In my class on Design and Management of Supply Chains my students have to scour the interwebs for interesting articles that are in some way related to class. After finding the article to do a one-page writeup that 1) summarizes the article, 2) convinces me this is interesting, and 3) ties the article to class at least tangentially. In early Fall 2014 this classic supply chain sourcing tradeoff article came across my desk.
So what happened? Well, Vans had one factory producing all their snowboard boots – a fairly common practice as you can build economies of scale and scope in manufacturing, transportation, etc. As with everything else in life a big gain like this must have some downside. In this case it’s that Vans is in serious trouble if this factory goes down due to some disruption such as a massive weather event, worker strikes, or, as was the actual case, bankruptcy of the factory. As a result Vans completed missed the 2014-2015 snowboard season.
Yes yes, this is unlucky and uncommon but do the economic benefits pay off when you lose an entire season of sales? How much do you want to bet Vans has a backup factory waiting in the wings in the future?
http://business.transworld.net/150858/features/vans-will-deliver-snowboard-boots-winter-2014-15/
Credit to Chelsea Pick, a Penn State/Smeal College of Business student (at the time), for bringing this article to my attention.