Building a leading toy company's supply chain brick by brick

Key change: The toy company cut transportation providers from 55 to just 10 international carriers capable of serving both Europe and Asia, improving efficiency and reducing complexity. 

The outsourcing bet—and the hard lesson that followed

By 2006, the toy brick company took another leap: outsourcing much of its production to Flextronics, a third-party manufacturer.  

While the move promised cost savings, it soon became clear that handing off core manufacturing compromised its ability to meet soaring demand. Quality issues, warehouse mismanagement and forecasting mismatches plagued operations.

Within two years, the company reversed course by bringing production back in-house, reasserting control over key capabilities and reaffirming a critical lesson in supply chain strategy: core competencies should never be outsourced without deep operational alignment.

Strategic footprint: factories built for proximity, not just cost

The company's current manufacturing footprint reflects a supply chain optimized not just for cost, but for proximity to key markets. Today, it operates factories in: 

• Billund, Denmark

• Kladno, Czech Republic 

• Nyíregyháza, Hungary

• Monterrey, Mexico 

• Jiaxing, China

• Ho Chi Minh City, Vietnam (opened 2024) 

• Virginia, USA (opened 2025 as the company's first carbon-neutral factory)

This localized production model shortens lead times, reduces emissions and improves agility during peak demand—especially critical given seasonal surges, with over 40% of sales occurring before the December holidays. 

End-to-end visibility: from raw resin to retail shelf in 10 days 

Most of the toy bricks are made from ABS plastic sourced from countries in the Middle East and Southeast Asia like Saudi Arabia, Kuwait and Thailand.  

At full speed, machines produce 500 bricks per second—totaling over 20 billion per year. With a defect rate of just 12 bricks per 100,000, the company’s precision rivals that of medical-grade manufacturing. 

Once molded, painted and packed, products are routed to the Prague distribution center and then dispatched globally. The end-to-end cycle—from production to delivery—can take as little as 10 days. 

Operational agility in the face of disruption 

The toy brick company's supply chain was tested again during the COVID-19 pandemic.  

In Q1 2020, despite the surge in curbside pickup and e-commerce complexity, it reported a 14% sales increase. Its hybrid retail model, which emphasized in-store experiences and direct-to-consumer e-commerce via their website, allowed it to respond quickly to changing customer behavior without compromising fulfillment speed or brand experience. 

The company continues to enhance agility by investing in AI-driven demand forecasting, sustainable logistics and omnichannel fulfillment. The Virginia plant, for instance, will support U.S. demand with solar-powered operations and intelligent warehousing—aligning environmental goals with operational performance. 

Innovating beyond the brick: crowdsourcing and product co-creation 

Since launching a fan-driven platform in 2008—a crowdsourcing platform for community-designed sets—the company has redefined how it develops new products. 

Over 40 products have been launched from this community, including bestsellers like the Women of NASA and The Office set.  

This approach expands the design pipeline while embedding consumer voices directly into the product lifecycle.