| |
One minor problem with all this...If TLG were to decide to do this, then
they would end up putting a sizeable percentage of their machinery to work
on the production and filling of customer orders. This machinery would
therefore not be available to put together sets for sale in stores or
through S@H. Now having heard you say that their machinery must be working
more-or-less constantly in order to fill the needs of the sets they produce
for sale in stores, you seem to be advocating that TLG cut back on or stop
production of these sets. Unfortunately if TLG were to do something like
that instead of relying on store sales, with the bulk ordering as a minor
side-line, they'd be shooting themselves in the foot. TLG is dependant on
store sales for the following reasons:
1) If TLG didn't have store sales, how many children would buy lego/how many
parents would buy lego for their children
2) If children aren't exposed to lego, where are TLG's future sales to come
from
3) How, if TLG don't have sets available in stores, are TLG to become the
most popular toy by 2005?
I think that the amount TLG currently makes from store sales is more than
most of us probably realize, and that although they would be cutting out the
middle-man by doing bulk orders/S@H and hence getting a greater income from
what they produce, they would also lose out on free advertising of their
product [store shelves, shop sale catalogues, etc] which would impact on the
sales to children, and would eventually cause the market for lego to die out
completely. after all, how would people find out about getting lego?
I believe that the way TLG is currently organised is probably the best for
them, as it allows them a good sales base [which will increase when LD
becomes available in the many markets that there is little in the way of a
S@H service.[1]] and promotes the hobby through the prominant packaging and
store displays. Until the entire world has access to the internet and LD
[well, at least 80% of homes having net access] it would be [in my opinion]
a bad idea for TLG to remove the emphasis from store sales.[but even then,
there should still be store sales.]
[1] Why is it that although americans have the best in lego, they are always
complaining about it?
You've had S@H for how long, you get more exclusive sets than any country,
you've got your own lego factory and park, and you've even got LD. Instead
of complaining about what you want and don't have, why don't you spare a
thought for all the people who don't have these things, may never have
access to these things, and who are getting sick of all the 'we want this'
and 'we want that' attitude you seem to take. You'd be a lot better off if
you'd just be content with what you've got, instead of trying to force
others to cater to your every whim. Leave the complaining to those in
markets that TLG have been neglecting, or even help by turning your emphasis
from 'we want ...' to 'why can't you let people in ... have access to ...'.
Opening the LD and S@H areas to the rest of the world may even help you to
get what you want after all, as there'd be a much larger customer base than
just the USA/Canada.
Benjamin Whytcross
BWhytcro@PacificAccess.com.au
Ph: (03) 9856 5282
Directory Technology Pty Ltd
1/436 Elgar Road,
Box Hill, 3128
Growing older is compulsory..Growing up isn't :-)
> -----Original Message-----
> From: sinclair@cadvision.com [mailto:sinclair@cadvision.com]
> Sent: Thursday, July 06, 2000 2:36 PM
> To: lugnet.lego.direct@lugnet.com; lugnet.general@lugnet.com
> Subject: Bulk Sales in the 21st Century
>
>
> HOW TO DO BULK SALES IN THE 21st CENTURY
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>
> Be prepared, this is long... I hope you find it is worth reading.
>
>
> I think it is time we stopped guessing what The LEGO Group's real
> costs are.
>
> None of us know; period.
>
> Some people with actual TLC experience have given us some incite into
> the company and its manufacturing and operational practices. I'm
> actually very surprised that a book has not been researched and
> written about these practices. When a company, as well known as TLC
> reaches the pinnacle of success, everyone else wants a little incite
> into their strengths and weaknesses, and an explanation of how they
> got there.
>
> Has anyone conducted a thorough research job to see if some MBA hasn't
> actually written a thesis on TLC's business practices? There may
> actually be a few. Especially in Denmark.
>
> My company does not produce injection molded plastic parts, but I have
> worked as a draftsman for a window company that did vinyl and other
> plastic extrusions. Our department was tasked with the job of
> designing the molds. I had some experience on the production floor.
>
> Now that I'm on the management side of a manufacturing company, I now
> have experience in parts acquisition, machinery purchasing, assembly
> lines, warehousing, cost analysis, manufacturing, quality control, and
> a few dozen other related jobs that I now do.
>
>
> We have asked The Lego Company for bulk ordering. TLC has responded
> with its first attempts at bulk purchasing.
>
> I say attempt for one good reason. These test items on three pages of
> TLC's web site are a far cry from what I had envisioned. They are even
> a far cry from what I had expected, which wasn't very much.
>
> TLC's biggest problem is there size. They are a dinosaur, both in size
> and speed. They are so huge that product roll outs take a year, two,
> or longer from planning and inception to the time they reach store
> shelves.
