I am challenging myself not to make a refence to the “Everything is Awesome” song from the Lego movie. We’ll see if I can make it through the the entire day’s blog posts without referring to it.
On our penultimate day, we had just one site visit, but it was a big one. We visited Lego. (The same rule applies as with IKEA. If you don’t know who Lego is and what they do, your license to read this blog is hereby revoked. Go find a kid and ask them.)
Anyway, our visit to Lego began with a tour of their production facility in Billund, Denmark. Lego was founded in Billund during the Depression and has been located here ever since. (Lego is 3rd generation family owned, which probably has something to do with their ties to the local community Today, their facility in Billund only does molding of pieces (it used to do packaging as well) But saying the facility only does modling, while accurate, gives a bit of a misleading impression. The facility in Billund has 760 injection molding machines running 24/7 for 361 production days a year production 4.5 million Lego bricks per hour. They use 80-100 tons of plastic (mostly ABS plastic but a few other types for specialized parts)
What was interesting about Lego was that technically there was nothing in the production facility we haven’t seen already on this tour, Lego had so many of the elements combined and on such a scale it was almost as if we were seeing them for the first time.
- Highly automated production: Check. Lego typically has two employees to monitor 64 injection molding machines, which are fed raw materials (granulized plastic resin and dyes) through feeder lines.
- Robotic delivery of materials: Check. The typical Lego brick is never touched by a human in any way during production. When a molding machine fills a bin with bricks, it signals a delivery robot to automatically take the bin and feed in into the injection ingestion system.
- Lights Out Automated Inventory storage: Check. The Lego facility we visited only had inventory ranks maybe 50 feet tall. But the new facility Lego is building in China will have inventory ranks 37 meters high (a little over 100 ft) Their inventory system was controlled with LabView. I know some developers that would kill to see the source code for that. Heck, I’d love to see it and I haven’t used LabView in close to 20 years.
- Lean Systems/Continuous Improvement Process: Check. Lego has daily huddle meetings, one of which we walked by. It was in English, but unfortunately we didn’t get to stop and listen in on it.
One other thing that was interesting about Lego was the efforts they put into reducing their waste steam. The plastic runners (extra plastic used in the mold to connect each individual brick in the mold) are ground back up and fed back into the supply stream for that molder, resulting in Lego recycling 99.4% of their waste plastic.
After the factory tour, where we got a cool “I was here” Lego brick, we headed over to Lego’s headquarters for a pair of presentations about Lego.
The first presentation had a corporate overview and a detailed discussion about Lego and their values. First and foremost of those values is quality. And they really mean it. During one of the breaks, our host showed me a few malformed bricks. I mentioned that some manfacturers such as Jelly Belly actually sell their factory rejects in special packaging as ‘belly flops’. and asked if Lego had ever considered something like that. Short answer: No. Long answer: Absolutely not, as selling rejects, even clearly sold as such, would undermine the quality of Lego’s brand.
Our host had a couple of exercises for us, both involving Lego’s naturally. The first was to give each person a small six piece Lego kit without instructions and instructed us to create a duck. We were only given a minute or so and all 28 of us produced a different style of duck, despite there only being six Lego bricks to work with. (Some of the ducks were, shall we say, arather abstract. But the point of how creative you can be with Lego bricks was made.) The second exercise was more straight-forward, assembling a small truck from a kit.
Hey, I’d like to see you come up with a better duck in a minute
After a lunch break, we settled in for a presentation on risk management and frank discussion of some of the challenges Lego faced in the 2000s. (and today) The presented was very lkely and walked us through Porter’s four forces as they applied to Lego.
Lego has many strengths as a brand but they are in a very difficult industry with a product that has very short lifespans and is easy to duplicate. How easy to duplicate? The counterfiet package on the right in the picture below started appearing on shelves five weeks after the genuine Lego version was released.
A couple of other points of note was the intense seasonalty of Lego’s demand. 50% of their sales occur in the 10 weeks leading up to Christmas and 20% in the first three weeks in December. That makes demand forecasting, in an industry dictated by the fickle tastes of kids, crucial. But Lego has an ace up its sleeve. By delaying packaging as late as possible, and locating manufacturing facilities near the markets they serve, Lego can get product from factory floor to store shelves in as little as four days. This allows them tremendous flexibility in responding to changing demand
The presenter talked in detail about the seven primary processes Lego uses to run their operations. I will spare you listing all seven, but the key takeaway for me was this line: “Lego is run by processes not people.” I think that’s a great question to ask about our own companies. There were many additional insights (like how Lego creates a value proposition for retailers without lowering price) but the processes vs. people is a good thought to end on.
Lego was kind enough to let us keep the duck and truck Lego sets as well as a parting gift of another set. But while the corporate swag was appreciated, the real gift was the opportunity to see Lego’s production up close and hear an unvarished account of their strengths and weaknesses.
With that, I’ll close out this post as I need to get ready for our Carlsberg presentation today. At some pont, I’l add a supplimental post about our visit to Legoland.