LEGO Consolidating Distribution (A) Harvard Case Solution & Analysis

IMD-6-0315 © 2008
Cordon, Carlos; Seifert, Ralf W.; Wellian, Edwin

He is halfway implementing a bold plan: close down all existing local and regional logistics businesses and combine all logistics and distribution activities from a central place in the Czech Republic, handled by an outside associate - DHL. Outsourcing logistics services on a scale like this – in East Europe – had never been done before by any other European company. The stakes are high as LEGO, struggling for survival, is also trying to reinvent itself. Must Nielsen push in the course of his plan – in which he steadfastly believes - or give in to the mounting pressure from house and relax his attempts? Learning objectives: We notice two new partners, both active on new, unexplored territory in the early phases of their partnership.

LEGO Consolidating Distribution (A) Case Study Solution

The relationship is strained; while there's a general doubt in each others ability and motivation both businesses are under tremendous pressure from their corporate headquarters to show results. In this first instance we learn that establishing a relationship that is based only on a contractual agreement can be a painful experience. Cost accounting in general and cost drivers in specific are mentioned to illustrate their significance in crucial decision making. This case was the 2009 EFMD prize winner in the category “Supply Chain Management” and the 2011 ECCH prize winner (Production and Operations Management).

Subjects: Distribution/logistics consolidation/transformation; Outsourcing; Costs of complexity; Turnaround burning platform; Change Management; Partnership; Shared values
Settings: Europe; Asia; Toys; 6,000 employees; 2008 turnover €1.2 billion; 2003-2008

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