Introduction to study
Background or Rationale
Supply chain management (SCM) is crucial for businesses in the context of globalization and fierce global competition Its significance lies in its ability to enhance operational efficiency and drive superior organizational performance.
A supply chain (SC) encompasses a network of facilities and activities involved in product development, material procurement, manufacturing, distribution, and after-market support (Mabert & Venkataramanan, 1998) Supply Chain Management (SCM) refers to the management of interconnected businesses that deliver products and services to end customers (Harland, 1996) It is a crucial strategic factor for enhancing organizational effectiveness, competitiveness, customer care, and profitability (Gunasekaran et al., 2001) The primary objectives of SCM include minimizing non-value-added activities and costs, increasing customer responsiveness and flexibility, and improving overall performance and cost competitiveness (Stewart, 1995) A study by Petrovic-Lazarevic and Sohal (2002) highlights the importance of effective supply chain management in achieving and maintaining a competitive advantage in the Australian textiles, clothing, and footwear industry.
Supply chain performance (SCP) is influenced by external factors such as demand fluctuations and lead time variability, as well as decisions related to supply chain management (SCM), planning, and overall supply chain design.
2008) More recent work has identified such emerging themes as value networks (e.g., Ehret, 2004), learning within these networks (e.g., Hồkansson, Havila, & Pedersen,
1999), and conceptualizing industrial marketing networks as a series of resources, activities, and actors (Gadde, Huemer, & Hồkansson, 2003)
Many firms are increasingly focusing on supply chains, yet some view existing literature as merely descriptive and anecdotal There is significant potential for improvement by addressing inefficiencies stemming from poor supplier performance, unpredictable customer demands, and an uncertain business environment An integrated supply chain enhances the competitiveness of individual companies, leading to a shift from enterprise-to-enterprise competition to chain-to-chain competition, especially in less developed economies.
In response to volatile market conditions, companies are actively seeking tools to enhance performance and effectively manage their operations The primary goals of performance measurement are to boost the efficiency and effectiveness of supply chains, as highlighted by Beamon (1999) and Gunasekaran et al (2001).
Performance measurement aims to lower operating costs and enhance customer service in logistics, while also boosting revenue growth and shareholder value Organizations are recognizing the necessity of not just improving internal efficiencies but also making their entire supply chain competitive Mastering supply chain management (SCM) has become crucial for remaining competitive in the global market and achieving profitable growth.
The sportswear industry is a global powerhouse, primarily driven by production in Asian countries and dominated by three major brands: Nike and Reebok from the United States, and Adidas from Europe Influential factors in this market include sports superstars, television sports programs, and various sports activities that significantly impact consumer trends and sales.
The sportswear market shares key characteristics with the fashion industry, including strong seasonality, short product life cycles, volatile demand, and high impulse purchasing Seasonal trends are influenced by both weather and the sporting calendar, making effective supply chain management (SCM) essential For major companies like Sport Obermeyer, the costs associated with stockouts and markdowns can exceed 10% of sales Therefore, efficient SCM is crucial to prevent outdated stock and minimize markdowns, ultimately protecting retail profits.
The supply chain in Asia is characterized by a significant presence of small independent retailers, while large international suppliers dominate the market Several factors contribute to Asia's substantial sourcing volume, including lower labor costs compared to other regions, reduced political and economic risks, and superior infrastructure Additionally, the growing domestic demand in countries like China, India, and Japan enhances the attractiveness of this market for businesses.
Research problem
Numerous empirical studies have explored the factors influencing supply chain performance (SCP) Specific research has concentrated on various elements of internal supply chain management, including total quality management practices (Tan et al., 2002) and internal integration (Pagell, 2004; Braganza).
Research in supply chain management has explored various methodologies, including agile and lean manufacturing, as well as postponement strategies Key studies highlight the importance of supplier-related factors, such as selection, involvement, and overall manufacturing performance Additionally, the impact of supplier alliances on organizational success has been examined, identifying critical success factors for strategic partnerships Effective supplier management orientation is also crucial for enhancing supplier-buyer performance.
Recent studies have shifted focus from solely examining downstream linkages between manufacturers and retailers to considering both upstream and downstream aspects of supply chain (SC) management Research by Tan et al (1998) highlights the impact of supplier management and customer relations on organizational performance, while Frohlich and Westbrook (2001) explore how supplier-customer integration influences performance outcomes Additionally, Tan et al (2002) delve into supply chain management and supplier evaluation practices, further contributing to the understanding of SC dynamics as outlined by Min and Mentzer (2004) in their work on developing and measuring supply chain concepts.
