Readers of the blog will recall my fascination with all things Lego (in my defence, I've got a lot of kids). I use the company as a case study in applying the Long Tail to consumer packaged goods, in everything from mass customization to peer-production.
Lego Factory is the company's service that allows you to design your own models and have the parts sent to you in a cool Lego kit-style box (and share your designs with others in a Lego marketplace). It's a great idea, but it's been hampered in the past by gnarly fulfillment issues that inflated the cost of the kits by including too many pieces you don't need. (I described the problem here).
Basically, the combinatorial possibilities of 7,000 possible parts in 75 possible colors (that's more than a half-million variations) created an overwhelming picking-and-packing challenge. So Lego limited choice in two ways. First, each model could only be built from a single set brick palette, such as car parts. Second, those parts come in pre-packaged bags of a fixed number of bricks, so you'd likely get more than you needed. If you weren't careful, a simple vehicle that might cost less than $10 in retail could turn out to cost nearly $100 in Lego Factory simply because it uses those bags of parts inefficiently.
Now Lego's just announced a very welcome new version of the software (1.6) that fixes this problem, only charging you for the pieces you use. You're still limited to certain set palettes of parts (although they now include train pieces and minifigs), but somehow they've found a way not to ship more than you need. Lego claims average savings of 60%. I've got a call in to Lego HQ to find out how they did it, but for now we can just enjoy the good news...and start designing!
Lego! My brother and I used to love playing with Lego when we were younger. And after x years of putting different colored Lego blocks togethe, Lego continues to thrive. In my opinion, it was and continues to be one of the best toys one can give to kids - since it sparks a child's imagination, creativity and mechanical skills all at the same time.
Posted by: nikki | May 12, 2006 at 07:26 AM
Continues to thrive?
2000: Loss of DKK 1,092 million
2001: Profit of DKK 521 million
2002: Profit of DKK 617 million
2003: Loss of DKK 1,498 million
2004: Loss of DKK 1,237 million
2005: Profit of DKK 456 million
Not exactly thriving to me...
(Source: http://www.lego.com/eng/info/default.asp?page=annualreport)
Posted by: Anonymous | May 12, 2006 at 09:01 AM
Hello,
They probably did it using operations research algorithm. If you are interested, I can send you some link to it.
http://www.deviant-abstraction.net/2006/05/14/lego-and-operations-research/
Posted by: Nicolas Toper | May 13, 2006 at 06:07 PM
No need to defend lego-building as an adult. I mean, I go to lego conventions, and usually I'm the only one younger than 16 there. So... you're not alone! And yeah, I'll definitely be using the new LDD.
~Ben
Posted by: Ben Schwartz | May 15, 2006 at 10:09 PM
I love to play with my LEGO! Thanks for great article!
Posted by: Nina Krause | May 17, 2006 at 04:16 AM
i think you should let people be there lego they made and play around with them in a lego city and fill out applications
Posted by: drake | September 23, 2007 at 08:07 PM
i think you should let people be there lego they made and play around with them in a lego city and fill out applications
Posted by: drake | September 23, 2007 at 08:08 PM
This is not a factory, it is a Great Ball Contraption. Google it or look at my Great Ball Contraption playlist. For an actual Lego factory, check out Mindstorms Autofabrik, Mindstorms Aircraft Factory, or DuckPro: Automated Duck Assembly.
Posted by: gift ideas | November 04, 2009 at 11:54 PM