Adidas - Sports and Logistics

...

Adidas has a team of 65 professionals, who not only conduct assessment and audits in the factories, but also work together with supplier’s owners and managers on capacity building, employee training and programs thereby educating and enabling these factories to meet the Group’s standards. The company also collaborates with NGOs such as the Fair Labor Association (FLA) to run operate independent facility audits, and works with domestic companies to train factory managers on a variety of problems from compliance with labor laws to human rights. However, there is another side of the coin: the more factories become educated with the advocacy of adidas AG professionals and endeavour to make their supply chains more ethical, the more there is a risk of those factories to switch to another company’s offer. The company has to find out ways to build better relationships with the factories’ managers and incentivize them to stay (Sustainable brands, 2013).

Even though the company trains its suppliers carefully, eventually the rules and standards to meet are still stringent. In 2014, according to the company’s sustainability report adidas Company cancelled contracts with 13 suppliers for non-compliance and all of these agreements were with suppliers from Asia, where, as it was mentioned above, 60% of its supplier facilities are located. According to the report, in situations where the factories repeatedly did not comply with the rules; the company finished any business relationships, since the mistakes were of severe nature (Supply Management, 2015).

The company's global sourcing team, which works to pre-screen potential new suppliers, evaluated 226 factories in 2014, rejecting 104. Some are rejected on a first visit, others that have serious but correctable non-compliance issues, got three months to fix problems before being re-audited. The final rejection rate in 2014 was 10 per cent (Sustainable brands, 2013).

Moreover, the company is testing out new ways to improve working conditions and communication at factories. On the grounds that most of the workers of Indonesia footwear factory (9000 employees) were using mobile phones and calling a hotline was not a convenient option in order to make suggestions or complain, in the second half of 2012 adidas Group launched a mobile phone communication pilot project (Procurement Leaders, 2013; Reuters 2013; Sustainable brands, 2013).

The system gave workers a discreet channel through which they can complain, suggest ideas or leave positive feedback. All of the text messages were sent to a central server and then managers can run queries to see what complaints are most critical, what kind of changes could be made within the factory to improve workers’ comfort or what new processes could help the factory become more efficient. The project was inspired by an ILO Better Work initiative (Procurement Leaders, 2013; Sustainable brands, 2013).

In 2012, the system had already revealed a wealth of information Adidas’ sustainability report states 79 % of the texts were related to grievances in the workplace (Sustainable brands, 2013). In its first months of operation, workers shared grievances on human resources-related issues, such as staff reductions, working hours and insurance, and also asked questions and made suggestions to their management (Procurement Leaders, 2013).

Adidas said it had also enhanced workers’ grievance system by expanding its SMS worker hotline system to nine more factories in Indonesia and 10 more factories in Vietnam in 2015 (Supply Management, 2015).

Environmental Sourcing Strategy

Since 2010, the company has a special Environmental Sourcing Strategy (ESS) in place to level off the sustainability efforts and activities in its supply chain with those of the overall adidas Group Environmental Strategy 2015.

The key goals of our ESS are to:

- Have sound management systems in place at a supplier level which decrease and remove environmental hazards

- Have environmental and resource management imprinted in its sourcing decisions and the selection and retention of suppliers

- Decrease the overall environmental footprint of material sourcing and the production of the products.

In order to be able to manage the environmental risks within the supply chain, the company elaborated and implemented a Supplier Risk Assessment Tool and an Environmental Assessment Tool, which rank its footwear, apparel and accessories & gear suppliers, but also chose material suppliers, according to their level of environmental risk. This in turn has helped the company to develop targeted training and capacity building programmes for the suppliers as well as adequate standards and policies (adidas Group, 2014).

The examples of the application of the environmental sourcing strategy of adidas AG Company: the used DryDye technology for the produced t-shirt line. The company was the first in the market to introduce the revolutionary DryDye technology, which requires no water in the dyeing process. The global DryDye handsel is part of the adidas Better Place program, a cooperation of people and processes aimed to make the world better, globally and locally. It comprises internal collaborations to bring sustainable innovations to adidas products and external projects to help enhance local communities via elemental activities, framed by the power of sports. Adidas is presently expanding this technology to include other product ranges across multiple sports categories.

(DyeCoo, 2013).

In addition, its target of using 5% Better Cotton, an initiative to produce cotton in a more sustainable way, by 2012 was achieved (Procurement Leaders, 2013). Adidas had also improved energy efficiency in many of its stores (Sustainable brands, 2013).

-

Logistic Network

Nowadays, Adidas are rapidly become more strength. In 2010, 69 countries across the globe were involving in producing Adidas goods, such as Africa, Asia, Europe, Australia and New Zealand. (Anthony Grahame, eHow Contributor, 2014). Adidas has rank by the largest sportswear manufacturer in Germany and Europe. Besides that, it also is second biggest sportswear manufacturer in the world. (Wikipedia, 2016).

Adidas Group Retail has open more than 2200 retail stores over 60 countries around the world to ensure their have the right products at the right time, and that they can run as efficiently and effectively as possible (adidas Group, 2014).

There