Ethical issues that effect supply chain.
LULULEMON ATHLETICA.

Lulu lemon athletica commonly known as Lulu lemon is a clothing retail chain founded by Dennis Wilson in 1998. Originating in Vancouver British Columbia. The Canadian based company has stores in the USA, New Zealand and Australia with a total of 201. They mainly manufacture their products on home soil in Vancouver but have expanded to other countries, which include China, United States of America, Israel, Taiwan, India, Peru and Indonesia.

March 2013 Lulu lemon put out the Luon black yoga pants. These looked like the typical lulu lemon yoga pants. They had the quality; the style but lacked the coverage of the usual product. This caused a huge controversy. Everywhere people were talking about lulu lemon see through yoga pants. The pants were too sheer to the point they were transparent. Almost every media outlet was talking about it, the sheer yoga pants from lulu lemon. This brought production to a halt. They had to do a recall. These particular pants totaled 17% of the all pants in all of lulu lemon stores. This was a huge loss of profit. On top of loosing profit this company lost their good reputation and stocks went down by 6%. Because of this costly mistake their expected 11% sales gain has been decreased by about 3 to 6 %.. There are customers who have turned away from the athletic clothing retailer because they no longer trust in their product. This is not the first time the Lulu lemon has had issues with the quality of their product. This see through yoga pants have been said by many to be an issue that has repeated itself. In 2004 some reported that the yoga pants they purchased from lulu lemon were in fact see-through so latest issue does not come as a surprise to most. The problem is that this product retails for 100 us dollars, and to sell something that does not meet the quality that is being offered knowingly is just unethical. People go to buy this product because the expect it to be made a certain way and when an ingredient is taken out then the manufacturers of this product is selling something worth less therefor should be reduced in price.
How does this ethical issue of quality merchandise affect lulu lemons supply chain?
After the recall the retailers would be short stock, which in turn they would be missing out on, would be sales. Investigation would take place to determine the cause of the problem and the production process would need to start over again so they could provide the appropriate product to the customer. The cost to do this would be very high because not only is everyone involved loosing out because the initial product put out was not up to standards. There was no profit generated from this product. We know that there has been a decrease in sales and customers have been looking elsewhere to purchase related products because they no longer trust in the quality of lulu lemon. This recall cost this multi billion-dollar company a reported 20 million dollars. This issue goes to question the ethics of this company. When asked they declined to answer whether they did the recall before or after customer complaints. There is a question whether or not they knew that their product was too sheer but put it out anyway thinking that it would go unnoticed.
Lulu lemon is blaming this problem on their Taiwanese supplier Eclat textiles. If indeed the supplier is to blame for the problem and that is proven then the supplier would be responsible for the loss in sales cost of the returns and cost of associated with the damage to the company’s reputation as a result of this issue. In order for this to take place then lulu lemon would have to prove that their supplier did not meet specifications given. Even with that supply management did not do their job properly otherwise this issue would not have made it to the customer. Although lulu lemon blamed éclat for the sheer product the company did not stay silent. They insisted that lulu lemon was to blame they did their job to the requirements of lulu lemon and all went through lulu’s certification process and everything was approved. The supplier points the finger at lulu lemon because if there was anything wrong on their side then they should not have signed off on it. Quality control should have not accepted this product if there were any issues that would not meet standards and would later result in loss of sales.
Lulu lemon has not proven whether or not Éclat is to blame for the faulty products. It has been said that if it had gotten that far as to reach the customers then this is a issue that keeps repeating itself within the same company with only few suppliers then the problem is not with the supplier but with the company. There is not enough supervision of on the factory floor to make sure that product is being made to specifications. The company is trying to produce more products to increase stocks. On top of that they are also looking to expand to other countries and with that there needs to be an increase in production. The company has been continuously putting out products that do not meet regular standards. This is the 4th time this happened only this time the issue received a lot of attention from various media outlets. So they were forced to do the recall. Issues like this were never treated with the same action in the past.
In conclusion this company unethical practice of knowingly allowing products below standards to pass through supply chain to customers was a costly mistake to them this time. The have been getting away with it in the past but this time the media highlighted the issue and forced the company to take action to do right by their customers and do a recall. It cost them a lot of money and hurt their reputation. They even tried to blame it on their supplier but the supplier knows what if they ad a problem with the product they were receiving then they would not have passed the certification process. In the end the company has to take accountability for their actions and suffer the consequences. This is something that the company has been doing for a while perhaps to cut cost so they can maximize their inventory.

Bibliography

Extracted Sunday April 14th 2013. Wikipedia.com.

Extracted Sunday april 14th 2013. http://money.cnn.com. See-through pants problem causes lulu lemon recall. By Chris Idiore.

April14th 22013, http://www.denverpost.com. By ANNE D'INNOCENZIO and MICHELLE CHAPMAN AP Business Writers

April 14th 2013, Read more: See-through yoga pants a pain for Lululemon - The Denver Post
By ANNE D'INNOCENZIO and MICHELLE CHAPMAN AP

http://community.cengage.com/. Lulu lemon Blames Its Supplier for Defective See-Through Pants: Contracts At Issue