Adidas 1998 Annual Report Download - page 25

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adidas-Salomon Integration 23
tion of personnel, a shortening and improvement of reporting lines, and streamlining of
the entire organization. The creation of one group headquarter function will be completed
in 1999. The annualized savings resulting from all these measures are expected to total
DM 10 million.
INTEGRATION OF SALES ORGANIZATION INITIATED
Gradual progress
is being made in the integration of the adidas and Salomon sales subsidiaries. In Germany,
this process was completed at the beginning of 1999. The Salomon sales organization
formerly based in Munich has been closed down and integrated into the existing adidas
organization in Herzogenaurach. This will lead to savings on a scale of around DM 3 million
per annum, as it eliminates rental for expensive office space, does away with separate
warehousing needs and enables back-office functions to be shared.
In 1999, similar steps will follow in other European countries and in the USA.
OPTIMIZATION OF SOURCING ACTIVITIES AT AN ADVANCED STAGE
A number of measures to optimize the global sourcing structure have been initiated and
implemented. The aim is to create one sourcing organization for the benefit of all brand
activities.
Effective January 1st, 1999, Salomon Far East sourcing activities have been integrated
into the existing adidas organization. Existing Salomon liaison offices have been closed,
and the employees integrated into the combined operations. Further consolidation will
take place in Europe with particular emphasis on the integration of footwear sourcing. In
addition, the adidas organization will take responsibility for apparel sourcing across all
brands in order to exploit existing strengths.
These steps ensure that Salomon brand products will also benefit from the expertise
that adidas, as the second-largest company in the sporting goods industry, has built up
in sourcing operations worldwide. The benefits of more favorable sourcing and simplified
structures are not currently quantifiable, but they are expected to be in excess of DM 10
million.
GLOBAL BUSINESS UNITS ESTABLISHED FOR GOLF AND CYCLING
The new Golf and Cycling Business Units combine the respective competencies of Taylor
Made and Mavic in equipment with the expertise of adidas in footwear and apparel.
Leveraging of existing distribution channels, sharing of back-office functions and imple-
mentation of joint product development activities will help to increase sales and earnings
within both units. Further opportunities to leverage promotional assets and sponsorship
programs will be exploited.
As part of the reorganization of the Business Unit Golf, adidas Golf America has
merged with the Taylor Made golf organization and moved to Carlsbad, California, the home
of Taylor Made. In Europe, a combined sales and distribution organization specializing in
golf products has been established in the U.K., in order to create the basis for better
servicing of the distribution channels.