The Idea Dude


Friday, September 28, 2007

Lego rebuilt, brick by brick

I'm a huge Lego fan. The reason my son has a massive (no kidding, massive is understatement) collection, is probably my way of fueling my passion without feeling guilty about spending all that money over the years. Alas, he's outgrown it now, so I'll need to find another reason. It would be major travesty if they ever ceased to exist.

Lego has had it's share of problems in the last few years, having to compete with ever increasingly sophisticated toys, the high cost of carrying branded Lego kits like Star Wars and apparently a highly inefficient supply chain. Strategy+Business carries a highly interesting article on how they turned it around from a struggling toy icon to a path of profitability.

Interesting long tail facts include:
  • 200 major stores represented two thirds of their sales and the other third consisted of thousands of smaller stores
  • Just 30 products represented 80% of their revenue
  • 2/3 of the company's 1,500 SKUs were not longer manufactured

    We don't actually see the logistically nightmare that exists in launching major products like the PS/3, Wii, iPhone etc. To coordinate the supply chain, to make sure it hits all the stores on the same date with components from all over the world and assembled and packaged in various locations probably makes a interesting business case study.

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