is you never know which until the last second. Risk management is child’s play in the United States compared to
what it’s like on the [Indian] subcontinent. Make it your
organization’s mission to be prepared.
QIn general, what’s the biggest challenge that supply chain professionals face today?
A Perhaps the biggest challenge today is that we spend so much time squeezing blood out of a rock—trying to
run and optimize the old system—that we don’t find the
time to think about what I like to call “extreme innovation.”
Too much innovation today is done out of necessity and
not by choice. If we’re going to continue to drive costs out
properly and deliver more value to the planet [and our
companies], we need more really new ideas that originate
from logistics professionals. We can’t let the government,
Wall Street, and the Bay Area techies create the change
agenda for us.
Egil Møller Nielsen
IN JANUARY 2004, THE LEGO GROUP
recruited Egil Møller Nielsen from Ecco Shoes
to develop a turnaround strategy for its
European logistics and distribution operations. Nielsen oversaw the toymaker’s initiative
to consolidate most of its Europe-based distribution centers into a single facility in the Czech
Republic to serve customers in all of Europe
and Asia. Lego was the first major company to
move its regional distribution operations into
that former Eastern Bloc country (see “Lego’s
game-changing move,” March 2010, www.dcvelocity.com).
Nielsen’s strategy was so successful that it’s been used as a
case study in M.B.A. courses. His efforts eventually earned
him a promotion to group vice president of Lego’s global
logistics operation.
QLego has worked hard to transform its supply chain over the past few years. What’s been the toughest
challenge in that regard?
A The biggest challenge was the consolidation and out- sourcing of 10 European logistics operations into a
single facility located in the Czech Republic that’s managed
by DHL. The visible result of that effort is the 1 million-square-foot facility that now services 130 countries world-wide. What’s not so visible are all the changes and difficult
decisions we had to make in order to make it all happen.
I can talk for hours about the changes we have made in
connection to this decision. But just to mention a few, we
made changes in organization (competencies and layoffs),
sold off old Lego operations and buildings, changed the way
we sell and process orders, and adopted new IT systems. I
will not lie if I say this had the greatest impact on most people within the world of Lego. When we did a stakeholder
analysis, it was difficult to find many stakeholders who
weren’t significantly impacted by this decision.
my knowledge, we are still the only company
in the world that has consolidated all of its
logistics operations in the Czech Republic or
another former Eastern Bloc country, serving all of its customers on the European continent directly from that site.
We ended up with a regional supply
model, where our products bound for
Europe are manufactured and supplied from
locations in the Czech Republic, Hungary,
and Denmark, and our markets in the
Overall, where we have the big volumes, we have a local
supply model with a simple and agile logistics operation
and a very short replenishment lead time. In our model,
there is hardly any complexity and no double handling. It’s
very flexible in terms of capacities and costs.
QWhat’s the one piece of advice you would offer a U.S. supply chain manager looking to set up a distribution
center in the Czech Republic?
A That you must have the right skills and competencies on board, and you must possess much confidence and
experience. It is hard work and requires much on-site time
regardless of whether you are outsourcing or not. My philosophy, after having spent the past six years outsourcing all
my global logistics operations, is that you can only outsource your body, not your brain.
QDo you see other European companies adopting a similar approach?
A I do. I expected that other companies would follow suit pretty quickly, but so far we haven’t seen that. To
QWhat advice would you offer a young person consid- ering a career in logistics or supply chain?
A Go ahead and just do it. It is one of the few areas where a person possessing the same skills can be in either a
selling or procurement role. Furthermore, you get in touch
with the global and local aspects, including various cultures
and ways of working. Lastly, as long as there is trade, there
will be a need for professional logistics and supply chain people. So from a high-level perspective, there is always a job.
