Here’s How Some Companies Are Handling Issues in Supply Chain

Here’s How Some Companies Are Handling Issues in Supply Chain

issues in supply chain

Red Wing Shoe Company strives “to be a great company that makes a difference in people’s lives.” How? Well, that’s simple: by putting their customers first and at the center of their operations. With over 115 years of experience and 500 retail locations across the U.S., Red Wing Store Co. works towards fulfilling the legacy of its purposeful craftsmanship. 

Steven Sikora, the owner of the Red Wing Shoe stores in Birmingham, AL, shares a bit of insight into the supply chain issues and its results. 

Operational Issues: The Background

With half of the company operating in Red Wing, MN and the other half overseas, there have been many problems during the past two years with the overall shipment and supply chain. 

Due to the many shoe companies larger than Red Wing Shoes being manufactured in China, there was a corporate decision to pull out of making products in China and move their overseas facilities to Vietnam and Indonesia. This was an excellent opportunity for the company, but when the coronavirus hit in early 2020, a major delay affected the shipping so they made another switch to shipping directly through aviation. 

The United States manufacturing plants are found in Minnesota, Kentucky, and now Arkansas. While they were producing their shoes in the U.S. plants, the “uppers” of the boots—the leather, the stitching, etc.—were being put together in the Dominican Republic, then sent back to the U.S. factories to put the soles on. Now, their goals are to teach the employees in the D.R. to put the soles on there to minimize shipping costs. 

Investment Payoffs

As aforementioned, Red Wing Shoe Co. has plans to shift its U.S. million-dollar operations to the Dominican Republic. This risky corporate decision will reap incredible benefits due to cutting the 30, 60, or 90-day slack period of waiting for the not-fully-produced to come back to the U.S. 

At the same time, the demand for Red Wing Shoe products has significantly increased in many retail stores they partner with. Regardless of how exciting those numbers seem for the company, the supply is nearly flatlining, causing major issues. 

Core Products

After thoughtful consideration, the company examined their top 25 products of the 100 they offered and chose to sell just those. The Core Products focus on their top-selling products in their top-selling colors—limiting excess shoes which are being made but not sold. 

This has limited the selection for the company, but the inventory levels for each store have seen a significant increase. 

What’s the Cost?

As of November 1st, there was a significant price increase for our products. Prior to the price increase, the average products were being sold at about $200 per product, but now it’s gone up anywhere from $220 to $225. The consumer has officially started to feel the effects of the supply chain issue problem. 

A Special Thanks

With all that information shared, it’s important that we at EO Birmingham give a special thanks to our member Steve Sikora for giving us some insight into such a high-level company. To connect with him, contact us and become a member. We look forward to hearing from you, learning more about your business and passions, and connecting you with people like Mr. Sikora. 

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