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Brief introduction to the Adidas

Discuss about the Analyzing Logistics System Of Adidas.

Logistics is referred to as the most important part of the supply chain management and it involves various functions in regards to the inventory management cycle. It is true that every company totally dependent upon its inventory management system implied in the business operation cycle. Logistics helps in planning, implements and also controlling the flow of goods and service from the point of origin to the point at where it ends. So it can be said that it is management driven system that truly based on the customer demand. Logistics management assures the efficient and effective management, reverse flow and storage of inventory.

In this report the logistics system of Adidas has been evaluated in detail through analyzing the different interfaces of logistics and order cycle. This report also guides on the inventory management of the goods provided by the Adidas at stores and online processing.

Adidas it one of the famous company from German that is involved in designing, manufacturing and sales of clothing products, shoes category and other accessories. Adidas is known for its brand name and its quality products. Adidas is the largest company in Germany that manufactures shoes and also the second largest sportswear company in the world. The logistic system of the Adidas is the most complex one due to level of demand it handles with the assurance of highest quality products (History of Adidas, 2013).

There are mainly three dimensions of the supply chain network of any organization. It can be classified as below:

  • Intrafunctional Coordination: This dimension administrate the different activities of the one main function of the supply chain management that is logistics
  • Interfunctional Coordination: As per dimension there must be perfect coordination between logistics and production, marketing, and accounting as they are the most important functional areas of any company
  • Interorganizational coordination: It is the relation between two different firms, particularly in supply chain management it can be suppliers and company itself

In this section of the report, the concern in the second dimension ie Interfunctional Coordination. The production of any goods requires procurement of raw material, machines to work on, labour to work on and various parts and components that are put in series of process to have a required product. It is also true that quality of finished goods will definitely dependent upon the type of raw material has been obtained from the supplier (Coyle, J.J., et. al.2012). The interface of logistics come here as logistics plays an important role in managing the procurement of quality raw material and also to make proper arrangements of its storage. So the use of logistics starts directly from the suppliers through procurement of the raw materials and sending them to the production department. In Adidas mostly the manufacturing work has been outsourced but company manufactures their core product that is shoes in their home production unit. Adidas logistics is most easy to handle as it has simplifies each rule to make the transfer the goods from the suppliers end to the production department. After production has been carried out goods has to be sent for warehousing purpose and after that it is moved for sales made to wholesalers and retailers. Company is also involved with the sales of goods through online shop and it is through appointing the agents that triggers the sales directly from the different warehouses in various part of the country.

Interference of the Logistics with the three main department of the selected organization

Marketing is also the important concept in the organization as it involves with the marketing mix the four Ps, namely price, product, promotion and place. The price of product covers the cost of transport, so larger the shipment lesser will be the transportation rate (Chakravarty and Eliashberg, 2005). Adidas usually uses its own transport vehicles to deliver goods in its own nation. For outbound sales goods are generally send through ships. Product packaging and its storage must be done precisely and advice of logistics manager is very useful as changing the dimensions of the product packaging will definitely hampers the storage capacity. Adidas uses definite packing style of packing their finished goods such as same size cardboard boxes for packing the shoes. Logistics department plays an important role while making the promotions. Logistics are aware of any changes that are made in demand patterns of goods. Adidas believes that pull strategies will be more erratic as compare to push strategies that are more predictable. Place of keeping the goods also matters a lot in marketing as warehouse serves both the wholesalers and retail department (Min, 2015).

Accounting is department that has a relationship with every department of the organization. There is the intense relationship between the accounting department and logistics department. While performing the auditing work of the freights bills and finding any errors there is use of logistics departments.

The company is having a large and complex logistic and supply chain system that works in integration for effectively meeting the customer demands and expectations. The effectiveness and efficiency of the order processing system of Adidas depends on adequate performance of its various supply chain departments such as information, inventory and logistics unit. The procedures after the order placement by a customer consist of various processes involving finding the product ordered in the inventory to its final delivery to the customer (Gallouj and Djellal, 2011). The various steps involve din the order processing system of the company can be described as follows:

  • Use of information System: The Company incorporates the use of DSI system (Dry sales of inventory) for storing information about its product style, color, size and availability of the product. The system is used for selecting the right type of product ordered from the customer. In addition to this, the company also adopts the use of point of sales system for processing and shipping the products ordered to the distributor and retail outlet within 24 hours of time.
  • Inventory Management: The Company has developed an effective inventory management system for proving real-time information about the availability of products. The development of a good management system for controlling the inventory is essential so that the products ordered are readily available. The company integrates the use of ERP system that helps the sales representative of the company to effectively mange the inventory as per the customer demands (Sage, 2015).
  • Warehouse: This is regarded as major link between the procedure and consumers as it store products between points of origin to the point of its utilization. The warehouse department provides information to the management of the company regarding the availability of the product ordered for distribution for sale.


