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