[Document title]COST REDUCTION & PROCESS

IMPROVEMENT

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Abstract:

Adidas is one of the oldest company as a sports good manufacturer with having very diversified

and strong history. Adidas was facing some serious challenges in its supply chain like meeting

the demands and problems in distribution network. Various Quality tools are applied to analyze

the problems and its impact on various processes. These tools helped to find the problems and

improve the processes and reduce cost. The organization will deal with all distribution-related

issues by time-sensitive strategies. It is important that all essential functional factors are

addressed in order to produce efficient results

Table of Contents
Introduction:........................................................................................................................................3

Problem Statement...............................................................................................................................3

As in Condition......................................................................................................................................4

Pareto Chart........................................................................................................................................6

Control Chart.........................................................................................................................................6

Analysis:...............................................................................................................................................6

Cause and Effect Diagram..................................................................................................................7

Conclusion:........................................................................................................................................12

References...........................................................................................................................................15
Introduction:

While urban legend states that "Adidas" is an anagram of the phrases "I am dreaming about

sports every day," its founder by Adoiph "Adi, “Dassler names the athletics wear company.

He and his brother formed a worldwide branding business, but it is not as well-known their

background as leaders of the Nazi Party. Avid football player Adolph (Adi) Dassler, the son

of a cobbler, invented track and field spike shoes in 1920 at the age of 20. The German sports

shoe company Gebrüder Dassler OHG, later known as Adidas, was founded four years later

by Adi and his brother Rudolph (Rudi). Adi's specifically made shoes started gaining

international recognition from the 1928 Olympics in Amsterdam. Dassler had more than 700

patents on sports shoes and other sporting equipment on the occasion of his death in 1959.

Adidas was the leading sports shoe brand in US in the 1970s.

Problem Statement

Since supply chains operate as a system or network, supply chain issues affect the entire

supply chain In the supply chain as a whole this can lead to greater inefficiency. The

organization faces a poor distribution network strategic challenge. Operating for more than

80 years in all countries, the organization is facing difficulty in running with a large

distribution network. The supply chain of the company is long and complicated, making the

management difficult. The company also faces the challenge of rising market

individualization demand In order to make the right decisions for the supply chain as a whole,

the consequences of acts and choices to one section of the supply chain should be weighed.

This paper tries to address this question:

Is there evidence of inefficiencies in the supply chain or of problems which penetrate

Adidas' entire supply chain?

As in Condition

HERZOGENAURACH, Germany-- Adidas AG said a In North America the supply-chain

shortage will keep it from meeting demand for its products in the next months, shares settling

in one of the most significant markets of the world's second-largest sports goods

manufacturer.

Chief Executive CEO Kasper Rorsted reported that the company has failed to satisfy

increasing midprice demand, and that the cost to the company is estimated at between

EUR200 million and EUR 400 million (225 million and 450 million).With a regional and

mesh network supply chain, the organization efficiently handles transportation and

distribution, but still faces a competitive threat from a weak distribution network. Operating

for more than 80 years in all countries, the organization is difficult to run with a large

distribution network.

Furthermore, based on approximately 570 companies in the world, the supply chain of the

business is long and complex (Berger, 2008, 39). The distribution is hard to manage

effectively with the large supply chain.

The company also faces the challenge of increasingly individualizing demand with a wide

range of product lines. The organization had challenges in successfully preparing and

predicting shifts in customer buying power and making individual goods options, resulting in

problems with the management of warehouses and distribution. Despite of all these issues, it

is important for the company's distribution network to enhance or develop. The procurement

and market distribution of products has been greatly affected by globalization and trade

liberalisation in the new through competitive climate. The introduction of trade liberalization

and the rise of economies such as Brazil, Russia and India will mean a continuous dramatic

change in supply chains from different industries worldwide. Therefore, the task of
improving the Adidas distribution network is chosen to strengthen it in time and to allow

companies to adapt to potential demands (Rhodes, Warren and Carter, 2009, p. 52).

Worldwide and emerging economies are changing, and companies from various industries are

demanding to reconfigure and re-optimize their distribution and service networks. In

addition, it is important that the organization re-configure and re-optimize its distribution

networks and use new distribution technologies and techniques in coping with growing

competition and expanding networks. Adidas will be able to develop the distribution network

and to restructure it in a way that will function better in the future, using even some new and

modern delivery methods and techniques.

The supply chain can be treated as a network instead of a linear chain. ."Nick FinillSenior

Analyst of Intelligent Supply Chain, ABI Research

Lag time is the symbol, one might claim, of a sluggish supply chain, inflexible.

The CEO of Adidas notes that they have not "reacted adequately fast to this demand post." It

means that the demand forecast was not the problem. The ability to execute a robust

forecasting demand strategy is critical and calls for consistency in the supply chain from end

to end.

