Q2. What impact will the personal pair system have on the value chain shown in exhibit 3?
Prior to getting into the analysis of the impact of personal pair jeans, we have to make a few assumption as the case is not clear on a few points.
Assumption 1 - We assume that owing to the introduction of customization, (which is a novelty in the Women Jeans Segment) the sales of jeans as a whole rises. Personal pair cannibalizing the market for mass produced jeans is assumed to be relatively low.
Assumption 2 - The deal with FedEx is not clear from the case. We assume that as the standard FedEx practice, the finished goods are collected from the Levis factory by FedEx trucks.
Assumption 3 - As the cost of home delivery is only $5 which is minimal compared to the total price of the Jeans, we assume majority of the customers would choose that option, rather than re-visit the store again.
We consider the effect of the new line of jeans on each component of the value chain individually. 1. Demand Forecasting : As a portion of the demand is already known owing to the pre-orders, the demand forecasting will grow more accurate for levis 2. Market research: Each kiosk is also a point of interaction with the customer. By gaining the precise measurements of each customer, the database of information with Levis increases substantially and help them conduct more robust market research 3. Design Research: By training the sales person to interact with customers while the measurements are being taken, the Levis team will be able to obtain insights into the changing trends and customer needs. Hence Personal Pair kiosks improve the design research for the firm. 4. Production Planning: Production Planning will become easier considering that forecasting as a whole has turned more accurate. However, because of high levels of customization (pull strategy) production planning