Over the last couple years we've told you about some clothing manufacturers that are embracing lean manufacturing methods. American Apparel is able to profitably manufacture t-shirts at a factory in Los Angeles while paying higher than average wages. Joseph Abboud is making high-end suits in New England, New Balance is making great athletic shoes, and Allen-Edmonds is making high-end shoes in Wisconsin and Maine.
Three months ago the Wall Street Journal told us of another company in that industry that is embracing lean: Louis Vuitton. Not in the United States, but in France where some of the rather ridiculous work rules can constrain the benefits of lean almost out of existence.
Lean is an interesting trick for Louis Vuitton as their reputation is built on extremely high quality and exclusivity. As the article points out, sometimes that exclusivity is artificially generated, as are their prices. There were several reasons why the company decided to embrace lean:
Vuitton was releasing a new handbag each season. But the factories, which were working on long-term schedules, remained out of step. If a seasonal bag became a hit, the company wasn't capable of ramping up production.
The lean implementation wasn't an easy change:
Specialists worked on one batch of bags at a time. Half-completed purses would sit on carts until someone wheeled them to the next section of the assembly line. Because craftsmen were specialized, it was nearly impossible for Vuitton to quickly switch workers from one type of handbag to another.
But with some help from McKinsey consultants (no comment... at this time...):
The first step was to train workers to handle multiple parts of the assembly process. Gluing, stitching and finishing the edges of a pocket flap, for example, became the job of one worker, not three. To minimize wasted time, the production process for each product was divided so that each worker would need the same amount of time to complete his or her allotted tasks.
The factory floor was reorganized accordingly. Mimicking the small-team format used by Japanese electronics makers, Vuitton organized workers into groups of six to 12, depending on the complexity of the bags or wallets they are making, according to Vuitton officials and company documents. For maximum efficiency, Vuitton arranged the groups in clusters of U-shaped workstations that contain sewing machines on one side and assembly tables on the other. Workers simply pass their work around the cluster.
And success soon followed:
Because workers are less specialized now, they can make more types of bags, which gives Vuitton more production flexibility. Last month, for example, the company shifted more workers to its new $770 Lockit bag, which was selling faster than expected, to boost production.
The system also has enabled workers to detect flaws earlier. At one factory, under the old production system, one of every two $1,240 Tikal shoulder bags had frayed inside seams and needed to be repaired, according to a company document. Under the new production system, those flaws are recognized earlier and can be fixed more easily.
Later Louis Vuitton extended lean thinking to their distribution, administration, and even retail activities. But there was one quote that made me raise an eyebrow:
"It's about finding the best ratio between quality and speed," says Patrick-Louis Vuitton, a fifth-generation member of the company's founding family, who is in charge of special orders.
Excuse me? Even if your product's reputation wasn't built on quality, a ratio implies that quality can be sacrificed to some extent. If Patrick-Louis believes that, then he doesn't truly understand the power and magic of lean (apologies to Norm Bodek).
But based on what Louis Vuitton has accomplished, I have to think that the company does understand what real lean is all about... because they have experienced it.