Inventory Management of Adidas

Tài liệu tham khảo nghiên cứu về việc quản lý tồn kho của thương hiệu giày nổi tiếng Adidas. Tài liệu này giới thiệu về thương hiệu Adidas, các vấn đề tồn kho và hướng giải quyết nhằm giảm tải các vấn đề mà thương hiệu đang gặp phải.

University of Technology and Education INVENTORY MANAGEMENT OF ADIDAS SPECIALIZED: INDUSTRIAL MANAGEMENT SUBJECT : INVENTORY MANAGEMENT HO CHI MINH CITY 10/10/2021 CONTENTS CONTENTS CHAPTER 1: CONCEPTS AND SPECIALIZED KNOWLEDGE IN INVENTORY MANAGEMENT 1.1 WHAT IS INVENTORY MANAGEMENT ? 1.2 Classification of inventory 1.3 Why is inventory management so important to a business owner? 1.4 keys inventory management concept a.Ordering Products b.Receiving a Shipment c.Storing Inventory d.Minimizing Loss e.Taking Regular Inventory f.Inventory Management Solutions g.Inventory Consultants 1.5 Wastes of Lean Manufacturing (TIMWOOD) 1.6 SOME INVENTORY TERMS : CHAPTER 2: ADIDAS 10 2.1.INTRODUCE ABOUT ADIDAS 10 2.2 INVENTORY MODEL OF ADIDAS (WMS) 10 2.2.1 WHAT IS Warehouse Management System (WMS) 10 2.3 SOME PROBLEM OF ADIDAS 11 2.4 SOLUTION of ADIDAS 12 2.5 Inventory management techniques 12 CHAPTER : ABOUT IoT 14 CHAPTER :The LEAN Theory and Fishbone Diagram of Adidas 15 4.1 List out wastes of Adidas 15 a Transport (moving products that are not actually required to perform the processing) 15 b Inventory (all components, work in progress and the finished product not being processed) 15 c Motion (people or equipment moving or walking more than is required to perform the processing) 15 d Waiting (waiting for the next production step) 15 e Overproduction (production ahead of demand) 15 f Over Processing (resulting from poor tool or product design creating activity) 16 g Defects (the effort involved in inspecting for and fixing defects) 16 4.2 Fishbone diagram (5M+E) 16 4.3 5WHY for Fishbone Diagram of Adidas 17 CHAPTER : CHECKLIST FOR INVENTORY AUDIT 21 REFERENCE 22 CHAPTER 1: CONCEPTS AND SPECIALIZED KNOWLEDGE IN INVENTORY MANAGEMENT 1.1 WHAT IS INVENTORY MANAGEMENT ? Inventory Management is a planning method for determining when to order and how much to order so that ordering and inventory costs are maximized without causing production loss discontinuity Inventories are raw materials, work-in-process goods and completely finished goods that are considered to be the portion of business’s assets that are ready or will be ready for sale Formulating a suitable inventory model is one of the major concerns for an industry The earliest scientific inventory management researches date back to the second decade of the past century, but the interest in this scientific area is still great Again considering the reliability of any process is an important feature in the research activities Values of some factors are very hard to define or almost unreal In such cases, fuzzy models of inventory management take an important place This paper analyzes possible parameters of existing models of inventory control An attempt is made to provide an up-to-date review of existing literature, concentrating on descriptions of the characteristics and types of inventory control models that have been developed 1.2 Classification of inventory Currently, people divide inventory into categories as follows: First, raw materials or input products They are retained by the enterprise to serve future production Second, semi-finished products mean work in progress They are still unfinished, only partially machined Third, finished products include finished products that can be released to the market at any time All three types of inventory can be stored at one or more different companies They can also be transferred from one business to another 1.3 Why is inventory management so important to a business owner? Inventory management can make or break a business Inventory is often the largest item in the current assets category on a balance sheet Issues with inventory can contribute to business losses, even failures Proper management of the supply chain, on the other hand, can allow a business to thrive Good inventory management strikes a balance between the amount of inventory coming in and going out It controls the timing and costs of non-capitalized assets and stock items, allowing a business to reach optimal profitability 1.4 keys inventory management concept This is key inventory management concept will help us know clearly about steps to manage our inventory easier a.Ordering Products How you choose to purchase your merchandise will define your ordering method and quantities you will need to reorder This should be based on your return on investment Large retailers have the benefit of using distribution warehouses and complex systems that break each item into smaller units to ship and to store as items are ordered Smaller businesses need to watch ordering even closer because of space and financial limitations Thus, monitoring sales trends and specific products to determine the needed replenishment amounts is absolutely essential Start by acquiring an inventory book where you can record all items, as well as changes to them Make note of fast and slow moving products and compare your revenue against carrying costs to figure out which products are the most profitable for you b.Receiving a Shipment A key point of loss is at the time of receiving inventory Closely reviewing packing slips to catalog shipments is necessary for inventory management You will also want to carefully inspect items before the shipping company leaves in case you need to file a damage claim Each shipment should be closely checked, and this should include counting products and