This purchase them over the counter. Customers

This essay will aim to show my understanding of theoperations management, supply chain and process flow of the business that Ihave chosen. I will also give recommendations on how they can improve theirsupply chain strategies and possible market developments.Adidas is a multinational corporation that design andmanufacture sports and accessories. They have made a name for themselves as oneof the biggest companies which specialises in sports goods.

The 4 V’sAll operation processes always use one thing to get theirinputs (raw materials, knowledge, capital) and transform them into outputs(goods and services) and that is called the Four V’s (Volume, Variety,Variation, and Visibility).Volume: In Adidascase they are known for their high volume and high-quality sports clothing thatis available for their consumers to purchase. The volume of their operation isvital to how their business is organised. Employees are repeating tasks dailywhich drives them to do their job how it is supposed to be carried out with nofaults, one might say it is almost machine-like. High volume allows Adidas togain more profit as there is more stock available for the customers.Variety: Variety shows that there are more options to choosefrom for the customers.

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Adidas made sure they don’t just one specific type ofproducts. They offer products like shirts, footwear, sports accessories etc.This is very advantageous for Adidas because more options mean there is somethingfor everyone which in turn increases revenue.Variation: Adidas have a very good manufacturing processsince they get it exported from countries around the globe and is distributedto stores in different parts of the world.

Adidas have made sure that topurchase their products in store and online very is a smooth purchase. Theyhire good employees to help the customers whenever they need help, theseworkers are trained to a suitable standard where they can serve anyone whoneeds help. They have specific types of clothing for certain seasons.

Visibility: The visibility dimension allows the customers tosee how their order is being processed. For example, Adidas do have highvisibility as customers can pick up their goods and purchase them over the counter.Customers can easily order online if the item they are looking for is not instock at the store and it can be delivered to their house.Literature ReviewA literature review was conducted to structure the analysisof Adidas supply chain management and logistics. Logistics is a managerialsystem which makes sure that the right product or service is delivered to theright customer, given on time, in the right quantity and at the right place (Adriane,2011). The flow can be reversed, by beginning at the customer andthen flowing it back to the suppliers of components and raw materials (Adriane,2011) and this is called reverse logistics.

To achieve a sustainable chainmanagement, businesses like Adidas must implement reverse logistic practicesinto their business. The advantages of reverse logistic are that it reducesfinancial and environmental burden and it reduces consumption of raw materialsfor packaging (Bouzon and Govindan, 2017). However, there are disadvantageslike additional logistic cost such as air emissions from transportations,associated energy/environmental effects, labour management. Adidas do usereverse logistics like for example, when a customer returns a product, theyhave a returns policy of 45 days and Adidas will offer a full refund if youreturn your product.

and that is because there is a cost benefit to it. Reverselogistics maximises costs of handling from the returned goods and they canreuse, remanufacture, or dispose it. Suppliers are very crucial towards Adidas’ success becausethey rely heavily on them.

Since Adidas’ supply chain is quite large andvaried, they have a detailed and systematic approach to managing a strongrelationship with their suppliers. Adidas has outsourced a lot of itsproduction.  They work with more than1000 independent factories around the world where they manufacture theirproducts in 63 countries. China, India, Indonesia, and Vietnam are the mostdominant sourcing locations for Adidas (Adidas-group, 2017).Even though Adidas is one of the global leaders in thesporting goods industry, transportation is an essential part of the developmentof their company.

Adidas uses inbound logistics is that they utiliseinternational water carriers, so they can ship their goods to differentcountries around the world. Adidas also uses air carrier for bulk ordersbecause they can deliver the products faster for something like a huge event. Adidasuses outbound logistics by giving out their products to retail stores. Also,motor carrier is something Adidas use to deliver products to retail stores likeSports Direct and JD.Adidas have three different types of sourcing relationshipswhich are direct sourcing, indirect sourcing, and local market production.Adidas do direct sourcing is that they have direct contractual relationshipswith its core suppliers.

Product development, commercialisation, distribution,and the manufacture of most of the products for Adidas, Reebok and adidas golfsegments are all handled by a corporate function called Global Operation. Thesesuppliers produce the most amount of the total sourcing volume of the company.The other part of Adidas’ product volume is that they are sourced by agents oris made under license and this is called indirect sourcing. Agents place ordersfor Adidas with their preferred suppliers and licensees can place ordersdirectly with their own suppliers. Indirect sourcing complements the directsourcing by meeting specific requirements which Global Operations are not ableto do.

