Research questions and research objectives
Research questions
Research questions involve the research translation of “problem” into the need for inquiry The research problems which are defined as above will lead to the following research question:
What are the relationships between SCM practices- Strategic supplier partnership, Product creation, Purchasing/Supply planning, Sourcing Production (manufacturing), Internal lean practices (Fast and Lean) – and adidas SCP?
Research objectives
The research objective serves as a researcher’s interpretation of a business problem, articulating the purpose of the study in measurable terms and establishing criteria for its success (Zikmund 1997, p 89) This paper aims to identify the key factors influencing supply chain management (SCM) practices that impact adidas's supply chain performance (SCP) in Asia, as well as to evaluate the relationship between these SCM practices and adidas's SCP.
This research aims to assist adidas supply chain managers in assessing their supply chain using relevant data, ultimately providing recommendations to enhance the efficiency of adidas's supply chain processes in Asia.
Scope and Limitation of research
Research scope
This research focuses on the determinants of adidas's supply chain performance (SCP) specifically in Asia, concentrating on the manufacturing and operational activities within Asian countries Limitations prevent the inclusion of adidas's SCP from other regions, which will be explored in future studies.
This research will concentrate on adidas footwear contract factories, specifically focusing on "tier 1" and "tier 2" suppliers, while raw material suppliers and distribution centers will be explored in future studies.
Research limitation
Collecting survey data from individual respondents at various locations can lead to inaccurate measurements, even when the respondents are high-level executives Additionally, the subjective perceptions of these respondents may skew their assessments of performance discrepancies between their company and competitors.
This research focused on SCM practices of manufacturing firms Therefore, the construct of internal lean practice may not be appropriate for distributors or retailers
The Postponement factor is not suitable for the characteristics of adidas‟s supply chain; therefore, it was not included in this research
This research deems delivery dependability as measurements for SCP
Confidential company metrics, including inventory costs and cash-to-cash cycle time, pose challenges in obtaining precise data for this research.
Research method
This research study aims to identify the key factors of supply chain management (SCM) practices that influence the supply chain performance (SCP) of adidas in Asia It also seeks to measure the relationship between these SCM practices and adidas's SCP, making exploratory research the most suitable approach for this investigation.
This research employs surveys as the primary method to identify key factors of supply chain management (SCM) practices that influence the supply chain performance (SCP) of Adidas in Asia Additionally, it aims to measure the relationship between SCM practices and Adidas's supply chain performance.
Questionnaires are utilized to gather data on supply chain management (SCM) practices by directly asking interviewees The rationale for selecting surveys is twofold: they offer a quick, efficient, and accurate way to assess information about a population, and they are particularly useful when secondary data is scarce.
Finally, SPSS Version 16 software program are used to analyze data.
Introduction to adidas Limited Sourcing Company
Introduction about adidas group
Adidas is synonymous with excellence in the global sports industry, embodying the vision of its founder, Adolf Dassler His corporate philosophy continues to guide successive generations, ensuring the brand's commitment to quality and innovation in sports.
In 1920, Adi Dassler embarked on a mission to equip athletes with top-quality footwear, starting with his first shoes crafted from limited post-World War I materials His innovative vision aimed to enhance athletic performance through superior equipment.
Today, the adidas product range extends from shoes, apparel and accessories for basketball, soccer, fitness and training to adventure, trail and golf
The adidas brand originated in 1948, named after Adi Dassler, who created the iconic Three Stripes trademark the following year After nearly 70 years of family involvement, the Dassler Family exited the company in 1989, leading to its transformation into a corporation.
Robert Louis-Dreyfus served as Chairman of the Executive Board of adidas from April 1993 to March 2001, during which he initiated the company's stock market flotation in November 1995 Since 2001, Herbert Hainer has been at the helm of the Group In 1997, adidas expanded its portfolio by acquiring the Salomon group, leading to a rebranding as adidas-Salomon AG, which also encompassed the TaylorMade golf brand.
In October 2005, the Salomon business segment, along with its subsidiaries and brands such as Salomon, Mavic, Bonfire, Arc'Teryx, and Cliché, was acquired by the Finnish company Amer Sports Corporation Following shareholder approval at the Annual General Meeting in May 2006, the company will officially change its legal name to "adidas AG."
