How LEGO Builds Resiliency into its Operations
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Demand for LEGO increased dramatically during COVID as locked down families sought new ways to occupy their time.
LEGO was ready to meet that surging customer demand, despite ongoing supply chain challenges and the rising costs of materials, freight and energy. How did they do it?
In this interview, Jesper Toubøl, Vice President Operations - Moulding Production at the LEGO Group, discusses how LEGO has built resilient operations that can effectively deal with volatility, how the toy maker leverages robots and smart technology, and the changing role of the human worker.
Diana Davis, IX Network: For the last two years we’ve been living in a world where the seemingly unlikely – global pandemics and European war – have been increasingly possible. That’s on top of the ever-present risk of more extreme weather events and supply chain disruption. How do you mitigate the impact on your operation of this kind of volatility?
Jesper Toubøl, LEGO Group: The toy market industry grew more rapidly than it had done for the last two decades. Prior to Covid it was actually a declining market. But during Covid parents were at home with their children and wanted to keep them entertained with valuable play time. LEGO Group is a great social activity for parents and children. We had tremendous growth of 50% during this period (2020 and 2021).
That has meant that there was a lot of pressure on our supply chain. We had some advantages in our operating model. We source regionally so that means we had much more resilience in our supply chain. If we closed down a factory in America we could still supply from Europe, for example.
We learned a lot through testing our operating model throughout the pandemic. Of course, we faced a lot of supply chain issues and increasing freight, material, and energy costs.
It's still a challenge and I would not say that we are totally comfortable with current events, but the resilience in our operating model has been useful during this period.
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Diana Davis, IX Network: With this tremendous period of growth and uncertainty, what kind of changes did you have to make?
Jesper Toubøl, LEGO Group: We have a huge plant in Monterrey - just south of the Mexican border - that basically supplied most of the Americas. That includes both South and North America, which is, by far, LEGO’s biggest market.
When they closed down for almost two months, we were able to change production to Europe and start shipping products from Europe to the US.
We also needed to source new material because the chemicals industry in US was hit by extremely cold weather in the winter of 2020. That meant that our suppliers could not produce the type of plastic that we wanted. We had to quickly onboard a new supplier otherwise we would have forced been to reduce production our factories.
Diana Davis, IX Network: I’ve read that at your factory in Billund, Denmark LEGO can make up to 1140 pieces per second or 36 billion per year. How are robots, smart sensors and precise machines helping you do that?
Jesper Toubøl, LEGO Group: It’s even more than that; last year I produced 54.7 billion Lego bricks at the Billund factory.
Denmark is a high-cost country. We are in the northern part of Europe and the cost structure here is high. We have a highly automated factory for all logistics. The transport of finished Lego products and material is automated. That means that robots pick up the boxes and put new boxes in on the conveyer belts.
We are also testing a new approach to maintenance; we are planning to do pilots with acoustic sensors to see if we can do smart maintenance instead of counters and regular maintenance. We are trying to be much more event driven.
Diana Davis, IX Network: One of the challenges I often hear with automation is that it becomes difficult to change the operations. How do you kind of balance that that need to remain agile to deal with all the ambiguity and uncertainty in the world while maintaining high levels of automation?
Jesper Toubøl, LEGO Group: That’s a very relevant question. LEGO Group is very strict about working on platforms. That means that when we do add new products, we try to fit them into our current production platforms. We have focus on design for manufacturing, in other words.
People in marketing and product development may, at times, find it restrictive to have to fit design to our current equipment because that constrains their innovation. It forces your innovative people to really think about how the product will be made.
But there are many operational advantages to this approach. Our global sites are all the same. Our site in Mexico, our site in Hungary, and our site in Denmark have the same equipment, the same material handling, the same everything.
This increases our resilience because we can quickly change production to an identical site in another part of the world.
Diana Davis, IX Network: Taking it back to the human worker side of it. You’re going to be speaking at our Connected Manufacturing Worker event. How has the role of your human workers evolved to support these smart automated factory operations?
Jesper Toubøl, LEGO Group: We have implemented smart devices, which we call ‘factory devices’. We see these devices not as an IT solution but, rather, as part of our whole agile journey. That means that the ideas for improvements that we've implemented have come from the floor.
As an example, we just had a workshop on improving one process. I ended up with 36 ideas from my team. There are a lot of potential improvements we can find but it requires you to invest in your people. You need to invest in your people and then they come with many great ideas.
Diana Davis, IX Network: What kind of skills and capabilities do you see needing in the future to support your operations?
Jesper Toubøl, LEGO Group: We have both skilled and non-skilled operators. Some left school without graduating. We have developed a system where our operators learn, math, English and Danish so that they get to a level where they able to communicate effectively.
We give our workers basic IT skills. It’s like an IT “driver’s license” where workers understand how to use IT systems effectively.
Our smart devices is a consumer product bought into the shop flow. The smart devices producers have been working intensively on making products super intuitive, so by using their products you don't have the barriers to implementation that you often have if you buy a traditional industry device.
If you use industrial devices that have been developed by engineers, they tend to be more difficult for workers to learn. By contrast, with consumer products the barrier to entry is lower. Workers use their phones at home and we use the same logic to build our apps on the phone. We, of course, have robust cyber protection for the devices we use but I think that is one of the tricks is to take a standard product and build on it.
Interested in Learning More?
Jesper Toubøl will be speaking about future factory operations at our Connected Manufacturing Worker summit taking place this June in London, England. Join over 200 industry leaders to learn how to build a connected workforce to improve resilience, agility and growth in a recovering economy.
Find out more here.
