When you buy a new piece of furniture online, how long do you normally wait for delivery? I am not talking about one with custom fabric or a special order.
I’m guessing you’d be pretty thrilled to see your furniture arrive in less than one week. But you probably wouldn’t complain too much if it took somewhere between one and two weeks.
OK, what if your furniture provider’s website told you to expect delivery in two months? Six months? Or even eight months?
That may sound farfetched, but it’s exactly what customers of Restoration Hardware are going through as they try to order pieces from the company’s new RH Modern line.
According to a recent Wall Street Journal article, the upscale furniture retailer is struggling to stock and ship many of the pieces in this new line. The article cites the examples of a desk that won’t ship until October and a lamp that won’t ship until June.
The problem? You guessed it: poor supply chain planning.
The Anatomy of a Supply Chain Planning Disaster
As the article reports:
“Executives at Restoration Hardware Holdings Inc. initially said they were conservative with how much inventory they purchased for the RH Modern launch and later blamed delays at key suppliers for shortages. One person familiar with the matter said the company rushed to bring the concept to market and gave suppliers deadlines that were too tight.”
These are familiar challenges. When retailers launch a new product line and lack visibility into the supply chain supporting that line, they’re likely to order inappropriate quantities, get blindsided by production issues among their suppliers, and hold their suppliers to unrealistic standards.
And that’s when customers begin to disappear. The article quotes an analyst who says that Restoration Hardware’s order cancellation rates have spiked.
Now, one could argue that because Restoration Hardware isn’t a low-end mass-producer, the company can get away with longer wait times and back-orders. After all, many of its well-heeled customers are probably willing to wait for just the right piece to finish off their living room set.
Fair enough. But will they wait two months for a lamp, six months for a desk, or eight months for a dresser?
The fact that retailers such as Amazon and Wayfair can offer two-day shipping on their furniture have changed the game for everyone. Restoration Hardware may not need to be that fast, but they’ve also got to strike a balance between quality and speed.
Otherwise, they clearly stand to lose more than customers—they’ll lose investors. The Wall Street Journal article reports that Restoration Hardware’s shares have plummeted from over $100 last November to under $40 today. It’s not a leap to suggest that the company’s current supply chain nightmare has played a part.
Anyone Still Think Supply Chain Planning Doesn’t Matter?
If there was any lingering doubt that supply chain planning is strategic, this story has obliterated it. Here’s what I believe is the most important lesson from the article:
“Logistics experts say new product launches are tricky, but there are tools available to better predict demand.”
Exactly. No supply chain planning vendor can promise you a seamless product launch with 100% customer service rates. But the least you can expect is to gain the visibility and control you need to shorten your lead times, eliminate your two-month delays, and keep customers happy by meeting your promise dates.
The Demand Solutions DSX supply chain planning platform can help you do all of the above. I’d love to talk with you about how we can help your business.