How Louis Vuitton switched to a modular system with minimal production costs

How Louis Vuitton switched to a modular system with minimal production costs

LVMH Moet Hennessy Louis Vuitton the manufacturer of luxury goods with a worldwide reputation. Louis Vuitton occupies the niche of the bag manufacturer and contributes half the profit to the conglomerate, steadily winning the competition at the market.

LVMH Moet Hennessy Louis Vuitton the manufacturer of luxury goods with a worldwide reputation. Louis Vuitton occupies the niche of the bag manufacturer and contributes half the profit to the conglomerate, steadily winning the competition at the market. The profitability of the brand is high but that is not the end of the line. Managers of Louis Vuitton realized that they can earn even more, but their production fail to keep pace with every successful trend. And the company began a large-scale reconstruction in order to increase the speed of delivery of goods to the market.

The changes mainly affected the production, introducing a new system of modules, which later turned out to be super efficient. Before, Louis Vuitton practiced inconvenient batch production: the stages of pruning, sizing, sewing and assembling were performed by masters in different departments, where the trolleys with half-finished goods moved among them. That’s slowed down the process so much that the production of a one bag could take up 8 days, and over 20 people took part in its sewing. Not surprisingly, that there were many defective copies under the old model of production. Work at minimal costs was intended to address the problem, and Louis Vuitton introduced a system of U-shaped modules.

The module aims to combine all stages of production on a small area so that the goods move from the first step to the final one on the same tape. Continuous motion immediately eliminates the problem of intermediate delivery. The module provides 6-12 workplaces, and each master performs a single step. Their specialties are different, and the chain forms a complete production cycle. Sure, the masters needed to be retrained to work on the new U-shaped modules.

What happened next? An important victory is that complaints were greatly reduced and customers returned the goods of 70% less often. Earlier half of the products had to be sent for revision, but then the masters began to see the defects immediately and to eliminate them quickly or reject the products without getting through the full production cycle. In its turn, this reduced the need for materials storage.

From that moment, Louis Vuitton refused to schedule for a week and began to use daily plans. The consequence is the growth of productivity and quality as well as a more sensitive reaction to market trends.

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