Louis Vuitton Case

Louis Vuitton New harvest-feast foots vs. product accessibility conception Louis Vuitton is a part of the Louis Vuitton Moet Hennessy Group. Being the nucleus business, Louis Vuitton is the near famous denounce not merely in the conclave, but also in the counterfeit industry. It is well- hit the hayn for its grapheme and design. Most of the Louis Vuitton consumers atomic number 18 wealthy people, who expect tribute products regardless to the set. Considering this accompaniment, Louis Vuitton whitethorn implement a strategy, which ensures availability of the products at each time and append the clients with the best practical node service.In the past, Louis Vuitton faced the out-of- storage enigma and it has not been solved yet. As a consequence, the corporation loses not only sales but also overcomes its reputation. Managers realized that consumers satisfaction is nonp beil of the al virtually important aspects for a company in bon ton to continue be succe ssful, gain exalted profits and reputation. The source of the out-of stock enigma in Louis Vuitton ca wonts some disagreements surrounded by the companys vice president for merchandising and sales and the vice president for manufacturing and logistics.The first one states his opinion that the omit of flexibility and responsiveness is the base of the problem, while the second one blames the new-fangled sum up in new product introductions and the poor forec asting of requisite. We will check up on these different problems and how Louis Vuitton ignore solve them by aligning the manufacturing process and selling activities in the most cost-efficient way. Supply Chain Strategy Consumers of highlife products absorb high expectations regarding the products? quality and design. Further more(prenominal), the consumers want to be provided with a omplete shop experience, when they purchase a Louis Vuitton handbag for 3 000 Euros or a touch of Louis Vuitton shoes for 1 000 Euros. An essential part of this shopping experience is the product itself. Therefore, Louis Vuitton? s supply chain has to be set up in making engageed products operational, wherever and whenever they are leaseed by a consumer. Unfortunately, Louis Vuitton is able to have around 98% of all demanded products from classic product lines available at their store . But if consumers request a product of one of Louis Vuitton? bearing lines, which are newly and less frequently introduced product lines, the rate of available products decreases roughly to 80%. Louis Vuitton products are bought due to the quality of the intelligents. Thanks to online stores, consumers habit to easily purchase a desired good on the Internet. On the one hand, it saves consumers time on the other hand, the probability of a potential out-of-stock problem is reduced, because o nce the purchase is realized, the company is able to move in a several ways to deliver the product.It after part glow the product from a store or from different stores, depending on where the consumer is dictated and where the item is available at that time. Moreover, Louis Vuitton could improve its cleverness strategy. Managers have to square off how to organize manufacturing in the most efficient way that a level best number of units are produced for a time period. Currently, employees working for Louis Vuitton are dual-lane into groups and each group is able to produce 120 hand bags per day.However, considering the out-of-stock problem, one can assume that it is not the comfortable quantity to meet the demand and a solution has to be found. In order to append the capacity, Louis Vuitton has to increase the labor force. In that way, Louis Vuitton will be able to increase its manufacturing capacity and potentially solve the out-of-stock problem. Inventory Strategy Louis Vuitton has to decide whether to reduce the armory in order to avoid additional costs induced by required stocktaking space in the stores or to increase the availability of demanded products.Undeniably, inventory must be as close to the stores as possible. This implies that if a certain product is out-of-stock it can be quickly delivered and satisfies consumer wants. Moreover, inventories should be unbroken in regional warehouses and that would also help Louis Vuitton to react in the most flexible way t o fluctuations in demand. For instance, if the store in Tokyo is out -of-stock, it would be easier to report about the problem to the nearest warehouse rather than to the main one in France. It will impart in shortening the will time. As a consequence, Louis Vuitton has to be always aware of the stock level.This can be achieved by the introduction of a continuous review system, which is used to manage independent demand of inventory and monitors the inventory level of any item constantly to release orders, when the reorder point is reached. Thus, the company will be able to solve the problem once a higher(prenominal ) than anticipate demand is realized. The most efficient strategy for Louis Vuitton should be larger inventories in the regional warehouses at higher prices. Sourcing Decisions Louis Vuitton is well known for world creative, innovative and looking for the excellence.Since Louis Vuitton was established in 1854, the core competencies of the company have always been des ign and quality, they perfectly go to the come of Louis Vuitton to be one of the market leaders in the means industry. On the one hand, the classical collections have not been changed for years, and therefore being a symbol of elegance and prestige. On the other hand, fashion and collections constantly change in order to be moderne. Quality is the second core competence the company uses to be one of the best brands in the industry.To provide the customers with the best, Louis Vuitton uses high quality raw materials, which is the first step to a pendant final product. Furthermore, employees involved in the manufac turing process do 80% of their line manually. It is more costly and time consuming, but is highly valued by the consumers. Considering these facts, Louis Vuitton needs to make the right sourcing decisions. First, the company should keep the designing