Adidas 2002 Annual Report Download - page 106

Global Operations
104 REPORTING
Global Operations /// OUR GLOBAL OPERATIONS UNIT
IS RESPONSIBLE FOR MANAGING THE DEVELOPMENT,
COMMERCIALIZATION AND MANUFACTURING OF OUR PROD-
UCTS, AND IS LEADING OUR EFFORTS IN SUPPLY CHAIN
IMPROVEMENT. IN ADDITION TO OUR GLOBAL OPERATIONS
TEAM, OUR SUPPLY CHAIN INCLUDES RETAILERS, SALES
SUBSIDIARIES, INDEPENDENT MANUFACTURERS, RAW
MATERIAL SUPPLIERS, TRANSPORT COMPANIES, FINAN-
CIAL INSTITUTIONS, AND MANY OTHERS INVOLVED IN
GETTING OUR PRODUCTS TO THE CONSUMER. THE adidas-
Salomon SUPPLY CHAIN CAN BE DIVIDED INTO TWO DIFFER-
ENT CYCLES: PRODUCT CREATION AND PROCUREMENT.
THE PRODUCT CREATION CYCLE DESCRIBES OUR ACTIVI-
TIES FROM THE INITIAL PRODUCT CONCEPT TO PRODUCT
OFFERING AND COMPRISES THE DESIGN, DEVELOPMENT
AND COMMERCIALIZATION OF OUR PRODUCT. THIS PART OF
THE PROCESS IS FOLLOWED BY THE PROCUREMENT CYCLE,
WHICH INCLUDES ORDER MANAGEMENT, MANUFACTURING
AND DISTRIBUTION. WHILE MOST OF THE INDUSTRY FOCUS
IS ON SHORTENING THE PROCUREMENT CYCLE, WE ARE
COMMITTED TO MAKING SIGNIFICANT PERMANENT
IMPROVEMENTS IN BOTH THE CREATION AND PROCURE-
MENT AREAS TO PRODUCE OPTIMAL EFFECTS IN TERMS OF
QUALITY, COSTS AND DELIVERY PERFORMANCE.
ALIGNING ACTIVITIES AND SHARING BEST PRACTICE /// In
2002, Global Operations reorganized its activities to better
service the large portfolio of brands at adidas-Salomon. As a
result, our consumer-oriented structure was extended to
Global Operations in an effort to align its activities more
closely with the Group’s marketing and sales endeavors. This
meant closely intertwining our supply chain operations with
each of our divisions versus a traditional organizational
structure aligned by product type (e.g. footwear, apparel and
hardware). By working more closely with marketing and sales
colleagues, we are now able to better and more quickly
understand and react to unique customer and consumer
preferences. At the same time, critical corporate functions
such as sourcing, global supply chain and administration
continue to be managed at the Group level. This allows us to
capitalize on our Group leverage to enlist the best suppliers,
factories and third-party logistics providers in the industry
in getting products made and delivered to our customers.
As a result of this reorganization, our product is now more
reflective of our brand values, internal communications have
improved dramatically and we are sharing best-practice
methods throughout the Group.
WORKING TOGETHER WITH SUPPLIERS /// With the vast
majority of our products being produced by independent
manufacturers, our relationship to suppliers is critical to the
Group’s success (see Risk Management). Our supply chain
utilizes three different types of suppliers. The first group
consists of suppliers who have a direct contractual business
relationship with us. By contrast, subcontractors are compa-
nies that have been subcontracted by our suppliers and do
not have a direct business relationship with adidas-Salomon.
The third group consists of local sourcing companies, which
source and manufacture products for local markets, rather
than Group-wide distribution. We provide all of our suppliers
with detailed technical and design specifications for the
production and delivery of our products. In addition, we
enforce strict quality control and inspection procedures.
Such procedures include the regular presence of our more
than 100 quality control officers in these factories during
the manufacturing process.
FOOTWEAR PRODUCTION BY REGION
95% Asia
Europe 4%
Americas 1%
APPAREL PRODUCTION BY REGION
65% AsiaEurope 23%
Americas 12%