In 2004, researchers developed instruments and techniques to measure and analyze supply chain management (SCM) at conceptual levels, including a set of tools for examining SCM strategies Li et al (2005) further conceptualized and validated six dimensions of SCM practices—strategic supplier partnerships, customer relationships, information sharing, information quality, internal lean practices, and postponement—encompassing the upstream, internal, and downstream aspects of supply chains This body of research highlights the multifaceted nature of SCM practices; however, it also emphasizes that the implementation of these practices can be influenced by contextual factors, such as firm size, position within the supply chain, supply chain length, and channel structure Larger organizations, for instance, often exhibit higher levels of SCM practices due to their complex supply chain networks, which demand more effective management Therefore, additional research is essential to explore SCM practices across various industries and supply chain models.
Adidas, a leading German sportswear and equipment manufacturer, operates through four main brands: Adidas, Taylor Made-Adidas Golf, Maxfli, and Reebok Headquartered in Herzogenaurach, Germany, the company oversees over 150 subsidiaries and employs approximately 26,376 people With a diverse product line exceeding 20,000 items, Adidas updates its offerings biannually or more frequently as new technologies emerge In 2008, the company's revenue reached €10.799 billion, up from €10.299 billion in 2007, equivalent to around $15.6 billion.
The company's supply chain is extensive and intricate, involving approximately 1,120 independent factories across 68 countries A significant portion of these factories is located in six key countries: China, India, Indonesia, Thailand, Turkey, and Vietnam In Asia, suppliers are spread across 18 different nations, highlighting the company's global supply chain network, which is fully outsourced.
Adidas's supply chain management strategies heavily rely on diverse global manufacturing resources to leverage the strengths of various countries The company prioritizes locations with low labor costs, minimal import taxes, efficient manufacturing management, and political stability, making Vietnam, China, India, and Indonesia key choices for production This approach allows adidas the flexibility to relocate manufacturing as needed due to cost concerns, political instability, or trade restrictions Recently, the company has shifted production from Indonesia and China to Vietnam, driven by concerns over Indonesia's political stability and the rising labor costs in China However, adidas continues to face challenges associated with its outsourcing strategy in these regions.
Adidas faces challenges in its strategic supplier partnerships, primarily due to its reliance on material suppliers from developed countries like Japan, Korea, Taiwan, and China This dependency leads to long material lead times, which adversely impact adidas's supply chain performance (SCP) To address these issues, adidas is fostering strategic partnerships based on trust and commitment with its contract factories and key suppliers, aiming to improve its overall supply chain efficiency.
Research questions and research objectives
Product creation is crucial in the sports industry, prompting major brands to relocate their product development and production centers to Asia This strategic move aims to streamline processes and reduce lead times and costs associated with production, from the initial creation stage to mass manufacturing However, this transition presents significant challenges, as it marks the first time these brands are undertaking such an experiment.
This study utilizes the theoretical model proposed by Li et al (2005) alongside adidas' FY10 sourcing limited operations strategies, which emphasize nine key drivers of Supply Chain Performance (SCP): Strategic Demand/Design, Product Creation, Demand Planning, Purchasing/Supply Planning, Sourcing Production, Inbound Customs, Order Fulfillment/Warehouse, and Outbound/Point of Sale By examining these elements, the research aims to identify factors influencing adidas' SCP and develop a theoretical model or measurement scale that can be effectively applied to the company's supply chain management practices, addressing current supply chain challenges.
1.3 Research question and research objectives:
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?
The research objective serves as a researcher’s interpretation of a business problem, articulating the purpose of the study in measurable terms and establishing benchmarks for success (Zikmund 1997, p 89) This paper aims to identify the key factors of supply chain management (SCM) practices impacting adidas' supply chain performance (SCP) in Asia and to measure the relationship between these SCM practices and adidas' SCP.
This research aims to assist supply chain managers at Adidas in evaluating their supply chain by utilizing relevant data and providing recommendations for enhancing the supply chain performance of Adidas in Asia.
Scope and Limitation of research
This research investigates the determinants of adidas's supply chain performance (SCP) specifically within the Asian region Due to certain limitations, the study is confined to adidas's manufacturing and operational activities in various Asian countries, while SCP analysis from other regions will be addressed in future research.
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 addressed in future studies.
Gathering survey data from individual respondents at specific locations can lead to inaccurate measurements, even when the respondents are high-level managers or executives Additionally, the respondents' perceptions and feelings may contribute to a flawed assessment of the performance gap between their company and its 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
Due to the confidential nature of certain metrics, including inventory cost and cash-to-cash cycle time, obtaining precise data for this research poses significant challenges.
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, while also measuring the relationship between these SCM practices and SCP Therefore, an exploratory research approach is deemed suitable for this investigation.
This study employs surveys as the primary research method to identify the key factors of supply chain management (SCM) practices influencing the supply chain performance (SCP) of Adidas in Asia Additionally, it measures the relationship between SCM practices and the SCP of Adidas.
Questionnaires are crafted and administered to gather data on supply chain management (SCM) practices The rationale for utilizing surveys is twofold: they offer a fast, efficient, and precise method for evaluating information about a population, and they are particularly suitable when secondary data is scarce.
