Date: 5/10/2023

Program/Term/Group: Supply Chain

Management – Term 1

Lululemon is a sportswear store founded in Vancouver, Canada in 1998 that aims to promote a
healthy lifestyle among its buyers, focusing on innovation and sustainability in its products. With
over 600 stores in 17 countries and more than 29,000 employees, it has experienced exponential
growth thanks to its quality, excellent designs, and brand positioning.

1. In the selection of suppliers, the purchasing team took into account that most
subcontracted factories would be located in Southeast Asia. As a result, they concluded
that it was best to subcontract suppliers located close to these areas, where 43% of the
fabrics come from Taiwan, 19% from China, and 16% from Sri Lanka. This approach is
aimed at fulfilling the "five rights": the right quality, quantity, time, price, and source.

Additionally, Lululemon has established a strong commitment to sustainability throughout

its value chain. The brand strives to drive innovation with the goal of discovering more
sustainable materials that do not harm the environment. An example of this commitment
is its inclusion in the Restricted Substances List since 2011, a measure that ensures the
brand does not use harmful chemicals. As part of its strategy for the year 2020, Lululemon
has decided to embrace the circular economy. In April 2021, the brand took a significant
step by launching its first pilot program in the United States. This program allows
consumers to exchange their older Lululemon garments for store gift cards. This approach
not only encourages garment reuse but also reflects the brand's commitment to more
sustainable business practices.

2. For the Lululemon purchasing team, efficiency and effectiveness are key factors in
adapting to the rapidly changing customer demand in a demanding market. Regarding
efficiency, when selecting the majority of suppliers in Southeast Asia, proximity to
factories was considered to reduce logistical costs and mitigate the risk of running out of
 raw materials for product manufacturing. The team also analyzed the dynamic nature of
the business environment, choosing suppliers in North America with subcontracted
factories to respond more quickly to changes in demand due to their proximity to stores.
To maintain effectiveness, they collaborate with suppliers who share their values and work
as partners to uphold strong standards and address systemic issues.

In addition to their innovative approach, another crucial point for meeting changes in
demand is their strong relationship with suppliers. This has allowed them to develop new
garments in a wide range of fabrics designed to adapt to various body shapes and needs.
For instance, the collection made with Warpstrem (a type of fabric that combines Lycra) is
presented as an ideal option for office environments, while the one crafted with Everlux (a
cool, soft, and quick-drying fabric) is specifically designed for intense physical activity
sessions.

3. With a multifaceted approach, Lululemon seeks to minimize its costs, such as through
supplier diversification, providing flexibility to negotiate and make decisions based on
market conditions. Additionally, sustainable sourcing is emphasized, where all orders
placed with subcontractors in Southeast Asia are based on projected demand. This
approach enables them to place orders with ample lead time, considering delivery times
and avoiding incurring rush orders that are synonymous with high costs.

4. Despite not having long-term contracts with the majority of its raw material suppliers,
Lululemon has been able to develop enduring relationships. This is attributed to a clear
commitment to quality and ethics, as the company adheres to the Supplier Code of Ethics
regarding social and environmental sustainability practices. Therefore, sustainability and
product quality teams closely evaluate and monitor each supplier's compliance with
applicable laws and the Supplier Code of Ethics. This monitoring includes partnerships with
leading inspection and verification firms. The company also has agreements in place to
protect trade secrets, such as the technology associated with its raw materials.

Furthermore, effective resource management has led to licensing and supply agreements
with partners in the Middle East and Mexico. These agreements allow them to operate
 lululemon brand retail stores in the United Arab Emirates, Kuwait, Qatar, Oman, Bahrain,
and Saudi Arabia. In 2020, an extension of the initial term was signed for the Middle East
agreement, extending it until December 2024.

5. Thanks to the implementation of the Oracle Cloud Enterprise Performance Management

(EPM) Planning model, which allows for the generation of different scenarios to adapt to
the changing conditions of the industry and the economy, especially crucial during the
COVID-19 pandemic, Lululemon experienced a 70% growth in online sales at the end of
May 2020 (Business of Fashion, 2020). Consumer demand has propelled the brand,
positioning it favorably to benefit from a period in which athleisure fashion has become
the go-to attire for home and office. Lululemon has established itself as the quintessential
brand embodying the athleisure trend. The company goes beyond selling leggings,
sneakers, and sweatshirts, offering a 38-brand lifestyle model targeting the Millennial
generation (Fromm, 2016).

This success is also attributed to its management and collaboration, not only with primary
suppliers but also with support suppliers. This collaboration has allowed Lululemon to
position its brand globally. In the image below, you can see some of the products or
services they purchase. The company aims to involve third-party certified suppliers in its
supply chain.

(Lululemon, s.f.)
 References

Fromm, J. (2016, July 6). The lululemon lifestyle: Millennials seek more than just comfort from

athleisure wear. Forbes. https://www.forbes.com/sites/jefffromm/2016/07/06/the-

lululemon-lifestyle-millennials-seek-more-than-just-comfort-from-athleisure-wear/?

sh=404bd6514d96

Kent, S. (2020, July 6). Case study. Business of Fashion. https://www.businessoffashion.com/case-

studies/retail/case-study-lululemon-athleisure-brand-activewear-sportswear/

Restricted sub stances list (r sl ). (n.d.). Lululemon.com. Retrieved October 6, 2023, from

https://pnimages.lululemon.com/content/dam/lululemon/www-images/Footer/

Sustainability/Restricted_Substances_List_RSL_v50.pdf

Supplier inclusion & diversity. (n.d.). Lululemon.com. Retrieved October 6, 2023, from

https://corporate.lululemon.com/our-impact/our-people/supplier-inclusion-diversity

(N.d.). Lululemon.com. Retrieved October 6, 2023, from

https://corporate.lululemon.com/~/media/Files/L/Lululemon/investors/annual-reports/

lululemon-2022-annual-report.pdf