Reebok 2011 Annual Report Download - page 95

adidas Group
2011 Annual Report
GROUP MANAGEMENT REPORT – OUR GROUP
91
2011
02.5 Global Operations
by almost 40%. The function will continue to look for opportunities
to semi-automate process steps in production where possible, while
supporting this effort with the endorsement of lean manufacturing
principles throughout its supply base.
The Profitability Management department within Global Operations
assumes a central role in realising cost competitiveness by driving
our strategic costing efforts and optimising our buying strategies.
Throughout 2011, the function has been developing a model of profit
and productivity incentives that serves as a basis for productivity
improvement discussions with our supply base. As part of this
initiative, data and documenting processes were analysed across
the adidas and Reebok brands to make differences in cost policies
transparent in order to align them longer-term.
Providing industry-leading availability
Building on the solid platform that has been established to ensure
product availability, Global Operations is further shortening our order-
to-delivery lead times. This will be accomplished by establishing and
offering a set of tailored and sophisticated replenishment models to our
customers and own-retail activities via improvements in our planning
systems and processes. The overarching goal of these initiatives is to
delay decisions on customer-specific order adjustments to the latest
possible point in time for increased flexibility in how we plan, produce,
deliver and stock product.
As part of this priority, Global Operations is building five new supporting
system solutions that use SAP as a basis to standardise, automate,
bundle and execute market processes and system functionalities. The
roll-out of these systems and processes is a prerequisite to enable
enhanced value-added services (e.g. labelling, price tags and RFID
tags) at our factories and distribution centres. These are also critical
for our flexible make-to-stock service which aims to improve product
availability and inventory utilisation by planning and building inventory
buffers at different locations further up the supply chain.
Other capabilities that the function is building include an increased
level of transparency on lead times in our supply chain. This will
allow for more pro-active and accurate instructions on delivery times,
planning and purchasing, resulting in a reduction of workload and
increased customer satisfaction. Another important aspect will be the
introduction of the capability to transfer inventory between locations in
a more automated manner.
Enabling later ordering
Enabling later ordering is a cross-functional priority in Global
Operations aimed at allowing our customers and own-retail network
to order our products closer to the time of sale, facilitating buying
decisions that are based on better market knowledge.
This priority focuses on reducing production lead times on footwear
and, ultimately, apparel to 60 days. In 2011, we succeeded in bringing
70% of Reebok footwear articles onto this lead time. Since the majority
of adidas footwear is already on 60 days, the change will allow us to
align sales processes across the brands and improve efficiencies. For
apparel, Global Operations has now developed a 60-day lead time
concept, which will be rolled out in three phases starting in the second
half of 2013.
Further order-to-delivery lead time reductions will be achieved
through a greater regional source base, which will enable us to
manufacture closer to our key markets to deliver and replenish
products faster. Today, Global Operations already sources significant
portions of apparel for the US market regionally. Business cases for
additional countries and specific business categories are currently
being reviewed.
On Group level, Global Operations is also a key contributor to the
company’s Integrated Business Planning (IBP) project SEE INTERNAL
GROUP MANAGEMENT SYSTEM, P. 114
. IBP forms part of the Group’s Driving Route
2015 programme and aims at establishing a coherent end-to-end
demand and supply planning process across finance, marketing and
operations.
02 Global Operations in go-to-market process
Global Operations
Marketing
Briefing
Design
Concept
Product
Development
Product creation
Sourcing
Manufacturing
Supply Chain
Management
Distribution
Sales Subsidiaries
Sales
Centre of Excellence
Processes and infrastructure of the future