From Design to Logistics
Luxottica’s vertically integrated business model and geographically diversified manufacturing footprint have led to greater efficiency, flexibility and speed in product design, engineering, supply chain, manufacturing and logistics, while maintaining uncompromising quality.
Emphasis on product design and the continuous development of new styles are key to Luxottica’s success. During 2014, Luxottica added approximately 1,900 new styles to its eyewear collections. Each style is typically produced in two sizes and five colors.
The design of the Group’s products is the focal point where vision, technology and creativity converge.
Each frame expresses Luxottica’s two core precepts: the use of innovative materials, technologies and processes, and unparalleled craftsmanship.
The design process begins with Luxottica’s in-house designers who work in an environment that promotes innovation, originality and a creative process where eyewear is interpreted as art, as an object to put on display. They draw inspiration from both market trends and their own imagination and creativity. In addition, the design team works directly with the marketing and sales departments, which monitor the demand for current models, as well as general style trends in eyewear.
After the design process has been completed, the product development process is executed through engineering, planning, manufacturing and distribution of Luxottica’s products.
The engineering process consists of the product development stages between style sketches and the manufactured final products. By using a launch calendar that focuses on customer and geographic demand, the engineering department has been able to decrease product development timelines in recent years.
The research and development efforts of Luxottica’s engineering staff play a crucial role in the development process. Engineers are continuously looking for new materials, concepts and technology innovations to apply to products and processes in an effort to differentiate them in the eyewear market.
During the initial phase of the development process, the prototype makers transform designs into one-off pieces, crafted by hand with meticulous precision.
Once developed, they are passed on to the product department, which uses visual rendering and 3D software to analyze the necessary steps to bring the prototype to mass production.
At this point in the cycle, the mold workshop designs and assembles the equipment needed to make the components for the new model. The first samples are assembled and undergo a series of tests required by internal quality control procedures.
The next steps in the process involve the production and quality certification of sales samples of the new models. These samples are subjected to another sequence of tests to verify the quality of the engineering. The final step is the production of a preliminary batch using definitive tooling certified by an external standards organization. These samples are produced in a pilot facility that resembles the plant chosen to produce the final product for consumers.
In 2014, Luxottica’s manufacturing facilities, located in Italy, China, India, the United States and Brazil, produced a combined total of approximately 83 million prescription frames and sunglasses.
Six manufacturing facilities are located in Italy, which is at the center of Luxottica’s luxury eyewear production, combining the tradition of Italian craftsmanship with the speed and efficiency of modern automation. These factories represent 43% of global production output. Five facilities are located in Northeastern Italy, where most of the country’s eyewear industry is based, and one is located near Turin. Over the years, the Group has consolidated its manufacturing processes and allocated specific production roles and technologies to each plant. This has enabled Luxottica to improve both the productivity and quality of its manufacturing operations.
The three manufacturing facilities in China and a small plant in India collectively represent another 43% of total production output. From 1998 to 2001, Luxottica operated the Dongguan plant in China’s Guangdong province through a 50%-owned joint venture with a Japanese partner. In 2001, Luxottica acquired the remaining 50% interest in this Chinese manufacturer and in 2006, it increased its manufacturing capacity in China through the construction of a new manufacturing facility to produce both metal and plastic frames. With the opening of this new facility, the annual average daily production in China increased by approximately 80% from 2005 to 2006. In 2010, the facility started producing plastic sun lenses to be paired with frames manufactured in the same location. In 2013, Luxottica integrated into its manufacturing processes a newly developed state-of-the-art plant, partly dedicated to decorations, utilizing techniques adapted from other industries.
The Foothill Ranch facility in California manufactures high-performance sunglasses, prescription frames and lenses and assembles most of Oakley’s eyewear products. Oakley apparel, footwear, watches and certain goggles are produced by third-party manufacturers.
