Introduction

This report aims in discussing about the overall system of supply chain management (“SCM”) at Adidas AG (“Adidas”) by way of analysing the company’s internal operations. In this context, the overall flows in the supply chain shall be discussed for the purposes of understanding the flow concerning the product, information flow, cash flow as well as return flow pertaining to Adidas shoes. This report shall undertake evaluation of prevailing processes at the company for the assessment of overall effectiveness in operations. After performance of the overall analysis pertaining to the SCM system of the company, suitable recommendations shall be offered for improving the SCM process at this company.

Adidas is Germany based corporation of multinational nature which undertakes the manufacturing of shoes, clothes as well as other accessories. This company at present is ranked second in terms of manufacturer size globally and is ranked only after Nike (Adidas Group, 2021). Adidas as a brand is well-known for production, marketing and sale of sports as well as athletic wear. This company undertakes the designing as well as production of running shoes, sports shoes, apparels as well as accessories targeting men as well as women. In effect, Adidas has set up a global network for sales as well as distribution using supplier relationships of strategic nature. This company boasts suppliers over ~60 nations across the globe (Adidas Group, 2021).

Supply Chain Management Analysis

Adidas has undertaken the development of effective form of product flow at the level of SCM process. In this context demand planning as well as production planning makes sure that the optimum number in shoes shall get produced at their factories (Adidas Group, 2021; Hugos, 2018). In effect, Adidas has established factories across the globe and yet most of the company’s products has been outsourced via ~1200 factories that are located across different parts in the global context. The major form of outsourcing countries for Adidas include China, Vietnam, India and Indonesia (Adidas Group, 2021; Hugos, 2018). Hence, the shoes shall be initially developed across one amongst the various production factories. Further, finished goods shall be stored for certain time within inventory storage in the production houses. After consignment gets completed, shoes shall need to be transported towards larger-sized warehouses at this company (Adidas Group, 2021; Hugos, 2018). Then, the products shall move to the wholesaler, and the warehouse shall hold the inventory. From the warehouse of wholesaler, products shall move to the warehouse of retailer as well as later on gets distributed amongst the Adidas retail outlets. The use of cross doors shall reduce the time in the warehouse of retailers. The overall time interval in-between transportation of the goods from the warehouse of retailers towards retail outlets shall lead to the increases in sales as well as turnover with respect to the company (Adidas Group, 2021; Hugos, 2018).

The process of demand planning with respect to SCM entails statistical forecasts in the manner of collecting specific information pertaining to customer by way of order history (Adidas Group, 2021; Copacino, 2019). Further, the results which are obtained by way of a process for demand planning aids in the process of supply planning which shall be comprised with production planning. After the process of production planning is completed, information shall move towards the manufacturing process wherein the detailed form of production schedule shall be laid out for starting the process of production. The relevant information shall move from the manufacturing domain to the distribution department focussed on inventory deployment, storage process of inventory as well as fulfilment of customer orders (Adidas Group, 2021; Copacino, 2019). The system of information flow in SCM concerning Adidas shall make sure that each of the department shall receive information that is required in a timely manner as well as the information sequence shall in addition be maintained. As Adidas shall operate in quantities spanning in tonnes and entails huge sales as well as distribution network, consequently, even a single loss in information shall have an impact over the complete SCM (Adidas Group, 2021; Copacino, 2019).

In effect, cash flow shall take place in hands of the consumers towards retailer by way of invoicing system which can either be electronic or else cash (Adidas Group, 2021; Jacobs et al., 2014). The retailers shall receive the invoice from distributors of company as well as cash flows from retailer hand to that of distributors. From that of distributors, cash flows to manufacturer have the agreement with suppliers. Herein, return products shall travel from consumer hands to that of retailers as well as shall be received by company with respect to any defects. Further, Adidas has highly effective form of return policies for making sure the consumer rights shall not get violated. In effect, sustainability shall be essential to the process of supply chain at the company for protecting against environmental / social / economic laws (Adidas Group, 2021; Jacobs et al., 2014). The overall process concerning the manufacturing of shoes shall entail the usage of toxic chemicals which have a potential for polluting the environment. In addition, water represents a component that is essential to manufacture shoes as well as shall be used on a greater quantity and can result in scarcity for drinking water. Hence, Adidas needs to introduce suitable mechanisms for reducing carbon emissions in air as well as in minimising usage of water over this process (Adidas Group, 2021; Jacobs et al., 2014). The development of the products which could be recycled shall be essential. The company needs to produce products which shall not need adhesives as well as chemicals, hence, none of the waste shall get liberated. The shoes shall in addition get recycled in a repeated manner as well as consequently, shall not lead to threats for product disposal.

Recommendations & Conclusion

On the basis of the critical analysis undertaken, the most suitable methodology that can be undertaken by Adidas to enhance SCM shall be to use trend projection such that the company can establish demand driven form of supply chain (Adidas Group, 2021; Blanchard, 2021). This methodology of trend projection shall aid the company in forecasting the demands and the same shall be adequate for meeting demands of its customers. This demand driven form of method aids in slowing down production methodology while forecasted demand shall be lower as compared with earlier year (Adidas Group, 2021; Blanchard, 2021). In an alternate manner, production process has become faster as well as number the product quantities need to be increased while the demand shall be forecasted to be high. This method shall aid the company in providing real-time figures of the demand such as for meeting the demands concerning the consumers. The co-ordination, visibility, optimisation and infrastructure represent four pillars pertaining to the process that is demand driven (Adidas Group, 2021; Blanchard, 2021). Visibility shall aid in the development of a business process that is transparent, infrastructure shall support in flexible process for production that shall effectively meet demands of the consumers, co-ordination amongst the members of team shall make sure satisfying of operations as well as optimisation shall ensure that the satisfaction of customers by way of greater levels in customer services.

References

Adidas Group. (2021). Adidas Group. Retrieved from:
https://www.adidas-group.com/en/

Blanchard, D. (2021). Supply chain management best practices. John Wiley & Sons.

Copacino, W. C. (2019). Supply chain management: The basics and beyond. Routledge.

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.

Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2014). Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.