Mueller Lehmkuhl Case Analysis Essay

4491 Words Nov 19th, 2012 18 Pages
Mueller-Lehmkuhl GmbH

Mueller-Lehmkuhl (ML) was a German producer of apparel fasteners. Apparel fasteners are used in the garment industry. ML had been producing apparel fasteners since the late 19th century. In recent years, they had achieved technological superiority which resulted in high margins for their products. ML valued reliability of their products and fast service to their customers. However, competition and domestic market saturation in the 1980s led ML to a crossroads in which they needed to decide how they would maintain domestic market leadership and while expanding to new markets.

Mueller-Lehmkuhl’s Apparel Fastener Products

ML utilized an integrated approach in the apparel fastener industry
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However, they still required the operator to position the material manually. Automatic machines were designed for use by high-volume producers. ML believed that the increased speed would offset the higher costs for the machines. Two of the automatic machines were pneumatically powered. The primary difference between them was that one machine positioned only one part of the fastener while the other machine positioned both parts of the fastener which increased its speed. The third automatic machine was electrically powered which made it significantly faster than the other two automatic machines, and it could attach multiple fasteners to the same garment.

ML had developed a policy of selling manual machines and renting automatic machines. Manual machines did not cost much, did not require service, and could be modified to attach different fasteners inexpensively. Automatic machines were rented on an annual basis because they would have been more expensive to sell and it provided annual income to ML. However, about 700 of the rented machines were returned each year. During the time that machines were in inventory, ML would modify the machines to attach different fasteners. This was expensive with an average cost per modification of $2000. If all 700 machines were modified during a given year this would have cost $1.4 million per year. It was also industry practice to provide preventative maintenance and

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