{"id":26925,"date":"2017-11-15T23:00:58","date_gmt":"2017-11-16T04:00:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/am4u-adidas-made-for-you\/"},"modified":"2017-11-15T23:02:19","modified_gmt":"2017-11-16T04:02:19","slug":"am4u-adidas-made-for-you","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/am4u-adidas-made-for-you\/","title":{"rendered":"AM4U: Adidas Made For You"},"content":{"rendered":"

The need to redefine supply chains<\/strong><\/p>\n

In sports, competition is the name of the game and it cannot ring more true for Adidas. Its biggest competitor, Nike, had marked a revenue of $8.7 billion earlier this year[1]<\/a>, while Adidas remained in second-place with a revenue of around $6 billion[2]<\/a>. Adidas been touted as playing catch-up with Nike and with the rise of Under Armor, the time to make quick, significant changes for Adidas is now. The urgency is amplified with the rise of a \u2018buy now\/wear now\u2019 culture in customer demand catalyzed by the rise of e-commerce. To remain competitive, Adidas needs to redefine the way it does business starting from its manufacturing processes.<\/p>\n

Nike and many other competitors are quickly leveraging technological advancements focusing particularly on increasing speed and creating more innovative designs. Nike, for instance, launched a \u201cManufacturing Revolution\u201d where they partnered with supply-chain experts Flex to double up production speed and DreamWorks to design more agile and customized shoes.[3]<\/a> The use of robots and 3D-printing in manufacturing have allowed companies to be more agile and creative in meeting customer\u2019s demand. Unlike prior days, supply chains are no longer focused purely on lowering cost, it is now a key tool to increase sales by creating more value and capturing the market quickly and at scale.<\/p>\n

A4MU: Uniquely Yours<\/strong><\/p>\n

Up until recently, Adidas has mainly produced its shoes in Asia where labor cost is relatively low. Their Asian supply chain follows a more \u2018traditional\u2019 combination of connected flow lines and batching model where steps are discreet, siloed, produced in mass and generally inflexible. Under this model, a shoe-making process starts with drawing designs on paper that are later translated into actual production through blueprints and technical specifications. Numerous iterations will then take place before the final shoe design is produced. In total, the whole process of creating a shoe from concept to finished product could take between 12 to 18 months.[4]<\/a><\/p>\n

Things started changing in 2015 when they launched Speedfactory in Germany, birthplace of Adidas. Unlike their Asian factories, Speedfactory is mainly filled with machineries including a robotic knitting machine called Primeknit that integrate both manufacturing and assembly of the upper part of a shoe in one step.[5]<\/a> With Speedfactory, Adidas claimed they can now produce a shoe in a day enabling them to offer highly tailored shoes to customers. This is further enabled by using 3D-motion capture and analysis technology called Aramis, the same technology used by NASA and Boeing to calibrate stress points on their space shuttles and planes respectively.[6]<\/a> For Adidas, Aramis helps them customize shoes that are precisely tailored to fit the unique ways an individual transfers their weight as they walk, stand and run.<\/p>\n

In fact, Adidas has launched a global campaign called AM4 (Adidas Made For\u2026.) where shoes are produced specifically for the unique lifestyle of that particular city. London (AM4LDN) was the first city, followed by Paris (AM4PAR). Future launches will take place in early 2018 into Los Angeles (AM4LA), New York (AM4NYC), Tokyo (AM4TKY) and Shanghai (AM4SHA).<\/p>\n

Design and Data<\/strong><\/p>\n

As Speedfactory expands beyond Germany into Atlanta, USA, the following are recommended steps for Adidas to consider:<\/p>\n

In the short-term, the company should do an in-depth analysis of its organizational structure and consider what roles ought to be integrated or restructured. We are already seeing this at Adidas Russia as it combined the role of Head of IT and Supply Chain.[7]<\/a> In particular, I would suggest integrating more roles between product development and design with manufacturing. This is especially crucial given their plans of adopting 3D-printing technology in the near future. In addition, they also ought to boost their data analytics team through the launch of AM4 to better understand customer demand.<\/p>\n

