The LEGO Story and PFS

LEGO® brand products are beloved by millions of children all over the world. As the world’s 6th largest toy manufacturer, LEGO Group sells their products in more than 130 countries. In 1999, LEGO toys were named the Toy of the Century by FORTUNE magazine.

In 2004, LEGO Group was struggling as a company and was in need of change. Debt had reached over $1 billion and they saw sales fall over 40%. They hired a new CEO, Jørgen Vig Knudsdorp, to take over global LEGO operations. Jørgen turned focus back on the LEGO brick and their core competency, making great LEGO sets for all ages. He relocated manufacturing and scaled down their product line. Part of his strategy was to leverage outsourcing as a means to reduce costs and create a more variable cost structure; all while keeping or increasing the quality of their products to the customer.

In 2006, they began searching for a specialty order fulfillment partner to support their online business. They sought a single partner that could effectively integrate with their online channel and respond to dramatic seasonal demand spikes during the holiday peak while also taking advantage of a variable cost model. After an extensive evaluation, they chose PFS as their direct-to-consumer order fulfillment partner.

PFSweb provides LEGO Brand Retail with a flexible, custom order fulfillment solution from a centrally based distribution center that includes system integration, order fulfillment, returns processing, kitting, and transportation management. PFS services all LEGO customer orders from the website and the LEGO Shop at Home catalog in North America.  PFS also supports all the U.S. LEGO stores with product replenishment services.

A few examples of the services offered by PFS which are utilized by LEGO include:

• Facilities, Infrastructure, Staffing, and Holiday Scaling – LEGO brand utilizes a warehouse sharing model with several other companies located in Memphis, Tennessee.  This model is optimized for each company while leveraging a shared high-volume fulfillment infrastructure featuring an innovative zone-picking solution with mobile pick carts.

• Quality Assurance – The LEGO motto is “Only the best is good enough” and PFS mirrors that philosophy in the solutions they provide. No tears, wrinkles, or damage of any kind to the boxes are acceptable.

• Value-Add Services – In early 2009, LEGO brand came to PFS asking “How can we deliver something from our online store that is unique?” PFS began brainstorming and one of the ideas offered LEGO the option to use LEGO branded packing slips.