How Adidas Wants to Take a Shoe From Idea to Store Shelf in 45 Days
December 15, 2016Adidas, the world´s second-largest sportswear brand, has visions of a leaner, faster, and more consumer-centric future. A future that will be built largely on the supply chain.
By 2020, adidas plans to deliver 50% of its products – from inception to store shelves – within 45 days.
The sportswear industry has evolved over the past several years. Athletic shoes and apparel used to be valued for their function over their design. Now fitness is a lifestyle, and athletic apparel is as common on the runway as it is at the gym. Style matters.
Coming into 2015, adidas’ leadership saw the need to revolutionize the brand to become faster, more agile, and better equipped to meet the constant changes in consumer demand. The brand is going on offense.
“We will become the first true fast sports company,” adidas Group CEO Herbert Hainer said during the company’s Investor Day presentation in March. “We have developed game changing capabilities which will enable us to listen and to win our consumers with the right concepts anytime, astonishing experiences everywhere, and the desired product always.”
A Three-Striped Approach
Adidas has long aspired to take Nike’s spot as the No. 1 brand in sportswear. But in recent years, the brand with the three stripes has felt the squeeze of new competition like Under Armour and Lululemon that were quick to capture market share.
Adidas’ vision of a consumer-led organization relies on three key elements that, if executed in harmony, will make it the fastest sportswear company in the world: cloud technology, localized production, and an open ecosystem.
Adidas wants to be the fastest brand in sports. It will achieve that goal by investing in agility in manufacturing. Right now the company is piloting new programs to simplify its processes and innovate in the supply chain.
The first step is already being executed. Adidas relies on a cloud-based platform to achieve better end-to-end visibility into all inventory movements across its supply chain, from raw materials to finished products. With cloud technology, adidas is able to manage its transport flows and incorporate the principles of responsiveness and fast fashion into its production capabilities.
While technology enables streamlined processes, proximity will get production closer to key markets around the globe. Right now most of adidas’ footwear sourcing is in Asia, with production taking place in China, Cambodia, Laos, and Vietnam.
“We want to get closer to the market, because today everything is located in Asia, and obviously it takes you normally six weeks from the production site to your retail store when a product is finished,” Hainer says. “Six weeks is too long.”
By automating more of its manufacturing cycle, adidas will be able to produce closer to where its consumers live – even in high-wage countries like Germany or the United States. Hainer says the company will actually bring the production of some of its shoes back to Germany – the country where it all started. It’s the beginning of a plan to use automation to produce more footwear in geographically strategic regions. In August, adidas even announced their vision of producing shoes in-store. In the near future, the company will be assembling custom-made shoes on demand, right at the retail location.
An Open Ecosystem
The third part of adidas’ plan to become the fastest sportswear maker around depends largely on its listening skills.
“We will be the first sports brand that invites athletes, consumers, partners, and customers to be part of our brand,” Hainer says. “We will open up so that they can co-create the future together with us. And we are already working with some of the most creative and innovative people and organizations on this planet.”
A lot of it has to do with listening to trends hidden in big data, too. Adidas acknowledges capturing all that data will require a lot of IT and big data spending. But the company’s execs see it as a worthwhile investment. Adidas’ idea of speed isn’t solely about production. It’s also a matter of investing in technology to enable faster reaction times in its response to consumer demand.
Adidas claims to be heading toward an open-source ecosystem and has already integrated all of its suppliers via a cloud-based platform to enable real-time collaboration. For a company like adidas, which outsources the majority of its production to 1,100 independent factories in 61 countries, the ability to see its products as they pass through the supply chain and identify bottlenecks with its suppliers is crucial to realizing its goal of achieving world-class speed to market.
Supply Chain as Path to the Future
The underlying feature in adidas’ vision of a more consumer-centered future is its supply chain. Only through the better utilization of data, technology, and global sourcing will adidas be able to meet its stated goals of 15% annual income growth with 50% of its products going from inception to store shelf in 45 days or less.
“In order to live up to this goal we have to constantly reinvent ourselves as an organization to lead the change in our industry,” Hainer says.