>
> The LEGO Company is slowly adapting itself to the ever increasing pace
> of change in the retail market.
>
> I think they have made incredible improvements in the last couple
> years. It is obvious to me that change is coming, and things are on
> the way that will lead to a far better company with more direct
> connections to its customer base.
>
> My thoughts on production:
>
> How can anyone claim that 1200 piece tubs are a lost leader for TLC?
> Not a chance. Most of you have no idea what it costs to produce parts
> and products in vast quantities. I'm talking REALLY vast quantities.
> Nothing TLC does is on a small scale.
>
> One of the reasons it takes so long for product roll outs is the shear
> number of parts and sets being produced. It takes weeks and months
> for TLC to churn out the billions of pieces going into every set
> shipping this year. That takes planning, and I mean lots of it.
>
> The LEGO Company is a modern manufacturing firm that has been doing
> business for decades, has vast experience and expertise in the
> plastics business, and has invested huge sums in modern
> state-of-the-art production facilities.
>
> The LEGO Company would not be out sourcing anything. A multi-national
> firm of its size and calibre buys everything it needs to do the job
> itself, or contracts out tiny aspects of production when other firms
> can beat its own in-house operations in capability or price. This
> would be rare.
>
> Having complete control over the entire production of every part going
> into every set that they design, produce and ship to retail department
> stores offers them huge savings on fees to third party vendors.
>
> The LEGO Company even side steps the need for a third party
> distributor. All its sets are shipped directly from its own plants to
> the retailers directly, or the retailers distribution centers.
>
> TLC is more like Coca-Cola, than your typical manufacturer.
>
> Allow me to explain why...
>
> TLC is practically a commodity producer. They buy huge quantities of
> plastic pellets from the petroleum industry and then churn out
> billions of parts which they drop into sets, that get placed on the
> shelves of your local Toys-R-Us by LEGO's own staff in every major
> city around the world.
>
> That makes TLC comparable to Coke & Pepsi. Of course there are
> differences and so I'll address those.
>
> I would not be surprised if the manufacturer of TLC's injection
> molding machines was not a wholly owned, or partly owned subsidiary of
> TLC. If they don't, as president I'd be asking why. Why buy equipment
> from someone else when you can buy it from a subsidiary, who also
> sells the equipment to thousands of other companies making their own
> products that don't compete against TLC's.
>
> Parts storage and warehousing seems to be TLC's weakest point in its
> production operation.
>
> I would like to have a complete tour of Enfield to better understand
> exactly what they are doing.
>
> From discussions and comments posted by past employees it would seem
> that the following is correct.
>
> TLC has large numbers of injection molding machines in lines on the
> production floor. Above these machines will be some method of
> delivering the large volume of pellets used on a continuous 24 hour
> basis. This equipment isn't cheap, so I guarantee its operating at
> maximum capability as long as possible. Regular maintained shut downs
> will be scheduled, otherwise its clean and go. Finish a production run
> of x00,000 copies of a particular piece, and then on to another after
> the molds are changes and the machine is cleaned, flushed and
> restarted on the next piece.
>
> What happens next is less clear. Some maintain that all parts
> produced go into standard size boxes for warehousing and sorting into
> bags and sets at a later date. Others maintain that parts from
> different machines all end up together in one bag for inclusion is a
> set.
>
> Most likely it is a combination of both assembly line techniques. We
> have few details about the actual assembly line equipment being used
> by TLC. This is an important question. Can anyone provide details?
>
> I do know that TLC uses extremely accurate digital scales on assembly
> lines where it can, for counting parts. They will be automated to
> dump, redirect or change bags when the accurate count is reached.
>
> I do not know what types of counting machines are used by The LEGO
> Company. TLC must have machines that allow them do dump boxes of a
> single part into large hoppers by hand, or automatically, and then
> count out an exact number of elements through mechanical means or by
> weighing them.
>
> Dozens of such machines will be employed in a gang arrangement on a
> very long assembly line. Each machine will be fed from a hopper, or
> directly by an injection molding machine.
>
> Some sort of conveyor system will connect all these parts counters
> together. As each bag, or transport vehicle passes under each, the
> correct number of elements will be added. At the end of the line,
> each transport vehicle (think box) will dump its contents into a bag
> that's then sealed or the bag itself will get sealed if it was the
> assembly line transport vehicle.
>
> These bags then can follow one or two paths. They can be dumped into
> large holding bins for later inclusion in a set. Or they can be put
> directly into the retail boxes. These retail boxes follow one of two
> paths. Either they go into warehousing awaiting the production of the
> other bags within the set, or they have all bags added in there own
> little assembly line from more assembly lines described above and are
> then sealed immediately, then warehoused.
>
> How exactly each set is made, and how long it takes depends on the
> numbers of these assembly lines existing in one building.