The manufacturing facility in Campinas (Brazil), acquired in January 2012, produces both plastic and metal frames for the Brazilian market. In September 2012, Luxottica launched the first locally designed and produced Vogue Eyewear collection for this market. Between 2013 and 2014, the Company added the production of select Ray-Ban, Arnette and Oakley collections. In 2014, the Campinas plant produced approximately 50% of the eyewear sold by Luxottica in the Brazilian market.
Over the years Luxottica has progressively diversified its technology mix from traditional metal, plastic injection and acetate slabs to include aluminum, wood, die casting, fabrics and the LiteForce material. This technology shift has reduced the weight of metal-based frames from 44% of total production output in 2010 to approximately 30% in 2014.
The manufacturing process for all frames begins with the creation of precision tooling and molds based on prototypes developed by in-house designers and engineering staff.
Luxottica’s manufacturing process for metal frames has approximately 70 different phases, beginning with the production of basic components such as rims, temples and bridges, which are produced through a molding process. These components are then welded together to form frames over numerous stages of detailed assembly work. Once assembled, the metal frames are treated with various coatings to improve their resistance and finish, and then prepared for lens fitting and packaging.
Plastic frames are manufactured using either a milling or an injection molding process. In the milling process, a computer-controlled machine carves frames from colored acetate slabs. This process produces rims, temples and bridges that are then assembled, finished and packaged. In the injection molding process, plastic resins are liquefied and injected into molds. The plastic parts are then assembled, coated, finished and packaged.
Luxottica invests in R&D to strengthen its manufacturing processes on an on-going basis. As a result, the Company continues to invest to increase its manufacturing capacity in Italy, China, the United States, Brazil and India, while benefiting from innovation and information technology enhancements. This commitment is expected to translate into increased efficiency and improved quality of the manufacturing processes.
The satisfaction of wholesale clients and retail consumers is one of Luxottica’s primary and indispensable objectives.
Achieving this objective means continually improving the quality of every phase of the production and distribution cycles and this has been one of the drivers prompting the Group’s full vertical integration. By increasing production capacity in both developed and emerging countries, the Company is pursuing a crucial goal: delivering the same ”Made in Luxottica” quality everywhere in the world.
Wherever design and production of frames and sun lenses take place, a single quality system applies to every process involved, from product development to procurement, distribution, operational analysis and uniform and measurable performance management in the plants.
Most of the manufacturing equipment is specially designed and adapted for the Group’s manufacturing processes. This facilitates a rapid response to customer demand and an adherence to strict quality control standards. Through on-going verification of precision and expertise in all the phases of production, Luxottica seeks to manufacture a product of the highest quality.
Quality and process control teams regularly inspect semi-finished products, verifying the feasibility of prototypes in the design phase, controlling standards in both the product development and production phases, subsequently checking for resistance to wear and tear and reviewing optical properties in relation to type of use. The manufacturing processes and materials used by primary suppliers are also controlled and certified.
Luxottica designs products to meet or exceed relevant industry standards for safety, performance and durability. Throughout the development process, eyewear products undergo extensive testing against standards established specifically for eyewear by ANSI (Z.80.3), ASTM, Standards Australia Limited (AS 1067) and EU (EN ISO 12312 and EN ISO 12870). These standards relate to product safety and performance and provide quantitative measures of optical quality, UV protection, light transmission and impact resistance.
To assure its quality standards worldwide and the right support for quality improvement, Luxottica has four main labs, one in Italy, one in China, one in the United States and one in Brazil. Each lab is responsible for establishing and maintaining the quality standards in the region where it is located and supports activities in engineering, production and market feedback management. All of these labs conduct the same tests using the same equipment and procedures which are developed and approved in the central Italian lab.
In 2014 Luxottica’s Italian, Chinese and US manufacturing facilities were granted accreditation by the American Association for Laboratory Accreditation (A2LA) for performing ISO 8624 and ISO 12870 tests on eyewear.
