European 3PL Summit, Nov. 24-25 2009, Brussels

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7th European 3PL Summit, Nov. 24

LEGO strategy is to build long term relationshipwith our suppliers ….

• Partnership approach

– Open end contracts

– Performance/cost has to be on right level

• Supplier Relationship Management (SRM)

– Ensure a aligned Global LEGO approach to the supplier

– Maximize the outcome of the corporation – manage relations not transaction

– Innovation and challenge from suppliers is a must

7th European 3PL Summit – Peter Husted 24.11.09

– Innovation and challenge from suppliers is a must

• Joint constant challenge of cost level and structure

– Cost to reflect LEGO requirement, e.g. on service and performance

– Understand external cost drivers

– Identify and work with internal cost drivers and performance programs

• Make sure your suppliers earn money!

– Share cost reductions

– Price check models

– Check their financial situation

Anchor approach to supplier platform ….

Risk

Maximal Global Attention

Partnerships

Flexibility Anchoring 80 Anchoring 80 –– 90 %90 %

7th European 3PL Summit – Peter Husted 24.11.09

Flexibility Anchoring 80 Anchoring 80 –– 90 %90 %

After all tender processes: Re-looping to secure anchoring

High level process for 2009 European distributiontender ….

7th European 3PL Summit – Peter Husted 24.11.09

LEGO performance model for European Distribution

LEGO Performance Model

Network Deliveries

Above 98%

Below 98%

Direct Deliveries

Above 98%

Below 98%

Arrival Performance EDC

Above 95%

Below 95%

7th European 3PL Summit – Peter Husted 24.11.09

98%

Considered as carrier with potential

98%

Carrier to correct performance within 2

months

If no improvement invoice is deducted

with % which is below target

After 4 month and still no improvement

LEGO can change carrier

98%

Considered as carrier with potential

98%

Carrier to correct performance within 2

months

If no improvement invoice is deducted

with % which is below target

After 4 month and still no improvement

LEGO can change carrier

95%

Considered as carrier with potential

95%

Carrier to correct performance within 2

months

If no improvement invoice is deducted

with % which is below target

After 4 month and still no improvement

LEGO can change carrier

Price check and performance model for oceanfreight ….

Price Check Quarterly Process:

1. New Contracted Prices

2. Price check template is submitted from

suppliers

Purpose of Price Check Model

1. To keep TLG up to date on current market condition

2. Harvest Price reduction within the price period

3. Better forecasting for budget

4. Links into performance when evaluating

7th European 3PL Summit – Peter Husted 24.11.09

suppliers

3. Price comparison template is completed by

TLG and neutral external party is used for

benchmark

4. Supplier feedback on observations made in

the Price Comparison by TLG

5. Q-meeting

1. Supplier reacts on feedback by

lowering prices

Or

2. Supplier cannot change price and

gives an explanation

6. KPI performance is used as additional

parameter for deciding consequence

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Thank you for your attention - questions?

7th European 3PL Summit – Peter Husted 24.11.09

- questions?