>
> If you can cut out all warehousing steps you do so. If not, you reduce
> it to the shortest time and number of parts being stored. Every time
> you have to handle these parts, it costs money.
>
> The goal is to produce the sets as quickly as possible, so these can
> be warehoused, not the parts that go into them.
>
> TLC's operations will be highly computerized. Production staff will do
> massive leg work before production begins, to reduce warehousing, die
> changes, colour changes, etc. This is the key to reducing costs,
> expensive delays, and problems.
>
>
> The only reason TLC cannot produce and package elements in any colour
> and quantity is the shear number of injection and counting sorters
> needed so that every element can be made in every desired color
> continuously. That is the drawback of having a huge number of
> different elements and a large color palette. Then you need the space
> to house everything under one roof.
>
> In and ideal production environment, TLC would have the next best
> solution:
>
>
> If The LEGO Company chose to make internet purchasing and direct sales
> to the consumer a global strategy, thereby eliminating all middle men
> here is how you'd do it:
>
> You would design a web site that allowed the customer to browse the
> entire parts catalog. The web site would list the parts and colours
> currently being made, or going to be made in a certain period of time,
> say two weeks.
> .
> You'd take the customers order, and send it to the production line
> computers. Every bin on the transport conveyors running under the
> counting machines (being fed by the injectors directly or by hoppers)
> would be a customer order. In the case of really large orders, many
> bins might be one customer's order.
>
> These bins would move the entire length of the assembly line passing
> under every parts counter in the building. The computers would
> automatically tell each parts counter to count out the exact number of
> pieces of this elements if its in the order. As the transport bin
> passed under it, the parts would be added.
>
> After each bin travels the entire length of the floor, each order is
> complete. These orders get shuttled to the boxing line where the
> contents are bagged, boxed, ladled and shipped immediately.
>
> If you do not have enough parts counters for every single element in
> every color in production, you will have to warehouse some orders that
> are only partially complete. These transport bins will make a second
> trip, a third trip, an Nth trip down the assembly line after the parts
> counters are loaded with different elements or different colors.
>
> When the complete order is filled, they are bagged, boxed, ladled, and
> shipped.
>
> This is how The LEGO Company should fill Bulk Purchase orders. They
> could do it quickly, cheaply, and be able to lower production costs by
> vast percentages.
>
> When will TLC have this production capability? When they decide the
> bulk market is large enough to warrant the cost of setting up the
> assembly line and counters to handle the highest number of elements
> and colors at once.
>
> If they want to do it more cheaply, use a smaller number of machines,
> and just run the transport bins through the assembly line multiple
> times after hopper changes to new parts and colors.
>
> If The LEGO Company cannot see the advantages to the production line I
> have just outlined, then someone within The LEGO Company should be
> fired and replaced by someone who does.
>
> Brad, I hope you can see the obvious benefits to what I have outlined.
>
> Your facilities should be able to fill any customer order with any
> element in any quantity they desire. Some very diverse orders with
> many colors, would just take longer to fill. The customers can
> understand that inconvenience.
>
> The above production line can also be used to churn out transport bins
> that are then bagged and boxed for LEGO's own sets as well.
>
> You could utilize this assembly line for both purposes.
>
> Lastly, you should be able to make a huge profit selling those custom
> orders directly to customers across the globe, thereby eliminating all
> middle men.
>
> A percentage of those savings should then be pasted onto the customer.
>
> LEGO Consumers should see this. LEGO Consumers should demand it
> happen.
>
> I see nothing but a win/win situation if Brad can make it happen. I
> already know the market exists. TLC is just taking some time to see
> it, and some time to change their production capabilities.
>
>
> If this cannot be done, I would like a lengthy response outlining
> exactly why it can not be obtained.
>
> Is The LEGO Company really ready to enter the 21st century marketplace
> where customer satisfaction and direct sales are the norm?
>
> We will see.
>
>
> Ian Sinclair
> Transworld Distribution & Manufacturing
>
|
|
Message has 2 Replies:
 | | Re: Bulk Sales in the 21st Century
|
| On Thu, 6 Jul 2000 05:52:48 GMT, you wrote: Benjamin, either I didn't do a very good job on my initial post or you didn't read carefully enough. If you read my reply to Erik Olsen, you'll see that this reorganization of primary and secondary lines (...) (24 years ago, 6-Jul-00, to lugnet.lego.direct, lugnet.general)
| | | Re: Bulk Sales in the 21st Century
|
| (...) You need to re-read his premise - the lines would handle BOTH Bulk and sets. To whit: (...) And NZ had BETTER than an LD for years, yet noone let the secret out. (...) Want to back that up with details? The only real exclusives I currently (...) (24 years ago, 7-Jul-00, to lugnet.lego.direct, lugnet.general)
|
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