Case Study- Louis Vuitton
Table of Contents
1. Introduction 2. The company Louis Vuitton 3. Supply Chain Strategy 4. Constraints of the Luxury Industry 4.1. Supply Chain Strategy of Louis Vuitton
5. Process map of buying process 5.Order Qualifiers and Order Winners 5.1. 5.2. Performance Dimensions Trade-off among Performance Dimensions
6. Internal Operation Practices
6.1. Manufacturing Process 6.2. Customization Point 6.3. 6.4. 6.5. 6.6. Service Package and Service Level Capacity Strategy Forecasting Demand Inventory Strategy
7. Purchasing and Logistics Strategy Practices
7.1. 7.2. 7.3. 7.4. Sourcing Decision Sourcing Strategy Organizing Logistics Interaction with the Final Customer
8. Conclusion 9. References
Louis Vuitton is a part of the Louis Vuitton Moet Hennessy Group. Being the core business, Louis Vuitton is the most famous brand not only in the group, but also in the fashion industry. It is well-known for its quality and design. Most of the Louis Vuitton consumers are wealthy people, who expect premium products regardless to the price. Considering this fact, Louis Vuitton may implement a strategy, which ensures availability of the products at any time and provide the clients with the best possible customer service. In the past, Louis Vuitton faced the out-of-stock problem and it has not been solved, yet. As a consequence, the company loses not only sales but also reduces its reputation. Historically, many companies in the fashion industry did not regard to the out-of-stock as a serious problem. For many managers it was considered as a sign that the collections were well selling and revenues and profitability were high. However, the situation changed and the managers realized that consumers’ satisfaction is one of the most important aspects for a company in order to continue being successful, gain high profits and reputation. The source of the out-ofstock problem in Louis Vuitton causes some disagreements between the company’s vice president for marketing and sales and the vice president for manufacturing and logistics. The first one states his opinion that the lack of flexibility and responsiveness is the base of the problem, while the second one blames the recent increase in new product introductions and the poor forecasting of demand (Dussauge, Moatti, 2009). This paper investigates in details the root of this problem and how Louis Vuitton can solve it by aligning the manufacturing process and marketing activities in the most efficient way. First, the paper describes Louis Vuitton as a company and the overall supply chain strategy it implements. Second, special attention is paid to the manufacturing process, which is one of the most important parts of the supply chain. Third, company’s capacity, forecasting and inventory strategies are explained and suggestions for how they can be improved are given. Fourth, the paper examines the sourcing strategy, how the logistics activities are organized and how the interaction with the final consumer can help for solving the out of-stockproblem. Finally, a conclusion is drawn, recommending how these strategies can be improved in order to avoid the out-of-stock problem.
2. Louis Vuitton – The company Louis Vuitton was established in 1854 as a young manufactory for trunks. The company was located in Paris, France, and it became renowned for its innovative stackable trunks. The marketing and sales were limited to the company owned sales outlet, which was located in Paris. Retaining its commitment to innovation, the company introduced luxury trunks with detachable frames in 1876. In 1886, the company was able to broaden its sales efforts and opened its first Louis Vuitton store outside of France, located in London, England. With the introduction of the legendary Monogram design, which was created by Louis Vuitton´s son, George, the company had become famous all over the world. In 1987 Louis Vuitton...
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