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Abstract

The case describes the luxury goods conglomerate Moet Hennessy-Louis Vuitton in 2005 and focuses on Louis Vuitton (LV), its most profitable subsidiary. At the time, LV was encountering problems associated with logistics costs, in store availability of highly successful products as well as a troublesome growth in unsold items. In addition to deteriorating profitability, these problems were creating conflicts between LV''s vice president for marketing and sales and LV''s vice president for manufacturing and logistics. The general manager of Louis Vuitton was wondering how to solve these problems. The objective of this case is to have students discover and discuss the intertwined nature of manufacturing, marketing and supply chain decisions, making this a crucial strategy issue for most companies. Indeed, organising the supply chain is highly dependent on both industry and firm characteristics. More specifically, the case illustrates the fact that organising the supply chain in a ''one-way fits all'' fashion leads to sub-optimal outcomes. Instead, the Louis Vuitton case makes it possible to show that a segmented approach to supply chain management (ie, distinguishing between ''functional'' vs ''innovative'' products and setting up a ''physically efficient process'' for the former and a ''market-responsive process'' for the latter) yields very significant gains. The case allows for a practical implementation of the model developed by M Fisher (Harvard Business Review, March-April 1997, p 105-116).
Location:
Industry:
Size:
Sales EUR14 billion
Other setting(s):
2006

About

Abstract

The case describes the luxury goods conglomerate Moet Hennessy-Louis Vuitton in 2005 and focuses on Louis Vuitton (LV), its most profitable subsidiary. At the time, LV was encountering problems associated with logistics costs, in store availability of highly successful products as well as a troublesome growth in unsold items. In addition to deteriorating profitability, these problems were creating conflicts between LV''s vice president for marketing and sales and LV''s vice president for manufacturing and logistics. The general manager of Louis Vuitton was wondering how to solve these problems. The objective of this case is to have students discover and discuss the intertwined nature of manufacturing, marketing and supply chain decisions, making this a crucial strategy issue for most companies. Indeed, organising the supply chain is highly dependent on both industry and firm characteristics. More specifically, the case illustrates the fact that organising the supply chain in a ''one-way fits all'' fashion leads to sub-optimal outcomes. Instead, the Louis Vuitton case makes it possible to show that a segmented approach to supply chain management (ie, distinguishing between ''functional'' vs ''innovative'' products and setting up a ''physically efficient process'' for the former and a ''market-responsive process'' for the latter) yields very significant gains. The case allows for a practical implementation of the model developed by M Fisher (Harvard Business Review, March-April 1997, p 105-116).

Settings

Location:
Industry:
Size:
Sales EUR14 billion
Other setting(s):
2006

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