Reebok 2007 Annual Report Download - page 66

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062
ANNUAL REPORT 2007 --- adidas Group GROUP MANAGEMENT REPORT – OUR GROUP -- Corporate Functions - Global Operations
VAST MAJORITY OF PRODUCTION OUTSOURCED To minimize
production costs, we outsource over 95 % of production to
independent third-party manufacturers, primarily located in
Asia. These suppliers possess excellent expertise in cost-
effi cient mass production of footwear, apparel and accessories.
We provide them with detailed specifi cations for production
and delivery. However, our Group also operates own production
and assembly sites in Germany (1), Sweden (1), Finland (1),
the USA (4), Canada (5), China (1) and Japan (1). In order to
ensure the high quality consumers expect from our products,
we enforce strict control and inspection procedures at our
suppliers and in our own factories. In addition, we promote
adherence to social and environmental standards throughout
our supply chain. see Sustainability, p. 065
OVER 350 INDEPENDENT MANUFACTURING PARTNERS In
2007, Global Operations worked with 377 independent manu-
facturing partners. This represents a 31 % decline from the
2006 number of 547 due to a planned consolidation in the
supply base and Reebok’s apparel build-up program. This
number excludes local sourcing partners of Group subsid-
iaries, sourcing agents, subcontractors, second tier suppliers
and factories of our licensees. Of our independent manu-
facturing partners, 71 % were located in Asia, 17 % were
located in Europe and 12 % in the Americas. 28 % of all
suppliers were located in China.
Our Global Operations function manages product develop-
ment, commercialization and distribution and also supervises
sourcing of the adidas, Reebok and adidas Golf brands. Due
to different sourcing requirements in their respective fi elds of
business, Rockport, Reebok-CCM Hockey, the Sports Licensed
Division and TaylorMade are not serviced through Global
Operations but instead utilize own purchasing organizations.
In order to quickly seize short-term opportunities in their local
market or react to trade regulations, Group sub sid iaries may
also source from local suppliers outside the realm of Global
Operations. Local purchases, however, account only for a
minor portion of the Group’s total sourcing volume.
GLOBAL OPERATIONS The adidas Grou
p
’s
Global Operations function coordinates the
d
evelopment, commercialization, manufac-
turin
g
and distribution o
f
the majority o
f
our
p
roducts and leads the
G
rou
p
’s efforts in
s
upply chain improvement. Our products are
a
lmost entirely manufactured by independent
s
uppliers, primarily located in Asia.
G
lobal
Op
erations continually strives to increase
cost e
ffi
ciency throughout our supply chain,
to ensure consistently high product quality
a
nd to further improve our delivery perfor-
mance. With the inte
g
ration o
f
Reebok, we
have already generated signi
fi
cant cost
s
avings by lever aging our increased buying
power, consoli datin
g
lo
g
istics and ware
-
hous
i
n
g
and shar
i
n
g
best pract
i
ces across
o
ur su
pp
ly cha
i
n.
SUPPLIERS BY REGION 1)
1)
Fi
g
ures include adidas, Reebok and adidas Golf suppliers, but exclude local sourcin
g
p
artners, sourcin
g
a
g
ents, subcontractors, second tier suppliers and licensee factories
.
Americas 12
%
Europe 17 %
71
%
Asia