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Case Study
Purchasing and Supply Chain Management Teacher : John Hegarty Presented by : Valerio Cataldo Cezara Ghebosu Antonella Liotine
General Background
It is a privately held clothing company of denim jeans. Founded in 1853 by Levis Strauss.
Organized intro three geographic divisions : San Francisco ,Brussels and Singapore.
Re-invention of jeans through the use of different fabrics and cuts large variety of products.
Products
Today Levis sells on average 800 millions of jeans per year ( primary product) Red Tab jeans offers traditional cuts. Silver Tab jeans define fashion looks with a background of quality. Levis jeans expanded its fashion Levis design not only in men and women apparels, but also in kids wear.
Jeans
Jeans T-shirts Jackets Skirts
Women Wear
Sometimes, the way to achieve a more sustainable design is to rethink a traditional process and find a way to do it better.
Price building
1. 2. 3. 4. 5. All materials and labor have an impact on price equal to 8,12$ ( in Dhaka factory) The assembly line takes an average of 20 minutes to complete a pair of jeans Then jeans are packed and sent to Chittagong Port ( 152 miles from the factory) There the jeans are shipped to US ( the average journey takes 30 days) and the price increases ,becoming 8,42 $ customs: the US import duties on a pair of jeans are 16,6% of landed cost. So the price becomes 9,82$ Jeans are repackaged for the distribution at the warehouse and then these are sent to a store at 12,29$ The average retail markup is 300% Your jeans will cost you at least 46,87$ ( final price)
6.
7. 8.
Value Chain
Distribution channels
The main distribution channels are: 1. Flag stores ( they sell only the Levis brand) 2. Franchised stores ( shops that sell many brands on the basis of a contract which give them this right) 3. Internet ( the online shop, which represents only the 10% of sales) All these channels allow to Levis to obtain the largest distribution cover and so be present everywhere .
Some KPI
Levis uses the supply chain KPIs to track the current shipments , monitor inventory level and to ensure that all orders are accurated. 1. Order tracking ( monitor the status and accuracy of orders that are shipped out) 2. Rate of return KPI ( mesures the rate at which shipped items are returned ) 3. Inventory turnover KPI ( measures how offen the organization is able to sell the entire inventory in a given year)
Penalties
Poorly performing suppliers are warned that they are in danger of having the production orders reduced unless the are able to improve their TOE performance. If performance does not improve, the production orders will be reduced untill the suppliers can bring it to an acceptable level. If performance still does not improve the relationship will be ended.
Sources
Anderson, J. (2009). Levi Strauss & Co. Annual Report. Camp, S., Clark, G., Duane, L., & Haig, A. (2010). Life Cycle Analysis and Sustainability Report. YouTube video about price building Levis Less water campaign Preece, S., Fleisher, C., & Toccacelli, J. (n.d.). Building a Reputation Along the Value Chain at Levi Strauss. Retrieved from www.toccacelli.com: http://www.toccacelli.com/pdf/Building-a-Reputation.pdf