Managing Distribution Channels and Supply Chains, Case Study Example

The first stop in Louis Vuitton’s (LV) supply chain is the suppliers. A majority of the suppliers are located in either France or neighboring European countries. On average, it took 6-8 weeks for supplies to be delivered to Louis Vuitton headquarters. Due to the long lead time, LV would typically 2.5 months of raw material inventory.

The second stop in LV’s supply chain was production facilities. Leather goods were manufactured in France, Spain, and the US. While specific production time frame figures are not available for every product line, the production time needed for bags was 6 days.

The third stop in LV’s supply chain was the central logistics center located in France. Products were typically stored in the central warehouse for one month.

Finally, once the luxury products were aggregated in the central warehouse they were distributed to stores located throughout the world. The company boasted a total of 340 retail outlets in 2005, in addition to the “experimental areas” the brand rented out in department stores. Once a month, retail store managers drew up an estimate of the replenishment requirements with the central warehouse in France. The method of transportation changed over the years: Although LV initially used boats to transport goods, as the number of stores and the need to cut down on transportation time emerged, it switched to air transport.

Although LV faced many problems besides transportation and logistics, they played a substantive role in the product “bottleneck” in the case study; customers demanded products that were not in stores that, in turn, led managers to over order products and demand faster delivery times that led to a less organized and efficient production process. Indeed, while this problem has already emerged as a key one to be addressed by LV in their attempt to improve financial results, it will likely continue over time. The case study states that LV has continued to not only expand their product lines that will place further burden on the system, but they have also expanded the number of stores that they house worldwide, including in further away areas such as China and Japan. In order to deal with the increasingly expansive geographic range, LV would be best served to reexamine their choice of transportation. In this case study, the decision is between increasing expensive transportation such as express airline, and/or cutting costs using less expensive modes of transportation such as boat. There will be a tradeoff there will be a key element of LV’s new corporate strategy. The strategic options for LV are explored more in-depth below through presenting the different stages of the supply chain and the approximate time period needed to reach the next stage.

In the page below, the supply chain of the company will be laid out in greater detail.

1. Louis Vuitton Supply Chain and Delivery Times (Case Study)