?All 19 billion ofthe Lego parts made each year are destined to pass through a single point. That point is limy in the Czech Republic, and the place – DHL Exel Supply Chain’s one million sq ft global distribution centre – the equivalent of ten football pitches. From here the toy maker serves 14,000 customers worldwide, spanning 135 countries.
DHL runs the centre, which doubles up as its Czech Republic headquarters, heading up warehouse and distribution operations, on a five-year rolling contract.
Lego took the decision to centralise its distribution operations in 2005. Prior to that, all its warehouses were run by different suppliers or by Lego itself, with a different warehouse management system for each. By centralising its logistics services in the Iirny distribution centre, located six miles outside of Prague, and handing DHL the key, the toy maker has transformed its supply chain, and shed 25 per cent off its operational costs.
Its progress was recognised last year when it won the European Supply Chain Excellence award for logistics and fulfilment. All stock from the company’s former seven distribution centres across Europe has now been transferred to the DHL site. By consolidating all distribution, inventory is now easier to track and stock shortages have been reduced. Its carbon footprint has also dropped by 25 per cent.
Being the epicentre for Lego’s global distribution, the centre channels 2,750 ditlerent products, handling 17,000 cartons ?each day. DUling peaks this goes up to 38,000 – a 65 per cent increase. Last year the throughput reached one million pallets. Stock him is approximately 5.6 turns per year – a stark contrast to the three turns it was seeing five years ago.
Operations at the site include inbound and outbound logistics, storage and value-added services such as assortment packing and customisation. Plans are now in motion to combine the pick and pack area so as to boost picking and truck loading efficiency. Egil Meller Nielsen, Lego’s vice president, global distribution logistics, says that they are now looking closely at voice-directed picking systems.
DHL deals with an average of95 truck movements per day, which spikes to 158 during peak periods. It runs a tight ship, sequencing inbound logistics activities to the second. To achieve this it collaborates closely with the carriers. Carriers log a booking time via a web-based transport management tool. They must then ensure earn truck is in place, ready for loading, one hour before the allotted time.
Each truck must be loaded and dispatched within a twohour window – a minute late and the order is nagged as a failure on the system.
The distribution centre’s storage capacity is up to 85,000 pallets, and has around 100 pieces of materials handling equipment to ship them around. It features three different types of racking: drive-in, racks, and pick locations.
The picking systems are surprisingly simple considering the scope of the building. Nielsen says they have decided not to invest in automated systems as it would add unnecessary complexity to the layout.
Christmas sales account for 60 per cent of Lego’s yearly income, and the 425-strong workforce doubles accordingly. This makes the building’s flexibility all the more vital – in June stock starts flooding in so as to prepare for the Christmas rush, and extra storage space is allocated. Then when it comes to shipping product out, the layout is readjusted to allow for more handling area.
“We want operations to be as flexible as possible, and to do this the building must be easy to reconfigure,” says Nielsen.
In January the distribution centre’s stock levels were at 58 per cent. “This is a good sign – it means we had a good Christmas,” he says.