together developed a Web-based transportation management system. The software is used to tender loads to carriers, optimize loads, and route shipments, taking into
account such factors as the aforementioned holidays to
ensure that Lego meets its customers’ delivery requirements. Lego and DHL decided to build their own solution
after a careful review of existing software packages. “We
couldn’t find any solution that provided the things we
wanted,” explains Møller Nielsen. “We wanted one platform where three or four different parties could access it in
real time.”
The challenge of knowledge transfer
Transportation wasn’t the only issue that Lego confronted
when consolidating its distribution operations in the Czech
Republic. The relocation meant that the toymaker would
need to hire a large number of qualified workers for the new
DC. That proved more difficult than expected. “We couldn’t find people who knew how to drive a forklift in a complex operation,” Møller Nielsen says.
Lego and DHL worked together to recruit and train some
400 year-round employees. (In the peak selling season, the
labor force climbs to 900 workers.) The goal of the training
was to educate the Czech employees, who had little distribution experience, on how Lego managed its worldwide
To collect that knowledge and transfer it to the Czech
workers, Lego began to document the steps its existing dis-
tribution operations would normally take to meet sales
commitments to customers. In many cases, that required
the sales staff to describe in detail the obligations included
in service-level agreements. “We said to the sales people, if
you don’t describe it, you won’t get it,” Møller Nielsen
recalls. “If it is a campaign for a customer and we need to do
special labeling, we need to describe it.”
The process-mapping exercise had an unexpected side
benefit. Lego discovered that it was providing customers
with additional services that were not only expensive but
oftentimes unnecessary. For instance, the toymaker found
that it was not achieving complete cube utilization of truck
shipments because some customers wanted special-sized
pallets that hindered efficient stacking. Some customers
had even requested that only one stock-keeping unit be
placed on each pallet, although that meant shipping partial
pallet loads. “A lot of things came to the surface,” Møller
Nielsen says. “A lot of truckloads were only 50-percent uti-
lized because of [these] agreements.” Thanks to those dis-
coveries, Lego was able to change some of the terms of its
sales agreements to eliminate inefficient handling and dis-
tribution practices.
