our factories

Global manufacturing is a subject that is not black and white, where there are many possibilities and potential outcomes. It is also a subject that draws much passion, energy and emotion from all sides of the discussion. At lululemon, we happen to be pretty passionate about it as well.

We started with one lululemon store in the Kitsilano neighborhood of Vancouver BC, in 1998. Our first factory was just a ten minute drive from the store. Then one store became seven, which eight years later has become over seventy-eight stores in four countries. With this growth we've formed manufacturing partnerships that support our needs for both capacity and technical capability. These partners are based in based in Canada, the United States, China, Taiwan, South Korea, Peru, Israel, Cambodia, Thailand and Vietnam.

And we're still partnering with that first factory in Vancouver that's just a short drive away.

We create long-lasting and healthy relationships with manufacturers that share our core values

selecting our partners

Our sourcing team was formed in its entirety in 2006 with the introduction of our director of global sourcing and manufacturing. Since then we've been working diligently to create a strong, ethical and talented global manufacturing team. The steps below illustrate just how we did that.

STEP ONE: IDENTIFY POTENTIAL FACTORY PARTNERS

Our director of global sourcing spent much of 2007 on the ground in various factories, taking a look at lululemon's factory relationships. A small, tight-knit group of manufacturers were specifically chosen based on capability, capacity, quality and their social and environmental responsibility values and actions.

STEP TWO: AUDIT AND INSPECT FACTORIES

A formal audit is conducted by our third party auditor, SGS, and includes a review of timesheets, accounting records, health and safety reports, factory inspections as well as interviews with everyone from workers to the factory owners. SGS is a leading international social auditing company that helps us monitor and manage our supplier compliance, and provides a neutral and unbiased evaluation (www.sgs.com).

STEP THREE: COMPLETE CORRECTIVE ACTION

During the audit, if a violation to our code of conduct is found or a recommendation is made by the auditors, a corrective action plan (CAP) is put in place. In partnership with the factory, we create a plan that outlines the root causes of the problem, the solution, and the timeframe given to implement the solution. Once the factory has the solution in place, lululemon's compliance team visits the factory again to personally review the change. If it is still not up to our standards, the process begins again with discussion, review and a new timeline for improvement.

STEP FOUR: CREATE GOALS FOR PRODUCTION

With the audit complete and the results reflecting a partner of integrity and honesty, we are ready to begin product development with the factory. All factory partners commit to lululemon's supplier agreement which outlines our manufacturing expectations and is a signed and written commitment to the standards outlined in our workplace code of conduct.

Determining which one of our approved factory partners will receive work orders for our apparel manufacturing is a decision that many believe is based solely on cost. We have developed a balanced scorecard which rates each partner based on social and environmental responsibility, delivery capability, price value and quality assurance. From our small group of partners, the factories that meet our high requirements in these four areas are the ones we work with each season.

STEP FIVE: ESTABLISH A FREQUENT PRESENCE

A small manufacturing base allows us to have greater visibility to the factory environments. In addition to our formal third party audits which occur twice a year, the factories are visited multiple times within the year by our compliance team, our commercialization team, our lululemon liaison office, and our quality assurance team.

factory legacies

Spending time to audit, inspect and ensure the health and safety of our manufacturing partners working environments is of the utmost importance. We will continue to build on this foundation through our frequent presence and long-term partnerships.

As the leaders in the lululemon global community, we also want to share with our factory partners our tools and opportunities for personal growth and development. These tools, from yoga classes, motivational audio and reading libraries, to goal-setting workshops, are offered both at lululemon for employees as well as in our stores for our guests.

In 2009 we will be bringing these same tools for health and personal development to our factory environments. We will provide our lululemon library of reading material for personal growth and development to each factory in their local language. We will also provide personal goal-setting training for all factory workers as well as factory management.

collaborations and affiliations

lululemon athletica partners with other apparel companies, non-profits, and industry leaders in an effort to learn from each other and accelerate change. CBSR, a non-profit organization of Canadian companies who have made a commitment to operate in a socially, environmentally and financially responsible manner, is one of these companies (www.cbsr.ca). We're also collaborating with other brands in the retail industry to tackle topics such as environmental responsibility and factory auditing standards, working as a collective team and sharing global best practices for supporting our factory partners.

personal responsibility creating change

The lululemon store educators work with our guests each day to provide information on the functionality and technical nature of our clothing. Our educators are extremely passionate about lululemon's product and take pride in sharing this knowledge with our guests. Our community boards within each store provide our code of conduct as well as pictures of our factory environments.

In July of 2008, we sent two store educators on a global sourcing trip with our director of global production. They are creating training tools to share their personal experience of their time with our factory partners. We will be sharing more information on this trip in the fall of 2008.

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