La-Z-Boy’s Raw Material Shortage Illustrates Supply Risk

January 26, 2021
La-Z-Boy’s Raw Material Shortage Illustrates Supply Risk

La-Z-Boy, which operates its own factories, laid off 70% of its workforce in April 2020, when the pandemic hit. However, furniture sales rebounded quicker than expected.

When the company attempted to ramp up production, they ran into delays due to a shortage across the furniture industry of a key chemical in upholstery manufacturing.


Video Spotlight: 


This post is based on the Supply Chain Dive article, La-Z-Boy manufacturing comeback stunted by raw materials shortage, by Emma Cosgrove, November 19, 2020; the Quartz article, Americans are running out of high-end furniture to buy, by Karen Ho, December 10, 2020; and the YouTube videos in the Spotlight. Image source: (c) gerenme/Getty Images

Discussion Questions:

1. Why did the supply shortage not impact Casper as it did La-Z-Boy?

Guidance: La-Z-Boy owns its factories and is dealing with a few key suppliers.  Casper is using contract manufacturing and multiple suppliers.  This allows Casper to scale as demand warrants more easily.  La-Z-Boy may have better quality control by using fewer suppliers and having its own factories, but the key is being able to better predict demand and a dependence on supplier performance.

2.  If La-Z-Boy has a growing backlog of orders to manufacture, what options does the company have to begin to alleviate this problem?

Guidance: There may be a tendency for students to advise overtime, 24/7 operations, etc. This would miss the key point. While increasing capacity will be required to catch up to orders, the first problem that must be solved is adequate supply of the key chemical that is in short supply.

Redirect students to remedies to correct the supply shortage.  Students should consider working with other suppliers such as those that Casper is using.  Shouldn’t these suppliers already be on La-Z-Boy’s radar well before the pandemic?  Part of risk mitigation is to identify key suppliers and then find suitable backup suppliers for emergencies.

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