"Environmental demand change is basically a textbook case of a low sensitive

(outsourced) supply chain. Basically, the bullwhip effect is more closely linked to an
inefficient supply chain than to procurement or preparation”

IPO Diagram Adidas:

 Equipment
PRODUCTION OF PRODUCT
PROCESS
Less plant capacity
than demand
PROCEDURES
Complex and long SUPPLY CHAIN INEFFICIENCIES
supply chain PRODUCT DISTRIBUTION
Weak distribution
METHODS network

Pareto Chart

Control Chart

Analysis:

Many customers who suffer from quality or distribution issues do not necessarily assume that

this is an issue in the supply chain. 'We attribute it all to the company's inefficiency,
The production of Adidas can't satisfy consumer demand due to capacity constraint. The

company also faces the challenge of increasingly individualizing demand with a wide range

of product lines. Changes in customer purchasing power and the choices made it hard for the

company to effectively schedule and forecast, creating challenges to manage warehousing

and distribution and to adapt to market demand because of production efficiency. Despite of

all these issues, it is important for the company's distribution network to enhance or develop.

At present, the purchase and selling of goods has been highly affected by globalization and

market liberalization in an ever-increasing demand climate. They have a long and

complicated supply chain that helps them to handle their core processes and distribute goods

to consumers effectively.

Cause and Effect Diagram

Machinery & Equipment

People (consumers)
Due to extensive product line
Capacity limitation individualization of consumer
of manufacturing demand taking place
plant
Consumers demand
Less production are not being fulfilled
which doesn’t meet and no effective
demand of inefficiencies distribution network
Process & method in supply due to which orders
Production customers
chain are delayed

Production Difficulty in
limitation managing
due to plant Storage distribution
capacity issue in network
warehouse
Adidas focused on expanding its business due to which it introduced extensive product line

but when expanding a business or product line there are few factors that should be

considered.

1) Adidas has limited capacity of manufacturing due to limitation of manufacturing plant

so it was a challenge to meet the demand of customers. Due to extensive product line

the demand for Adidas increased but because Adidas had limited capacity of

manufacturing faces difficulty in fulfilling the demands and orders.

2) When new product line is introduced we have to consider the inventory storage factor

because after manufacturing of goods the products are stored in inventory for

delivery. But Adidas just expanded its product line but didn’t focus on the factor of

warehouse storage which caused a problem for Adidas that when that goods were

produced it was difficult to store them because of restricted inventory capacity.

3) When a company expands in terms of products it should also consider its distribution

network because an effective and well operated distribution channel plays a very vital

role in supply chain. Adidas introduced its products but ignore the distribution

channel which was one of the other factor that caused a problem for it. They doesn’t

have integrated and effective distribution channel due to operating into many

countries and dealing with a lot of demands from consumer it was difficult for Adidas

to deliver orders to customers on time it resulted in delays of orders.

Process risk results from production process unreliability and risk of demand is perhaps the

worst risk R. Process risk. Bhatnagar, A.S. Sohal "Competence of supply chains: position

effect assessment, complexity and industrial practices"

Greater risk in the supply chain leads to less effective metrics such as production prices, lead

time, flexibility and reactivity.

Several authors have analyzed risk elements using various methodologies to reduce the effect

on the efficiency of the supply chain. An innovative approach has been developed to identify,

control, and analyze incoming supply risk using a multi-attribute decision-making process

called the Analytical Hierarchy Method. derived from the ever more dynamic global

networking of the supply chain include increased production delays and quality issues

potential (Bhatnagar and Sohal, 2005). As early as Davis (1993),

In the end, the customer decides the success and failure of supply chains on the market. The

right commodity, in the right spot, not only is the lynchpin to competitive success, but the

secret to survival at the right time for the consumers. SCM is competing for pricing, working

together with consumers and suppliers to build a position on the market based on end-

consumer demand (Chopra & Meindi, 2007)

The success and failure of supply chains are ultimately

Determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
Competitive success but also the key to survival
The success and failure of supply chains are ultimately
Determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
Competitive success but also the key to survival
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
Process risk results from the unreliability of the production process and demand risk is maybe

the most serious risk R. Bhatnagar, A.S. Sohal Supply chain competitiveness: measuring

the impact of location factors, uncertainty and manufacturing practices

Greater risk in supply chain has a poorer result in performance’s metrics such as inventory

costs, lead-time, flexibility and responsiveness

Several authors have investigated the risk elements using different methodologies seeking to

reduce the impact on supply chain performance. An integrated methodology has been

proposed to classify, manage and assess inbound supply risk using an Analytical Hierarchy

Process, defined as a multi attribute decision-making method. deriving from the increasing

complexity of global supply chain networks, which

include increased potential for delivery delays and quality problems (Bhatnagar and Sohal,

2005). As early as Davis (1993),

The success and failure of supply chains are ultimately determined in the market place by the

end consumer. Getting the right product, at the right place, at the right time to the consumer is

not only the lynchpin to competitive success but also the key to survival. SCM is about

competing for value, collaborating with customer and suppliers to create a position of

strength in the market place based on value derived from end consumer (Chopra & Meindi,

2007).

