Supply Chain Management Assignment Case Study Levis

Brief history and Getting into Wal-Mart As the stated details, before 2002, Levis was one of the biggest jeans makers all over the world. The company was founded around 160 years, and it is an American icon for many years. As stated the company was so popular that its revenue once was $7.1 billion in 1996. Even now, it has 470 companyoperated stores all over the world. The employee size even much bigger, nearly 11,400 employees around the world work for Levis. This giant was very power and proud of their operation performance. Almost everyone think Levis is a unbeatable. The fact is, Jeans business is a very competitive business, event at top of Levis history, it only get 18.7% of market shares. And in 2002, even Levis has tumbled its market shares to about 12%, and revenue shrimp to 4.1 billion. What Levis face is more and more competitions in Jeans business and less market share they have, they have to have taken some method to save their glory history. They found the world most powerful retail Wal-Mart, and tried to sell Levis in Wal-Marts massive distribution channel. At same time, Wal-Mart had been selling cloth for many years, as matter of fact, it had already the largest clothing retailer in the world, but it none of their cloth was known by customers. Since Levis had demand for selling its products through Wal-Mart and Wal-Mart like to have a known brand in its stores. Two companies start to merge to a supply chain relationship, but there is one thing Levis had to do, to prove to Wal-Mart it had the ability to deliver jeans on right time and to right place. To a large extent, if Levis achieve this goal, it had to highly depends on performance of its supply chain system. And for system to work, it had solved several business problems. First problem which Levis had faced is to track products. The old business process of Levis didnt have much information about trace of products. At Levis, executives couldnt track where its product was moving in the pipeline? How many pairs of jeans were being manufactured in which factories and how many were sitting in trucks or in distribution centers. If Levis wanted to keep its speed with Wal-Mart, this is the first problem had to be solved. The lack of product information leaded to another problem which is deliver goods on time. As known by public, Wal-Mart has a very tired supply chain which allow Wal-Mart always has right amount of products on shelf. In Levis reality, as one of the executive said we delivered 65 percent of our product on time to customers, and industry gurus call that a poor performance1. The third problem Levis has to solve is forecasting. As discussed above, Wal-Mart need goods delivered at right time and right place, that demand requires an advanced forecasting system to help Levis to know when will be the right time to deliver goods in order to make sure the goods arrive exact time it needed.

Finally, Levis previous operation was a national distribution system. In order to fit Wal-Mart requirements, it had to be changed to a regional distribution system. Levis had to improve distribution channel both physical and from information technology perspective. After identifying problems, Levis start to implementing new supply chain management system to solve problems. But for implementing, it is also not an easy task. During implementing, there are a lot of issues occurred and need to be resolved. Because the nature of this supply chain management system, Levis not only had to achieve its own goal, but also to achieve Wal-Marts expectation. First thing to do is to understand requirements of Wal-Mart. The expectation of Wal-Mart was its suppliers had to achieve certain level of performance and cost control. Wal-Mart drives you to work with your supply chain to put the same requirements on your suppliers that Wal-Mart puts on you. If you cant make your supply chain work, you wont benefit from being a supplier. On the other, new system had completely change the business process which Levis used to do. New system included function call Dashboard, which was used to track trends of certain products. To achieve this function, sales people have to provide sale forecasting information to help supply chain employees to determine amount of materials they needs. Meanwhile, financial office base on information provides by system to avoid inventory building. Another issue Levis face was employees training. To adapt this system, the project leader put together a cross functional team of employees from IT, finance and sales. They supporting everything from ordering to logistics to making improvements to the data warehouse2 . Cross functional deployment requires employees knew the project, business process and knowledge of project related business area. A 25-person team required lot of training before and during project. As whole company, it also required lots of training after project. It was a huge challenge for Levis, it took many years before Levis meet Wal-Marts requirements. But the reward was also huge. In 2002, sales for the companys third and fourth quarters grew for the first time since 1996. Also in the same year, Levis back to NPD Fashion worlds top 10 list of brands preferred by young women. Meanwhile, Levis increased its delivered on time rate from 65 percent to 95 percent. And its products appear 3,200 Wal-Marts stores all over the world.