It has taken on several different names. The Fourth Industrial Revolution. Industry 4.0. Regardless of debate over title, there is little doubt that the next wave of automation and digitization in production of consumer goods has arrived. It is and will continue to be increasingly essential for companies to align their supply chain processes with said advancements in order to stay competitive.<\/p>\n
One company embracing both the challenge and opportunity created by Industry 4.0 is Adidas. Adidas is responsible for roughly 35% of revenue generated in the global athletic footwear market, which in 2015 was valued at $80 Billion. [1]<\/p>\n
The global athletic footwear market has seen growing consumer demand for personalized shoes, as well as products embracing seasonal trends. The challenge posed to Adidas and its competitors is their products\u2019 time to market with their current supply chain model, which relies heavily on manual labor in giant factories. In short, according to the Economist, \u201cpeople want fashionable shoes immediately, but the supply chain struggles to keep up.\u201d [2] This successive process of designing, testing, ordering of raw materials, manufacturing, and distributing can take up to eighteen months, but the majority of shoe models are then offered on sale for less than a year. As Gerd Manz, Head of Technology Innovation at Adidas, phrased it, \u201cThe way our business operates is probably the opposite of what consumers desire.\u201d [3]<\/p>\n
Instead of sitting back on its heels, Adidas is embracing supply chain digitization by piloting the usage of additive manufacturing, often known as 3D printing, with the goal of reducing both manufacturing and production periods, and ultimately the time to market of its footwear products. This concept was first tested in December of 2016 with the sale of a limited-edition 3D printed shoe. Impressively, the sale of this model came only four months after the product concept was first announced. [4]<\/p>\n
In January of 2017, following the success of its first 3D printed trainer line, Adidas announced that they will be building a new smart factory in Ansbach, Germany in conjunction with local firm Oechser Motion. Embracing their \u2018need for speed\u2019 in manufacturing and production time, Adidas is appropriately calling this the Speedfactory.<\/p>\n
Adidas is betting on the Speedfactory to shorten the most time-consuming stage of their supply chain process: prototyping. The prototyping process currently requires both suppliers of raw materials and manufacturers to physically see, try out, and return the product to Adidas. When additional changes are required, as they often are, this process is inevitably lengthened. [5]<\/p>\n
Instead, in their new Speedfactory, prototype testing time could be shortened from several months to a few days with the integration of 3D design and 3D printing programs. In addition, the Speedfactory will allow robots to take on time consuming tasks and significantly reduce downtime in the factories often caused by the reprogramming and retooling of machinery required by the switching of product lines.<\/p>\n
In the short term, Adidas hopes to begin 3D printing production at the Ansbach Speedfactory in 2017, with the aim of increasing production to 500,000 pairs of sneakers per year. [6] The company is also building a second Speedfactory outside of Atlanta, Georgia to pilot with their American market. In the long term, should their Speedfactories perform as anticipated, 3D printing and supply chain digitization will undoubtedly continue to appear both in existing factories and in additional new ones around the world. The potential opportunity is massive. According to Forbes, smart factories will enable a 7X increase in overall productivity and have the potential to add between $500 Billion and $1.5 Trillion in value to the global economy by 2022. [7]<\/p>\n
Adidas management is clearly placing a high priority on driving commercialization through supply chain innovation. In their 2016 Proxy Statement, they highlighted Manufacturing Innovation, and the Speedfactories specifically, as one of their \u201cFive Pillars of Innovation.\u201d [8] On top of steps they are already taking, I would actively seek to monitor the supply chain digitization initiatives of their competitors, seek out best practice learnings from exemplars in smart factory utilization, and look for opportunities for acquisition of additive manufacturing and robotics companies to enhance the scaling of these practices.<\/p>\n
Ongoing questions regarding additive manufacturing at Adidas include: What are the IT and data security threats, particularly regarding proprietary production and product knowledge, aggravated by the digitization of Adidas\u2019 supply chain? On a macro-economic level, what is the effect of the loss of human jobs to such automations? Will this drive further societal inequality? Finally, will the process integrity of factories such as those Adidas is creating be able to remain intact with reduced human oversight?<\/p>\n
(WORD COUNT: 761)<\/strong><\/p>\n [1]\u201cAthletic Footwear Market Analysis, Market Size, Application Analysis, Regional Outlook, Competitive Strategies and Forecasts, 2016 to 2024,\u201d Grand View Research, 2016, {http:\/\/www.grandviewresearch.com\/industry-analysis\/athletic-footwear-market<\/a>}. Accessed November 2017.<\/p>\n [2]\u201cAdidas\u2019s High Tech Factory Brings Production Back,\u201d The Economist, July 14, 2017, { https:\/\/www.economist.com\/news\/business\/21714394-making-trainers-robots-and-3d-printers-adidass-high-tech-factory-brings-production-back<\/a>}. Accessed November 2017.<\/p>\n [3] Ibid.<\/p>\n [4]Young, Joseph, \u201cAdidas Launches Smart Factory Run by 3D Printers & Robots in Germany,\u201d 3DPrint.com, January 19, 2017, {https:\/\/3dprint.com\/162252\/adidas-smart-factory-3d-printing\/<\/a>}. Accessed November 2017.<\/p>\n [5] Ibid.<\/p>\n [6] \u201cAdidas\u2019s High Tech Factory Brings Production Back,\u201d The Economist.<\/p>\n [7] Columbus, Louis, \u201cSmart Factories Will Deliver $500B in Value by 2022,\u201d Forbes, July 30, 2017,\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 {https:\/\/www.forbes.com\/sites\/louiscolumbus\/2017\/07\/30\/smart-factories-will-deliver-500b-in-value-by-2022\/#17c2c54f2d22<\/a>}, accessed November 2017.<\/p>\n [8] Adidas, 2016 Annual Report, p. 71-72, {https:\/\/www.adidas-group.com\/media\/filer_public\/a3\/fb\/a3fb7068-c556-4a24-8eea-cc00951a1061\/2016_eng_gb.pdf<\/a>}. Accessed November 2017<\/p>\n Additional Sources:<\/strong><\/p>\n Marr, Bernard, \u201cWhat Everyone Must Know About Industry 4.0,\u201d Forbes, June 20, 2016, {https:\/\/www.forbes.com\/sites\/bernardmarr\/2016\/06\/20\/what-everyone-must-know-about-industry-4-0\/#5ed2fee4795f<\/a>).\u00a0 Accessed November 2017.<\/p>\n