Pandora is the world’s largest jewelry manufacturer by production volume and operates in over 100 countries around the globe. There are over 2,400 Pandora stores around the globe with 376 new stores in 2017 and Pandora products are carried at over 7,800 points of sale. Pandora produces more than 120,000,000 pieces of jewelry products every year which are spread across over 1,500 different designs which change every season.
It is clear from the above statistics that Pandora is a successful company which sells a high volume of products to markets all around the globe. However, recent market analysis by Pandora suggests demand for their products is projected to increase beyond their current capacity, and this growth in consumer demand can only be captured by growing production capacity as well.
To increase production capabilities Pandora is consulting with “Quintig”, a global leader in supply chain planning and optimization. Quintig will be using an advanced planning system to support Pandora’s capacity expansion program in Thailand. Over 95% of Pandoras jewelry is produced in its 3 crafting facilities in Thailand which make operations in this region essential to Pandora’s total production capacity. Quintig utilizes a supply chain planning software which optimizes the use of production equipment and human resources, insuring that manufacturing has the necessary equipment and human resources has the necessary training to meet capacity expansion goals. Using Quintig software Pandora hopes to double its production capacity by the end of 2019 to meet rising consumer demand.
Because Pandora has been lagging behind consumer demand in their decision to expand, they have practiced a conservative “Wait-and-see strategy”. Pandora’s decision to renovate existing facilities and finance further renovations around existing factories will align with their competitive priorities and likely allow them to successfully capture more demand and increase revenues by their end goal in 2019. This project aims to improve the costs and times associated with making Pandora jewelry, but also maintains quality and emphasizes improving resource flexibility.
By increasing production capacity the capacity cushion decreases. The capacity cushion is reserve capacity which has been withheld for increased demand in case it should occur, and it serves to protect the firm from uncertainty. Pandora seems to currently have a large capacity cushion because it is confident in its ability to meet a higher consumer demand by increasing utilization of current resources. By supplementing this increased utilization with additional financing, they will be able to meet their goals of doubling sales with an incremental expansion Pandora and Quintig have organized a promising plan for long term capacity expansion that will allow them to continue their yearly growth as a company and meet consumer demand.
Is Pandora aggressively planning capacity by aiming to double production goals by 2019? Is this an overdue change due to the existence of consumer demand? It is an impressive goal to set for Pandora which seems like it may just be achievable.