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Strategic Supply Chains Positioning In The Industry

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Question:

Write a Report on Strategic Supply Chains Positioning in the Industry.
 
 

Answer:

Introduction

The following report provides a case study of the underlying drivers and dynamics of the supply chains management facing Adidas apparel industry. The report thus describes its strategic supply chains positioning in the industry. the paper will also address its supply chains processes which are very important in building of the shoes and clothing brands.  The report draws extensively on secondary data and supply chains models which provide a rich insight on the wide range of the company’s supply chains practices to the business. The success of the company will also be analysed with reference to various supply chains activities that are driven through different efforts in the company. the insights that will be arrived at from this report will also be leveraged to understand supply chains management processes for other apparel companies in reference to information sharing, inventory management, packaging of goods and the forecasting in supply chain management (Cai, et al., 2013).

As a company, Adidas is a well-known German multinational corporation which its main activity is in the manufacturing of sports clothing and accessories. During the first time the company was established, adidas achieved more success in its market due to the fact that in addition to the sports footwear the company has other production lines that include shirts, watches, bags and other cloths and sports related goods (Chiu, et al., 2011).  Currently, the company is also a leader in sportswear and other fashion designs. Its operation is spread all around Europe and Germany, it also operates as the second main producer of sportswear in the world (Krajewski, et al., 2006).

The Key Flows in Supply Chains

Information Flow – When it comes to information flow in the supply chains,  the company has successfully utilized the Day Sales of Inventory (DSI) system in the functionality of the management of the warehouse and its footwear and apparel. The main function of the DSI is to provide information regarding the product color, style, and size. The DSI is also important when it comes to the picking of zones to work with the management of materials, during communication of the operations in the warehouse and the SAP systems (Kim, et al., 2006). The DSI is also useful when providing a customized development when generating and connecting information between the handheld radio frequency devices and the SAP for transactions (Caniato, et al., 2012). Other functions include movement of goods, receipts, replenishment, Zone picking and cycle counting.  In addition, the company has a Point of Sale system that is able to ship and process goods to distributors and other retail outlets within 24 hours. This is important as it prevents late delivery to other outlets. This shows that the POS is cost effective and quick in relation to the dispatch notes and good which produce shipping transfer and label (Govindan, et al., 2016).

Cash Flow –  when it comes to cash flow in supply chains management of Adidas, this is measured by increasing variations in demand where it is very important the company implements models that work. These models should be able to allow for a smooth demand signal that will be coming from customers (Kim, et al., 2006). As the challenges of the organisation increases and other demand uncertainties, the most effective models will be required to ensure that there is a coordinated cash flow in the organisation (Marley, et al., 2014).  These models should be able to also exceed the conventional approaches to the retailer and supplier relationship. One such model that the company has utilized well is the vertical solution that includes introduction calendars, promotions, promotions and initiations and supply/ demand. Other factors that will be looked at in the company’s cash flow will be goods and consumer flow. The company has good collaboration on the monitoring and shared access to safe cash flow systems.

 


The adidas supply chain also looks at the open opportunities that realize the increased long term and short term costs savings and cash flows.  It also important not note that at this time when there are inefficient supply chains, it will result to the poor cash position of the company.  Some of the cause will include ineffective expediting techniques which will lead to the degradation of the supplier on time delivery by a particular percentage. Cash flow will also be affected by the lack of dynamic inventory planning capability which in the end results in excess inventory buildup (Teller, et al., 2016). Also when the company fails to benchmark on the previous shortcomings and factors like transportation can increase the cost.  All these factors lead to cash leakage of the company’s operations. It brings about a cumulative impact that will result in low competition and profitability of the company (Kim, et al., 2006).

Return processes - The return process at adidas is looked at in terms of the increasing environmental concerns. This is very critical for the company it should be able to ensure that all the distributions networks have a reverse logistics plan in place. This includes the way that materials are packaged, repossessing and recycling used an unused material (Caniato, et al., 2012). Also, the company has made good use of the traditional backhauling packaging reuse and recycling.

