Three companies that succeeded in times of crisis
How a focus on financial processes, innovation and automation helped these three global companies achieve great business results
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The current macro-economic environment is challenging for organizations across the globe. Inflation is expected to reach a global average of 7.9 percent across the whole year 2022 as opposed to 3.8 percent between 2001 and 2019.
To manage the disruption caused by inflation, organizations can turn to their processes, automation and innovation. This article outlines how Nike, LEGO and Amazon have leveraged them to overcome a challenging time.
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Nike leveraged automation to overcome supply chains challenges
During Q1 of FY2022, Nike lost three months of production due to factory shutdowns in Vietnam, that produce more than half of the company’s shoes and 30 percent of its apparel. Compounded with transportation delays, port congestion and container shortages that affected product availability, Nike needed to find a solution to fulfil customer orders.
On top of its partnership with local US drayage carriers under the “Sole Train” initiative, Nike implemented 1,000 collaborative robots, or “cobots” in its distribution centers to increase order processing speed. These are able to sort, pack and move products and have helped the apparel company to triple its digital order capacity in North America, Europe, the Middle east and Africa.
In a company statement, Andrew Campion, chief operations officer at Nike said: “The challenges and constraints imposed by the pandemic have driven our teams to transform how we serve consumers through the implementation of new technology platforms, automation and process improvement in our operations.”
The company’s other tech capabilities for its supply chain include advanced demand-sensing and inventory optimization platforms that support its regional facilities.
Related article: Five things we learned from PEX Report 2022
LEGO focused on financial processes to become profitable again
In 2004, LEGO had recorded its biggest-ever loss of around £217mn (US$250mn). It resulted from the company’s management team operating in silos across six market regions and a lack of profitable innovation. This was coupled with years of attempts from the business to diversify in the late 1990s with theme parks, lifestyle clothing, TV series, DVDs and video games.
The then CEO Jørgen Vig Knudstorp discovered the degree of financial analysis within the company lacked product analysis and line profitability, meaning they did not know where money was made or lost.
Knudstorp along with then finance director Jesper Oveson implemented short-term life-saving actions that included setting financial targets, managing cash flow, reducing the product-to-market time, cutting the number of components from 7,000 to 3,000 and improving processes to cut operational costs.
This led the toy company to become a highly profitable business, even during the recession from 2007 to 2011 when its pre-tax profits quadrupled.
Amazon doubled down on innovation during the 2008 crisis
Between 2006 and 2008, despite the economic recession, Amazon decided to launch Amazon Prime, Amazon Kindle and AWS. This innovative mind-set mainly comes from Jeff Bezos’ “Day 1” strategy which involves keeping the sense of dynamism that defines new enterprises.
Doubling down on innovation during a recession has helped the company in becoming a market leader. It even sells its Amazon Web Services (AWS) cloud platform to companies such as Netflix and its direct competitors to help them offer their goods and services to buyers.
This focus on innovation in times of crisis has helped Amazon pass the US$1tn mark in late 2018, the second in American history to cross that line after Apple that same year.
Do you have any other great examples of business success in times of crisis? Leave a comment below.
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