Lego Distribution Strategy

Lego has been able to save money on its operational processes by changing its distribution plans. This is one of the most fascinating business strategies worth exploring in today’s climate. These strategies have to be checked well enough to create some nicer styles that are appropriate and ready for today’s business environment.

Much of this was done to keep costs down but it has also have an added bonus. It makes it easier for Lego products to become more accessible to more places. These include some sites that have the Lego branding on them. Much of the savings that Lego has gotten for its business needs have particularly come from how distribution and warehouse controls have been heavily simplified to allow the business to do more with whatever it wants.

Sticking With the Czech Republic

Asia has been a popular market for all sorts of retailers but the Czech Republic has been Lego’s focus for getting into the continent. This is primarily because of the country’s proximity based on where it is in Europe and how close it is to Asia.

In 2004, Lego had to cut about 20% off of its distribution and logistics costs. Lego chose to consolidate a large portion of its European warehouses and manufacturing spaces and move it all into one large warehouse and distribution center in the Czech Republic. The goal was to target not only Europe but also Asia and even the Middle East when the location of the country is considered.

This proved to be a massive success for Lego. The company attained a 21% profit margin in 2008 and saw a jump in annual revenue to about $1.8 billion US.

Focusing on Third-Party Distribution

Lego also saw that by shifting its distribution processes to a third party, it would be easier for Lego to save money. This strategy would allow Lego to have more time for other functions. This was especially important as a massive amount of distribution functions take place in the months of September to December due to the rather seasonal nature of Lego sales. By getting rid of its own original distribution site and replacing it with controls from DHL Exel Supply Chain, Lego trimmed costs.

Simplify Transportation

Transportation costs had to be adjusted just as well to ensure that the cost of operating the business would be a little easier to manage. Transportation costs were adjusted by removing some transportation providers.

By simplifying its European distribution to one location, Lego was able to go from having 55 transportation providers to just ten that would fit in both Europe and Asia. Costs are trimmed as a result because there is less of a need to spend a massive amount of money on hiring more people to ship items in and around several spaces.

The transportation costs that come with getting different products ready for sale have proven to be more expensive over time thanks to added fuel costs. The decision to reduce the number of transportation providers and routes have certainly helped to enhance the overall process associated with keeping costs down.

Official Lego Stores Are Very Popular

The reduced cost of distributing items has particularly helped but there has been a real need for Lego to keep its retail locations in check. This is where some changes had to be made to ensure that stores would sell more as needed.

Lego has especially made the distribution process easier through the use of Lego-branded stores. Lego-branded stores can be found throughout the world in a variety of shopping malls with a majority being found in the United States, United Kingdom, Germany and Canada.

These branded stores have become popular for offering practically every Lego product around while also making it easier for people to learn about Lego’s newest products. What makes this so important is that the business is able to not only sell its wares but also keep shipping costs down because it is easier for the business to sell products.

Much of this came particularly from the need to expand sales to separate spaces that are different from what’s open elsewhere. The problem that Lego once had with distributing its products is that about a couple dozen larger retailers had about two-thirds of the sales that Lego had in the United States and elsewhere while hundreds of smaller retailers were unsuccessful in getting options.

By reducing the total number of vendors, Lego is not only saving money on transportation and shipping costs but is also getting its products into places where people will be more committed to selling these products. The development of Lego-branded stores has only facilitated the process of selling more products with care.

Distribution has certainly been an essential consideration for consumer goods and Lego has use some strong business strategies to make sales easier to facilitate. This includes working with both traditional sales and with adjusting different terms for how different shipments are to be