How Does Pandora’s New Warehouse Management System Support Lean Operations?

Pandora A/S (Nasdaq Copenhagen: PNDORA), the Denmark-based jewelry company, is in the middle of a multiyear supply chain overhaul. A central piece of that effort is a new warehouse management system (WMS) from Hardis Supply Chain, which is being rolled out in phases across distribution centers in Thailand, Germany, and the United States. The U.S. rollout is scheduled for July 2026 at a new 107,000-square-foot distribution center in Anne Arundel, Maryland, a facility that will expand Pandora’s U.S. distribution footprint by close to 80%.

Pandora has said the new WMS is designed to “cut back on idle inventory,” “respond to demand signals,” and “improve overall service levels.” That language maps almost directly onto the ideas behind lean operations. Lean thinking treats inventory that sits unsold in a warehouse as a form of waste, because it ties up cash, takes up space, incurs insurance and handling costs, and runs the risk of becoming obsolete before it sells. For a jewelry company that crafts trend-sensitive designs from precious metals, the pressure to keep inventory moving is especially strong.

Inventory carrying costs are the ongoing costs a company incurs simply to hold inventory on hand. They typically include storage and warehousing, insurance, security, handling and moving inventory around, shrinkage and obsolescence, and the opportunity cost of the cash tied up in inventory that could otherwise be invested elsewhere in the business. When a company holds less inventory, those carrying costs generally go down.

For example, suppose a jewelry retailer estimates that its annual inventory carrying costs are about 20% of average inventory value. If that retailer trims its average inventory by 500 million kroner through better warehouse technology and demand planning, the expected carrying cost savings would be roughly 500 million times 20%, or 100 million kroner per year.

View a quick tutorial video about lean operations and then answer the following questions.

Note to instructors: This post is assignable in Pearson’s MyLab and has questions that are auto-graded.

Discussion Questions

1. Lean operations treats excess inventory as a form of waste. What types of waste might Pandora specifically be trying to eliminate with its new warehouse management system?

2. What are some of the main categories of inventory carrying costs for a jewelry company like Pandora? Are any of these costs likely to be larger or smaller than they would be for a retailer selling non-precious goods, such as a discount retailer?

3. Pandora has said the new WMS will help it respond to demand signals faster. How might faster response to demand signals reduce the risk of holding obsolete or out-of-trend inventory?

4. Lean operations also emphasize improving service to customers. How might the same system that reduces idle inventory also help Pandora improve the experience for customers who order online or shop in Pandora stores?

5. Not every company benefits from running very low inventory. What risks would Pandora take on if it trimmed inventory too aggressively, particularly heading into the holiday shopping season?