Local market production is a way for Adidas to quickly seize short-termopportunities in their local markets to satisfy the requirements for the nichemarket or to react to certain trade regulations. Adidas subsidiaries may alsosource from local suppliers in a specific country which are not overlooked byGlobal Operations. The larger the logistic network used by Adidas, the higherthe cost used to maintain Adidas. Adidas outsources to reliable companies incheaper countries to get higher profit. (Adidas-group, 2017)          Visio  Visio AnalysisAdidas has five types of suppliers which are main suppliers,subcontractors, material and other service providers, licensees and agents.Main suppliers supply products whether it is for exports or domestics marketconsumption. Subcontractors are the factories that are subcontracted by thesuppliers to perform manufacturing operations which the main supplier are notable to do. Material and other service providers might not have a directrelationship supply goods and services to main suppliers.

Licensees areindependent companies which handle the design, production, and distribution ofspecific products under the license of Adidas. In 2016, Adidas have worked withover 60 licensees and the suppliers outsourced the products from 377 factories in48 countries. Companies that are independent who act as mediators to sourceproduct manufacturing, overlook the manufacturing processes, then sell thefinal product to the Adidas.  Everysingle stage in this logistic network is connected, this helps the flow ofproducts, funds, and information. If there is a lack of co-ordination it willlead to an increase in cost consequently, resulting into diminishingprofitability which is not what any business wants (Adidas-group, 2017).    SWOT AnalysisStrengths:Adidas have an objective of being the world’s best sportsbrand which shows great ambitions. They have maintained a great image thereforethey have a lot of popularity and brand recognition. Adidas have a strongmarket presence around the world for example, Adidas have performed well in NorthAmerica, China, and Japan.

Adidas acquired Reebok in 2006 and this led to agrowth in its market share. There is a lot of momentum for both Adidas and Reebokin recent years. This is very beneficial for Adidas because the currencyneutral revenues grew by 26% and 6% for Reebok. (Ong, 2017)Adidas do very well in marketing by using sponsorships andpartnerships. They have many celebrity endorsements and sponsor major sportsorganisation such as FIFA, UEFA, NBA and the Olympics. Adidas have collaboratedwith footballer Paul Pogba and grime artist Stormzy. The youth of today willknow who Stormzy is since grime music has gone global especially the US. Thisis a very good marketing idea from Adidas getting someone like Stormzy andPogba since many young people will buy Adidas clothing because of them.

Weaknesses:The products by Adidas can be quite costly due to theproduction method or innovative technology being used, this can rule a certaintarget market because they cannot afford the high-priced clothing. They havetough competition from Nike who are dominating the footwear market thereforepressure is high for Adidas to get customer retention. Adidas has always been known for sports clothing and theyhave very limited stylish fashion accessories and clothing for their customers.This is a weakness for them because their rivals in the industry have delvedinto broadening their line of clothing and keeping up with the modern trend. Opportunities:Adidas should do continuous product and design because thisis good for sales and revenue. This will also help attract and gain retentionfrom customers.Adidas can venture into making more stylish design whichwill be more appealing to the younger generations since fashion is constantlychanging.

If we consider the Indian market, there is a growth rate of 33% indemand of premium products. This shows that there is a future businessopportunity in India and expanding the market size of countries with developingeconomies. Threats:Even though Adidas is a global and recognisable brand, butit is facing fierce competition from Nike. Nike are the biggest threat however,there is competitive pressure from brands like Puma and Under Armour.

Brexit isalso a problem from Adidas since there is political and economic uncertaintieswhich is a challenge is some of its key markets. Adidas have a high dependenceon their suppliers which is very risky for the long term. They have focused onbuilding long term and strong supplier relationships but relying on suppliersthis much can be dangerous.  A lot oftheir production are being outsourced therefore suppliers have more bargainingpower than Adidas.

Other brands offering more styles and varieties, thereforemore competition.Changes in the global economy such as recession is aweakness for major corporations like Adidas. For example, when BREXIT wasconfirmed, the sterling currency went down and if Adidas decided to expandtheir brand and business in the UK, it may be affected because of the possibledamages to the UK economy caused by BREXIT when it gets finalised.   Five PerformanceObjectivesThere are five performance objectives which alloworganisations to measure its operations performance (Slack et al, 2007). Theyare dependability, flexibility cost, quality, and speed.