Finally, SPSS Version 16 software program are used to analyze data.
Structure of research
This research includes six chapters:
The introduction of this research outlines its rationale and background, providing an overview of relevant previous studies that assist in identifying the research gap From this gap, the research questions and objectives are formulated Additionally, the chapter discusses the study's scope, methodology, limitations, and overall structure.
Chapter 2 (Introduction to adidas Limited Sourcing group) briefs the general information about adidas, its strategy, its majors location, partnerships in the world as well as its business performance in FY09 and its action plan in FY10
Chapter 3 (Literature review) summarizes theories and previous study, which is helpful to build up the hypothesis and conceptual framework
Chapter 4 (Research methodology) explains research process and the method of data analyzing in each stage
Chapter 5 (Empirical results of the research) analyzes collected data from each survey stage in more detail
Chapter 6 (Conclusion and suggestions) details the conclusion and recommendation of the research
Figure 1.2 Structure of the study
Chapter 2 Introduction to adidas Limited Sourcing Company
Chapter 5 Empirical results of the research
Introduction to adidas Limited Sourcing Company
Introduction about adidas group
Adidas is synonymous with excellence in sports worldwide, embodying the vision of its founder, Adolf Dassler His corporate philosophy continues to guide future generations, ensuring the brand's commitment to innovation and quality in all athletic sectors.
In 1920, Adi Dassler embarked on a mission to equip every athlete with top-quality footwear, utilizing limited materials available in the post-World War I era His innovative approach laid the foundation for a legacy of excellence in athletic equipment.
Today, the adidas product range extends from shoes, apparel and accessories for basketball, soccer, fitness and training to adventure, trail and golf
Founded in 1948, adidas takes its name from the first two syllables of Adi Dassler's name In 1949, Adi Dassler trademarked the iconic Three Stripes After nearly 70 years, the Dassler family stepped away from the company in 1989, leading to its transformation into a corporation.
Robert Louis-Dreyfus, born in France, 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 led the adidas Group, which expanded in 1997 with the acquisition of the Salomon group, resulting in a name change to adidas-Salomon AG; this acquisition also included the TaylorMade golf brand.
In October 2005, the Salomon business segment, along with its subsidiaries and brands such as 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 h
The new Group, formed by merging two leading brands in the global sporting goods industry, will enhance its competitive edge on a worldwide scale This collaboration will result in clearly defined and complementary brand identities, an expanded product range, and a more robust presence across teams, athletes, events, and leagues.
The adidas Group employs over 25,000 individuals globally, with over 2,000 based at its headquarters in Herzogenaurach A dedicated team of designers, product developers, and specialists in biomechanics and material technology conducts research at the company's facilities in Portland and its second technology center located in Scheinfeld, near Nuremberg.
In Scheinfeld models, adidas produces and tests both prototypes and custom performance products, housing the sole remaining sports shoe manufacturing facility in Germany.
Adidas maintains a strong global marketplace presence through over 80 subsidiaries, with sales and distribution organized into four key regions: Europe/Emerging Markets, North America, Asia/Pacific, and Latin America As a result, adidas has become Europe's leading supplier of athletic footwear and sports apparel.
For over 80 years, the adidas Group has been a prominent force in the sports industry, providing innovative 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
Dress, casual and outdoor footwear, apparel and accessories h
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 Additionally, the company has various creation centers and development departments globally, aligned with its business activities 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, appearance, and overall image 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 be a leader in the sporting goods industry by developing brands that embody a passion for sports and an active lifestyle Drawing from its rich heritage, the company recognizes that a deep understanding of consumer and customer needs is crucial to achieving its objectives.
To foster a culture of innovation, the organization actively anticipates and addresses the needs of its stakeholders, encouraging a break from convention and the embrace of change This commitment allows it to expand the limits of its products, services, and processes, enhancing competitiveness and optimizing operational and financial performance Ultimately, these efforts are designed 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 model for its adidas and Reebok brands, establishing a Global Sales function for commercial activities and a Global Brands function for marketing This reorganization also divided the Global Sales organization into Wholesale and Retail to better address the unique needs of each business model This 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 significant changes to its structure, including the creation of joint operating models for the adidas and Reebok brands across most global markets, the removal of regional headquarters to enhance direct communication between local markets and global functions, and a clear division of responsibilities between Global Brands and Global Sales management at the Board level Herbert Hainer, the CEO of adidas Group, took on direct oversight of Global Sales, while Erich Stamminger, a Member of the Executive Board, was designated to lead Global Brands.
The new organizational structure is designed to enhance the management team's strengths and provide exceptional service to consumers and customers However, the distinct business models of Taylor Made-adidas Golf, Rockport, and Reebok-CCM Hockey will remain outside this new matrix framework.