comparing them to the packing slip Variances need to be noted, and if need be, a claim will have to be filed with the vendor responsible for the shipment c.Storing Inventory After receiving your products, you will need to decide where they should be placed Will you be using your garage, a local warehouse, or a distribution facility that will both store and ship your products? Whatever you decide, develop a systematic way to be able to find your products For example, a supplier of buttons might use bins with numbers to map out what she has in stock Once this system is in place, you will not only simplify for yourself the picking process when there is an order but also for any staff that you might hire to help you d.Minimizing Loss Most of us think of loss as theft However, a substantial amount of loss simply occurs due to clerical mistakes These mistakes can occur at any point during the inventory cycle Incorporating loss prevention techniques can help prevent these costly problems Managing your inventory effectively may require implementing a variety of loss prevention techniques including utilizing security cameras to reduce customer and employee theft, using security tags, limiting access to inventory, and carefully monitoring customer returns e.Taking Regular Inventory Inventory management also includes taking periodic inventory for tax purposes Inventorying more often can also help you better understand loss trends and the amount of unsold merchandise Consider having scheduled inventory days when employees check inventory for quality and age This is the time to weed out old products by having clearance sales or special promos to liquidate merchandise f.Inventory Management Solutions If you sell products, a inventory management solution is something that you definitely need to consider There are many to choose from that are designed specifically for small businesses Most inventory systems currently available will help you oversee the flow of your products, create invoices and purchase orders, generate receipts, and control inventory-related accounting for you g.Inventory Consultants Very few small businesses have the luxury of being able to hire a dedicated inventory control manager However, there are outside consultants that can help you develop and manage your internal inventory management system A qualified consultant can help you maintain accuracy while helping you to manage shipping and receiving and order-picking operations The most successful small businesses take inventory management seriously because it can have such a profound impact on the bottom line By putting the right inventory management systems in place early in the development of your business, you can help set a foundation for success as you grow, and you can substantially minimize costly loss due to theft and errors If you are in need of an inventory loan to help you improve upon your inventory management processes, turn to Kabbage 1.5 Wastes of Lean Manufacturing (TIMWOOD) Transportation – in production, it may mean moving parts and materials from one place to another Inventory – undelivered products or parts Overstocking with equipment that may be in need somewhere in the future Motion – unnecessary movement of employees or machinery Waiting – waiting for goods to be delivered Overproduction – too many items produced “just in case” Over-processing – Spending a lot of time on a given task Adding a feature that doesn’t bring value Defects – broken parts or defective parts that need to be reworked The Lean Theory The Lean theory describes major areas where you can identify activities, more popular as the seven wastes of Lean Transportation This type of waste is when you move resources (materials), and the movement doesn’t add value to the product Excessive movement of materials can be costly to your business and cause damage to quality Often, transportation may force you to pay additionally for time, space, and machinery Inventory Excessive inventory is often the result of a company holding “just in case” inventories In such cases, companies overstock themselves in order to meet unexpected demand, protect from production delays, low quality, or other problems However, these excessive inventories often don’t meet customer’s needs and don’t add value They only increase storage and depreciation costs Motion This kind of waste includes movements of employees (or machinery), which are complicated and unnecessary They can cause injuries, extended production time, and more In other words, whatever is necessary to arrange a process where workers need to as little as possible to finish their job Waiting This is probably the easiest waste you can recognize Whenever goods or tasks are not moving, the "waiting waste" occurs It is easily identifiable because lost time is the most obvious thing you can detect For example, goods waiting to be delivered, equipment waiting to be fixed, or a document waiting for executives' approval Overproduction Keeping in mind that waste is anything that the customer is unwilling to pay for, it is easy to realize why overproduction is Muda Producing more means that you exceed customer’s demand, which leads to additional costs Actually, overproduction triggers the other wastes to appear The reason is that excess products or tasks require additional transportation, excessive motion, greater waiting time, and so on Furthermore, if occasionally a defect appears during overproduction, it means your team will need to rework more units Over-processing This type of waste usually reflects on doing work that doesn’t bring additional value, or it brings more value than required Such