This should not surprise you at all: Christmas is a big deal for Lego. According to the Financial Times, half of the company’s sales come in the month or so before the holiday (Lego makes push to avoid disappointments of Christmas past, Dec 22). But how do they gear up for that big peak in sales? Check out the video below:

The interesting part of this to me is how they balance inventory and capacity. From the article:

Chresten Bruun, head of the factory, explains how the 768 moulding machines that produce about 125m pieces of Lego each day are divided into two types. One, called “green flow”, is for high-volume, standard bricks. The other, “red flow”, is for more specialised, unusual bricks. … For much of the year, and particularly in the far slower first half, most of the machines churn out millions of standard bricks under the green flow. These are then stockpiled until later in the year.

This is just a nice example. Lego has many parts that are very, very generic. A six nub brick in gray can go into countless sets as well as being sold on its own. They will never not make such a brick. The cost of holding such a piece from, say, February until it is packaged in October or November is trivial. There is no reason not to utilize capacity in slow months to produce these basic pieces since that would allow capacity to do more specialized pieces later in the year. In effect they are using inventory to shift the availability of capacity in time.