On January 31, 2006, adidas-Salomon AG acquired Reebok International Ltd The closing of the Reebok transaction marks a new chapter in the history of the adidas
The merger of two leading brands in the global sporting goods industry will create a more competitive platform, enhance brand identities, expand product offerings, and strengthen the presence across teams, athletes, events, and leagues.
The adidas Group employs over 25,000 individuals globally, including more than 2,000 at its headquarters in Herzogenaurach Research and development are conducted by a dedicated team of designers, product developers, and biomechanics and material technology experts at facilities in Portland and Scheinfeld, near Nuremberg.
In Scheinfeld, adidas produces and tests prototypes as well as custom performance products, making it home to Germany's sole remaining sports shoe manufacturing facility.
Adidas boasts over 80 subsidiaries that ensure a global marketplace presence for its products, which are distributed across four key regions: Europe/Emerging Markets, North America, Asia/Pacific, and Latin America Currently, adidas stands as the largest supplier of athletic footwear and sports apparel in Europe.
For over 80 years, the adidas Group has been a key player in the sports industry, providing cutting-edge footwear, apparel, and accessories As a global leader in sporting goods, adidas offers a diverse range of products available in nearly every country The company's straightforward strategy focuses on enhancing brand strength and product quality to boost competitive advantage and overall performance.
Golf Equipment: metal woods, irons putters, golf balls, footwear, apparel and accessories Rockport
Dress, casual and outdoor footwear, apparel and accessories
CCM-Hockey Hockey equipment and apparel
The adidas Group, headquartered in Herzogenaurach, Germany, oversees its operations and more than 170 subsidiaries, including the Reebok headquarters in Canton, Massachusetts, and Taylor Made-adidas Golf in California The company also maintains creation centers and development departments globally, aligned with its business activities Additionally, adidas Sourcing Ltd., a wholly-owned subsidiary based in Hong Kong, serves as the global sourcing agent for the adidas Group.
31, 2009, the adidas Group employed 39,596 people
The adidas Group strives to be the global leader in the sporting goods industry with sports brands built on a passion for sports and a sporting lifestyle
Our organization prioritizes consumer satisfaction by consistently enhancing the quality, aesthetics, and perception of our products and structures This commitment ensures we not only meet but exceed consumer expectations, delivering the highest value possible.
It is innovation and design leaders who seek to help athletes of all skill levels achieve peak performance with every product it brings to market
It is a global organization that is socially and environmentally responsible, creative and financially rewarding for our employees and shareholders
It is committed to continuously strengthening its brands and products to improve its competitive position
It is dedicated to consistently delivering outstanding financial results.
Adidas‟s Strategy
Adidas aims to dominate the sporting goods industry by creating brands that reflect a passion for sports and an active lifestyle Drawing inspiration from its rich heritage, the company recognizes that a deep understanding of consumer and customer needs is crucial for success.
To foster innovation and meet evolving needs, the organization is committed to challenging conventions and embracing change By cultivating this innovative culture, it enhances its products, services, and processes, thereby boosting competitiveness and optimizing operational and financial performance Ultimately, this approach aims to generate long-term value for shareholders.
Reorganization of Group provides solid platform for growth
In 2009, the adidas Group transitioned from a vertically integrated brand structure to a functional multi-brand framework for adidas and Reebok, establishing a Global Sales function for commercial activities and a Global Brands function for marketing This reorganization divided the Global Sales organization into Wholesale and Retail to better meet the unique demands of each business model The new structure aims to enhance brand management and alignment for sustainable growth, while ensuring coordinated execution of best practices in the marketplace.
In 2009, the Group implemented several key measures to transition to a new structure, including the establishment of joint operating models for the adidas and Reebok brands across most global markets This involved the elimination of regional headquarters to enhance direct interaction between local markets and global functions Additionally, the responsibilities at the Board level were separated between Global Brands and Global Sales management Herbert Hainer, the CEO of adidas Group, took on direct responsibility for Global Sales, while Erich Stamminger, a member of the Executive Board, assumed responsibility for Global Brands.
The new organizational structure is designed to enhance the strengths of the management team, enabling the delivery of exceptional service to consumers and customers However, the distinct business models of Taylor Made-adidas Golf, Rockport, and Reebok-CCM Hockey mean that these operating segments will not be included in the new matrix structure.
