Comments on: Lean Louis Vuitton

By: J C Sprowls

J C Sprowls — Wed, 11 Oct 2006 18:07:33 +0000

Or shove that 20% margin into reserves so they are better equipped during the mean times of business.

Better yet, they could peel of 5%, distribute 1% to the project manager, and distribute the remaining 4% to the workers who endured the implementation of the system.

But, I suppose I’m an idealist…

By: Alison Cummins

Alison Cummins — Wed, 11 Oct 2006 17:39:57 +0000

Absolutely, Marnie!

By: Marnie

Marnie — Wed, 11 Oct 2006 15:46:02 +0000

I agree with Alison that LV would not want its prices to go down, and certainly doesn’t want everyone wearing it. However, lean manufacturing still makes sense for them. If they can save 20% on their costs, there’s no rule that says they have to pass that savings on to the customer. They can keep charging the same price and call that 20% profit.

By: Kathleen

Kathleen — Tue, 10 Oct 2006 22:55:01 +0000

You’re probably right Alison. Still, idly, one can only imagine how the retail landscape would change if lean manufacturing became more common. Imagine, quality brands across the board would suddenly have more competitive prices. I think it’d really raise the bar on quality execution. Maybe then, attitudes would change? Imagine, a Lexus for everyone!

By: Alison Cummins

Alison Cummins — Tue, 10 Oct 2006 19:25:12 +0000

Oh, and Kathleen: this is one of the very few times I’ve disagreed with you, but I don’t think that saving their customers money is one of LV’s goals. By owning an LV bag, you signal to other people that you can afford one. If the price of the bag goes down, then this signal becomes less useful.

From an article about HermÃ¨s bags:

“The immutable laws of supply, demand and merchandising are also at work here. Make something fabulous, in fabulously limited quantities, and people will clamor to own it. At Hermes in Fairfax — where just a handful of objects cost under $150, such as those itty-bitty leather holders for Post-it notes — 200 people fervently await the arrival 60 Birkins in any given season, said manager Sams-Manning. Their names are entered onto what she calls “a wish list.”

Such controlled scarcity explains why the resale market is so strong. idwesterner put 11 Hermes bags on the auction block at Doyle New York, including a 2002 black crocodile Birkin she had customized with 484 small diamonds set in the white-gold hardware. The presale estimate was $25,000 to $35,000, but when the hammer fell, the winning bidder ponied up $64,250.”

Somebody paying over $64k for a handbag isn’t trying to save money. They are boasting that they are rich enough to buy whatever they want. They are paying a premium for exclusivity – either they are they only one who has that thing, or they have something that only the ‘right people’ own.

Now, LV is not HermÃ¨s. Their handbags are much less expensive at under $5,000. But still, when you’re buying the LV brand you want to know that it’s a brand that the right people own and can use to identify one another. The high cost is perversely what people are paying for: it’s what keeps the riff-raff out.

By: Alison Cummins

Alison Cummins — Tue, 10 Oct 2006 18:45:16 +0000

Kathleen, yes, the better, more consistent quality is a very desirable outcome for LV. I’m not arguing against good production practices! I’m just puzzled that LV would posit keeping their products consistently available as an issue for them: if their products are not scarce, why should the price be high? What else is the point of their brand?

Amy’s thought that they want to keep the classic products consistently available while maintaining mystique and scarcity around the fashion-driven items makes sense. But still, if they can double their output by simply not having to discard half their bags, will they really double their output? Or will they make and discard fewer bags and send the same number to market?

By: Kathleen

Kathleen — Tue, 10 Oct 2006 18:17:13 +0000

I also disagree with Alison (rare, I know). Consider how much the expense of reworking and returns is costing them. The price of LV bags is derived in part through their wasteful practices. Why should customers be compelled to pay for waste? Being lean and producing better products can only enhance the company’s reputation. You need look no further than Toyota to see that.

By: Amy

Amy — Tue, 10 Oct 2006 18:08:26 +0000

I humbly disagree with comment 1. I highly doubt that the market will suddenly become flooded with authentic Louis Vuitton handbags, driving down their prestige and image, or that they would sit on excess stock to preserve their cache. This initiative is clearly resulting in an even higher quality product, and with better stocking of their stores, better customer service. It is presumeable that the more efficient production methods will have the most impact on the availability of their “classic” models, ones that you are likely to find year after year. The highly desireable bags that are introduced for a few seasons at most won’t suddenly become as easy as pie to obtain; more pieces will be produced, but Arnault and others at LVMH know the importance of preserving their prestige and making consumers/customers wild for their product.

By: Liz Brouwers

Liz Brouwers — Tue, 10 Oct 2006 16:25:06 +0000

I agree with comment 1. The LV will lose its meaning if it is readily available

By: Thomas Cuningham

Thomas Cuningham — Mon, 09 Oct 2006 22:57:25 +0000

cluster manufacturing has been around for a while, no?

I think i read that Levi’s tried this in their domestic plants — just before they were all shut down.

I think the old-line sewers were upset because their piece-rate (and income) fell as they were slowed down by newbies in their cluster — but that’s just a recollection, not a fact and I could be wrong.

I think Land’s End was also using this in their ‘custom” khakis that are ordered from the catalog or internet, the pattern made by a computer, automatically cut, then cluster-made in Mexico and shipped to the customer direct — again, I’m not 100% sure, but I think that’s what I recall.