Supply Chain Consultancy

How did Adidas come back from their Yeezy disaster?

Date:
16 April 2024

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Last year, we discussed the situation Adidas found themselves in after the spectacular fall from grace of Kanye West left them with over a billion dollars worth of Yeezy branded stock.

However, from a huge PR headache and a forecast loss of up to 700m Euro just over 12 months ago, Adidas is now reporting an operating profit of 268m Euro for 2023.

So how did they turn things around?

Dealing with a potential 500m Euro stock write-down of Yeezy related items was critical to turning around financial performance.

Donations to charity

After consulting with groups such as the Anti-Defamation League, Adidas elected to sell the shoes and to divert part of the proceeds to charities seeking to combat hate speech. A pragmatic solution similar to one of the options we suggested in our February 2023 blog.

Launch of classic ranges

In addition, new chief executive, Bjorn Gulden, pulled forward the launch of revamped classic Samba and Gazelle ranges that became immediate bestsellers whilst seeking to rebuild relationships with retailers who were rather frozen out in a drive to sell directly to consumers online and via own brand stores.

Collaborative relationships with suppliers and customers

Whilst it seems there was some initial resistance to speeding up the Samba and Gazelle launches due to internal processes, the ability of the business to ramp up and switch production to popular items speaks to how supply chains are designed and managed; as does closer collaboration with retail customers. We have long advocated building collaborative relationships with suppliers and customers as a key component of any supply chain strategy, with detailed design of how data and information is shared across the end-to-end supply chain to support both synchronisation and flexibility in operations. Collaborative planning is the foundation for success along with gearing ordering and execution activities to respond to demand.

Being agile to change

Supply chain management often makes the news when something has gone wrong or the ‘magic conveyor belts’ of global supply lines are disrupted; issues like container ships stuck in the Suez canal, attacks by Houthi rebels in the Red Sea causing ships to divert via the Cape of Good Hope - or indeed when demand plummets after Rishi Sunak ruins the credibility of your trainers! How supply chains are designed and managed is central to any business and how it seeks to pursue strategy. Indeed, we would argue that supply chain strategy should not be distinct or a consequence of commercial strategy, it is integral. It is also essential that supply chains adapt as circumstances develop and change. Climate change, demographics, geopolitics, and technological advances, most notably Artificial Intelligence, amongst many factors, provide the impetus to keep supply chain configurations under review and to adapt and innovate to meet challenges and take opportunities.

For advice on how to tackle your supply chain challenges, book a free discovery call with one of our experts.

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