MT460 – LEGO Group: An Outsourcing Journey Case Study Analysis

Company Name: LEGO GROUP

Topic of the Week: Implementation

Synopsis of the Situation

LEGO Group was founded in 1932 by a carpenter known as Ole Kirk Christiansen. Initially, LEGO Group produced wooden bricks but it later advanced into producing toys. In 2004, LEGO Group faced a serious internal crisis that almost made it bankrupt. The company sales dropped, and its manufacturing and inventory costs went so high that it could not control. All these problems occurred as a result of low profits generated from production, lack of effective compliance procurement procedures, and improper diversification. The company decided to shift to outsourcing which resulted into even more severe impacts than before such as piling of inventories, difficulty in supply chain management, and huge financial losses. There is therefore an urgent need of creating functional tactics that can help LEGO Group implement its outsourcing proposition in order to move forward (Pearce and Robinson, 2013).

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Alternative Solutions

LEGO group should conduct more research to find out how it can align outsourcing with business goals. In addition, LEGO Group should analyze its operations to gain a proper understanding of its business processes because this knowledge is important in assisting the company manage change of market demand. Furthermore, LEGO Group should document all its work processes in order to establish optimum and effective network of supply chain that can enable it foster outsourcing collaboration.

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Selected Solution to the Problem

            LEGO Group should consider documenting all its supply chain processes in order to have clear communication lines and ensure consistency in flow of inventory (Pearce and Robinson, 2013).

Implementation

            LEGO Group should develop a plan for training and education of all staff on the advantages and methods of reducing inventory wastage and duplicate information. This will help the company to realize improvements in sales and operation planning.

Recommendations and Conclusion

            LEGO Group needs to understand that outsourcing is not always the best option for reducing complexity and cutting cost. In order to solve the problems that LEGO Group is currently facing, it is recommended that the company standardizes all aspects of its products including inventory management, manufacturing, and distribution.

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