things can be adding extra features to a given product that nobody will use, but they increase your business costs For example, if a car manufacturer decides to put a TV screen in the back trunk of a vehicle, probably nobody will use it or find value in it Even more, it will cost resources, and it will increase the end price of the product for something that customers are not willing to pay for Defects Defects can cause rework, or even worse, they can lead to scrap Usually, defective work should go back to production again, which costs valuable time Moreover, in some cases, an extra reworking area is required, which comes with additional exploitation of labor and tools 1.6 SOME INVENTORY TERMS : Stock-Keeping Unit (SKU): SKU is a clear internal identifier assigned to each product and its variants The SKU can be any combination of letters and numbers chosen, as long as the system is consistent and used for all inventory products Out of stock (Stockout): Means out of stock of a SKU "New old stock" (NOS): A term used in business to refer to items being offered for sale that have been manufactured a long time ago but have never been used Such goods may no longer be produced, and perennial inventories may represent the sole market source of a particular commodity at the present time Cycle stock: Used in batch manufacturing processes It is available inventory, excluding buffer inventory De-coupling: Inventory buffers between machines in a single process, acting as a buffer to the next machine allowing for a smooth flow of work instead of waiting for the previous machine or the next machine in the same process a process CHAPTER 2: ADIDAS 2.1.INTRODUCE ABOUT ADIDAS Adidas, in full Adidas AG, German manufacturer of athletic shoes and apparel and sporting goods In the early 21st century it was the largest sportswear manufacturer in Europe and the second largest (after Nike) in the world Adidas products are traditionally marked with a three-stripe trademark, which remains an element in the company’s newer “trefoil” and “mountain” logos Headquarters are in Herzogenaurach, Germany The name Adidas (written “adidas” by the company) is an abbreviation of the name of founder Adolf (“Adi”) Dassler The Dassler family began manufacturing shoes after World War I At the 1936 Berlin Olympics, the American track-and-field star Jesse Owens wore shoes that were reportedly a gift from Adi Dassler Owens’s medal-winning performances increased awareness of the Dassler brand around the world After the disruptions of World War II, Adi and his brother Rudolf (“Rudi”) strove to rebuild the Dassler firm, but a personal breach between the brothers had become irreparable by 1948 The business therefore split in two: Rudi’s company was eventually called Puma, while Adi’s became Adidas Assets in 2006 were estimated at 10.084 billion euros ($13.625 billion) The company's personal care products and fragrances are manufactured by Coty, Inc under global copyright Today, Adidas has become the world's second largest company specializing in the production of sportswear and fashion products Its products are now available in over 160 countries/regions, annually more than 660 million products are sold to meet all the needs of users Adidas is famous for many shoe lines that have brought the name of adidas to the top, such as adidas superstar, stan-smith, ultra boost, NMD, Besides that adidas apply a lot of technology for their sneaker but but the most famous one known is “boost” technology That a breakthrough of adidas in that time 2.2 INVENTORY MODEL OF ADIDAS (WMS) 2.2.1 WHAT IS Warehouse Management System (WMS) Warehouse Management System (WMS) is a system that helps to track inventory levels, orders, sales and deliveries The system helps control and manage warehouse operations from 10 raw materials to warehouse to finished goods The WMS warehouse management system guides the inventory receiving and ordering processes Optimize order picking and shipping, replenishment, and inventory management 2.3 SOME PROBLEM OF ADIDAS The heads of the famous German sports company have not kept up with the tastes in the US : + Christine Noh, owner of the Nohble streetwear chain in New York, told the Wall Street Journal that Adidas is no longer listening to retailers' opinions on shoe models that will sell well in the US If your senior leadership is in Germany and they know nothing about Flatbush from Harlem to Virginia, it's hard to expect that information to be supported and to take immediate and appropriate action.Currently, Adidas is trying to add "American tastes" to the product.American tastes are probably very different from Germany's, said Adidas North America director Mark King + Adidas lost many lucrative advertising contracts to Nike.For example, in the 1980s, Adidas stopped a potential endorsement deal with basketball player Michael Jordan, believing that fans might prefer tall players Nike instead signed Michael Jordan.Thirty years later, the Jordan brand is still generating billions of dollars in revenue for Nike, even after Jordan left the NBA 10 years ago, according to Forbes.Nike also signs more American athletes than Adidas + Adidas' pace of innovation and product improvement is too slow.The average pace of innovation from design to store shelf is 18 months, making it difficult for Adidas to take advantage of emerging trends, according to the Wall Street Journal.Adidas is trying to reduce the improvement period to months + Adidas spent too much on Reebok in 2005.According to a former senior Adidas official, when it started to look at the numbers, the company knew that this was a business that did not