Consumers seek variety, whether they are athletes in search of top-tier equipment or casual shoppers looking for the latest fashion trends The adidas Group is committed to fostering enduring connections with its brands by developing engaging experiences By adopting a multi-brand strategy, adidas maximizes consumer reach and addresses opportunities from both mass and niche perspectives This strategy enables each brand to maintain its unique identity and core competencies while contributing to a diverse product range, enhancing adidas Group's 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, the company strategically prioritizes investments in regions that promise the best medium- to long-term growth and profitability A significant focus is placed on expanding operations in emerging markets, especially in China and Russia.
Adidas understands that consumer buying behavior and the retail environment vary across markets To capitalize on market opportunities, it customizes its distribution strategy to showcase its brands effectively This is accomplished through a unique channel approach that enhances consumer engagement.
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.
Speed and agility are essential for staying ahead in the competitive market The Adidas Group is dedicated to fulfilling diverse customer needs by ensuring product availability in the right sizes and colors, delivering groundbreaking technical innovations, and offering the latest high-end fashion products that meet the highest quality standards.
The company aims to reduce creation and production lead times by continually enhancing its infrastructure and processes By facilitating information flow between point of sale and sourcing, it seeks to closely integrate its supply chain elements, allowing for swift responses to shifting consumer trends The focus is on maximizing flexibility while utilizing efficient common infrastructure, enabling the Group to offer customized solutions across various business models, including wholesale, retail, performance-oriented, and style-oriented sectors.
At adidas Group, innovation is a collective responsibility, encouraging a culture that challenges the norm and welcomes change To promote this ethos, every division is tasked with delivering at least one significant innovative improvement annually.
The Group emphasizes that technological advancement and innovative design are crucial for maintaining sustainable leadership in its industry, particularly through Research and Development (R&D) Additionally, the organization focuses on improving customer services and optimizing internal processes to drive further innovation.
Develop a team grounded in our heritage
The Group's culture is shaped by historical, current, and future influences, reflecting its founder's dedication to athletes and consumers It emphasizes pride in its work, quality, and a passion for sport The Group achieves success through teamwork, fostering open communication, collaboration, and shared values inherent in sports.
The Group prioritizes best-practice social and environmental standards, fostering responsible behavior that enhances long-term value By focusing on these principles, the Group aims to create significant shareholder value.
Business performance in FY09 and its action plans in FY10
As of December 31, 2009, the adidas Group operates in nearly every country globally, with its headquarters situated in Herzogenaurach, Germany, and a network of 177 subsidiaries The Group boasts an extensive portfolio of promotional partnerships that includes sports associations, events, teams, and individual athletes Key locations and upcoming sporting events are prominently featured on the world map, showcasing the brand's global presence.
The details of major locations and partnerships are presented on appendix 2
Number of suppliers and its own factories
As of December 31, 2009, adidas collaborated with over 1,120 independent factories across 68 countries to produce its products, with 69% of these factories situated in Asia, 15% in the Americas, and 16% in Europe, the Middle East, and Africa (EMEA); notably, 27% of all factories are located in China.
The total numbers of supplier factories is higher than the number reported in 2008 for this are:
1 The supply chain disclosure by business entities increased
2 The number of business entities within the Group contracted and expanded, resulting in a moving supplier and factory count
There was a notable movement of factories as shown on appendix 3
2.4 Business Performance and its action plan in FY10:
In 2009, the adidas Group faced challenges due to a significant decline in consumer spending and increased promotional activities amid a tough macroeconomic environment Currency-neutral sales dropped by 6%, particularly in the Wholesale and Other Businesses segments In Euro terms, revenues fell by 4% to €10.381 billion from €10.799 billion in 2008 The gross margin decreased by 3.3 percentage points to 45.4%, primarily due to rising input costs, currency devaluation, and heightened clearance sales As a result, the Group's gross profit experienced a decline of 10%.
In 2009, the Group reported revenues of €4.712 billion, a decline from €5.256 billion in 2008 The operating margin fell by 5.0 percentage points to 4.9%, down from 9.9% the previous year, primarily due to a lower gross margin and increased operating expenses as a percentage of sales Consequently, the operating profit plummeted by 53% to €508 million, compared to €1.070 billion in 2008 Additionally, net income attributable to shareholders dropped 62% to €245 million from €642 million in 2008, resulting in a 60% decrease in diluted earnings per share, which fell to €1.22 in 2009 from €3.07 in 2008.
2.4.2 Its Action Plan in FY10
The adidas Group's Global Operations function oversees the development, production planning, sourcing, and distribution of most products This function is dedicated to enhancing efficiency across the supply chain while maintaining top-notch product quality and delivery performance for customers at competitive prices.