Adidas Group recognizes that consumers desire choice, whether they are athletes seeking top-notch equipment or casual shoppers looking for the latest fashion trends To foster long-lasting relationships with its brands, the company has adopted a multi-brand strategy that enhances its consumer reach This approach enables adidas to address opportunities from various angles, acting as both a mass and niche player, and offering distinct and relevant products to a diverse audience By allowing each brand to maintain its unique identity and focus on core competencies, adidas Group broadens its product offering and strengthens its market leverage.
Investments focused on highest potential markets and channels
The adidas Group aims to secure leading market positions across all its competitive markets With nearly 180 subsidiaries globally, it strategically prioritizes investments in regions that present the most promising medium- to long-term growth and profitability The company is particularly focused on expanding its operations in emerging markets, especially in China and Russia.
Adidas understands that consumer buying behavior and the retail environment vary across markets To maximize market opportunities, it customizes its distribution strategy to effectively showcase its brands to consumers This is accomplished through a unique channel approach that enhances brand impact.
The company is dedicated to delivering exceptional service to ensure optimal shelf placement for its brands, while also focusing on enhancing its strategic capabilities in retail and e-commerce.
To maintain a competitive edge, Adidas Group focuses on creating a flexible supply chain that prioritizes speed and agility The company is dedicated to fulfilling diverse customer needs by ensuring product availability in the right sizes and colors, delivering innovative technical advancements, and offering the latest high-quality fashion products.
The organization aims to reduce creation and production lead times by continuously enhancing its infrastructure, processes, and systems By facilitating information flow between points of sale and sources, it connects and integrates various elements of its supply chain, allowing for swift responses to changing consumer trends To achieve this, the focus is on maximizing flexibility while utilizing the efficiency of shared infrastructure and processes The Group is committed to delivering customized solutions across all business models, whether in wholesale or retail channels, as well as performance-oriented or style-oriented sectors.
At adidas Group, innovation is a shared responsibility, encouraging a culture that challenges the status quo and welcomes change Each department is expected to contribute at least one significant innovative improvement annually, reinforcing the company's commitment to continuous progress.
The Group recognizes that advancing technology and innovative design are crucial for maintaining sustainable leadership in its industry, as highlighted in its Research and Development (R&D) efforts Additionally, the organization is committed to enhancing customer services and optimizing internal processes to drive further innovation and efficiency.
Develop a team grounded in our heritage
The Group's culture is shaped by its historical roots and future aspirations, reflecting the founder's dedication to athletes and consumers alike It emphasizes pride in its mission, a commitment to quality, and a passion for sports Success is achieved through teamwork, open communication, and collaboration, all grounded in shared values inherent in sports.
The Group is committed to upholding best-practice social and environmental standards, fostering responsible behavior that enhances long-term value By prioritizing socially and environmentally conscious practices, the Group aims to create significant shareholder value.
Literature Review
Literature review
Strategic supplier partnership refers to the enduring relationship between organizations and their suppliers, playing a crucial role in relationship marketing and business-to-business marketing literature The examination of buyer-supplier dynamics and the purchasing process remains a key focus within this field.
Buyer-supplier relationships are crucial for supply chain integration, serving as a foundation for business success Effectively establishing and managing these relationships at every level of the supply chain is essential This approach aims to enhance the strategic and operational capabilities of each organization involved, ultimately leading to substantial and sustained benefits.
Strategic partnerships focus on fostering long-term relationships that promote collaborative planning and problem-solving, leading to shared benefits in key areas such as technology and markets By partnering with select suppliers, organizations can enhance efficiency and innovation, as early supplier involvement in product design allows for more cost-effective choices and better component selection This alignment not only streamlines processes but also minimizes waste, enabling organizations to work more effectively together.
1996) An effective supplier partnership can be a critical component of a leading edge supply chain (Noble, 1997)
Empirical studies in China indicate that strong buyer-supplier relationships positively influence a firm's financial performance (Liu and Wang, 2000; Luo, 1997; Yeung and Tung, 1996) Additionally, the dynamics between manufacturers and distributors, along with the concept of guanxi, significantly affect the success of export ventures in the region (Ambler et al., 1999).