The Make Process A typical making process at adidas looks at various stages that involve raw material supplies, (S), Manufacture ( M), Wholesalers (W), retailers and customers( C ). In each of these strategies, the making processes will be connected with the others to ensure the flow of products, information, and funds. It will also be important through coordination and complex mechanism. The making process is also designed in a manner that it can generate the support and trust that is very important during the transfer of knowledge. When there is a lack of coordination it can lead to the degeneration of the responses and an increase in regard to the logistics networking costs (David & Adida, 2015). This will also reduce the profitability of the network.  Through proper networking, coordination calls for each stage of the make process to take into account of the impact its actions will have other stages like when transferring and generating knowledge.

The structure of Make Process

With reference to research information, one can say that adidas is a large logistics network. This is because the process includes freight forwarding networks, transportation networks, container cycles, supply networks, and productions (Marley, et al., 2014).  For example,  logistics are important when a large number of items are moved across different levels. this is also important when using alternating transport carriers and other modes of transport, which are linked to one another on different relationships and structures (Marley, et al., 2014).

The other part of the make process is inventory management. This is important in maintaining proper relationships with customers. This is important as it avoids out of stock situations and provides real-time information regarding shipping status and inventory. Here the company is able to provide required customer relations and avoid losing loyalty. During the make process, retaining customers is another way of increasing and maintaining market share (David & Adida, 2015).

 


One of the main models used by adidas is the Enterprise Resource Planning. This is a system that will incorporate accounting, core financing, human resources, marketing and Information technology functions which interface with the whole supply chains.  One of the merits of this system is the visibility it enjoys in the company and other sense of control in operation, capability, and improvements of integration throughout the supply chains.  During the make process this has been witnessed in situations where retailers are asking questions during travel, also when sales representatives call on customer service representation to check the ERP database in relation to the travelling schedules which can be in days or in weeks (Govindan, et al., 2016).

Due to such factors, the retailers and the company have been able to service the risk of losing valuable customers and sales margin and profits. Sales representatives are also in a position to open up the application and get in to the ERP system which is higher and with broad bandwidth. When it comes to transportation, the company makes use of the carrier to ship their products to different destinations. This involves the general cargo ships. In addition, adidas also makes use of air carrier for bulk orders, during high demand situations and faster delivery situations. This can include situations like sporting events. Motor transportation can also be used when delivering inventory to retail stores (David & Adida, 2015).

 


In addition, there is a third party logistics also known as Total Logistics. This is a supply chain specialist based in Europe who provide rationalization solutions to adidas supply chain. In addition, they are in the forefront when it comes to the worldwide supply of sportswear and accessories (Mellat-Parast & Spillan, 2014).  The main success of these projects has been consolidated in four main distribution points in to one 30,000 meters squared facility located at the Trafford Park in Manchester. Here the company is able to save on costs with regard to making processes and also deal with expansion.  Adidas is also good in making partnerships with transport companies which have reduced environmental risk and enable it to become a benchmark partners for other firms (Govindan, et al., 2016).

The supply chains forecasting

According to Marley, et al., (2014), a proper forecasting in the clothing and apparel industry is usually difficult since it is characterized by high variety and volatile demand trends.  A lot of product lines face challenges due to the increase in demand individualization that adidas combat through creating variations. In this manner, planning and forecasting for the company become very challenging and can lead to a situation of overstocking and high complexity in the supply chains. It will also call for the need to facilitate markdowns and get rid of the surplus stock.  Accuracy in forecasting can be realized at adidas through flexible supply chains that had short lead times to be assessed. It is also important to note that the use of Point of Sale data at adidas can be useful in combating accuracies through adjusting the forecast or responding to inventory and market situations (Teller, et al., 2016).  It is also important that adidas forecasting looks at future programs where retailers will be in a position to order up to 80% of the inventory for a given period in advance. This will enable the customer to get substantial discounts while deliveries are guaranteed all the time.