Figure 2.1 Global Operations in Go-to-Market Process
Sources: http://www.adidas-group.com/en/ourgroup/OurGroup_AreaStart.aspx Enforced vision: closest to every consumer h
The Global Operations function aims to be closest to every consumer, driving adidas Group's growth by aligning product quality, size, color, style, and material with consumer demand across wholesale and retail channels To achieve this vision, the function focuses on five strategic initiatives: ensuring high product availability and timely delivery while minimizing finished goods inventory; optimizing decision-making to enhance profitability and mitigate financial risks; increasing flexibility and responsiveness in the supply network to meet rapidly changing market needs; improving efficiency and transparency in demand and supply planning across all segments; and building capabilities that enable faster and smarter product creation to boost overall growth.
Processes and systems tailored for expansion of Retail segment
The Replenishment initiative plays a crucial role in fostering growth within the Retail segment and Group-controlled retail spaces In 2009, a specialized retail transformation team was established within Global Operations to support the retail sales team by implementing tailored processes and systems Throughout the year, Global Operations intensified efforts to enhance its fulfillment models, enabling sales subsidiaries to purchase products closer to the market and replenish stores more frequently and strategically This improvement in capacity and material planning processes resulted in the production and delivery of over 1,300 articles with lead times reduced to just 22 to 30 days.
Further advancements in costing transparency and predictability
In 2009, amid declining global economic output, adidas intensified its End-to-End Profitability efforts by establishing a dedicated Profitability Management department to analyze macroeconomic trends and develop a profitability strategy The development teams played a crucial role by focusing on cost-efficient product engineering, while supplier engagement aimed to enhance transparency in costing By closely monitoring raw material costs and consolidating volumes, adidas improved its negotiation power to mitigate cost increases Additionally, the Sourcing teams refined the product allocation process to optimize supplier capabilities and consider total supply chain costs The Transport and Customs team capitalized on consolidated volumes to negotiate lower transportation costs and streamline shipment routes with service providers.
In 2009, Adidas advanced its Adaptive Supply Network initiative by optimizing its supply chain infrastructure, which included consolidating its distribution centers and upgrading existing facilities Significant improvements were made through warehousing consolidation and process optimization in countries such as the UK, Spain, the Netherlands, Greece, and South Africa A key achievement was the completion of the adidas Group's second multi-brand distribution center in Spartanburg, South Carolina, designed to accommodate future brand growth and retail channel demands Additionally, the planning phase for a new distribution center in Russia was finalized, though the project's execution has been postponed until market conditions warrant its restart to align with business models in the region.
In 2009, Adidas focused on improving its supply chain flexibility and responsiveness by enhancing its process and systems infrastructure Significant upgrades were made to the SAP-based Global Procurement System (GPS), driven by user feedback, which streamlined the ordering process and improved market adaptability Preparations also began for the system's implementation within the Reebok brand in 2010.
The adidas Group is executing its largest SAP implementation to date, aimed at replacing ten legacy systems throughout the organization Additionally, preparations are underway to expand its trading platform from Amsterdam to the USA and Japan This enhanced platform will provide improved visibility, control, and risk management, benefiting all supply chain functions across the Group's various brands.
Standardization and automation of planning processes
As part of its End-to-End planning initiative, adidas has been implementing an optimized demand planning process across more than 20 European countries, standardizing and partially automating planning functions to enhance forecast accuracy Following the initial implementation wave in 2008, the rollout continued throughout 2009, with the final launch scheduled for the end of the second quarter of 2010, allowing both adidas and Reebok to share a unified platform in Europe Looking ahead, adidas plans to extend this rollout to other key markets, including Japan.
The demand planning program is enhanced by a supply planning initiative designed to unify multiple legacy systems into a comprehensive International Logistics Planning System (ILS) for all brands and product categories, including Footwear, Apparel, and Accessories Launched in 2009 for the adidas brand, the ILS is set to be implemented for Reebok in 2010.
Product creation process streamlined and simplified
In 2009, the Accelerated Creation to Shelf initiative gained significant traction, particularly with the launch of the “Fast and Lean Creation” program for adidas and Reebok This program focuses on enhancing the product creation process by streamlining operations, improving communication between development teams and suppliers, and minimizing administrative tasks Additionally, it aims to harmonize processes and systems across the adidas and Reebok brands, fostering a more efficient and effective workflow.
The program aims to enhance the development of 12-month or shorter creation calendars for a broader range of products, with implementation ongoing until 2011 In 2009, adidas expanded its use of virtual technologies in global creation centers to lower the costs associated with product prototypes and sales samples.
Majority of production through independent suppliers
Literature Review
Literature review
Strategic supplier partnerships refer to the enduring relationships between organizations and their suppliers, playing a crucial role in relationship marketing, purchasing processes, and business-to-business marketing literature.
Buyer-supplier relationships are crucial for supply chain integration, as effective management of these relationships at every level is essential for business success By leveraging the strategic and operational strengths of each organization involved, companies can realize substantial ongoing benefits.
