Quality Progress - May 2013 - 12

keePingcurre recalls Back on Track T Yoga pants maker aims to put embarrassing recall behind it the high-end athletic wear maker lululemon thinks it has nipped its yoga pants problems in the bud, already implementing tighter testing protocols and oversight to prevent quality issues from rearing their ugly heads again. But many still point to lululemon’s missteps that forced the recall of its black luon pants and crops as a reminder to never sit still with testing and quality processes, and always pay close attention to supply chain management strategy. “everyone has (these issues), even big companies,” said sam Poser, an analyst at sterne, agee & leach brokerage firm. “But i don’t think it’s a supply chain issue per se. it’s a sitting-back-on-your-laurels issue and saying, ‘We’re doing it well enough.’ usually these issues are symptoms of some sort of complacency. it happens to the best of companies.”1 lululemon was forced to pull 17% of its yoga pants off store shelves in late March because the material proved to be too sheer. the embarrassing recall was first blamed on one of lululemon’s suppliers, but the company later admitted that quality control was lacking and testing protocols were incomplete for some of the pants fabric in question.2 in a press release last month, lululemon said it had already taken steps prior to the black luon fabric issue to bolster its internal product expertise, including the addition of senior-level capabilities in quality, raw materials and production. “this new team was instrumental in determining the root cause of the luon issue and has initiated three work streams to address what we believe are the contributing causes:” Testing and processes: a quality team is assessing all luon products in the production pipeline according to newly implemented 12 QP • www.qualityprogress.com rigorous testing and quality processes that includes revised specifications for modulus (stretch), weight and tolerances. Factory oversight: employees have been stationed in factories to monitor and test products and will educate internal teams and manufacturing partners on new testing standards and methods. Leadership and structure: the company is building a stronger internal structure with new leadership and cross-functional team capability to create a more robust organization to support its long-term growth strategy.3 the recall of the pants, which cost $70 to $100 a pair, has taken a toll on many fronts: the company estimated the recall will cost as much as $67 million, and shares of the company dropped 16% shortly after the recall news broke. it’s still uncertain how the brand’s value was damaged and whether lululemon can gain back its customers’ trust.4 Attention on supply chain in today’s complex and elaborate retail environment, retailers must pay close attention to supply chain management strategy, analysts said. retailers can sell products in brick-and-mortar stores, through mobile devices and on the internet. these three points of distribution opens a lot of supply chain risk that wasn’t there two or three years ago, said Megan Donadio, a retail strategist with the consulting firm kurt salmon.5 “good supply chain management comes down to having a true partnership with key suppliers,” said Donadio. “You must actively manage your vendors and not let them manage you. that’s the real key to a good supply chain strategy.”6 Fast-growing firms such as lululemon often face supply chain issues when products become very popular and create a strong demand. When that surge occurs, companies might not have a large supplier base to ensure quality products are made and delivered. “and if products aren’t in the stores, you risk disappointing what is a very loyal lululemon customer,” said Brian sozzi.7 When plotting out a supply chain strategy, companies must make sure they have enough suppliers to handle disruptions and mitigate risks, while also ensuring they’re not spread too thin across suppliers.8 REFERENCES 1. Marilyn Much, “Supply Chain Issues Send Retailers to the Drawing Board,” Investor’s Business Daily, March 28, 2013, http://news.investors.com/business-the-newamerica/032813-649686-lululemon-and-others-see-supplychain-issues.htm. 2. Tamara Rutter, “Lululemon Takes Responsibility for Failing Its Fans,” The Motley Fool, April 8, 2013, www.fool.com/ investing/general/2013/04/05/lululemon-takesresponsibility-for-failing-its-fan.aspx. 3. News Bites U.S. Markets, “Lululemon Gives Update on Production Issues,” April 5, 2013, http://asq.org/qualitynews/ qnt/execute/displaySetup?newsID=15724 (case sensitive). 4. Ashley Lutz, “Lululemon’s Stringent Return Policy is Hurting Its Business,” The Business Insider, April 4, 2013, www. businessinsider.com/lululemons-stringent-returnpolicy-2013-4. 5. Murch, “Supply Chain Issues Send Retailers to the Drawing Board,” see reference 1. 6. Ibid. 7. Marilyn Much, “Lululemon Luon Pants Fiasco Latest Supply Chain Issue,” Investor’s Business Daily, March 19, 2013, http://news.investors.com/business/031913-648541lululemon-athletica-pants-new-supply-chain-problem. htm?p=full. 8. Murch, “Supply Chain Issues Send Retailers to the Drawing Board,” see reference 1. http://news.investors.com/business-the-newamerica/032813-649686-lululemon-and-others-see-supplychain-issues.htm http://www.fool.com/investing/general/2013/04/05/lululemon-takesresponsibility-for-failing-its-fan.aspx http://asq.org/qualitynews/qnt/execute/displaySetup?newsID=15724 http://www.businessinsider.com/lululemons-stringent-returnpolicy-2013-4 http://news.investors.com/business/031913-648541-lululemon-athletica-pants-new-supply-chain-problem.htm?p=full http://www.qualityprogress.com

Table of Contents for the Digital Edition of Quality Progress - May 2013

Up Front
LogOn
Expert Answers
Keeping Current
Mr. Pareto Head
Balancing Act
Avoiding an Avalanche
What Makes You Tick?
Mood Righting
Innovation Imperative
Quality in the First Person
Standards Outlook
Statistics Roundtable
Special Section: ASQ Enterprise and Site Members
3.4 per Million
Career Corner
Career Corner
QP Toolbox
QP Toolbox
QP Reviews
QP Reviews
One Good Idea
One Good Idea

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