in China, statistic show that 90 percent of the solid groundâ €™s toys are made in China. This means many of LEGO’s competitors consume price advantages over LEGO and it’s stiff for LEGO to survive in some create countries, which have relatively low get power. That lead LEGO make the decision to outsource its production to Flextronics who have production line in low cost countries.Competitors in toy markets are also get by for decreasing lead time which is critical in the eyes of customers. Customers usually tire’t like to wait for long to receive the order, especially during the time before holidays when toys are brought as gifts for their kids. Variation in lead time often soused customers and triggered in market share losing. Since it’s difficult to control the lead time concerning to LEGO’s complex products with Flextronics’ stable and govern production and operation style, LEGO decided to source back its production task.\r\n'