Texas A&M’s redshirt freshman quarterback Johnny Manziel has certainly earned his nickname “Johnny Football” for both his passing and running abilities in leading his school to a solid season of resurrection at 7-2 (as of today) and a near-upset of LSU.
Unfortunately if you want to buy his jersey (featuring only his #2, not his name) you have to wait. From Darren Rovell of ESPN.com:
In February 2012, the school was asked to give the numbers of its biggest stars to adidas. After discussing it with retailers, adidas decided to just make two numbers this season for fan jerseys — No. 1, which is standard at many schools and No. 12, associated with the school’s famous 12th Man. The numbers are decided so far in advance so that companies like adidas can manufacture the jerseys in a place where they can get the best price and also ship them at a price that allows it to achieve the greatest margins. And though the world is smaller than ever, big shipping boats aren’t moving fast enough.
I’ve long railed against overseas production for reasons exactly like this – being ill-prepared for demand spikes because of the insane focus on “do whatever is necessary to get the lowest cost, even if that means ordering months in advance from overseas” and huge lead times are a waste of time and money.
It’s not often I get to talk about Lean as a revenue driver, but here is a shining example. Texas A&M is hamstrung by adidas and they are forced to leave money on the table because adidas cannot adjust to big demand spikes for jerseys. Sports jerseys have huge margins ($200+ for an authentic MLB jersey!! $250+ for an NFL jersey!!), and it’s not like the costs of domestic production are going to seriously hamper those margins.
By not being flexible enough to produce Johnny Football #2 jerseys when the demand is there (I dunno, by game #3 of the season in September?), the school and adidas cannot fulfill demand and therefore they lose out on those huge margins.
The lack of flexibility and immediate on-demand creation is a huge management oversight. This excessive frugality likely cost adidas a lot of money.
In the defense of adidas and Texas A&M, they are trying to be smarter:
Because so much is done overseas, the only way to capitalize quickly is to have blank jerseys, which can be customized in the United States. Adidas owns a tremendous warehouse in Indianapolis that is equipped to do this, but the company didn’t have any maroon jersey blanks that had the two stripes on the side like this year’s jersey has, according to Shane Hinckley, the assistant vice president of business development in the Aggies athletics department.
Obviously not smart enough to have those blanks already in place, though. That’s strike two.
And here’s another idea floated by Rovell:
The future of merchandising might be for schools and teams to ask fans how badly they want an item like this and to take preorders at prices based on how soon they can get it. For example, if Aggies fans decided they wanted to get the No. 2 jersey faster, they could be asked by the team how much they are willing to pay. Bulk on-demand ordering could reduce the premium of having the jerseys flown in and still allow companies like adidas to make their same margins.
As a Lean practitioner (and you as well, fearless reader) I think there is a better way. On-demand production and distribution with shorter lead times isn’t that hard. adidas won’t see the same 200% margins on jerseys, but they also won’t be leaving a ton of cash on the table by not being flexible.
Penny wise, dollar foolish. We can do it better, adidas and Texas A&M.