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Copy of LEGO

Embracing change with a flexible information system
by

Mandy Lee

on 14 June 2013

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Transcript of Copy of LEGO

EMBRACING CHANGE BY INFORMATION SYSTEMS
•The LEGO Group is a family-owned company in Denmark, and best known for the manufacture of LEGO brand toys.

In 2003 LEGO faced tough competition from imitators and manufacturers of electronic toys. In an effort to reduce cost and face competition , lego had to undergo a restructuring process.
In 2006, the company announced to outsource the production plant to the electronics manufacturing service company , flextronics
Analysis of the supply chain resulted in reducing the cost of labor and to simplify production
HR played a strategic role in hiring the best employees
Adapting to these changes requires flexible and robust IT infrastructure with business capabilities that help the management perform better forecast and planning.
•As a part of the solution they moved to SAP business solution software
•LEGO adapted to SAP’s supply chain management, enterprise resource planning and product life cycle management.
SAP’s business suite is based on three tier client server architecture – the three tiers are the client server, application server and a relational database.
ENTERPRISE RESOURCE SYSTEM

•Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise.
•Enterprise system gives the benefit of –
Increase operational efficiency
– Provide firm wide information to support decision making
– Enable rapid responses to customer requests for information or products
– Include analytical tools to evaluate overall organizational performance
•LEGO uses ERP human capital management to and strengthen its enterprise reporting capabilities with SAP NetWeaver Business Warehouse.

•LEGO intend to bring recruitment in-house.

•SAP ERP Human Capital Management helps LEGO to expand the business without linear increases in the human resources workload.

•LEGO will use SAP NetWeaver BW for sales reporting across the extended enterprise, as a ‘source of opportunities’ for procurement spending, and as an internal benchmarking service to drive performance
LEGO AND ERP
SUPPLY CHAIN MANAGEMENT
Network of organizations and processes for:
 Procuring raw materials
 Transforming them into products
 Distributing the products
• Upstream supply chain:
– Firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them
• Downstream supply chain:
– Organizations and processes responsible for delivering PRODUCTS TO customers.
Inefficiencies cut into a company’s operating costs
Can waste up to 25% of operating expenses
– Justintime strategy: Components arrive as they are needed and Finished goods shipped after leaving assembly line
– Safety stock - Buffer for lack of flexibility in supply chain
– Bullwhip effect (A slight rise in demand by customers for an item will cause successive participants to slightly overstock related inventory “just in case”.).
Information about product demand gets distorted as it passes from one entity to next across supply chain
LEGO AND SCM
• Supply Chain management helps them with supply chain monitoring, forecasting and inventory optimization. LEGO uses SAP Advanced Planning and Optimization (APO) to maximize supply chain efficiencies.

•Lego identified key changes such as -
Simplification
Manufacturing
Logistic
Sourcing
Rethinking Quality
Explain the role of the database in the SAP's Three tier system
QUESTIONS FROM THE CASE
The database acts as a store for data and programs. It provides the organised storage of all the data in form of database tables, rows and other structures. For example tables that store Lego’s products, daily operations, supply chain etc.
Explain why distributed architectures are flexible ?
• The work is distributed accordingly (to each layer/tier) and is worked on over of the tiers, making the system scalable

•Flexibility allows SAP software to run on various different types of hardware and OS environments

•It also allows for different (authorized) personnel to have direct access to the database no matter where they are.
What are some of the Business Intelligence (BI) features included in the SAP’s business software suite?
•Supply Chain Management (SCM) – supply chain monitoring and analysis as well as forecasting, planning and inventory optimization.

•Product Lifecycle Management (PLM) – enables managers to optimize development processes and systems.

•Enterprise Resource Planning (ERP) – includes Human Capital Management (HCM) application for personnel administration and development. It also consists of advanced features such as “Talent Manager” as well as those for handling employee administration, reporting, and travel and time management.
Multiple database locations can be helpful in increasing the scalability, stability and independent operations of geographically dispersed SAP work groups
Advantages and disadvantages of having multiple databases in distributed architecture
DISADVANTAGES -

Improved scalability

In a single database system the amount of data that can be stored depends on the limitations of one host, one database

A distributed database system is scalable and set up for growth.

As more sites become part of the network, database topology can be expanded to include the new databases.

With multiple databases, data is divided into logical pieces, so that users usually work only with the data that is most applicable to them(based on their locality)

Improved performance
majority of database inserts, queries, updates, and deletions are on user data;
>thus a distributed-database environment separates user data from centralized data and stores it locally.
This reduces network traffic and bottleneck on most transactions.
Local user databases also distribute the user load in terms of system resources, such as memory and disk.



Increased availability 
Because user databases are independent, if one database is unavailable, users of other user databases can continue to work.
In a distributed-database environment, selected classes are replicated in other databases when they are created, deleted, or updated.
This replication increases availability.
The disadvantages although present are far exceeded by advantages.

However these are:

Degradation of performance on a small network 
One user action can cause activity in several databases, some of which may be remote.
The additional overhead of these transactions can be a performance penalty when the total amount of data in the network is small.
Access to non local data can be slower, as the distribution of user data may be optimised for local access and

Increased use of database space
The model of all databases must be the same on all databases
Therefore, database space is used for tables that may never be accessed.
When the number of tables is very large, the amount of space used this way can be significant.
Complex use and administration 
The use and administration of distributed databases are more complex than for a single-database network:
>Users must be aware of the concept of database scope and where different types of data are stored.
>Administrators must keep the schemas of all databases synchronized and ensure that the network can optimize distributed-database environment in terms of availability and performance.
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