A strategic partnership fosters a long-term relationship that emphasizes collaborative planning and problem-solving efforts, promoting shared benefits among the involved parties (Gunasekaran et al., 2001; Yoshino and Rangan, 1995) By partnering with key suppliers, organizations can enhance their effectiveness, as these suppliers are more likely to share responsibility for product success Early involvement of suppliers in the product design process leads to more cost-effective design choices, optimal component selection, and thorough design assessments (Monczka et al., 1993) Such alignment allows organizations to work closely, minimizing wasteful time and effort (Balsmeier and Voisin).
1996) An effective supplier partnership can be a critical component of a leading edge supply chain (Noble, 1997)
Numerous empirical studies in China indicate that strong buyer-supplier relationships significantly enhance a firm's financial performance (Liu and Wang, 2000; Luo, 1997; Yeung and Tung, 1996) Additionally, the dynamics of manufacturer-distributor relationships and the concept of guanxi play a crucial role in the success of export ventures in the Chinese market (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 partnership refers to the extent of collaboration between manufacturers and their supply chain partners This collaboration involves managing both intra- and inter-organizational processes to ensure effective and efficient flows of products, services, information, finances, and decision-making The ultimate objective is to deliver maximum value to customers while minimizing costs and optimizing speed.
Strategic collaboration is essential for fostering ongoing partnerships that aim for mutually beneficial goals It builds mutual trust, extends the duration of contracts, and promotes efficient conflict resolution along with the sharing of information, rewards, and risks.
Strategic coordination offers both operational and strategic benefits, unlike operational coordination, which is limited to operational gains This approach highlights the importance of intra- and inter-organizational processes, as strategic supplier partnerships involve a wide range of activities, including materials management, transportation, and administrative tasks Ultimately, the primary goal of strategic supplier partnerships is to deliver maximum value to 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 theoretical understanding of how product innovation impacts macroeconomic performance Research has investigated the influence of product creation and destruction on business cycle fluctuations, with notable contributions from scholars such as Shleifer (1986), Caballero and Hammour (1994), and Ghironi and Melitz (2005) Additionally, the critical role of new and improved products in driving long-term economic growth has been examined by influential economists including Romer (1987), Grossman and Helpman (1991), Aghion and Howitt (1992), and Klette and Kortum (2004).
The growth in research and product development highlights the importance of optimizing supply chain processes to enhance operational effectiveness However, many companies overlook these systems when establishing new facilities or processes By strategically designing supply chain processes, businesses can achieve significant resource and cost savings, which not only improves the overall supply chain structure but also streamlines internal processes for new product development.
In examining supply chain operations for new product development, we focus on the collaborative integration of the supply chain during the product creation phase Typically, companies request component parts from suppliers while 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 Key focus areas include: 1 Early involvement of contributors to foster innovation, 2 Establishing a clear design to streamline communication, 3 Implementing multiple stages of quality testing to ensure product excellence, and 4 Gaining a comprehensive understanding of each contributor's role in the process.
As we prepare to develop a new product in response to a clear market opportunity and anticipated high consumer demand, it's essential to address not only the product's costs and launch timeline but also critical supply chain considerations Key questions to explore include lead time costs, optimal inventory levels, and strategic inventory placement across warehouses, retail locations, manufacturing facilities, and transportation Understanding these factors will ensure a successful market entry and efficient operations.
To enhance supply chain development, it is essential to start during the new product creation phase Involving key stakeholders, including the purchasing team and suppliers, alongside marketing's demand forecasts and product engineers' design efforts, fosters a deeper understanding of both the product and the evolving supply chain Additionally, engaging potential customers in retail can help establish effective stocking and shipping methods.
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 the system, forming a crucial component of the Product Creation Process This process closely aligns with traditional R&D activities, serving as the content-rich segment of product development.
The operational or project leader oversees operational management, while the architect ensures design control Additionally, the marketing or product manager is tasked with handling 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
Conceptual framework and Hypotheses
Basing on literatures review above, the hypotheses are built as below:
Hypothesis 1 : Strategic supplier partnership is positively related to SCP Hypothesis 2 : Product creation is positively related to SCP
Hypothesis 3 : Purchasing/Supply planning is positively related to SCP Hypothesis 4 : Sourcing production is positively related to SCP
Hypothesis 5 : Internal Lean practice is positively related to SCP
Research method
Research Design
Research design is crucial for addressing theories and hypotheses, guiding subsequent research steps Business research methods can be categorized by function or technique (Zikmund, 1997) Functionally, research types include exploratory, descriptive, and causal studies Technically, methods encompass experiments, surveys, and observational studies (Zikmund, 1997).