In the medium-term, Adidas should consider breaking down IT and having it permeate across all departments. Given the ubiquity of technology, to remain at the frontline of innovation in sportswear, Adidas should not centralize IT but rather empower all its staff to adopt technology as part of their job regardless of which team they are in. This is especially true as Speedfactory expand beyond the West. However, I would caution Adidas on moving into Asia too fast and ideally recommend that it only enter the region at the earliest 5 years from now. This is due to the lack of infrastructure and the ability to still utilize existing advantage of a relatively low-cost labor market.<\/p>\n

Future of Work<\/strong><\/p>\n

Finally, two key questions for Adidas to consider are whether customization is the most scalable way to increase sales? How much are people willing to pay for customized shoes or generic models are fine?<\/p>\n

Secondly, the company should also contemplate its responsibility lie in disrupting labor especially as it expands into Asia and starts closing down the factories there. (Word: 800)<\/p>\n

[1]<\/a> Nike, Inc. \u201cNIKE, INC. REPORTS FISCAL 2017 FOURTH QUARTER AND FULL YEAR RESULTS\u201d. 29 June 2017. Available at: https:\/\/news.nike.com\/news\/nike-inc-reports-fiscal-2017-fourth-quarter-and-full-year-results<\/a>. Accessed at 15 November 2017.<\/p>\n

[2]<\/a> Adidas Group. \u201cADIDAS WITH STRONG FINANCIAL PERFORMANCE IN THE SECOND QUARTER 2017\u201d. Available at: https:\/\/www.adidas-group.com\/en\/media\/news-archive\/press-releases\/2017\/adidas-strong-financial-performance-second-quarter\/<\/a>. 3 August 2017. Accessed at 15 November 2017.<\/p>\n

[3]<\/a> Manthorpe, Rowland. \u201cTo make a new kind of shoe, adidas had to change everything\u201d. 4 October 2017. Available at: http:\/\/www.wired.co.uk\/article\/adidas-speedfactory-made-for-london-trainers?lipi=urn%3Ali%3Apage%3Ad_flagship3_search_srp_content%3BfYJF4NP4RwmEGhOWM6yHDQ%3D%3<\/a>. Accessed at 15 November 2017.<\/p>\n

[4]<\/a> Bain, Marc. \u201cAdidas can now make specialized shoes for runners in different cities, thanks to robots\u201d. 4 October 2017. Available at: https:\/\/qz.com\/1081511\/adidas-can-now-make-specialized-shoes-for-runners-in-different-cities-thanks-to-robots\/<\/a>. Accessed at 15 November 2017.<\/p>\n

[5]<\/a> Manthorpe, Rowland. \u201cTo make a new kind of shoe, adidas had to change everything\u201d. 4 October 2017. Available at: http:\/\/www.wired.co.uk\/article\/adidas-speedfactory-made-for-london-trainers?lipi=urn%3Ali%3Apage%3Ad_flagship3_search_srp_content%3BfYJF4NP4RwmEGhOWM6yHDQ%3D%3<\/a>. Accessed at 15 November 2017.<\/p>\n

[6]<\/a> Bain, Marc. \u201cAdidas can now make specialized shoes for runners in different cities, thanks to robots\u201d. 4 October 2017. Available at: https:\/\/qz.com\/1081511\/adidas-can-now-make-specialized-shoes-for-runners-in-different-cities-thanks-to-robots\/<\/a>. Accessed at 15 November 2017.<\/p>\n

[7]<\/a> Benton, Dale. \u201cSupply Chain 4.0: Adidas and Amazon re-write the rules on supply chain management\u201d. 10 February 2017. Available at: http:\/\/www.supplychaindigital.com\/scm\/supply-chain-40-adidas-and-amazon-re-write-rules-supply-chain-management<\/a>. Accessed at 15 November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

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