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Levis

In: Business and Management

Submitted By SUNNYSUNNYSUNNYs
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Levi’s Strauss was the market leader for women’s jeans in 1995. However its position as leader was coming under heavy attack. Focusing on size combination (which they offer 51), Levi’s was losing ground as more styles, more colors, and better fit became more important to its customers. Market research showed that only 24% of women were completely satisfied with their jeans purchase, at $50 a pair they were becoming a tough sell. Levi’s responded by recognizing a need to be in closer touch with their customers. They began to open stores to sell directly to their customers (rather then trough another retailer). They also implemented new technology such as EDI to help their supply chain. Unfortunately the lag time for their products was still 8 months.
Levi’s was a company that needed a way to strengthen their business. Using the value chain analysis Levi’s was a prime textbook case of a company that needed to improve its value chain in order to sustain a competitive advantage. The results of their value chain analysis are as follows:
1. Value: only 24% satisfaction rate.
2. Value stream: ROE average more then 38% lead to little improvement in their cumbersome value chain.
3. Continuous flow: 8 month lag time.
4. Pull: The customer initiated nothing, activity was driven by sales forecasts.
5. Perfection: A good ROE led management to miss opportunities in improvement.
In addition, use a pull driven distribution strategy Levi’s lost big profits when retailers had to markdown their products in order to make them more appealing. Levi’s often made good on these markdowns to their retailers. Although the opening of Original Levi’s stores helped eliminate some of these losses, it was clear Levi’s need a “better fit” with their customer.
In 1994 they were approached by Custom Clothing Technology Corp. (CCTC) with a business proposal. Specializing in...

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