After reading Nikita Arora’s blog posts on “How Lululemon tripled its profits by improving its supply chain”, I found it very interesting and convincing but I have some disagreements toward the view that Lululemon has an efficient supply chain though it has made huge success in recent years.

Lululemon, the famous Canadian Athletic brand, ranks among the most productive chains in US, only running behind Apple and Tiffany, co.

“According to the ranking by U.S. research Retail Sails, Lululemon rakes in $1,936 (U.S.) per square foot, behind Tiffany’s $3,017 and the chart-topping $6,050 generated by Apple. Lululemon, which holds the No. 1 spot among apparel chains, and operates more than 100 shops in the U.S., has moved up one ranking from the last measure, swapping spots with Coach Inc. Rounding out the top five is Michael Kors Holdings.” 

Lululemon has been growing and expanding at a fast speed in recent years. What is different from Lululemon and Apple, Tiffany is that Lululemon also ranks 8th in the fastest growing annual change in store sales, which indicates its promising future. The sales of Lululemon has increased by 33% since last year.

With the growing sales and demand comes with increasing problems. Even though Lululemon’s retail sales are increasing annually, it still has one of the biggest problems unsolved. Lululemon’s supply chain management proves to be very inefficient and unresponsive , as we have discussed earlier in the COMM 101 class. The products of Lululemon get off shelves faster than new products arrive, resulting in a shortage of goods and loss of potential customers. Part of the reasons are Lululemon’s manufacturing partners’ locations. Lululemon’s manufacturing partners are based in Canada, the United States, China, Taiwan, South Korea, Peru, Israel, Bangladesh, Cambodia and Vietnam. However, most of its products are manufactured in countries far away from North America, resulting in a long time product-delivery and a inefficient supply chain. While some people may consider this as a good trend because Lululemon can increase the demand for its product when the supply is not enough, therefore making its products hot and desirable among customers, they clearly understate the significance of supply chain and logistics.

Lululemon has a high inventory turnover, which is a good thing meaning its products go out fast. However, Lululemon needs to enhance its control over its inventory and try its best to make the accurate forecast of its products’ needs in order to promote its retail sales. It is true that Lululemon will make money as long as it sells all of its products and it may get into trouble when some of its products are stuck in factory when it is producing too much. Yet the company needs to take opportunity costs into account and starts to consider improvements on its supply chain management so as to grow bigger and keep its revenue increasing. Supply chain management does make a difference in today’s retail world!

The optimistic behavior of Lululemon in the recent years:

Official Lululemon Website (Learn more about Lululemon!)

Original News Source:Lululemon among most productive chains in U.S. (the globe and mail)