This week, focus your analysis on the procurement or acquisition practices of the company you selected for the final project and the types of materials that the company uses. Also, analyze where tho
Running head: MANUFACTURING 1
Nicholas Calhoun
Manufacturing
Operations & Supply Management
South University
October 16, 2019
Introduction
Currently, Adidas’s manufacturing practices take place across the globe as the company strives to maintain its position in the apparel and footwear industry. Notably, the industry is highly competitive due to the presence of other key players like Nike, Converse, Fila, among others. Adidas is striving to unlock value in order to counter the stiff competition in the market. Consequently, the company has adopted various strategies characterized by manufacturing options such as outsourcing and offshoring. These strategies are meant to lower the operation costs while at the same time increasing the organization’s profitability.
Locations
As mentioned above, Adidas is striving to expand its presence globally. This is among the company’s global expansion strategy that is aimed at extending its operations in multiple countries. The multinational expansion has seen the company target countries which are perceived as prime markets for Adidas products and merchandise. The company has strived to gain a global outlook by establishing wholly-owned subsidiaries across various parts of the world as a way of brand leverage. Adidas seeks to gain a strong competitive advantage in foreign countries through the establishment of strong relationships with governments and business partners for the purpose of supporting its complimentary products (Diffen, 2019).
Over the years, Adidas has managed to establish a limited number of its own production and assembly sites in various developed countries which are perceived as primary markets. This ensures that the company’s products and merchandise are located near the prospective customers. By doing so, Adidas is able to conduct extensive market research in order to understand customer needs in various regions –something that helps to develop and design products that create maximum customer satisfaction. These are the locations whereby Adidas runs a number of production and assembly sites:
Canada where it operates 3 outlets
Germany (1)
Finland (1)
Sweden (1)
USA (4)
China (1)
Japan (1)
Offshoring
According to Oshri, Kotlarsky & Willcocks (2015), “offshoring involves the process of setting up physical infrastructure in another country and region.” Offshoring involves the process of multinational corporations like Adidas establishing their wholly-owned subsidiaries in different foreign countries. This is significant in ensuring proper customer service and delivery of products to consumers in a timely manner. Notably, offshore cuts the cost of exporting Adidas products to foreign countries by establishing manufacturing plants near the potential consumers in the host country. This will allow the company to uphold its mission of offering value to customers and also gain a competitive advantage –a move that is crucial in increasing their profit margins.
Offshoring helps to enhance the quality of Adidas products in two major ways. First, the company is in close link with the intended customers. This makes it easy to capture their needs regarding the products produced by the company. Adidas fully-owned subsidiaries mentioned above will help to conduct research in domestic markets and gain information on how to modify products to reflect customer needs. Secondly, it can help to tap on skills in host countries in order to offer diverse ideas on how to improve the quality of products produced by the parent company Adidas. In terms of supply chain, offshoring enhances logistics including warehousing, distribution, inventory management, and transportation (Pratap, 2019). This makes the products move quite efficiently and timely from the company’s offshore plants to the consumers since it is located near the factory.
Outsourcing
This refers to the process through which a company “contracts the entire business function, project or certain activities to an external provider.” These external providers act independently from the company giving them the contract. However, external providers take product specifications and design from the company that has contracted them. Notably, Adidas is known for outsourcing almost 100% of its production in the bid to minimize production costs. The company works in partnership with almost 338 independent plants in 29 countries globally. These independent factories manufacture products on behalf of Adidas. Remarkably, Adidas “has enforced strict control and inspection procedures at their supplier and in their own production units in order to ensure high quality products that customers expect from the company” (Kothari, 2014). Perhaps, external providers are able to improve the quality of Adidas products due to their proximity to customers. Moreover, external providers possess exceptional skills which help manufacturing the products more efficiently and within the minimum time possible. In terms of supply chain, outsourced plants help to simply the logistics through quick transportation since they are located near consumers (Shaharudin, Zailani & Ismail, 2014). They also help Adidas to manage the inventories as well as reduce the costs and time required to deliver the products to customer. Generally, outsources companies helps Adidas to manage the supply chain quite easily and in an efficient manner.
References
Diffen, (2019). Offshoring vs. Outsourcing. Retrieved from: < https://www.diffen.com/difference/Offshoring_vs_Outsourcing> [Accessed October 16 2019].
Kothari, V. (2014). Sourcing Practices of Adidas. Retrieved from: https://www.academia.edu/12875181/Sourcing_Practices_of_Adidas [Accessed October 16 2019].
Oshri, I., Kotlarsky, J., & Willcocks, L. P. (2015). The Handbook of Global Outsourcing and Offshoring 3rd Edition. Springer.
Pratap, A. (2019). Supply Chain Management at Adidas. Retrieved from: < https://notesmatic.com/supply-chain-management-at-adidas/> [Accessed October 16 2019].
Shaharudin, M. R., Zailani, S., & Ismail, M. (2014). Third party logistics orchestrator role in reverse logistics and closed-loop supply chains. International Journal of Logistics Systems and Management, 18(2), 200-215.