Selecting the appropriate research type hinges on the specific questions the researcher aims to address This study focused on identifying key supply chain (SC) practices impacting the supply chain performance (SCP) of adidas in Asia, while also examining the relationship between supply chain management (SCM) practices and adidas's SCP Consequently, exploratory research was deemed suitable for this investigation The case study method, an exploratory research technique that delves deeply into one or a few situations akin to the researcher’s problem, was employed to gather relevant information pertaining to the research issue.
After determining the type of research, the next crucial step is selecting the appropriate research design There are four primary research designs to consider: surveys, experiments, observations, and secondary data (Zikmund, 1997) The choice of research design should be informed by the specific advantages and disadvantages of each type, as well as the context in which the research problem is defined.
Research methodology literature highlights several survey methods, including face-to-face interviews, telephone interviews, and mail surveys Notably, face-to-face surveys achieve higher response rates and enable researchers to employ physical stimuli to enhance the interview process (Zikmund 1997) This method also provides interviewers the opportunity to clarify any ambiguous or complex questions, improving the overall quality of the data collected.
This research utilized surveys as the primary method to identify key factors of supply chain management (SCM) practices impacting supply chain performance (SCP) at Adidas in Asia, while also measuring the relationship between these practices and SCP The choice of surveys was driven by two main reasons: they offer a quick, efficient, and accurate way to gather information about the population, and they are particularly suitable when secondary data is scarce.
This research followed a structured sequence, beginning with a literature review that established a theoretical foundation for subsequent analysis A measurement scale was adopted from prior studies and current literature To ensure research design quality, a pretest was conducted with supply chain managers to evaluate the face validity of the scale items, followed by a pilot study involving 30 managers to assess overall design quality and gather qualitative feedback on supply chain practices The measurement scale was refined through in-depth interviews, leading to the elimination or modification of redundant items After these preliminary steps, a comprehensive survey was administered to users, buyers, and suppliers within the adidas group supply chains The collected data was then analyzed for construct and overall measurement model validity Finally, hypotheses from the literature review were tested using linear regression analysis, with the results informing the conclusion and recommendations.
Measurement scale development
Content validity is essential for effective measurement, ensuring that the items in an instrument comprehensively represent the key aspects of a construct (Churchill, 1979) Achieving content validity typically involves conducting thorough literature reviews and engaging with both practitioners and academics The items related to Supply Chain Management (SCM) practices are derived from established SCM literature (Aggarwal, 1997; Claycomb et al., 1999; Forker et al., 1999; Lee and Kim, 1999; Monczka et al., 1998; Shin et al., 2000; Stuart, 1997; Tan et al., 1998; Vonderembse and Tracey, 1999; Walton, 1996) and are assessed using a five-point scale It is crucial that the items measuring a construct demonstrate convergence, indicating that they align and support one another effectively.
Conclusion h construct should disagree (discriminate) with measures of the other constructs Each construct should be reliable and short and easy to use (Li et al, 2005)
The development of the measurement scale occurred in two distinct phases Initially, the scale was refined through a thorough review of existing research and literature, incorporating practical insights and feedback from practitioners and experts In the second phase, the refined measurement scale was validated and further enhanced using data gathered from a large-scale survey The final measurement scale, as presented in the table below, was utilized for this extensive survey.
Supply chain performance is assessed through key metrics that reflect critical elements of supply chain operations, as established by previous research (Cousins and Menguc, 2006) These metrics encompass cost reduction (Narasimhan and Das, 2001), delivery reliability (Narasimhan and Das, 2001; Shin et al., 2000; Tan et al., 2002), and high product quality (Shin et al., 2000; Tan et al., 2002).
Table 4.1 Constructs for SCM practices, Supply Chain Performance
Strategic supplier partnership is defined as the long-term relationship between the organizations and their suppliers
Balsmeier and Voisin(1996),Gunasekaran et al (2001),Lamming
Planning and goal setting activities involvement
Counter part strategies awareness Problems solving Product quality and price support Criterion in selecting partners Mutual benefits sharing SCM and finance performance impact
Product creation means bringing physical products into existence through their design and production
(1994) and Ghironi and Melitz (2005) among others), Romer (1987), Grossman and Helpman 1991),Aghion and Howitt
(1992) and Klette and Kortum (2004) among others)
Product specifications details/requirements in time providing Satisfied time line of product creation Consumer preferences adapting SCM and finance performance impact h
Strategic purchasing is an upstream component of SCM
(Betchel & Jayaram, 1997; Cohn & Tayi, 1999; Chen
& Paulraj, 2004a, 2004b; Paulraj, Chen & Flynn, in press; Wisner, 2003), (Cousins, 2005;Ferguson, Hartley, Turner& Pierce,
Inventory management cost, Lead time and logistics cost reduction Key liaison role in creating and delivering value Highly evaluated purchasing/supply planning SCM and finance performance impact
Sourcing is a crucial strategy that involves selecting vendors who become essential partners in the purchasing process for specific components or parts of a product This approach fosters collaboration and integration between the buying firm and its suppliers, enhancing overall efficiency and product quality.
