How did Adidas end up with so much excess Yeezy branded stock?

The fallout of the Adidas/Kanye West partnership has been all too well documented for Adidas over the past few months. Landing them firmly in PR crisis territory they will have been hoping to move on from this debacle as soon as possible. But the crisis is far from over as they now find themselves stuck with over a billion dollars worth of Yeezy branded stock.

We asked supply chain expert and founder of OP2MA, Calum Lewis, to explain how they got into this situation with so much excess stock and what their options are going forward.

Calum said, “This is a classic example of forecast driven supply with long lead times - great if you have stable, predictable demand but a big problem if something significant changes to disrupt that forecast; which in this case was Adidas’ association with Kanye West switching from exceptionally positive to extremely negative overnight. It’s a risky strategy and clearly one that has not paid off for Adidas.

“In my view, Adidas need to review the supply chain design that put so much stock in the market in the first place. This looks like a ‘push’ approach where Adidas get product made to forecasts well in advance and ship into retail. They could attempt to design a more ‘pull’ style approach that replenishes retail based on what is selling – Zara are big exponents of this approach with late finishing of items based on sales data from stores with local production facilities to make this happen.”

What are Adidas’ options now?

Calum suggested they look at a couple of possibilities to try and get themselves out of their current situation:

“Let customers choose - Adidas could work with retailers to:

• Sell the stock through recognising that they need to offset any profits from this by donations or other means to counter Kayne West’s statements.
• Offer a return and re-cycle option – basically run a reverse logistics operation to get this material processed into other products. Those could be Adidas products or other manufacturers that use such material; this might reduce transport movements if it can stay in the region for re-processing. Quite a challenge but might be possible depending on the details.

“It’s fair to say that none of the options available to them are ideal and without doubt there will be further damage to the company’s brand as they work their way through the next few months. Questions need to be asked about how so much risk was placed upon a third party and how that risk was managed in order to avoid any similar scenarios in the future.”

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