LEGOs Expectations from Flextronics and Outcome Essay

LEGOs Expectations from Flextronics and Outcome - Essay Example This essay declares that LEGO wanted to outsource its production to a famous Singaporean electronics manufacturing company Flextronics. So in the year 2006 LEGO finalized the contract with Flextronics for producing the major parts of its toys. The idea was considered brilliant because the prices were locked for an extended period of time, so this would save the company from the risks of product price fluctuations. Flextronics was handed over the production sites of LEGO for production purposes. The phases started from 2004 to 2006, and throughout this phase the company was making efforts to reduce their production capacity to about 20 percent. They were aiming at keeping a target of 80/20 percent for outsourcing their production functions. This paper stresses that LEGO had created a complex framework for outsourcing external providers. This was also a reason why LEGO faced issues while working with Flextronics. LEGO was going through extreme transition, so it can be said that it became problematic for them to delegate authority and control their global network of production. Further, complexity occurred regarding the flawless transmission of production knowledge. LEGO and Flextronics have different organization structure. Though LEGO outsourced Flextronics, but it could not match its complex systems with that of Flextronics. LEGO was a manufacturing company. It manufactured toys for children. ... Flextronics was an electronic hoods manufacturing company, in which plastic plays an important role. This was the reason behind Flextronics’s interest to move for a long-tem relationship with LEGO. LEGO too found Flextronics to be professional and systematic to work with. However, their collaboration did not last long because of several issues that developed during their three years journey. LEGO’s goal was to optimize their global supply chain by outsourcing their production system to Flextronics. Similarly, Flextronics wanted to utilize the expertise of LEGO in plastics. It was found that LEGO was not satisfied with the quality of facilities provided by Flextronics. LEGO had created a complex framework for outsourcing external providers. This was also a reason why LEGO faced issues while working with Flextronics. LEGO was going through extreme transition, so it can be said that it became problematic for them to delegate authority and control their global network of pr oduction. Further, complexity occurred regarding the flawless transmission of production knowledge. LEGO and Flextronics have different organization structure. Though LEGO outsourced Flextronics, but it could not match its complex systems with that of Flextronics. On the other hand the company who was outsourced would be working according to its own process and framework. So problems of disagreement and misalignment were the result of what the outcome was (LEGO, 2006). Key Challenges in Maintaining a Relationship LEGO was a manufacturing company. It manufactured toys for children. The focus of the company was mainly on production and management of the supply chain. Never did the company feel the need of out sourcing or documentation before it was