work as expected and that Adidas had spent too much money, up to $ 3.8 billion for this acquisition.Reebok was struggling at the time and Adidas had to use the proceeds from its core operations to improve Reebok's business 11 And all of that has made adidas sales go down very quickly compared to competitor Nike 2.4 SOLUTION of ADIDAS Inventory is mainly considered as a finished good which the company accumulates before selling them to customers But it also describes the raw material which is required in the manufacturing of products Inventory turnover for Adidas, together with its subsidiaries, designs The company's recent turnover is 6.6x, Adidas' inventory turnover its four years low in Dec 2015 Their turnover peaked in 2018 2.5 Inventory management techniques Technology has made it easier for companies to manage the inventory Adidas is also a prominent brand in the market; thus, it needs to manage the inventory effectively to keep up with the pace of consumer demand Most recently, it has adopted the GT Nexus cloud for dealing effectively with the challenges of inventory With the help of this software solution, the company can easily check the stock of raw material By keeping track of raw material, it can easily be predicted how much more is needed The track of finished goods is also kept Moreover, the company is experimenting with the NFC (near field technology) for developing closer relations with the consumers With this new technology, the company intends to expand its tactics across various other products NFC can easily be entrenched in smartphone technology All the data which will be collected by NFC interaction will facilitate the company in the process development of innovations (hbs.org, 2017) In the year 2014, the company was facing an intense challenge from its big competitor Nike just because it was unable to manage the inventory effectively However, now due to the implementation of the latest technology, it can manage the capacity and create value for the consumers In recent years due to effective capacity management, the company can gain leads in various regions like China and America Moreover, in the Asian region as the economy of developing countries is improving, and the financial condition of the people is improving due to which they are attracted to buy 12 branded goods These countries are a potential opportunity for the company to improve its sales 2.6 Major buying location and items The trend of online buying has increased, and the company is offering its products both at online platforms and physical stores For instance, there is a big store of the company present in the Dubai mall Moreover, the online retailer stores like Souq.com the items of the company are present from where the consumers can buy it The consumers can also order the products from the official website of the company and obtain the item at their doorstep There are a variety of items which are offered by the company such as men and women shoes, shirts, nite joggers, sports clothes and jerseys The company also offers accessories The consumers can buy the products which they like the most 13 CHAPTER : ABOUT IoT Following the launch event of Futurecraft 3D printing technology for the midsole of the running shoe line ,Adidas has unveiled its first innovative factory system called SPEEDFACTORY With the ambition to produce high-performance sports products faster and more efficiently, adidas uses fully automated production lines located in the center where potential customers live This is a project that has received many compliments from interested people as well as fans SPEEDFACTORY is built for the purpose of creating more than a number of bespoke or custom sneakers to bring to shoe lovers, adidas also affirms this will be their dedication to practical environmental protection The factory located near the place of issue helps to reduce materials as well as transportation costs, emissions and especially avoids the use of glue on shoes thanks to new technology to save the best materials SPEEDFACTORY is just the beginning of adidas' grand vision of bringing customers a revolution in manufacturing technology, a digital interactive experience, and in-store shoes customization 14 CHAPTER :The LEAN Theory and Fishbone Diagram of Adidas 4.1 List out wastes of Adidas a Transport (moving products that are not actually required to perform the processing) EX: They have a lot of factory in the world so when transport a raw material to an other country to produce it take a lot of time Solution : Put a factory in a country that already have materials they need to save a transport time b Inventory (all components, work in progress and the finished product not being processed) EX: Their have a lot of lines of sneaker, and many sample had produce but they are not known by many people, that leads to inventory Solution : Produce a lot of famous line that a lot of people concern and less lines that less people concern to avoid inventory c Motion (people or equipment moving or walking more than is required to perform the processing) EX: Factories arrange unreasonable areas, leading to employees having to constantly move to get raw materials Solution : Arrange the area properly d Waiting (waiting for the next production step) EX: They out of materials to produce and have to order more marterial to continue process Solution : Research that which part of that product that easy damaged when produce before produce, and order a lot materials of that part e Overproduction (production ahead of demand) EX: produce a lot out of style sneaker 15 Solution: Stop produce old sample of sneaker and focus on all