Back on Track
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 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
- Marilyn Much, "Supply Chain Issues Send Retailers to the Drawing Board," Investor’s Business Daily, March 28, 2013, http://news.investors.com/business-the-new-america/032813-649686-lululemon-and-others-see-supply-chain-issues.htm.
- Tamara Rutter, "Lululemon Takes Responsibility for Failing Its Fans," The Motley Fool, April 8, 2013, www.fool.com/investing/general/2013/04/05/lululemon-takes-responsibility-for-failing-its-fan.aspx.
- News Bites U.S. Markets, "Lululemon Gives Update on Production Issues," April 5, 2013, http://asq.org/qualitynews/qnt/execute/displaySetup?newsID=15724.
- Ashley Lutz, "Lululemon’s Stringent Return Policy is Hurting Its Business," The Business Insider, April 4, 2013, www.businessinsider.com/lululemons-stringent-return-policy-2013-4.
- Murch, "Supply Chain Issues Send Retailers to the Drawing Board," see reference 1.
- Marilyn Much, "Lululemon Luon Pants Fiasco Latest Supply Chain Issue," Investor’s Business Daily, March 19, 2013, http://news.investors.com/business/031913-648541-lululemon-athletica-pants-new-supply-chain-problem.htm?p=full.
- Murch, "Supply Chain Issues Send Retailers to the Drawing Board," see reference 1.
Box, Statistical Giant, Passes Away
George E.P. Box, considered by many to be one of the most influential statisticians of the 20th century, died last month at his Madison, WI, home. He was 93.
Box was a pioneer in quality control, time series analysis, design of experiments and Bayesian inference, a statistical approach to problem solving.
A native of Gravesend, England, Box earned a bachelor’s degree in mathematics and statistics. While pursuing his master’s degree, he began work at Imperial Chemical Industries and eventually became head of the statistical techniques research section of the company. He later served as visiting professor at the University of North Carolina and was at Princeton University as the director of its statistical research group.
Box encouraged the creation of a journal devoted to statistics and statistical implications. ASQ and the American Statistical Association responded to his encouragement by creating Technometrics.
In 1960, Box moved to Madison, where he was professor and first chairman of the statistics department at the University of Wisconsin (UW). His accomplishments in the field of statistics earned him ASQ’s Shewhart Medal in 1968. Box published numerous articles and papers, and authored or co-authored many books, including Statistics for Experimenters, Time Series Analysis: Forecasting and Control and Bayesian Inference in Statistical Analysis.
Box was also professor emeritus at UW’s Center for Quality and Productivity Improvement. He was an honorary member of ASQ and a three-time recipient of ASQ’s Brumbaugh Award.
Who’s Who in Q
NAME: Ron Berglund.
RESIDENCE: Canton, MI.
EDUCATION: Master’s degree in public health from the University of Michigan.
CURRENT JOB: Global quality coach, the Quality Guy, Berglund’s independent consulting company.
INTRODUCTION TO QUALITY: Berglund used W. Edwards Deming’s Out of Chaos in 1980 to train his hospital staff at Saratoga Community Hospital in Detroit to improve processes and systems.
PREVIOUS QUALITY EXPERIENCE: Quality director at Dexter Research Inc.; senior quality consultant for Omnex, assisting companies with Six Sigma implementation; assisted Volvo and ABB Robotics in China to develop their supply chains; adjunct graduate professor teaching graduate-level quality and healthcare courses for 16 years at the College of Extended Learning at Central Michigan University in Lansing.
ASQ ACTIVITIES: An ASQ fellow, Berglund is a member of technical advisory group 176, Section 1000’s Ask the Expert group, a member of a team that developed the International Organization for Standardization/International Workshop Agreement 1 for health services organizations, and a member of ASQ committees.
OTHER ACTIVITIES: Fellow of the American College of Healthcare Executives, Folmer Award member of the Healthcare Financial Management Association, and Canton, MI, precinct 38 delegate to select state candidates in general elections.
PUBLICATIONS: Berglund has written several articles that have appeared in ASQ newsletters and publications. Most recently, Berglund updated the chapter "Conducting Successful Improvement Projects," which he contributed to Hospital Epidemiology and Infection Control, fourth edition, published by Lippincott Williams & Wilkins in 2011.
RECENT AWARDS: Distinguished Faculty of 2012 by the American College of Healthcare Executives.
PERSONAL: Widower with two grown sons and three grandchildren.
FAVORITE WAYS TO RELAX: Golf, writing book reviews for ASQ, writing, and mentoring new people in quality.
QUALITY QUOTE: Quality is common sense, but the problem is that common sense is not very common.
SECTION RENAMED ASQ’S Ozark Section 1413 has been renamed the Northwest Arkansas Section 1413 to better represent the geographic area it serves.
TEAM EXCELLENCE FORMS Intent to submit forms for next year’s International Team Excellence Award are due July 1. For more information on the competition, visit http://wcqi.asq.org/team-competition/timeline.html.
ASQ QUALITY INSTITUTE ASQ is now offering a series of introductory quality courses July 15-17 at its headquarters location in Milwaukee. The ASQ Quality Institute will feature training not normally available in classroom settings. Courses include quality basics, integrated quality management, auditing for improvement, failure mode and effects analysis, and corrective and preventive action. Visit www.asq.org/promotional/milwaukee for more details on the courses, instructors and special registration offers.
