There are a few companies that come to mind when asked to list a few companies whose performance affect or could affect Kirkland’s performance. In general how our direct competitors do impacts our business. A few of our direct competitors are Pier One, Wayfair, and Homegoods. If these businesses run a sale, we are likely to lose some business to these companies. On the flip side if one of these businesses went out of business it would likely result in our business to pick up.
Another company that plays a major role in our business is Design House. This company is our biggest merchandise vendor, supplying over 50% of our product. If they were to seize doing business tomorrow, we would have to revamp our vendor list quickly to see which ones could replace the product line that Design House was supplying. It would, without question, have an impact on customers. Also, if our relationship with this company went south, our cost of sales would increase since new relationships would need to be built.
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They are a 3PL that receives all of our international imports in California. They sort out our product and place it on trucks or rail cars for us. If they run into issues, you can rest assure that it would impact us. Just last year Damco was hit with a virus. It took down their systems and our merchandise receipt information was delayed. This in turn resulted in the delay in payment to our merchandise vendors. As you can imagine resulted in some long days to get our systems correct so we could pay our vendors and update our inventory. With us and Damco moving more and more to lean management, there is more and more of the need for more effective management of our supply chain risk (Aglan & Lam,