Firms engaged in long-term relationship with their customers achieve higher profitability than firms using a transactional approach (Kalwani and Narayandas 1995)
Maloni and Benton (2000) found that strong buyer-supplier relationships have a significant positive effect on manufacturer performance, supplier performance, and performance of the entire supply chain
In the context of supply chain management, strategic supplier partnerships refer to the extent of collaboration between manufacturers and their supply chain partners, focusing on the joint management of both intra- and inter-organizational processes The primary objective is to ensure efficient and effective flows of products, services, information, finances, and decision-making, ultimately delivering maximum value to customers while minimizing costs and enhancing speed.
Strategic collaboration is crucial for achieving mutually beneficial goals, fostering trust, extending contract durations, and facilitating effective conflict resolution This ongoing partnership promotes the sharing of information, rewards, and risks, ultimately enhancing overall efficiency.
Strategic coordination offers both operational and strategic benefits, unlike operational coordination, which only yields operational advantages This highlights the importance of intra- and inter-organizational processes, as strategic supplier partnerships involve a wide range of activities related to materials, transportation, and administrative tasks Ultimately, the primary goal of strategic supplier partnerships is to maximize value for the customer.
Creation means bringing something into existence Here, product creation means bringing physical products into existence through their design and production
The Product Creation Process described how an organization gets from a product idea to a tested system and all product documentation that is required for the Customer Oriented Process
In the past two decades, economists have significantly enhanced our understanding of how product innovation impacts macroeconomic performance Research has investigated the effects of product creation and destruction on business cycle fluctuations, as seen in studies by Shleifer (1986), Caballero and Hammour (1994), and Ghironi and Melitz (2005) Additionally, economists have highlighted the essential role of new and improved products in driving long-term economic growth, as demonstrated by the works of Romer (1987), Grossman and Helpman (1991), Aghion and Howitt (1992), and Klette and Kortum (2004).
The growth in research and product development presents a unique opportunity for companies to enhance operational effectiveness through optimized supply chain processes However, many organizations overlook the potential of these systems when establishing new facilities or processes By strategically designing supply chain processes, companies can achieve significant resource and cost savings, ultimately influencing both the supply chain structure and the internal processes associated with new product development.
In examining supply chain operations for new product development, it's essential to focus on the collaborative integration of the supply chain during the product creation phase Typically, companies engage with suppliers to request component parts, while simultaneously conceptualizing and developing the new product Subsequently, they may provide demand schedules for these essential components weeks or even months prior to the product launch.
Is this enough though? How would a full supply chain understanding improve the performance and profitability for the product when it does reach the market?
The integration of supply chain processes into new product development can significantly enhance collaboration efficiency among companies Key strategies include the early involvement of contributors to leverage diverse insights, creating a clear design to streamline communication, implementing multiple stages of quality testing to ensure product integrity, and understanding the roles of each contributor to optimize the overall process.
As we prepare to develop a new product in response to a clear market opportunity with high consumer demand, it's essential to consider not only the product's costs, projected demand, and launch timeline but also critical supply chain questions Key considerations include lead time costs, inventory storage locations and expenses, and determining optimal inventory levels across warehouses, retail outlets, manufacturing facilities, and during transportation Addressing these supply chain elements is crucial for a successful market entry.
To enhance supply chain development, it is essential to initiate the process during the new product creation phase By involving integral stakeholders like the purchasing team and suppliers, alongside marketing's demand forecasts and product engineers' design efforts, companies can gain valuable insights into both the product and the evolving supply chain Additionally, incorporating potential customers in retail discussions is crucial for establishing effective stocking and shipping strategies.
At adidas, we follow this below models for production creation phase:
Further decomposition of the Product Creation Process
The Product Creation Process can be decomposed in 3 processes:
Marketing: Defining how to obtain a sellable profitable product, starting with listening to customers, followed by managing the customer expectations, introducing the product at the customer and obtaining customer feedback
Project Management: Realizing the product in the agreed triangle of o Specification o Resources o Amount of time
Design Control involves the specification and design of a system, serving as a crucial component of the Product Creation Process This process closely aligns with traditional research and development (R&D) activities, representing the substantive aspect of product development.
