Luxottica Streamlines Lead Time and Invests in Its Supply Chain Toward a Goal of Producing 100 Million Frames in 2015

By

Luxottica CEO
Andrea Guerra.
AGORDO, Italy—At its first Investor Day held here, where Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX) was founded more than 50 years ago, the company announced significant gains in its lead time and substantial investment in its supply chain. Chief executive officer Andrea Guerra said, “We have developed a more proactive and customer-centric approach to drive additional efficacy and efficiency in service levels. This has proved to be a game-changer in the eyewear industry, and it has been constantly reflected in our results.”

During the meeting in which Luxottica opened the doors to its operations facilities, the company cited the following statistics as the results of having streamlined operations:

Between 2009 and 2012, the company has constantly decreased the time to market for new products by 44 percent and the re-order lead time for existing styles by 43 percent. During that time, the engineering department has decreased product development time by five weeks. The company credits its R&D, product and industrial engineering as well as technical teams located across four continents for this accomplishment.

Also over the last four years, Luxottica has decreased overall lead time by 43 percent and backorders by 36 percent, while simultaneously reducing inventory. Luxottica has invested to make its service level more sophisticated and, at the same time, optimize the number of distribution centers worldwide, thus reducing local inventories. Logistics performance has steadily improved over the last four years—costs have diminished by 12 percent, while service level has improved by 30 percent.

The company plans to invest over €200 million over the next three years to increase manufacturing capacity in Italy, China, the U.S., Brazil and India, as well as for innovation and IT enhancements. With all of these improvements in logistics and investments in the supply chain, Luxottica expects reductions in overall lead time of 30 percent and by 20 percent in inventory days. In 2015, the company plans to produce 100 million frames.