Levi’s “Personal Pair” Jeans
Women’s jeans was very popular and broad market. Levi Strauss was the market leader in the growing fast market in the US which 51 size combinations of standard Levi’s women’s jeans were sold for decades. The market research revealed that only 24 percent of women were fully satisfied with their products at cost of $50 per pair. The fashion in jeans meant more style, more colors and better fit that made more complexity in product line for manufacturing-oriented. The other problem was supply chain from product design to retail sale that was still complex, expensive and slow. Therefore, the Personal Pair kiosks were introduced as a new alternative value chain concept with a new technology of MA-based software application link to point of sale customer fitting program directly with the single ply cutting programs in apparel factories by a partnership with Custom Clothing Technology Corp (CCTC). This report addresses in five parts. First, the impacts of the Personal Pair kiosks are identified. Then, the relevant issued in terms of performance measurement and value chain analysis are recognized including SWOT analysis. The third part is an alternative solution to solve the problems. Fourth, this section suggested about the role of management in decision making. The final part is conclusions of this study.
Levi faced with the complexity in product line for manufacturing-oriented and the complication of supply chain from product design to retail sale. Therefore, Levi’s jeans had high cost of productions and high selling price that lead to the lower of customer satisfaction. When the Personal Pair system was established, it had impacts on the value chain of traditional original Levi’s store. Managements have to answer how it will identify the price of the Personal Pair jeans and how it will change the overall result of ROIC. The other issue is how to make decisions in further expansion, extent to other products, changes to the system and overall evaluation. Relevant Issues
Levi’s SWOT analysis is identified in Table1.
* Levi Strauss was the market leader in women’s jeans. * The Personal Pair system can attract and satisfy its customers. * Levi invests in process improvements and information technology to improve manufacturing and delivery cycle times. * Levi's improve their supplies chain that made Levi's lag time average at 8 months compare with industries average over 12 months.
| * A level of product line is complexity for manufacturing-oriented. * Overall supply chain of traditional Levi’s store was complex, expensive and slow. * Only 24 percent of Levi’s customers are fully satisfied with their products.
* Women’s jeans market is fast growth in the US. * New technology in online order system directly to apparel factory.
| * It depends on “fashion” that meant more styles, more colors, and better fit to each customer. * There are several strong competitors that attack Levi’s.
| Table1. SWOT Analysis
For performance measuring, management should apply the Return on Invested Capital (ROIC) model to assess the historical performance of a business and can compare with the benchmark in the industry. In Levi Company, the profitability of wholesale channel was $4 less than Levi’s stores at $6 that showed in Exhibit2. However, the wholesale channel’s investment capital was less than Levi’s channel. In terms of the ROIC before tax, the Levi’s store decreased at 15.79% when compared with wholesale’ store was at 30.77%. (See table2). There was the same position when analysis with the Return on Equity (ROE). Table1 illustrated that wholesale channel had the higher almost twice than Levi’s channel in the ROE. This is due to the fact that Levi had to invest more in retail distribution and retail store. Operation per pair
| Wholesale channel
| Original Levi’s retail store
| Profit before tax
| $ 4...
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