Reebok 2012 Annual Report Download - page 123

adidas Group
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2012 Annual Report
Group Management Report – Our Group
101
2012
Global Operations
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02.5
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In the area of manufacturing excellence for footwear, automation
represents the key driver for efficiencies. As part of this initiative,
we support the implementation of state-of-the-art machinery and
solutions, such as computer stitching, high-frequency cutting and
automated production lines across factories, and provide technical
competency training to factory-floor staff. The resulting improvements
in the factories are both visible and tangible. With less manual labour
required, manufacturers were able to reduce operating space and
energy while increasing their right-first-time rate and optimising their
operator utilisation. For apparel, the mid- to long-term goal is to use the
manufacturing excellence initiative to roll out modular production lines
and Global Sewing Data (GSD) – a globally recognised, industry-leading
pre-determined motion time system. It is an accurate and consistent
way to measure the standard production time or Standard Minute Value
(SMV) of a product. All strategic apparel vendors joined this effort in 2012
and agreed on joint targets.
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 2012, the team focused on developing and commencing
the implementation of specific workstreams within the “Optimised
Costing and Buying” initiative aimed at capturing the value of range
efficiencies across our footwear supply base. For 2013, the aim is to
implement a more data-driven and standardised cost approach for the
apparel division which will, in turn, enable consistent benefit capture of
efficiency initiatives.
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 products.
In this context, Global Operations is a key contributor to the Group’s
Integrated Business Planning (IBP) project
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SEE INTERNAL GROUP
MANAGEMENT SYSTEM, P. 124. IBP forms part of the Group’s strategic
business plan Route 2015 and aims at establishing a coherent end-to-end
demand and supply planning process across finance, marketing and
operations.
As part of the product availability 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
focused on 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 initiative for reducing standard lead times focuses on shortening
production lead times on footwear and apparel to 60 days. 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.
The implementation for apparel started in early 2012, with the goal to
transition a third of all styles for all brands to 60 days. We successfully
achieved this target for the fall/winter season 2013, where over 30% of
styles and more than 40% of forecast volume will be supplied on the
shortened lead time of 60 days. As the project moves forward, focus
will now shift to stabilising the 30% for future seasons. Simultaneously,
our goal is to continue to increase the share of articles on 60 days or
less production lead time for critical ranges and high-volume products,
specifically targeting a global foundation range as well as regional
ranges.