Principles Of Management Human Resource Management

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 Pegase 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 Pegase, 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:

  1. Under      the old production system, it took 8 days to complete one tote bag. This      is a measure of?
  2. 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?
  3. 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?
  4. The      manufacturing process that best describes Vuitton’s old production methods      would be?
  5. 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?

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