I will be talkingabout each of these and say which one suits Adidas the best. Dependability: Dependability means that doing things in time for customersto receive their goods or services. Being on time is very important becausecustomers are likely to get irritated if their product is not given on time ornot there at all when promised. This has internal and external effects on thebusiness. Adidas are reliable and dependable because they have a high volume ofstock ready to give out to different retailers. Retail stores like JD getsAdidas clothing given to them to sell to the public. Internal dependabilityinfluences cost in three ways – it saves time therefore saving money, savesmoney directly also, it gives Adidas stability which helps them improve ontheir efficiency (Heizer & Render,2006).

Flexibility: This performance objective suits Adidas the most since theyare very flexible in terms of having a variety of products. They sell shoes, t-shirts, tracksuits, football boots etc. They have these products’ sizesavailable for men, women, kids.

There is an option to customise the products inany way you want. On the adidas website, they have a section which is dedicatedto sports. This is very useful for customers who wants sportwear, Adidas madeit easier to access on their website for them. Adidas have recognised thattheir large base of customers come from diverse cultures and backgrounds, thereforethey have adapted to this by providing a wide range of products for theircustomers. They have also collaborated with different types of people such asStormzy (a grime artist) and Paul Pogba (Manchester United football player).This goes to shows that Adidas are flexible in choosing people to representtheir brand on a global scale. Cost: Cost is a major performance objective which businesses needto focus on.

Low price is universally attractive to customers and this can beachieved by getting their goods at low cost. Adidas gets most of their clothingfrom countries, where workers are less privileged and are given minimal wagewhich contributes to reducing cost. This is an ethical issue since workers arenot getting paid much for their hard labour, reputation can be harmed byworkers protesting for better working conditions and wages. Adidas do put outcompetitive prices on their products to match or beat their competitors,however, they do try and make sure it is affordable, so customers will feelthat is good value for their money. Quality:Quality is the most important aspect in the modern businessenvironment. This when the product or goods meets the customer requirements.

Adidas have built a reputation of having quality clothing which means errorfree goods and services which makes customers satisfied.  The price of adidas clothing is quite highbut that is only because of the fact the quality is there at adidas. To makesure they can keep up with their rivals, Adidas need to produce high qualityproducts and have a good reputation about their products. The materials anddesigns they use are of high standard in a way that it justifies the price tag ofthe products. Also, having high quality clothing gains customer retentionbecause they can rely on Adidas for good quality clothing.

 Speed:Another performance objective is speed, and this means doingthings fast to minimise the time between the order and the availability of theproduct or service. Adidas have been improving on their speed when it comes toshortening queues. I have been to an Adidas store and I was impressed on howquick they were on helping their customers and serving them on the tills. Queuelines are made into ‘zigzagesque’ lines to make their customers psychologicallythink it is getting shorter than it actually is. This was originally used for airlines,but this knowledge has been transferred into fast food restaurants likeMcDonalds and now Adidas are using the same method which is effective in busyperiods. This is very good for a retail store like Adidas because this getscustomer retention which in turn increases profit/revenue.

Recommendations Adidas’ performance has been doing well in recent years andthat is because of the increase of focus on marketing in the last couple ofyears. The market dominance of Nike is the major challenge for Adidas so tostay competitive, they need to continue focusing on their marketing and productinnovation. I recommend Adidas to fine tune their supply chain becausetraditional sports footwear is not eye catching on to the public. They shouldinvest in making more high-tech shoes which will challenge the likes of NikeJordans which are produced by Nike. They need to develop footwear to appeal tothe mass public because Adidas are mainly known for their sports footwearwhereas Nike Jordans can be worn for casual wear and for sports.  For Adidas to be more relevant than Nike, theywill need to invest more into casual footwear.

Nike Jordans is very popular inthe US, which is Nike primary market, and for Adidas to increase their exposureand revenue, they will need to win over the US market by releasing productswhich are out of the ordinary but within trending fashion.Adidas own Reebok and although Reebok has a good brand imagein the sports industry, it is only seen as a fashionable footwear rather than apractical sports footwear therefore customers are not interested in this. Irecommend Adidas to concentrate in having many retail stores in markets likeIndia, China, and Russia.

The growth of the business can be risen by focusingon the evolving markets in China, Russia, and India. Their current performancein China and Japan is doing great also, India has potential as a market forAdidas. They will increase revenue if they were to exploit these markets moreaggressively. 


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