 


In the most recent times, adidas was able to launch ‘world class supply chain’ initiative which has been useful when it comes to moving away from the forecast based supply chain and a demand drove supply processes. In addition, adidas has also been able to re-engineer its supply chains and ensure its business is customized to a dynamic model of business to allow for differentiation to target customers.  Through this forecasting initiative, the company has been able to cover different concepts-to-shelf processes and engage sales, marketing and operations functions (Chiu, et al., 2011).  Lastly forecasting at adidas incorporate the brand model which delivers the company’s statement, marketing, customer service, supply chains and retail capabilities. There is also the evergreen model which ensures short lead times and ensure the company is never out of stock especially for its long life cycle product and commercial operations. The Global and regional model has been able to create a regional adaptation of the international concepts and meet regional consumer requirements. This goes together with the quick response model that looks at addition markets opportunities that consider the 3-6 months concept. This will also reduce the turnaround process of products distributed in their stores (Krajewski, et al., 2006).

Conclusion

In conclusion, adidas has succeeded in living up to their slogan ‘Impossible is Nothing’. The company remains to be the leader in the industry. this is why it continues to confidently outperform other actors in the industry. the company has also enjoyed years of consecutive increase in market share and net include. Currently, the company remains to be the second best in manufacturing and sale of sportswear and other apparel.  Through a functioning supply chains process, adidas has been able to distribute their products all over the world. Suppliers and retailers of the company products are also located all over the world and ensure customers continue to have a liking for the product in an easy and convenient manner (Teller, et al., 2016).

In addition, the company has a well-established logistics system for their products. This means that there are a lot of benefits retailers gain from partnering with adidas as they will never run out of stock. In the same line, adidas will never lose its customers.  Lastly, the company has successfully made use of information systems like POS and DSI. These information systems have enabled the company to be organized and maintain efficiency and effectiveness (Kim, et al., 2006). This means that adidas has to continue putting a lot of effort in the management of their inventory. A proper inventory management will call for the monitoring of stock and control the stock levels. the ERP and Tom models will be useful to increasing quality, maintaining market share and smooth flow of the supply chains.

 

References

Cai, S., Goh, M., Souza, M. d. & Li, G., 2013. Knowledge sharing in collaborative supply chains: twin effects of trust and power. International Journal of Production Research, 51(7), pp. 2060-2076.

Caniato, F., Caridi, M., Crippa, L. & Moretto, A., 2012. Environmental sustainability in fashion supply chains: An exploratory case based research. International Journal of Production Economics, 135(2), pp. 659-670.

Chiu, C., Choi, T. & Tang, C., 2011. Price, Rebate, and Returns Supply Contracts for Coordinating Supply Chains with Price?Dependent Demands. Production and Operations Management, 20(1), pp. 81-91.

David, A. & Adida, E., 2015. Competition and Coordination in a Two?Channel Supply Chain. Production and Operations Management, 24(8), pp. 1358-1370.

Govindan, K., Seuring, S., Zhu, Q. & Azevedo, S., 2016. Accelerating the transition towards sustainability dynamics into supply chain relationship management and governance structures. Journal of Cleaner Production, Volume 112, pp. 1813-1823.

Kim, D., Cavusgil, S. & Calantone, R., 2006. Information system innovations and supply chain management: Channel relationships and firm performance. Journal of the Academy of Marketing Science, 34(1), pp. 40-54.

Krajewski, L., Ritzman, M. & N.Malhotra, 2006. Operations Management: Processes and Value Chains. 8th ed. s.l.:Prentice Hall.

Marley, A., Ward, T. & Hill, J., 2014. Mitigating supply chain disruptions – a normal accident perspective. Supply Chain Management: An International Journal, 19(2), pp. 142-152.

Mellat-Parast, M. & Spillan, E., 2014. Logistics and supply chain process integration as a source of competitive advantage: An empirical analysis. The International Journal of Logistics Management, 25(2), pp. 289-314.

Teller, C., Kotzab, H., Grant, D. & Holweg, C., 2016. The importance of key supplier relationship management in supply chains. International Journal of Retail & Distribution Management, 44(2), pp. 109-123.

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