Transportation: This is the physical link that helps the firm to supply its products to the customers. The company integrates the use of water and air carrier for shipping their products so that they are received by the customers in a quick span of time. The company is known to operate about 220 retail stores in approximately 60 countries across the world. As such the company ensures that right products are available for the customers at the right time. Therefore, the company in order to meet the customer demands effectively has developed an integrated logistic between for co-coordinating its various departments such as suppliers, manufacturers, wholesalers, retailers and customers demands (Hofmann, Beck and Füger, 2012).

Analysis of Effectiveness and Efficiency of Current Order Processing System of Adidas

As such, it can be said that the company has developed an effective order processing system to meet the customer expectations properly. However, the development of a large logistic network for ordered processing involves the company to incur high cost. As such the company is recommended to implement the use of outsourcing for reducing its logistics cost and increasing its operational profits. In this context, the theory of transaction-cost analysis states that business firms exist for maximizing their operation profits by minimizing the transaction costs. As such the company can reduce its logistic cost rough outsourcing all of its logistic activities to a cheaper country where there is adequate supply of labor and there is presence of related information technology (Groenewegen, 2012).

The company ‘Adidas’ is placing large emphasis on developing an effective inventory management system for achieving customer satisfaction. The development of a sound inventory management system is essential to avoid the occurrence of out of stock of its different products. The inventory management system is also used for gaining information regarding the order fulfillment and shipping status. Thus, it largely helps in providing good customer service through delivering them timely order of the products demanded by them. The Company in order to develop an effective inventory management system has integrated the use of Enterprise Resource Planning that integrates its various departments such as finance, marketing, human resources and information technology with the supply chain management system. Thus, the company can communicate effectively the current position of its inventory to its various departments that helps in managing the inventory level properly and maintaining the stocks level as per the customer demands (Hofmann, Beck and Füger, 2012).

The use of ERP system in inventory management has helped the company to gain an operational control of its various processes involved in inventory management and integrating the overall supply chain system. In addition to this, the company has also adopted the use of TQM (Total Quality Management) for improving the productivity level of the company. The use of the system enables the company to continuously improve its inventory system through identifying the area of loopholes and developing effective strategies for overcoming them (Banfield, Eriksson and Walkingshaw, 2017). However, the company is currently facing issue regarding the reducing of its holding costs through improving its inventory management practices. This is because the company is maintaining high level of stocks for meeting the customer demands and this is leading to an increase in its holding costs. In this context, the flexibility theory in inventory management states that a company should maintain flexible inventory practice that helps it to avoiding the overstocking of its products by reacting quickly to market situations. Thus, the company can adjust quickly as per the current needs and expectation of the customers through incorporating flexibility in its inventory management practices. Thus, the company through introducing a flexible inventory management model can reduce its operational cost involved in managing the inventory levels and also meet the customer demands adequately (Adidas Stepping Up Inventory Management, 2014).

Conclusion

As this report provides the how efficiently and effectively the Adidas manages its logistics department. There is discussion of various interfaces between the logistics and other departments of organization such as production, marketing and accounting. It has been founded that there has been intense relationship of logistics department and all the other departments of the organization. Current order processing system of the company is also discussed in detail and improvements have also been provided. Information on how inventory is managed by the Adidas is also provided in detail.

References

Adidas Stepping Up Inventory Management. 2014. Retrieved on September 28, 2017, from https://opsmgt.edublogs.org/2014/11/11/adidas-stepping-up-inventory-management/

Banfield, R., Eriksson, M. and Walkingshaw, N. 2017. Product Leadership: How Top Product Managers Launch Awesome Products and Build Successful Teams. "O'Reilly Media, Inc.".

Chakravarty, A.K. and Eliashberg, J. 2005. Managing Business Interfaces: Marketing and Engineering Issues in the Supply Chain and Internet Domains. Springer Science & Business Media.

Coyle, J.J., Langley, J., Novack, R.A. and Gibson, B. 2012. Supply Chain Management: A Logistics Perspective. Cengage Learning.

Gallouj, F and Djellal, F. 2011. The Handbook of Innovation and Services: A Multi-disciplinary Perspective. Edward Elgar Publishing.

Groenewegen, J. 2012. Transaction Cost Economics and Beyond. Springer Science & Business Media.

History of Adidas. 2013. Retrieved on September 28, 2017, from  https://taylorsadidas.blogspot.in/2013/04/history-of-addidas.html

Hofmann, E., Beck, P. and Füger, E. 2012. The Supply Chain Differentiation Guide: A Roadmap to Operational Excellence. Springer Science & Business Media.

Min, H. 2015. The Essentials of Supply Chain Management: New Business Concepts and Applications. FT Press.

Sage, G. 2015. Globalizing Sport: How Organizations, Corporations, Media, and Politics are Changing Sport. Routledge.

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