The operational management is overseen by the project leader, while the architect is tasked with ensuring design control Additionally, the marketing or product manager handles the commercial aspects of the project.
Figure 3.1 adidas Product Creation Process
Sources: http://www.adidas-group.com
At adidas the most frequently conceptualized is that “New products offer the lifeblood of any dynamic business organization” With that reason the Product creation process is streamlined and simplified
Empirical results of the research
Conclusions and Suggestions
Theoretical contributions
The existing literature indicates that implementing Supply Chain Management (SCM) can significantly enhance organizational performance, including improved inventory turnover, higher customer service levels, and reduced costs Empirical findings from this study corroborate the theory that SCM practices have a substantial impact on company performance Notably, the results emphasize that production creation, purchasing/supply planning, and internal lean practices play a crucial role in improving various performance metrics.
The research developed and validated measurement scales and a research model for analyzing supply chain management (SCM) in the adidas group This process involved a comprehensive literature review, survey testing, and refinement through exploratory factor analysis (EFA), reliability testing, and linear regression analysis, confirming the reliability and validity of the scales Consequently, these validated scales can be applied in future studies on SCM within the adidas group globally, extending beyond the Asian region The suggested research model, which underwent similar testing and refinement, is also deemed valuable for future research in various regions The analysis methods employed, including EFA, reliability testing, and linear regression using SPSS software, are widely recognized and provide reliable results for subsequent studies.
Managerial contributions
This research aims to enhance our understanding of the factors influencing adidas's Supply Chain Performance (SCP) in Asia and how performance measures can predict SCP outcomes It makes two significant contributions: first, it addresses the lack of previous studies on the determinants of adidas SCP in this region; second, it identifies key determinants such as production creation, purchasing/supply planning, and internal lean practices, which are crucial in the footwear industry and applicable to various other sectors.
The revised model of determinants of SCP, illustrated in Figure 5.2, highlights that SCP is influenced by three distinct factors at varying levels The discussion of managerial implications for each factor and its relationship with SCP is grounded in research findings.
Product creation is a crucial element influencing adidas's supply chain performance This research highlights the significance of new product development and the application of supply chain concepts to enhance existing systems Many companies encounter avoidable costs and delays in product introduction, often due to inadequate supply chain design or inefficiencies in the process Additionally, marketing considerations are vital in product development, alongside managerial guidelines and economic evaluations that shape decision-making.
1975) In summary, recommendations from this study are as follows:
• New products require continues evaluation to decide whether to GO, NO GO or continue development
An effective economic evaluation system should not only identify the optimal product but also offer insights for enhancing both the products and their marketing strategies.
• Company should acknowledge the sensitivity of the results change with the input data, management constraints and uncertainty
• The expected risk return characteristics provide alternative marketing strategies, and relevant environmental changes
• The attractiveness of the conceptual and operational measures is used to evaluate the alternative products
Information feedback is utilised to vary objectives or evaluate corporate policies and controls significant new marketing opportunities
Strategic purchasing plays a crucial role in supply chain management, enhancing supply chain performance (SCP) This study emphasizes the importance of fostering strong relationships and effective communication with key suppliers Selecting suppliers that meet specific quality standards can significantly improve adidas' supply chain efficiency Additionally, improved communication between purchasing and warehouse departments optimizes inventory levels, leading to cost reductions by ensuring that the purchasing team can clearly convey needs to suppliers and synchronize deliveries effectively.
In the context of "alliance capitalism," effective management of supply-chain relationships is essential for achieving a sustainable strategic advantage This paper explores how strategic purchasing enhances supply management capabilities, including long-term orientation, a limited supplier base, and effective communication These capabilities ultimately improve customer responsiveness and financial performance for the buying firm Practically, this study demonstrates that purchasing not only impacts the firm's profitability directly but also serves as a crucial strategic partner in developing supply management capabilities that foster long-term advantages Furthermore, it reinforces the significance of managing buyer-supplier relationships for mutual benefits and highlights how supply management contributes to improved operational performance and financial success Customer responsiveness, viewed as an "output-based competency," reflects the firm's ability to deliver value effectively, thereby enhancing its image, reputation, and legitimacy among customers, suppliers, and stakeholders.
