The 2020 pandemic was a significant event that had a broad-based impact on the global business environment.

 

Project Background: The 2020 pandemic was a significant event that had a broad-based impact on the global business environment.  One of the more lingering issues that arose both during and even more so, after the pandemic, was the global supply chain disruption created by the shutdowns that were required during the pandemic. The focus of this project is to assess the impact of the supply chain disruption on a selected company and to evaluate the key financial impacts of the disruption, the company-specific risk factors that are present, and provide insight into how to potentially deal with these issues in the future.
Company Selection: The first step in this assignment is to choose on of the following companies as the focus of your analysis,
• Nike Inc.: is an American multinational association that is involved in the design, development, manufacturing and worldwide marketing and sales of apparel, footwear, accessories, equipment and services.
Overview of the Assignment: You have been asked by the company Board of Directors (BoD) to complete an analysis of the impact of the global supply chain disruption on the chosen company.  In order to complete this assignment, you will need to complete a ratio/FCF analysis of the company, assess the financial results, and use insight/commentary provided in the annual report to develop the narrative required to support the Board request.  The final deliverables for the project include the completed Excel template and a PPT presentation, that should be structured in a way to support an in-person presentation to the BoD at the next quarterly meeting.
Key Focal Points of the Assignment:
1. Excel ratio/FCF analysis: Develop an accurate ratio/FCF analysis using the template provided.
2. Assessment of the financial impact of the disruption: Using the completed analysis as a guide, provide a comprehensive assessment of the financial impact of the disruption on the chose company. This assessment should not only be focused on the calculated metrics, but rather a broad-based analysis of the overall financial impact of the disruption.
3. Cash flow impact assessment: In addition to the overall financial impact analysis, provide a targeted assessment of the impact on operational cash flows due to the disruption.
4. Risk Assessment: Based on the results of the analysis, develop a risk assessment for the company which highlights the key factors that were impacted by the global pandemic supply chain disruption.
5. Strategic Recommendations: Providing a comprehensive summary and at least three recommendations for how the company could avoid these impacts that could result from future supply chain disruptions.
Task
The final deliverable for the project should include the following:
• 12–15-slide PPT presentation
• At least 150-200 words of slide notes per slide
• Completion and submission of the Excel template (please include the calculation results table on one of the slides in the PPT deck)
• Be sure that the Excel template submission includes calculations in the cells (not hard-coded numbers)

 

The disruption presented a challenge of mismatched supply and demand. Initial pandemic shutdowns led to lower inventory and canceled orders. Once demand rebounded sharply (driven by athleisure trends and consumer savings), Nike could not ramp up production or transport goods quickly enough.

Revenue Volatility: Nike experienced significant swings. While demand was strong, supply constraints limited the company’s ability to fully capture revenue, resulting in lost sales opportunities, particularly in key markets like North America and Europe. Later, when the supply chain unclogged, Nike was flooded with late inventory, leading to heavy discounting to clear excess stock, which eroded gross margins.

Cost of Goods Sold (COGS) Inflation: The dramatic spike in ocean freight rates and higher factory labor costs (due to health mandates and labor shortages) directly increased COGS. This led to a substantial contraction in Gross Profit Margin (GPM), a key metric for profitability, despite raising product prices.

Operating Expense Management: Increased complexity in logistics (e.g., shifting to more expensive air freight to rush high-demand items) forced higher Selling, General, and Administrative (SG&A) expenses.

 

Targeted Assessment: Impact on Operational Cash Flows

 

The supply chain disruption had a direct, negative impact on Cash Flow from Operations (CFO), primarily through the working capital cycle.

Inventory Build-Up: Disruptions led to major changes in inventory. First, Nike shifted to carrying higher levels of "buffer" inventory as a protective measure against future delays. Second, the late arrival of seasonal goods meant the company had to hold excess, outdated inventory. This build-up in the Inventory asset account directly consumes cash, lowering CFO.

Sample Answer

 

 

 

 

 

Project Outline: Supply Chain Impact on Nike Inc.

 

The focus of this analysis is Nike Inc., a global footwear and apparel leader highly susceptible to supply chain volatility due to its outsourced manufacturing model, primarily concentrated in Asia. The analysis assesses the lingering financial and operational impact of the 2020-2022 global supply chain disruption.

 

I. Financial Assessment: Impact of Supply Chain Disruption (Slides 4-6)

 

The global supply chain disruption affected Nike's financials primarily through two mechanisms: manufacturing shutdowns (particularly in Vietnam and Indonesia) and logistics bottlenecks (port congestion and shipping cost spikes).

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