and manufacturing activities sourced in, because these activities are the most important regarding Lou is Vuitton? creation of value. Second, I think distribution activities can be sourced out. The company should use firms, such as TNT, DHL, UPS, etc Louis Vuitton can guide among a variety of distributors in each country and select the most reliable one, which provides good delivery and service for a given price level. Warehouses are another part of the supply chain which can be sourced out. Renting a warehouse implies a smaller investment for Louis Vuitton and enables them to be more flexible.The out-of-stock problem that Louis Vuitton is facing can be solved by placing warehouses in regions with high population. Moreover, according to the fact that the company requires high quality raw materials, but not all of the existing suppliers offer sufficient qua lity one possible solution is the implementation of the single sourcing. This means that Louis Vuitton depends on only one firm for all items needed for producing their leather goods. However, this can be extremely risky, because of the probability of un expected blots such workers strike.Another solution may be the multiple sourcing strategy. This implies that Louis Vuitton relies on many suppliers, but the associated risk with this instance of strategy is that many firms become familiar with the core competencies of Louis Vuitton and it is possible to use these competencies for their own businesses. Finally, the most suitable sourcing strategy in the case of Louis Vuitton seems to be the dual sourcing strategy. It means that Louis Vuitton uses two suppliers, which serve the needs of the firm proportionally.Both of them are willing to have the leader posit ion on behalf of higher revenues. This situation is advantageous for Louis Vuitton, because it can assure that because of the competition between the suppliers, they will be always supplie d with premium quality raw materials on a particular pric e level. Logistics One of the main aspects of the logistics system is the distribution. Most companies aim at minimizing their distribution costs and Louis Vuitton is not an exception. This is the reason why the company uses the multimodal solution.Therefore, Louis Vuitton combines transpor tation by sea, air and road. The advantage of cargo ships is that they can transfer boastfully quantities on long distances. Moreover, Louis Vuitton operates in different continents and thus it is of great grandness to ship in a cost effective way. The water transportation system provides efficient services at low prices. However, in particular proposition situations such as rush orders, it is more rational to use airfreight. It can increase the costs but it guarantees that the company avoids the out-of-stock problem and satisfies customers? and consumers? wants.The distribution system, on its side, has a great impact on the location of warehouses. For instance, the main centralized logistics warehouse in Cergy Pontoise is located near Paris, in France. The capital of France facilitates t he headquarters of Louis Vuitton as well as it is a city with high demand in fashion products. These are maybe some of the reasons why Louis Vuitton chose to situate its central distribution center. But, shipping from France to other countries may necessitate long customer lead time, which is the required time between the customers order and the delivery of this product.To shorten it Louis Vuitton could benefit from spot stock warehousing. Shortening the lead time is one of the most important aims of the companies, because of the fact that goods are available in the stores just at the time consumers demand them. One way for Louis Vuitton doing that is to decrease the overproduction of goods with lower demand. The second possible solution is the implementation of more frequent shipments of smaller quantities. This could be more effective in combination with an improved anticipate system.It has the potential to reduce costs by not keeping fewer goods in stock, which are not highly demanded. Moreover, to avoid the out-of-stock problem, Louis Vuitton should interact and understand the preferences of the consumer. Louis Vuitton could do it via trailing the last purchases. In this way the company can recognize if a certain customer is willing to buy goods from the classical or from the modern collections. And Louis Vuitton can progressively improve its considering activities in order to know which collections have to be produced and which inventory has to be increased.Conclusion To improve the alignment between manufacturing and marketing, Louis Vuitton has to consider several factors. First, giving the present out-of-stock p roblem combined with the expected fruit rates, the company has to increase their manufacturing capacity, based on the expected growth rate for the overall industry and for the different regions as well. In order to achieve that, they should add more labor force. More groups of workers will lead to increased production and therefore increased inventory in the warehouses.This would offspring in greater availability of products in retail stores and solve the out-of-stock problem. In addition, larger inventory of product enables Louis Vuitton to be responsive to increasing demand in peak times as well as providing the probability to focus on the production of newly introduced products and the satisfactions of its demand. Furthermore, Louis Vuitton should consider decreasing the introduction of new fashion lines in order to avoid disruptions of manufacturing and su pply chain activities caused by changes in the manufacturing process due to newly introduced products.Second, by improvin g the forecasting tools, Louis Vuitton should be more accurate in estimating the future demand for specific products. Moreover, Louis Vuitton should forecast more often and for shorter time periods. Louis Vuitton should continue to insource the leather good production and use the dual sourcing strategy for purchasing raw materials. Finally, the group should introduce marketing tools in order to interact more with the consumers and to forecast the demand.