Lego: Embracing Change by Combining BI with a Flexible Information System

INTRODUCTION

The LEGO Group is a privately held company based in Billund, Denmark. The company is still owned by the Kirk Kristiansen family who founded it in 1932.The LEGO Group is engaged in the development of children's creativity through playing and learning. Based on the world-famous LEGO® brick, the company today provides toys, experiences and teaching materials for children in

more than 130 countries. Our head office is in Billund, Denmark, but we have subsidiaries and branches throughout the world, and LEGO products are sold in more than 130 countries.

PROBLEM STATEMENT

 In 2003, The LEGO was facing tough competition from imitators and manufacturers toys. In an effort to reduce costs, The Group decided to initiate a gradual restructuring process that continues today.

In 2006, the company announced that a large part of its production would be outsourced to the electronics manufacturing service company Flextronics. The decision to outsource production came as direct consequences of an analysis of Lego’s total supply chain. So, in order to reduce labor costs, manually intensive processes were outsourced, keeping only the highly skilled workersin Billund.

Lego’s workforce was gradually reduced from 8300 employees in 2003 to approximately 4200 in 2010.

Additionally, production had to be relocated to places closer to its natural markets. As a consequence of all these changes, Lego transformed itself from a manufacturing firm to a market-oriented company that its capable of reacting fast to changing global demand.

Lego’s structuring process, coupled with double digit sales growth in the past few years, has led to the company’s expansion abroad and made its workforce more international. These changes presently supply chain and human resources challenges to the company. The supply chain had to to be reengineered to simplify production without reducing quality. Improved logistics planning allowed Lego to work more closely with retailers, suppliers, and the new outsourcing companies. Therefore, HR department also need play more role inside the company. So, in order to solve this solution, LOGO choose move to SAP business suite software.

SWOT Analysis
Strength	1.Incorporates educational features to develop key skills in young children 2. Strong brand name across the world in over 55 countries 3. Many places use cars from the Automoblox range to demonstrate modern car assembly techniques to children 4. Encourages goal oriented play and problem solving 5. Strong product portfolio 6. Lego based theme parks are extremely popular tourist destinations 7. The brand has also diversified into video games, TV and movies, merchandise etc 8. Top of the mind brand recall owing to TVCs and extensive advertising
Weakness	1. Imitation of products and brand name is a concern 2. Intense competition means high brand switching and also loss of market share to online games
Opportunity	1. Organize competitions in schools 2. Diversify more into other segments 3. More branding exercises to reach out to newer segments
Threats	1.Video games 2.Cartoon channels 3.Internet 4. Outdoor games 5. Other similar companies
Competition
Competitors	1.Automoblox 2.Meccano 3.VTech 4.Leapfrog

QUESTION

1.  1.    Explain the role of the database in SAP’s three-tier system

 SAP’s business suite is based on a flexible three-tier client-server architecture that can easily be adapted to the new Service-Oriented Architecture (SOA) available in the latest versions of the software. In the first tier, a client interface-a browser-type graphical user interface (GUI) running on either a laptop, desktop, or mobile device-submits users’ requests to the application serves. The applications servers send the processed requests to the database system-receive and process clients’ requests to the database system-the third tier-which consists of one or more relational databases. SAP’s business suite supports database from different vendors, including those offered by Oracle, Microsoft, MySQL, and others. The relational database contain the tables that store data on LEGO’s products, daily operations, the supply chain, and thousands of employees. Managers can easily use the SAP query tool to obtain reports from the databases, because it does not require any technical skill. Additionally, the distributed architecture enables authorized personnel to have direct access to the database system from the company’s various locations, including those in Europe, North America, and Asia.

 2.  Explain why distributed architectures are flexible.

Distribute architectures are flexible because they adapting company operations to these  changes required a flexible and robust IT infrastructure with business intelligence capabilities that could help management perform better forecasting and planning. As part of the solution, LEGO chose to move to SAP business suite software. SAP AG, a German company that specializes in enterprise software solutions, is one of the leading software companies in the world. SAP’s software products include a variety of applications designed to efficiently support all of a company’s essential functions and operations. LEGO chose to implement SAP’s Supply Chain Management (SCM), Product Lifecycle Management (PLM), and Enterprise Resources Planning (ERP) modules.

3: Identify some of the business intelligence features included in SAP’s business software suite.

 SAP’s Supply Chain Management(SCM) included features such as supply chain   monitoring and analysis as well as forecasting, planning and inventory optimization. In SAP’s Product Life-cycle Management(PLM) module enables managers to optimize development processes and systems. SAP’s Enterprise Resources Planning(ERP) modules includes among another applications, the Human Capital Management(HCM) application for personnel administration and development.

SAP’s business suite is based on a flexible three tier client-server architecture than can be easily adopted to the new Service-Oriented Architecture(SOA) available in the latest version of the software. The first tier, a client interface which a browser type running on either a laptop, desktop or mobile device. The second tier is application servers that receive and process client’s requests. In the third tier, it is consists of one or more relational database.

SAP’s business suite supports database from different vendors, including those offered by Oracle, Microsoft, MySQL and others.

 4. What are the main advantages and disadvantages of having multiple database in a distributed architecture? Explain.

Advantages	Disadvantages
Mutiple database contains the tables that store data on products, daily operation, supply chain and thousand of employees.	The additional overhead of these transactions can be a performance penalty when the total amount of data in the network is small. Users also see slower performance when accessing user data that is not local.
Managers can easily use the SAP query tool to obtain reports from the database because it does not require any technical skill.	Increased the use of database space. E very table must exist in every database. When the number of tables is very large, the amount of space used this way can be significant. Administrators must use database storage parameters to size tables and reduce database space consumption.
Distributed architecture enables authorized personnel to have direct access to database system fronm the company’s various locations including in Europe, North America and Asia	Administrators must keep the schemas of all databases synchronized and ensure that the network is configured to take optimal advantage of the distributed-database environment in terms of availability and performance. Although database backups are more flexible in a distributed-database environment, multiple databases add complexity to the backup process.