In an article in the Friday, November 22,1996 edition of the Wall Street Journal, Robert Berner reports that a small company called Langlitz Leathers in Portland Oregon is making one of the worlds most popular leather jackets, but they will not increase their production from six jackets per day. According to the Journal, "Langlitz is the leather jacket of choice for many rebels . . . as well [as] people who want to look rebellious. (WSJ A1)"
The executives at Langlitz seem to understand that their jackets are a very hot item. However, they insist on making the same number of jackets today as they made during the company's inception 40 years ago. The company makes only 1600 items a year, including jackets and pants. Their jackets typically have a seven month waiting period. This work process is based on a per-order basis as discussed in Managerial Accounting.
An example of a per-order basis is a "just-in-time" or JIT approach. Just-in-time "is a production system in which materials are purchased and units are produced only as needed to meet actual customer demand" (Garrison 11). Langlitz is actually producing below customer demand and that is what "leaves business observers scratching their heads" (WSJ A1). Langlitz is not concerned with improving their bottom line and maximizing their profits. In fact, Langlitz has sent "thousands of people" to their competitor, Leatherworks, Incorporated (WSJ A1). These are the customers who are impatient and do not want to wait for the higher quality Langlitz jacket. Quality is a precision standard and is concern for any company that runs under a JIT environment. Langlitz must insist that each jacket be of the highest quality to ensure zero defects so that they can continue to produce six jackets a day. Their jackets are made from panels of such thick leather that brand new jackets can completely stand up on their own (WSJ A8).
This system appears to be what makes Langlitz such a successful company. By insisting on the highest quality jacket and keeping quantities available low, Langlitz is counting on a continued demand for their jackets. A Langlitz jacket "typically takes two years to break in and 20 years to wear out" (WSJ A8). By continuing the same production process for 40 years, Langlitz has the attention of everyone from Hell's Angels to high ranking Japanese executives. Limiting the quantity to only six jackets per day is a highly unusual procedure considering the typical American company's desire to make a huge profit from producing high volumes of their products. As you can see, Langlitz Leathers focuses on the quality of their goods and not the quantity that they can produce. This is unlike a typical American company. Most companies attempt to "maximize . . incomes and improve . . lifestyles all the time" (WSJ A1).
The executives of Langlitz do not want to produce more than six jackets per day because "we would have to work weekends," according to Thomas Schoen, a grandson of the founder, Ross Langlitz. Producing more jackets and increasing their production lines altogether would mean a decentralization and they would lose their family-type relationship. There would also be communication problems. According to Schoen, "When you get bigger, you have an executive section and a worker section, and then nobody communicates." Communication problems are one of the biggest issues that corporate America has to deal with. When faced with this issue, many companies choose to simply to ignore the problem. Quality and productivity then become the number one issue for the company. Langlitz, however, appears to manage to keep all three under control.
Langlitz Leathers relates a great deal to the issues we discussed in the first chapter of Managerial Accounting. By keeping their company small, they avoid such issues as decentralization and automation. They produce only a few items per day and never keep an inventory on hand, much like JIT. Their future is planned for them and it has been for the past 40 years. They plan to make only six of their leather jackets a day for the entire lifetime of the company. I found that this article and this company were most interesting. Langlitz Leathers is taking a different approach to production than any company I have ever read about before.