LensCrafters 2005 Annual Report Download - page 22

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LUXOTTICA GROUP IN 2005 | 21 <
Already equipped with production technologies geared to maximizing efficiency, the Group’s various
manufacturing facilities increased its focus on staff training, especially in the areas of task management
and production cost analysis.
In 2005, the Group continued to carry out the process started in 2004 of strengthening its organizational
structure at the manufacturing level, which has already contributed good results in terms of production
efficiency and flexibility as well as cost control. New staff roles were added at the production level to
more closely monitor the industrial process and to study potential improvements to production layout
and flows, enhanced coordination of production progress and analysis of new automation processes.
The entire system of forecasting requirements and planning and monitoring production progress was
then significantly overhauled, with the objective to reduce production times and the stock of semi-
finished product as well as accelerating the ability of the organization to address changes in demand.
This will improve inventory management without compromising the level of service provided to clients.
External consultants were brought in to help analyze organizational models at individual plants and
check that they are properly geared to business objectives. Still in progress in the Rovereto and
Pederobba facilities, this activity will be extended to all the Group’s manufacturing units.
Industrial investments were stepped up in 2005 to maintain the Group’s ability to rapidly adapt to the
changing needs of its production facilities and distribution network and to the market in general. For the
year, a total of approximately Euro 29.7 million was invested in plant, machinery, and equipment for
manufacturing plants in Italy. Most of this was for the Agordo facility.
Pederobba completed its new production programming project, which yielded a significant reduction in
average production times. In the last quarter of the year, this project was also initiated at the Sedico
facility. The new programming introduced at the Pederobba and Sedico manufacturing plans resulted
in changes to the process of launch of production programs in certain departments of the Agordo
facility, which supplies the two plants with semi-finished products. This process, now nearing
completion, is expected to achieve a significant reduction in production program times, which will in turn
cut programming times, drastically reduce forecasting errors and thus stock obsolescence as well.
Still regarding programming and procurement, the growing need for efficiency driven by ongoing
pressure on production times has made it necessary to strengthen the buyer function both within the
Italian and the Group’s wholly-owned manufacturing operations in China, Luxottica Tristar Optical. The
aims here are to:
• improve control of delivery times and quality by external suppliers of both raw materials and finished
products;
• search for new potential suppliers as alternatives to existing ones;
• create a database of the production capacity of each supplier by product type; this to be able to react
more promptly and more effectively to peaks in demand;
• organize systematic medium-term forecasting of requirements for every single supplier, so that their
production capacity can be geared to the Group’s needs.
There was a special focus on the implementation of industrial relationships with the Chinese subsidiary
Luxottica Tristar Optical, where programming and control procedures are being further integrated to
ensure more flexible and coordinated management of production between Italy- and China-based
plants. 2005 saw the introduction of new programs (general accounting, industrial accounting, parts
lists, warehouse management, suppliers management, first phase production progress control) in line
with the software applications used in the Italian facilities. The aim is to complete this process in 2006
so that the Chinese plant will be fully integrated and capable of improving its efficiency and flexibility.