WWYD Louis Vuitton a Multinational Company Based in France, Louis

question 86

Multiple Choice

WWYD Louis Vuitton A multinational company based in France, Louis Vuitton Moët Hennessy (LVMH) is the world's leading luxury goods company. Louis Vuitton started his company in 1854 and revolutionized travel by selling trunks and luggage designed for easier stowage on board trains and steamships. Today the company is comprised of the highest-end luxury brands in fashion, jewelry, perfume, cosmetics, shoes, wine, and spirits. Over the last decade, the worldwide luxury market has doubled to $220 billion a year, with much of that growth coming from China, where "1.4 billion people … suddenly want to treat themselves, and it will continue." Growth like that creates a number of challenges for companies like Louis Vuitton. First, it can't run out of the most popular products, but it must have the flexibility to produce small batches (limited editions) of a large number of different luxury goods. Second, because workers complete just one task, it generally takes 30 craftsmen eight days to produce just one Louis Vuitton bag. Production bottlenecks are common. The company wants and needs to restructure its production process to add more capacity without building any more factories.
Louis Vuitton generally releases one new bag a season, or four per year. Because its factories were working on long-term production schedules for its most popular products, they lacked the ability to scale up production if a bag suddenly became popular. In other words, they weren't flexible. This also meant that they were hitting production ceilings where, under their old system, their 17 factories weren't capable of producing more goods without building more factories. As a result, Louis Vuitton experienced frequent stockouts where it could not stock its store shelves.
One improvement came from using robots to move unfinished inventory throughout the factory and thereby get rid of waiting time and production bottlenecks. For example, in its Italian shoe factory, Louis Vuitton uses robots to retrieve the foot molds around which workers make shoes. Now, instead of having craftspeople retrieve a shoe mold every time they're ready to begin a new job, the robots bring the molds to the workers. CEO Yves Carcelle says the robots have yielded "considerable" time savings. As a result, instead of shipping a new bag every three months, it is now every six weeks. Patrick-Louis Vuitton, in charge of special orders, says, "It's about finding the best ratio between quality and speed."
Another improvement involved switching to teams of 6 to 12 workers and who learned to complete multiple production steps. So, instead of having three workers separately handle gluing, stitching, and finishing the edges of a flap, one worker would do all three steps. And, by placing those teams in U-shaped clusters, Louis Vuitton was able to free up 10 percent more space in its existing factories. Because of that, says CEO Yves Carcelle, "We were able to hire 300 new people without adding a factory." The U-shaped workstations also positioned sewing machines and assembly tables so that team members could pass bags back and forth without waiting. That, combined with having workers perform multiple production steps, eliminated production bottlenecks. Refer to WWYD Louis Vuitton. Partial productivity measures for making a batch of Louis Vuitton handbags would consider all of the following inputs EXCEPT:

• A)leather
• B)electricity
• C)wages and benefits
• D)sewing machines
• E)the finished bags themselves

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