The A2LA accreditation program provides formal recognition of the technical competence and quality management utilized in performing these specific tests.
Every year, Luxottica enhances the performance criteria used in its standard tests and introduces new requirements. As a result of the effectiveness of the quality control program, the return rate for defective merchandise manufactured by Luxottica has remained stable at approximately 1% in 2014.
The Group’s distribution system is globally integrated and supplied by a centralized manufacturing programming platform. The network linking the logistics and sales centers to the production facilities in Italy, China, the United States and Brazil also provides daily monitoring of global sales performance and inventory levels so that manufacturing resources can be programmed and warehouse stocks re-allocated to meet local market demand. This integrated system serves both the retail and wholesale businesses and is one of the most efficient and advanced logistics system in the industry with 18 distribution centers worldwide, including 11 in the Americas, five in the Asia-Pacific region and two in Europe, which have allowed the Group to reduce worldwide logistic lead time year after year.
There are four main distribution centers (hubs) in strategic locations serving the Group’s major markets: Sedico (Italy), Atlanta (US), Ontario (US) and Dongguan (China). They operate as centralized facilities thanks to a highly automated order management system, servicing other Group distribution centers or, in some markets, shipping products directly to customers, thereby further reducing delivery times and keeping stock levels low.
The Sedico hub was opened in 2001 and is one of the most technically advanced in the industry. In 2014, it managed approximately 20,000 orders per day, including eyeglasses and spare parts. Sedico ships approximately 210,000 units daily to customers in Europe, the Middle East, Africa, select US markets and to the Group’s distribution centers in the rest of the world, where they are then shipped to local customers. In addition, Sedico manages customized services, such as Ray-Ban Remix, providing direct global deliveries.
The Dongguan hub was opened in 2006 and manages an average of 170,000 units per day. The growth in the Asia-Pacific region has made this hub a strategic part of the Group’s distribution network.
Luxottica continues to invest in ways to improve services and increase capacity in order to create even greater efficiencies in the region.
The Atlanta facility, opened in 1996, has consolidated several North America-based facilities into a single state-of-the-art distribution center located close to one of the major airport hubs of the United States.
It serves both Luxottica’s retail and wholesale businesses in the North American market. This facility has a highly advanced cross-belt sorting system that can move up to 150,000 units per day.
In 2013 the Group opened a distribution center in Jundiai, close to São Paulo, which offers targeted distribution services to customers.
Intellectual property is one of Luxottica’s most important assets and is protected through the registration and enforcement of its trademarks and patents around the world.
The Group’s commitment is demonstrated through the on-going results of its anti-counterfeiting activities and increased leveraging of its global organization.
Trademarks and products from market leaders are increasingly copied and the implementation of a strong global anti-counterfeiting program allows Luxottica to send a strong message both to infringers and to its authorized distribution network.
This program allows Luxottica, on the one hand, to exercise rights against retailers of counterfeit eyewear, wholesalers and manufacturers which supply them, and, on the other hand, to send a message to authorized distributors that the Group values its intellectual property and will work diligently to protect it. Through a strong investigative network, especially in China, the Company has been able to identify key sources of counterfeit goods, to assist local law enforcement in investigating these sources and, when applicable, to file legal actions against the counterfeiters.
Additionally, the Group continues to consolidate and strengthen its cooperation with customs organizations around the world, which helps to stop, seize and destroy hundreds of thousands of counterfeit goods each year. Luxottica is a member of the major global anticounterfeiting organizations, including the International AntiCounterfeiting Coalition (IACC), the International Trademark Association (INTA) and the Quality Brands Protection Committee (QBPC).
The Group dedicates considerable efforts to monitoring the trafficking of counterfeit goods through the internet, and works actively to remove counterfeit eyewear from certain popular online auction platforms and shut down the websites that violate its intellectual property rights, through the sale of counterfeit products or the unauthorized use of Luxottica’s trademarks.