lines of sneakers suitable with everyone’s needs f Over Processing (resulting from poor tool or product design creating activity) EX: A business tries to polish or smooth out spots on a product (such as hidden or hidden parts when assembled with other details) that the customer did not request and not care about that Solution : Only what customer ask g Defects (the effort involved in inspecting for and fixing defects) EX: : Factories hire unqualified and inexperienced workers, which leads to employees making defective products and having to redo another one Solution : Hired quality manager to choose and manage a worker that have enough skills and good attitude 4.2 Fishbone diagram (5M+E) Man Machine Method Wrong method Inexperienced staff The sole of sneakers is not firlly glued easy damaged Lack of material Total Inventory Cost of Adidas is Too High Hot Low quality woking environment Measure Materials Environment 16 4.3 5WHY for Fishbone Diagram of Adidas Man: Inexperienced workers 1.Why a workers are inexperienced ? - Because they are not well trained 2.Why they not well trained ? -Because a training course too short 3.Why a training course too short -Because a factory hiring a lot of worker so they don’t have enough time to training all of them clearly 4.Why a factory hiring a lot of people ? -Because a number of product that Adidas give to factory to produce are very huge, so they need a lot of worker to produce in time 5.Why they don’t fire a bad workers ? -Because a number of worker is too much and a number of manager in a factory is less So they cannot control fully working ability all of worker in the factory SOLUTION : Hiring more managers with high quality to easy control worker’s ability Machine :Easy damaged 1.Why a machine easy damaged ? -Because they use old machine in many year 2.Why they use new machine ? -Because shipping new machine take a lot of time 3.Why shipping new machine take a lot of time ? 17 -Because a machine to produce a product is very huge and heavy It’s take a lot of time to transporting and setting in the factory Why they don’t checking a machine frequenly ? -Because a machine have a lot of part So when a part of machine goes damage, a manager don’t recognize it 5.Why a manager don’t recognize it ? -Because they have to manage a lot of areas and machines So they don’t have time to checking all of them SOLUTION : Checking a machines daily, usual in weekend because it’s a time that worker off and easy for manager to check a machines Method: Wrong Method 1.Why a workers make wrong method ? -Because they don’t focus on work 2.Why they don’t focus on work -Because they’re tired when standing at a same place in eight hours a day 3.Why they feel tired ? -Because a working environment very hot, that’s easy make them feel tired and stress 4.Why they don’t fix a mistake in that shoes ? -Because they think that a small mistakes and no problem 5.Why it’s a small mistake but adidas not allow all that sneakers ? -Because adidas is very perfectionist about products Solution : Invest more high quality system to apply quality method to avoid a mistake and replace for a process that need a workers Measure : The sole of sneakers is not firlly glued 18 1.Why The sole of sneakers is not firlly glued ? - Because Due to the time of use, the quality of glue has decreased gradually Why the quality of glue has decreased gradually ? - Because the amount of glue in stock has not been used yet, so the quality is poor for a long time Why don't they buy new glue ? - Because they want to optimize the amount of glue remaining to reduce costs Why they want to cut costs? - Because the cost to spend on other stages is a lot Why does it cost so much? - because to create a good pair of shoes for consumers Solution : use of good type glue, has limited use is long and secure the manager of good Materials : Lack of material 1.Why lack of materials ? - Because it takes a lot of different materials to make a pair of shoes ? Why you need different ingredients? - because of customer demand and because of manufacturing defects Why is the manufacturing process faulty? - Because the material of the raw materials is not guaranteed and the machines are of poor quality Why is the raw material not guaranteed? - Because the cost is low and the price of raw materials is expensive 19 Why is it less expensive to buy raw materials? - Why is the amount of money spent on advertising too much? Solution : invest more costs in raw materials to buy better materials Environment : Low quality working environment 1: Why Low quality working environment ? - Because of work pressure, frustration with the management system Why are you disappointed in the management system? - Why is the manager not properly trained? Why are managers not properly trained? - Because from the top down, the recruitment is not tight Why are they not properly trained? - Because of the pressure of work, sales, and salary pressure, good people have to quit, so the quality of latecomers decreases Why does the pressure of work, sales, and salary make good people quit? - Because the company needs to use few employees, causing the workload to be overloaded Solution : recruiting more employees, training more managers, good salary and bonus 20 CHAPTER : CHECKLIST FOR INVENTORY AUDIT 21 REFERENCE https://fastgulfassignmentsolutions.blogspot.com/2020/02/inventory-management-atadidas.html https://gosmartlog.com/he-thong-quan-ly-kho-hang-wms/ https://snkrvn.com/bi-mat-dang-sau-nha-may-san-xuat-sneaker-duoc-van-hanh-bangrobot-cua-adidas/ https://bizapps.vn/blog/blog-cua-chung-toi-1/post/nganh-san-xuat-cach-mang-congnghiep-4-0-2 22