Supply management is a complex construct that requires future research to consider additional factors like supplier selection, certification, and integration The significance of trust in fostering long-term, cooperative relationships while enhancing transaction value and reducing costs must be explicitly measured as a key component of supply management This study primarily examined the buyer-supplier relationship from the buyer's perspective, highlighting the need to explore the supplier's viewpoint to determine if the relationship is truly reciprocal and beneficial for both parties Additionally, as buyer-supplier relationships exist within larger supply chain networks, future research should adopt a strategic network perspective to assess whether these networks enhance or hinder the competencies of member firms Despite its limitations, this study lays the groundwork for researchers and managers to leverage strategic purchasing to improve supply management capabilities.
Internal Lean Practices (Fast and Lean)
Research indicates that Lean practices significantly contribute to various positive outcomes, including reduced unit production costs, enhanced product quality, decreased lead times, minimized manufacturing waste, shortened cycle times, and lower inventory levels Specifically, adidas's supply chain emphasizes reducing lead time from development to mass production, targeting a reduction from 18 months to 12 months to swiftly introduce new models and gain a competitive edge This initiative employs value stream mapping to identify and eliminate unnecessary tasks, while adidas mandates its contract factories and T2 suppliers to engage in continuous improvement (Kaizen) activities, which are shared quarterly to enhance quality stability, reduce lead times, and boost productivity Additionally, a "Pull" production system is effectively implemented across contract factories and suppliers.
Reducing cycle time, downtime, and inventory significantly enhances delivery performance Adidas and its contract factories are actively encouraging suppliers to shorten lead times, particularly in material delivery, which is a crucial factor in evaluating supplier performance Suppliers are motivated to minimize lead times to meet customer demands Research indicates that lean implementation practices are positively correlated with Adidas's supply chain performance (SCP) To improve internal lean practices, companies should aim to minimize development and commercialization lead times Additionally, effective implementation of Kaizen activities and "Pull" production is essential, alongside urging suppliers to reduce material lead times.
This study identifies three key factors that influence Supply Chain Performance (SCP), which aims to meet customer demands for timely delivery and accurate quality and quantity Effective SCP not only reduces manufacturing and delivery costs but also accelerates the introduction of new products to the market, thereby boosting competitiveness Research indicates that companies should focus on improving production creation, purchasing and supply planning, and internal lean practices to enhance their SCP However, since each company has unique business characteristics and resources, tailored approaches to improving Supply Chain Management (SCM) practices are essential for optimizing SCP.
Integrating additional supply chain management (SCM) performance measures, such as enhanced quality and reduced overall costs, can significantly impact organizational performance This is crucial as SCM holds strategic importance at both the firm and supply chain levels Contrary to the common belief that effective SCM relies solely on managers, research by Trent (2004) emphasizes the necessity for all supply chain units to fully understand and embrace the strategy for successful implementation Ultimately, the proposed framework serves as a valuable tool for SCM managers to identify key factors and implement effective SCM practices.
Limitations and Suggestions for Future Researches
The study faced several limitations, primarily due to its focus on a limited sample of T1 and T2 manufacturers in Asia, which may restrict the generalizability of the findings The analysis relied solely on data from manufacturers, potentially overlooking valuable insights from suppliers and end consumers Therefore, future research should consider incorporating data from the supplier's perspective or utilize a dyadic approach to enhance understanding of the factors influencing supply chain performance.
Future research should broaden its focus to include diverse regions and cross-cultural perspectives, while also considering longitudinal studies for deeper insights The current study relied on perceptual data from a single informant per firm, which may introduce biases like over-evaluation To enhance reliability, future investigations could utilize alternative research designs incorporating objective data, multiple informants, and longitudinal data collection.
Future research should enhance the supply chain management (SCM) practices construct by incorporating additional dimensions, including total quality management, cross-functional coordination, and internal integration It is also essential to consider inter-organizational relationships, such as trust, commitment, shared vision, risk and reward sharing, and agreed supply chain leadership The focus of upcoming studies should be on testing and validating this comprehensive construct.
This study presents a foundational model that identifies key determinants of supply chain performance (SCP) in the shoe industry, providing valuable insights for both scholars and managers By bridging the gap between existing knowledge and practical needs, the research underscores the importance of integrating three critical literature streams: production creation, purchasing/supply planning, and internal lean practices.
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