Recommendation

The success and failure of supply chains are ultimately

Determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
The success and failure of supply chains are ultimately
determined in the marketplace by the end consumer.
Getting the right product, at the right price, at the right
time to the consumer is not only the lynchpin to
competitive success but also the key to surviva
Recommendation:

Whether the poor distribution

network is to be tackled efficiently or

to improve its global distribution

system , the organization must really

concentrate on enhancing its various

aspects, such as logistics in the

stores, warehousing, procurement,

transport, planning , tracking, etc. (Rhodes, Warren and Carter, 2009, p. 55). To improve the

distribution network of the organization, it is important to focus on the co-ordination of all

these elements, which cannot be accomplished unless a variety of delivery methods and

technologies is used as follows:

It is crucial to improve first within the company and concentrate on keeping the added value

for the consumer and cutting its business costs in order to make the business distribution

network effective. In-store visibility is required for solutions. Having RFID technology will

allow the company to provide a real-time view of the inventory, along with device warnings

when suppliers are not functioning properly or when voles are visible. The company must

concentrate on the use of collaborative physical logistics following its focusing on in-store

logistics. Efficient use of integrated physical logistics would help Adidas improve the

distribution network, which would also help to reduce the economic and environmental

effects of transport.

For rising demand volatility, it

is important for the organization

to create new models that can

typically ease the demand

signals from its clients. Efficient

models which overcome

traditional approaches to retail

supplier integration and

partnership are required with that challenges and demand uncertainties. The organization may
use vertical approaches such as promotions / calendars and the capacity to supply / demand to

launch and facilitate projects. In this regard. (2016 Future Supply Chain, 2008, p. 26).

However, the cooperation on the implementation of other methods that can also be used in

this regard apply to mutual supply / demand preferences based on real-time visibility of the

products and the physical movement of customers. Monitoring cooperation requires mutual

real-time access on the basis of security frameworks to initiate results and promotions (2016

Future Supply Chain, 2008, p. 27). With the aid of these devices, production and distribution

can be expected and handled effectively.

If Adidas increases its manufacturing capacity or does outsourcing and meets the demand of

customers in this way, it the customers will be satisfied and will create good reputation of the

brand. If distribution channels are well integrated and managed, then the customers will get

appropriate delivery on time which will also result in customer satisfaction and strong brand

image. It will also help to retain customers.

Stakeholders involve employees, customers, suppliers and sometimes even the government.

If Adidas starts fulfilling the demand of customers and focuses on its distribution channel and

follow the techniques mentioned above would satisfy stakeholder. E.g. if customers are

satisfying and retained the business will operate well and earn profit which will satisfy the

employees as the business is earning profit and has good reputation in market.

If we focus on minimizing out inefficiencies in supply chain, we can be able to improve our

operations.

The facts and figures analyzed above represent us that it is very necessary to make

improvement in our supply chain process and it creates unreliability throughout the process.

It also leads to effect the lead time, inventory cost, production cost, inefficiencies which

effect the overall performance of Adidas. The failure and success of an organization depends
upon its supply chain system by delivering customers at right time and right place. So it plays

a very important role in organizations success so the supply chain of Adidas should be

revamped or reconsidered to minimize all the inefficiencies regarding the production and

distribution to carry all the processes smoothly and efficiently.

Conclusion:

For the effective implementation of the above-mentioned distribution tools and techniques it

is important for all those involved in manufacturing, operations and distribution management

to deal with practical issues such as adequate training. The business cannot use modern

distribution equipment and technologies without adequate and consistent training for all

employees. An important practical aspect to be resolved is the efficient planning and

conception of these tools and techniques, in addition to training. Different new distribution

tools and techniques are difficult to apply without careful planning and design (Rushton,

2010).

Extensive cooperation involves extensive preparation and knowledge steps in order to

identify implementation issues or delays. The introduction of advanced delivery tools and

techniques and related ICTs is a major focus of security. It’s crucial for corporate

management to have secure systems for effective monitoring for the safe application of

various tools or techniques.

Drawing on the above discussion, it becomes obvious that physical distribution management

is difficult to manage and handle in the flow of multiple aspects and components. With

increasing demands, fluctuations, expanded market conditions, etc., the management of total

distribution becomes more critical. The large and complex Adidas supply chain makes it

difficult for its employees to manage distribution in nearly every part of the world, and that is
why the application of various distribution tools and techniques according to their needs and

challenges is recommended.

Adidas has to re-structure its current distribution network, which can be applied using the

methods and strategies described above, with increasing competition and evolving economic

environments. The company would be assisted in improving visibility, logistics, inventory,

warehouse, transport and overall distribution through all the tools and techniques suggested.

The organization will deal with all distribution-related issues by time-sensitive strategies. It is

important that all essential functional factors are addressed in order to produce efficient

results.

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