Adidas Supply Chain Analysis

Supply chain of Adidas is global and multiple layered, with different kinds of business partners. While some among them are direct contractors, others are not. Adidas Group follows different types of sourcing models.

Direct sourcing model

Adidas Group maintains a direct contractual relationship with few of its core suppliers which are centrally supervised and controlled by global operations. These are the major suppliers of footwear, apparels and other accessories.

Indirect sourcing model

Another sourcing model is the indirect model wherein agents are assigned the work of placing orders. Requirements that cannot be met through direct sourcing model are successfully done through indirect source model.

Local market production

For fulfilling the

A key event wherein the company had to undergo a massive rationalization of its supply chain & logistic infrastructure was during the acquisition of Reebok, another giant of the sportswear industry. Adidas realized that the integration of the company could only be successful if it was possible to leverage and maximize the synergies and from consolidation of inventory from diverse key brands of Adidas & Reebok.

Originally Adidas’s Northern European distributions, was split between 4 conventional warehouses, each using different systems and processes, with the overspill being handled by third parties. On analysing the combined company’s distribution network , it was clear that supply chain rationalisation was essential to would achieve significant economies of scale and provide massive benefits to the Group. However, this entailed changing the distribution strategy of Adidas for various global

Inventory Management

Adidas Group manages its inventory level efficiently in order to satisfy the needs and changing demands of the consumers. It also ensures quick replenishments of the required raw materials. A sudden decline in demand can lead to excess inventories which will have negative implications on the financial performance of the Group. Likewise, a rapid in increase in demand for footwear or apparels can lead to a shortfall in the inventory level thereby adversely affecting the brand value and reputation of Adidas Group.

The main issue in the inventory management of Adidas Group was that there was no real time information regarding the status of shipping details and inventory levels. This lead to reduced productivity levels and dissatisfaction among the employees of the group which in turn affected the relationship with the customers. This problem caused decline in profits. To avoid the risk of inventory mismatch Adidas Group has improved the their forecasting approach by aligning the production processes and timelines of related business