The Luxury Goods market has witnessed exceptional growth over the decades. The extremely wealthy, for a long time, were the traditional customers of Luxury goods. However, on account of progressively opening up the market to wider audience, the luxury industry has witnessed exponential growth opportunities, resulting in unprecedented increase in the bottom-line of these luxury companies. Louis Vuitton has exemplified this over 20 years.
However, the company faces a lot of challenges with respect to optimizing its supply chain so as to ensure mitigation of losses on account of lost sales & stock outs. We have identified the following challenges:
The time for the raw materials to get from the supplier to the facilities is very long. However, because LV stands for high quality of the goods, this is a factor the company does not wish to compromise on
The time it takes for the products to go from the warehouse to the company owned stores is also too long. This is the main cause to the inventory stock outs, which results in loss in revenues.
The logistics cost is a too high. This is because LV uses one main warehouse, which delivers to most, if not all retailers, no matter where they are located.
The time it takes for the order to go through between the retailer and the warehouse is too high, especially for a luxury good. Since their order time is a month, it becomes an inconvenience for the customer to wait, and it might come as a disadvantage.
The held inventory in-stores is too high, which results in high holding costs, and loss or revenue from additional sales.
The cost of shipping a good is quite expensive.
To remediate the loss of opportunity and the ensuing loss of revenue, we suggest that LV implements the following recommendations:
LV should integrate the way they treat the demand information they get to their supply chain process planning. This would