Lego: Building on Product Quality, Brick by Brick

When you were younger, did you ever try and build an entire house? Not to brag, but I certainly did at age five. When I was especially bored, I would try to construct a towering skyscraper. I would even go so far as to assemble a car for a building resident, whose smile seemed to imply complete satisfaction.

How did I accomplish such daunting tasks at a young age? With a little creativity…

…and a bunch of Lego bricks.lego-6

The Lego brand is known worldwide for its ingenious building sets and for fostering children’s imaginations, and it all starts with standardized blocks connected together by miniature knobs. Yet as simple as this may sound, a lot of work goes into ensuring that these small bricks are produced to the highest degree of quality.

According to the company’s profile, Lego bricks are manufactured through a molding process, where ABS plastic is heated and injected into standard molds and left to cool for about seven seconds. The molds are extremely accurate in that they only allow for a natural variation of 0.001 millimeters in each brick, to ensure connectivity. Nevertheless, the entire molding process itself is so precise that there are about 18 defective bricks in every million produced. And if you thought that was crazy, the company ensures that “all Lego elements are fully compatible, irrespective when they were made during the period from 1958 to the present or by which factory.” Talk about extreme quality control!

Forbes recently interviewed Lego’s Senior Vice President for Engineering and Quality, John Hansen. The interview provided insight into the company’s unequaled level of quality, which allowed them to increase brick production from 25 billion in 2008 to 45.7 billion in 2012.  “We have the same quality standards all over the globe,” he says, which explains their uniform and consistent products. Hansen also states that their production facilities put each element of a Lego set (from the bricks to the instruction manual) through rigorous tests to make sure that they follow company, consumer, and international standards. As if this weren’t enough, Lego also looks for new ways to improve their production process from both a business and environmental perspective. They are currently working on searching for new ecological raw materials and refining their product packaging to reduce waste.

I think that other toy companies need to take Lego’s quality standards into consideration in their operations. With product recalls or safety hazards being found in numerous toy products annually, it would not hurt for them to learn a thing or two from their design and production processes. It might even help to solve their product variation or defect problems given Lego’s track record; you don’t see many consistently produced superhero action figures as you do Lego bricks. Besides, why question a successful company whose motto is “The best is never too good”?

Do you think that other toy companies can follow Lego’s standards of uniform quality when it comes to manufacturing their products? Can they also be applied to other industries as well?

Links:

Lego Company Profile: http://cache.lego.com/upload/contentTemplating/AboutUsFactsAndFiguresContent/otherfiles/download98E142631E71927FDD52304C1C0F1685.pdf

Michael Venables, “How Lego Makes Safe, Quality, Diverse and Irresistible Toys Everyone Wants: Part Two” (Forbes): http://www.forbes.com/sites/michaelvenables/2013/04/20/how-lego-makes-the-safe-quality-diverse-and-irresistible-toys-we-all-want-part-two/

That’s the Way the Cupcake Crumbles: Is the market for the sweet delicacy crashing?

Molly’s. More. Sweet Mandy B’s. Chicagoans may recognize these names as local eateries specializing in the most convenient of small pastries: the cupcake. Though recipes for these treats have been around for hundreds of years, and are a major staple at birthday parties and big celebrations, it was not until the early 2000s when the country started to develop a demand for gourmet cupcakes. You can thank the TV series Sex and the City (of all places!) for that; with the show prominently featuring the popular Magnolia’s cupcake shop, the nation went cupcake crazy. Today, hundreds of gourmet cupcake shops thrive in our city and throughout the country, rallying behind its industry’s largest leader, a New York-based publicly traded company called Crumbs Bake Shop. With mouth-watering flavors ranging from red velvet to cookie dough, you would think this market would continue to thrive off of our taste buds.

Unfortunately, that may not be the case anymore.

Source: The Wall Street Journal

At the peak of its success, Crumbs launched their initial public offering in June 2011 with a strong $13 per share. This past month in mid-April, though, its shares have sunk to $1.70, and they continue to fall at a disquieting rate. Because of this, the company adjusted their 2013 sales forecast from an initial $73 million to an unsettling $57 million. The declining performance of such a huge company as Crumbs has caused some analysts to claim that the market for gourmet cupcakes is beginning to collapse. A recent Wall Street Journal article poses the question, “Is the cupcake bubble that inflated relentlessly over the last decade finally about to burst?”

There are many factors that could have caused this impending cupcake recession. Probably the most apparent of these is the oversaturation of the market. Since the trend began, cupcake making became one of the prime choices for young entrepreneurs to kick-start their small business ventures. This has obviously led to increased competition and a staggering number of locations selling the same product; in Chicago alone, there are nearly three hundred different gourmet cupcake shops. But even these specialty stores have to compete with other establishments like grocery store chains, which are trying to attract the same market with their own cupcake concoctions. With all of this competition, the lines of differentiation start to blur, and it leaves consumers wanting a change of pace.

This change of pace is an additional factor contributing to the cupcake’s demise: consumers are growing tired of the fluffy delicacies and want to indulge in something new. The aforementioned Wall Street Journal article attempted to scour Twitter for the next big tasty treat. Responses differed from gourmet ice cream to mini-pies, but the uncertainty itself is pretty clear. Cupcakes are no longer king, and many successful cupcake shops are starting to feel it in their wallets… and their stomachs.

What do you think is the next big trend in the pastry/delicacy market? Do you think the “cupcake economy” will bounce back, or is it all heading down south from here?

Sources:

http://online.wsj.com/article/SB10001424127887324345804578425291917117814.html

http://stream.wsj.com/story/corporate-intelligence/SS-2-60962/SS-2-214382/

http://www.policymic.com/articles/35885/everyone-panic-the-cupcake-market-is-crashing