Lego's Nearshoring Strategy Cuts Costs, Boosts Resilience

The Lego Group is taking steps to bring its production and distribution operations closer to key markets in an effort to strengthen supply chain resilience.

• Shifting production closer to key markets

• US factory launch delayed to 2027

• New Vietnam plant opening in 2025

Why the change?

It's all about cutting costs and staying flexible. Lego's latest annual report tells all:

"Our global supply chain network is designed to locate manufacturing and distribution sites close to our largest markets."

Here's what it means:

1. Faster Response Time: Lego can quickly adapt to demand shifts. No more waiting on far-flung factories!

2. Shorter Supply Chain: Less distance = less shipping impact. It's a win for being cost effective and the planet.

3. Cost Savings: Bringing production home slashes distribution costs.

And in addition to this:

• Expanding factories in Mexico, Hungary, and China

• Ramping up sustainability efforts

• Using more eco-friendly resins in bricks

Lego's not alone in this game. La-Z-Boy's also reshuffling its deck, moving some upholstery work to Mexico. Their CEO, Melinda Whittington, calls their North American manufacturing a "key differentiator."

With more major companies nearshoring to Mexico, logistics providers are responding.

Growth near Laredo, Texas, and surrounding regions ensure these providers will be closer to production and can jump on new opportunities to capture billions in freight.

Source: Supply Chain Dive | Lego's 2023 Annual Report