ACCREDITATION Environmental laboratories can now become
accredited to TNI Volume 1 and additional standards through a single
accreditation process offered by
ANSI-ASQ National Accreditation Board/ACLASS. Environmental laboratories can be accredited concurrently by ACLASS to the NELAC Institute (TNI) Volume 1: Management and Technical Requirements for Laboratories Performing Environmental Analysis and to ISO/IEC 17025, the international standard for laboratory accreditation. For more information about the accreditation, visit www.aclasscorp.com.
ASQ GLOBAL STATE OF QUALITY RESEARCH
Quality Not Always Centralized
Quality isn’t usually governed and managed by an organization’s centralized quality group, and measureable quality goals aren’t always included in an organization’s strategy and goals for management and support services.
Those are just a few results from ASQ’s Global State of Quality Research, scheduled to be released during ASQ’s World Conference on Quality and Improvement (WCQI) May 6-8 in Indianapolis. Some earlier results from the report include:
- 30% of respondents indicated quality is governed and managed by a centralized quality group.
- 34% of respondents said they strongly agree there are measureable quality goals in their strategies and goals for management and support services.
- 14% of respondents strongly agreed they use quality metrics in variable performance compensation.
ASQ partnered with the American Productivity and Quality Center to conduct and manage the research and report. A special session at WCQI to discuss and analyze the research has been scheduled at 4 p.m. May 7.
Survey: Midsized Manufacturers Expect Growth in Revenues in 2013
A majority of midsized manufacturers expect their revenues to increase this year, and 43% said they expect to hire more workers in 2013, according to a survey released recently.
In its annual survey, Prime Advantage, a buying consortium for midsized manufacturers, said most small and midsized manufacturers expect to beat strong revenues of 2012, with 68% of respondents anticipating an increase in sales in 2013.
The manufacturers’ top concern this year is the cost of raw materials. More than 90% of respondents included raw materials in their top three cost-pressure concerns. Healthcare costs moved back into second place among top cost-pressure concerns, with 57% of respondents including it in the top three.
"We are encouraged to see that our members expect to see growth in 2013, after a very strong 2012 for most," Louise O’Sullivan, founder, president and CEO of Prime Advantage said in a prepared statement. "As they focus on profitability and margins, we look forward to partnering with both members and endorsed suppliers to fuel the bottom line, reflecting total cost of ownership, along with the top line, greater sales and market share."
Long-time Director Hertz to Retire
Harry S. Hertz, director of the Baldrige Performance Excellence Program since 1992, has announced his retirement and will leave the post on June 3.
Deciding to retire in the program’s 25th year, Hertz said he "thought that was sort of a good transition point for me and the program. The program has had two leaders in its 25 years. It seemed like a good time for me to do something new and for the program to have some fresh thoughts and leadership."
Hertz said he considered the program’s expansion from strictly covering manufacturing and service sectors to including education, healthcare, nonprofits and government arenas as one of the program’s biggest accomplishments while he was at the helm.
The program is no longer viewed as simply an award and has become one of the standards of excellence organizations around the world strive to achieve. The Baldrige criteria are being practiced in nearly 90 countries, Hertz said.
"We’ve changed from strictly an award program to a national educational program," Hertz said. "It’s really about education and learning and helping to improve performance broadly."
One of the program’s biggest obstacles during Hertz’s tenure happened when the federal government decided it would no longer contribute funds to the program’s budget. That meant there was a $9.6 million hole in the program’s budget in 2012. But the program and its partners—including the Baldrige Foundation, the Alliance for Performance Excellence and ASQ, which administers the program—regrouped and developed a different business model and plan to maintain operations and continue the program.
"I think we’re through the transition now," Hertz said. "It was tough."
Hertz said he isn’t sure what the future holds for him. He has three growing grandchildren who will keep him busy, but he doesn’t want to lose touch with the Baldrige program, which he predicts will continue to develop and grow.
"Certainly, I want to stay involved in Baldrige somehow," Hertz said. "I think it has a lot to offer. I want to continue in some capacity—working with the program and the wonderful people on staff, as well as in the community that has engaged in Baldrige through the years. I’ve always been very interested in education, and so I’d like to do some teaching, as well."
The Baldrige Program is in the process of seeking a successor. The job has been posted on the www.usajobs.gov federal hiring website.
Word to the Wise
To educate newcomers and refresh practitioners and professionals, QP occasionally features a quality term and definition:
Matching tooling and equipment to the job and space requirements of lean production, right sizing is a process that challenges the complexity of equipment by examining how equipment fits into an overall vision for workflow through a factory. When possible, right sizing favors smaller, dedicated machines rather than large, multipurpose batch processing ones.
"Quality Glossary," Quality Progress, June 2007, p. 55.
In the March 2013 Quality in the First Person column, "Show and Tell" (pp. 48-49), author Marcia M. Weeden was misidentified as the chair of the ASQ’s Olde Colony Section. She is the section’s voice of the customer chair. QP regrets the error.