The Globe and Mail provides an article that discusses Lululemon’s current problem: stocks are dropping due to a shortage in supply. Over the past year there was a 28% increase in store sales and RBC retail analyst, Howard Tubin, estimated a 10-12% increase in the first quarter of 2011. However, in March 2011, the stocks dropped 4.4% on the Toronto Stock Exchange.
Lululemon is unable to supply its customers with enough yoga wear and combined with their increasing expenses of air transportation of products, their stocks dropped a considerable amount. Lululemon’s problem occurs frequently in many companies because it is difficult to get the product to the right place at the right time in accurate amounts.
I believe that Lululemon in unable to meet their demands because they are unable to deal with variability. Randomness is everywhere in business and demand is a variable; therefore, companies make mistakes. I think that Lululemon should construct a demand forecast using market research, analysis and prototyping. Since a forecast is the possible outcomes and the likelihood of those events happening, Lululemon should use this probability distribution to improve its supplied quantity to better meet customers’ demands.
Works Cited:
“Lululemon’s Problem? Customers Can’t Get Enough – The Globe and Mail.” The Globe and Mail. Web. 24 Nov. 2011. <http://www.theglobeandmail.com/globe-investor/lululemons-problem-customers-cant-get-enough/article1945253/>.
Powerpoint: Class 15, Supply chain operations 2, Oct. 27