Supply Chain Analysis of Adidas

Adidas is a sportswear product manufacturing German multinational company. Adolf Dassler founded the sportswear company in 1949. Today, we’ll discuss the supply chain analysis of Adidas; it focuses on various SCM elements like procurement planning, inventory management, warehousing, automation, transportation, and distribution.

Supply Chain Analysis of Adidas

Let’s discuss the main elements of the supply chain analysis of Adidas are as follows;

Sourcing of Material

Adidas is highly careful and cautious about social and environmental sustainability and the sportswear brand focuses on building a strong relationship with suppliers.

I-Direct Sourcing

Adidas builds a strong contractual relationship with the sourcing suppliers and carefully monitors their operations. They perform various operations like production, sourcing, planning, development, and distribution on the company’s behalf. However, these direct-sourcing suppliers produce a large volume for the company.

II-Indirect Sourcing

The indirect suppliers source a small portion of products and suppliers for the sportswear brand. The indirect agents place their orders under the preferred suppliers category. However, the indirect suppliers support and facilitate the direct sourcing suppliers that meet and satisfy their requirements which they can’t serve any other way.

III-Local Market Production

Sometimes, Adidas sources products and suppliers from local suppliers in their specific region and the country. Before collaborating and partnering up with the local suppliers, the social and environmental team analyzes their care and gives them permission to start working with the brand.

Types of Suppliers

Adidas deals with the following types of suppliers;

• Strategic Suppliers: They’re the material suppliers and the manufacturing partners; they’re relevant for the specific social and environmental initiatives and they’re much more than compliance monitoring. They have a meaningful relationship with the brand, and they’re the strategic partners.
• Agents: independent businesses and companies that serve as intermediaries to source product suppliers, manage manufacturing partners, and sell finished goods to customers.
• Licensees: independent businesses and companies that manage the production, distribution, and design of the specific product
• Material & Service Providers: don’t have a direct relationship with the brand, and they provide products, supplies, and goods to the company’s suppliers
• Subcontractors: production and manufacturing factories employed by suppliers and vendors to perform various production operations
• Manufacturing Partners: build a direct contractual relationship with the brand Adidas to perform various supply chain operations and produce finished goods

Relationship with Partners

Adidas has sub-categorized its suppliers and vendors in various categories and they’re as follows;

• Natural rubber and leather suppliers
• Cotton suppliers
• Raw material sourcing suppliers
• Components and material suppliers
• Manufacturing suppliers

According to an estimate, Adidas has a network of approximately over 110 production and manufacturing business partners. The sportswear brand closely collaborates with strategic suppliers. 65% of the manufacturing suppliers have been collaborating and partnering up with the brand for the past 10 years; 35% of the suppliers have been partnering up with the brand for the past 20 years.

However, the sportswear brand regularly reviews and analyzes the length of its relationship with its suppliers. In order to maintain their performance, the company has set up strict evaluation criteria and the company offers them rewards.

Suppliers Performance Analysis

I-Social Compliance

It is necessary for suppliers that have a long-term contractual relationship with the brand. Adidas regularly conducts factory audits and recognizes the root cause of the non-compliance. However, the social KPI tool focuses on analyzing the following measures;

• Effectiveness of workers
• Empowering initiatives
• Better worker satisfaction
• High retention rate
• Low accident rates

The objective of Adidas is to achieve 4S ratings for 90% of the suppliers; 100% of the suppliers would have 3S ratings by the end of 2025. The strategic approach of the sportswear brand is to regularly review its suppliers and supply chain network.

II-Licensee Performance

Adidas also procures products and supplies from the intermediaries and they run and manage their businesses independently. It is the in-direct product sourcing process; the licensees should comply with the in-house strategic measuring criteria. You could measure the annual performance of the licensees by employing the report card. The reporting mechanism is relevant to the S-KPI system, and it is applicable to the manufacturing partners and the high score means that they’ve successfully implemented it in their system.

Training Programs for Suppliers

Adidas regularly conducts training programs for suppliers and partners to improve their skills and expertise. For instance, the sportswear brand has conducted roundabout 179 training sessions and trained 4200 suppliers in 2023.

• Advanced training programs
• Performance training programs
• Fundamental training

Conclusion: Adidas Supply Chain Analysis | Adidas Supply Chain Management

After an in-depth study of the supply chain analysis of Adidas; we have realized that Adidas is the world’s leading sportswear brand. If you are learning about the Adidas supply chain analysis; then you should keep in mind the abovementioned SCM elements; procurement, planning, transportation, automation, inventory management, and sortation.