Louis Vuitton's In-Stock Problem

Case study: Louis Vuitton faces in-stock problems

Issue statement

The case provides an overview on Louis Vuitton 's problem of in-store unavailability of successful products. In 2006 Louis Vuitton 's 340 company-owned stores around the world were increasingly facing the out-of-stock problem, especially regarding the new collections: products unavailability turned many would-be buyers away, preventing the company from having optimum profitability.

This problem was especially caused by the production 's lack of responsiveness: the absence of communication between marketing and production pole caused a rapid introduction of new products that require employees new learning in order to develop new products. Consequently, they are much less

It is the grandson of the founder, Gaston-Louis Vuitton, who led the company in the modern age by continuing the globalization strategy initiated by his father. The company expanded its product portfolio by introducing its whole luggage line and small leather goods, such as wallets and purses. It was in this time that the firm started to focus on advertising, developing its first advertising strategy of handling bags to Hollywood celebrity actresses.

By the mid seventies, Louis Vuitton had become the world’s largest luxury company in terms of market share and in 1987 the largest luxury goods conglomerate in the world was created: Louis Vuitton Moët Hennessy. Moet et Chandon and Hennessy were the leading manufacturers of champagne and brandy. The merger resulted in an increase in profits for Louis Vuitton of 49% in the first year.

Product lines

The brand bases its reputation on its “savoir faire” and its high quality products. Louis Vuitton also enjoys a strong brand identity with the Canvas Damier Pattern as well as the logo and the monogram which were created in order to make the the brand recognizable from its competitors.

Nowadays, Louis Vuitton owned plenty of shops worldwide.

Because of steady growth in sales, the number of manufacturing facilities increased dramatically after 1995. From 1999 to 2004, four new plants were set up to satisfy the rapidly increasing demand for Louis Vuitton products. The Vuitton factories, where the leather activity was exclusively held, were located mainly in France (6 over 8, 1 in Spain and 1 in the USA). The reason for maintaining the majority of the production in France was to keep the French soul of the brand and, of course, the coveted label "Made in France": in the luxury market it is a sign of quality and know how for both for French and for foreign customers. The brand had never planned to manufacture its products in a less-expensive location, as the quality controls in France were very high and customers expected "un savoir-faire a la Francese". The Vuitton factories employed approximately 3.500 people and maintained a strong tradition of craftsmanship: high-skilled labour was a must-have for the company, which trained workers for months before the introduction of a new product. In all Louis Vuitton 's factories, employees worked in teams of 20 to 30: each team was responsible for a product at a time. Employees were encouraged to suggest improvements in manufacturing and were required to be autonomous, multitasking and multi-skilled. The aim was to make production very flexible and responsive and to maintain high-quality standards. Average manufacturing cycle-time for standard bags (i.e. the time