Loewe
Commitment to Lean
Management?
Philip Moscoso
Point of departure: handbag business
Manufacturas Loewe
(Getafe Factory)
Own Stores
•80% Louis Vuitton (International)
•20% Loewe
Warehouse
(Getafe)
Wholesalers
Suppliers (International)
(Ubrique, Spain)
Philip Moscoso
1
Framework for outsourcing decisions
STRATEGIC
VALUE
High
Develop Keep in company
• Impact on client
preferences and
customer relation
• Importance of
know-how (e.g.
tech Medium
development)
• Impact on
competitiveness
• Supplier
capabilities
EVA: profit after
• Architecture Outsource Harness deduction of all expenses,
(modularity)
product/service
Low opportunity costs
(shareholders, debt
holders) and taxes
Negative Breakeven Positive
ECONOMIC
VALUE
Philip Moscoso Source: Ch. Fine et al.
Diferent levels of outsourcing
Design and Development Industrialization
Selection Patronage
Series 0 Raw Planning
raw and Proto-
Design m aterial docum enta- types
BO M + FT (industrial m aterial and Production
ization) orders scheduling
supplier tion
Outsourcing
LW
LW LW LW LW LW LW LW Supplier
Supplier
Co-Development
LW LW LW Supplier
Final product purchase
LW LW Supplier
Technical support
Raw material management
Quality Control
4
Philip Moscoso
2
X
Getafe factory: current situation
Table 1
Assignment of Operators to Areas and Production Capacities
Areas Operators Approximate Capacit y
Cutting 9 160 units/day
Preparation 16 145 units/day
Skiving
Stamping
Splitting • How are they doing?
Other
Assembly 20 groups of 4 120 units/day • How to improve?
Sewing
Cutting Board
Quality Control 3 150 units/day
Total 108
4 supervisors
(1 for cutting/preparation
and 3 for
assembl y/q uali ty)
5
Philip Moscoso
Fábrica Getafe: performance assessment
“Wasted” operators
1 Transport
• 112 ops * 5% • 6 ops (48h/shift)…
2 Quality
• 106 ops * 3% • 3 ops (24h/shift)…
3 Unbalanced line
• Production hours paid:
(112-6-3)*8h = 824 • 9 ops (72h/shift)
• Value added hours in products:
120 bags* 377 min (work content/bag) = 754h Cutting: 25
Work content (eg. Cutting) Preparation: 49
TOTAL:
Assembly: 295
(9-0,7) ops x 8h x 60min 377 min
= 25 min Quality: 9
160 bags
(Adjusted for transport and quality) Supervisors: 12 6
Philip Moscoso (@ 150 bags/sh)
3
Improvements of the factory
Before Now
Productivity (cell or 8 12 bags / day 27 bags / day
equivalent ops)
Hours of work 5-6 hours 2-3 hours
content per bag
Leather utilization 50% 70%
Direct production +10% above own -20% lower than
cost suppliers own suppliers
Lead time of 5-6 weeks 1-2 weeks
orders
7
Philip Moscoso
Define a mission
Keys of the new mission
•To development our know-how on how industrialize our
products
-Support design and development in the development of quality
collections and on time
-Improve supplier management and reduce dependencies
• Be more competitive, more agile, and have the capacity to
deliver products on time (supply chain control)
8
Philip Moscoso
4
Product mix revision
Reactive Productive
« One shot » « High Runners »
> 240 Current mix
hours per LOEWE LOEWE
week
15% 30%
Volume
Volume Increase
« Image » SKU « Low runners »
Reduction
LOEWE LOEWE
10% 45%
< 240
hours per
week
< 8 weeks > 8 weeks
Production
period
Philip Moscoso 9
3 key improvement areas
• Production cells • Roles of supervisors and
• Lean (pull, JIT, …) team leaders
• Area coordination • Planning and monitoring
meetings
• Quality control function
Performance • Monitoring-management
Management tools and systems
• Updated incentive sistems
Operating
System
Culture and
Mindset
HR P1 P2 P3
• Training
• Coaching
P1
P1
P2
P2
P3
P3
P4
• Communication
P4
Team Leader • Reorganization
P4
P6
P7
P7
P6
P5
P5
P7 P6 P5
10
Philip Moscoso
5
The key contribution of LEAN
Company Customer
“Doing more with less”
Value • Resource è process
Value
(VSM)
• Results è improvement
LEAN
• Eliminate waste (reduce • Right products and good
costs) service
• JIT and six-sigma • Competitive prices
• Simplify processes • Convenient processes and
locations
• Etc.
Value reinforcement, break trade-off: WIN-WIN is possible!!
Philip Moscoso (eg. through process improvement, technology, etc.)
Task design as starting point to achieve operators
full potential
• Complete tasks: tasks that include preparation, planning, execution, control,
maintenance, repair, etc.
• Opportunities for learning and personal development: tasks that allow
application of gained knowledge and capacities, and its continuous development
• Variety: tasks that offer variety in terms of proceedings, tools, people, materials, etc.
• Transparency: the operator understands how his tasks forms part of the global
system (factory, company, supply chain).
• Communication requirements: the task requires communication and cooperation
with other persons
• Planning and decision making requirements: some minimum degrees of freedom
in terms of planning and need to take decisions.
• Influence over working conditions: opportunity to adjust basic working conditions
(eg. light, temperature, positioning, etc.)
• Temporal flexibility: reasonable working time horizon, possibility to make breaks,
etc.
• Work load: reasonable work load, avoiding too many interruptions (informative
and/or sensomotoric)
INTRINSIC MOTIVATION 12
Philip Moscoso Fuente: Waefler et al.
6
Key takeaways: Loewe
•The importance of an industrial model aligned with the business
strategy
-The question isn’t if outsource Y/N, but WHAT and HOW!
-Adjusted by product and customer typology
•Move from improvement projects to establish an improvement culture
• Only a socio-technical vision allows for optimizing both dimensions
(which are interdependent!!)
-“Physics”: optimize flows, capacities, stocks, etc. (eg. cells)
-“Chemistry”: motivation, objectives, culture, incentives, etc. (eg.
associates)
• Be pragmatic and do the numbers when designing your solution.
Not the best as possible, but as good as necessary è performance
monitoring
13
Philip Moscoso
Escaping the “tool trap” and “initiative fatigue”
What “dark” forces pull you Management
backwards? Systems and
Principles
Silo thinking, complacency,
complexity, incentives, etc.
CAPABILITY
Lean Escape
Trajectory Continuous
im provem ent culture
RESULTS
(know-why)
Tools
PROJECTS
Punctual im provem ents
(know-how)
TIME
Philip Moscoso Source: Bell 2010
7
Lean roadmap
Articulate strategic intent
Invest in lean expertise Build lean leadership
and its distribution team
Consolidate results and Design and communicate
build momentum plan
Measure, evaluate and
Learn toolkit
get buy-in
Asses value streams
Launch lean pilots
(AsIs and ToBe)
Philip Moscoso Source: Adapted from Bell 2010
