Case: Louis Vuitton
Louis Vuitton was founded in 1854 and opened its first workshop in 1860 in the Paris suburb of Asnières. Work at Asnières is still done by hand, and many current models are closely based on the original designs that made Vuitton a fashion icon. Workers specialize in making certain types of bags, and 20 to 30 craftsmen can take up to 8 days to complete one tote! That level of precision and care has been encouraged to maintain the traditional appeal of the brand.
Maintaining that caché involves creating high demand, frequent use of limited-edition products, and suppressing supply levels on their standard product lines. Vuitton sells its luggage at prices from roughly $2,000 to $4,000 per piece and has never put its products on sale. In the 1970s, the single factory in Asnières could not meet the increased demands of globalization, so Vuitton began adding new factories every other year. As a result of major pushes in marketing, store-opening, and expansion into the U.S. and Japan, Vuitton experienced annual sales increases from $760 million in 1990 to $3.7 billion in 2000.
Vuitton’s current production system, however, is slow and makes it difficult to adjust to increased demand when certain items become hot. In spite of new factories and production schedules, the production process itself still needed to change to keep up with demand. In 2005, Vuitton introduced its new Pegase plan, which was based on teamwork and production line models used by Japanese automakers. Previously under Vuitton’s production process, each task involved in making an item was done by a single craftsman, who would pass the item along to the next station after he had completed his task.
Under Pegase, workers are divided into teams of 6 to 12 craftsmen, with each worker trained in several specific tasks. Tasks are divided so that each set takes about the same amount of time. Each team is given a single batch of items to work on, and their work stations are arranged in U-shaped clusters, eliminating the time it took to move items between workstations. Previously, it took 8 days to complete a single bag, like the Reade tote, but now it takes only one. Furthermore, Vuitton can now get new batches into its boutiques in six weeks, half the time it used to take. Worker versatility makes it much easier to switch teams to new projects if an item becomes hot, and additional training has improved product troubleshooting as well. Customer returns at Vuitton’s Issoudun and Conde plants have dropped by two thirds since the new production system has been in place.
ANSWER THE FOLLOWING QUESTIONS:
- Under the old production system, it took 8 days to complete one tote bag. This is a measure of?
- With improvements in troubleshooting, Vuitton has been able to reduce the number of returns on handbags at two of its factories. This reduction in the number of flaws in its products is an example of improvements in?
- As a result of insufficient production rates, customers were frequently being put on long waiting lists. By increasing production capacity to meet increased demand, Vuitton was attempting to achieve higher?
- The manufacturing process that best describes Vuitton’s old production methods would be?
- When Vuitton made an assessment of its manufacturing process, it discovered that items were often left sitting on carts waiting to be moved to the next work station. In response, Vuitton eliminated separate work stations and rearranged its factory floors into U-shaped clusters with adjacent tables. Vuitton’s transition to a more efficient system demonstrates its commitment to quality through?