Production sourcing literature also considers the physical location of production sites
(Zenz, 1994) Nellore & Soderquist (2000), Rajagopal & Bernard (1994); Frear et al.(1995) ; Sheth (1996) ; Elmuti & Kathawala (2000); Zeng
Aligned with partner‟s strategy Effective cost reduction, quality, service and delivery improvement and flexibility
SCM and finance performance impact
Effective lead-time reduction and wastes elimination program
Internal lean practices is the practice of eliminating waste (cost, time, etc.) in a manufacturing system, characterized by reduced set-up times, small lot sizes, and pull- production
1996, McIvor, 2001 and Taylor, 1999) Handfield and Nichols (1999), Mason-Jones and Towill
Effective lean program Output maximizing Lead-times shortening and quality improving requirements
SCM and finance performance impact
SCP is defined as the multiple measures of performance developed by the
(Hall, 1993, Koufteros et al., 1997 and Rondeau et al., 2000) (Ragatz et al.,
On time delivery Accurate volume of product delivery h
Sampling technique and Data collection
organization to gauge the ability of a SC to meet an organization‟s long-term and short-term objectives
Good business results achievement Qualified and satisfied services Flexible SC
4.3 Sampling techniques and Data collection
Firstly, the population of the study needs to be chosen Population is defined as
„the complete set of units of analysis that are under investigation, while element is the unit from which the necessary data is collected‟ (Davis 2000, cited in Quan 2006)
A reliable and valid sample is essential for generalizing findings to the population under investigation, as emphasized by Canava et al (2001) The sample statistics should accurately reflect the population parameters within a narrow margin of error, with the sample size influenced by the desired precision and confidence levels, as well as population variability Tho & Trang (2008) note that the optimal sample size remains debated and is dependent on the statistical methods employed, such as Maximum Likelihood and generalized least squares Researchers recommend a minimum sample size of 100 to 150 responses for Maximum Likelihood methods, or at least five observations per estimated parameter Additionally, for Confirmatory Factor Analysis (CFA), it is advised to have five times as many observations as variables, while a minimum sample size of 200 is suggested for Exploratory Factor Analysis (EFA) with modest communalities (0.45-0.55), according to Hair et al (2006).
This study aimed for a sample size of at least 200 participants due to the number of parameters to be estimated With 35 items generated during the initial phase, the minimum required sample size for factor analysis was calculated to be 5 times the number of items, totaling 175 Consequently, the 199 samples collected are considered significant for the analysis.
A questionnaire was developed and distributed to interviewees to gather data on supply chain management (SCM) practices from late January to February 2011 over a five-week period Participants were informed that their involvement was voluntary, allowing them to withdraw at any time during the survey To promote honesty and openness in their answers, respondents were assured that their responses would be kept confidential and reported only in aggregate form.
Data was gathered from adidas Ltd., focusing on 10 Tier 1 contract factories and 30 Tier 2 suppliers across Vietnam, China, Indonesia, Taiwan, and Korea To enhance response rates and address potential data gaps, both face-to-face and phone interviews were conducted alongside questionnaires sent via email to top managers or representatives from each firm, utilizing adidas's networking mailing list Most respondents have held their positions for over three years, ensuring they possess the necessary knowledge about the requested information.
A total of 235 questionnaires were distributed to top managers and representatives from adidas, 10 tier 1 contract factories, and 30 tier 2 suppliers across Vietnam, China, Indonesia, Taiwan, and Korea These were conducted through face-to-face interviews, phone interviews, and emailed questionnaires using adidas's networking mailing list Ultimately, 199 usable responses were collected.
The below table provides overall statistical information about collected samples h
Table 4.3: Statistical information about collected samples
Total 41 companies, which are adidas sourcing ltd, the contract factories (T1) and tier 2 suppliers of adidas in Vietnam, China, Indonesia, Taiwan and Korea, were selected to conduct the survey Number of received answered sheets which are also number of usable answered sheets are 199 Thus, the usable collected sample size is deemed to be used for further descriptive analysis, EFA, linear regression analysis, since it well qualifies the requirement of minimum sample size (175)
The surveyed companies are situated in multiple countries, with those in Vietnam participating through direct or phone interviews, while foreign companies were surveyed via email The responses collected from direct interviews constituted 15% of the total, whereas email responses accounted for 78%.
Out of 199 usable responses collected, 25% were from adidas, 45% from adidas's contract factories, and 30% from tier 2 suppliers The contract factories primarily focus on footwear, while tier 1 suppliers encompass seven key industry groups: synthetic leather, textiles, leather, lace/webbing, rubber, chemicals, and others.
Surveyed companies are located in various countries such as Vietnam (35%), Taiwan (10%), Korean (15%), Indonesia (15%), and China (25%).
Data analysis methods
The measurement scales were firstly developed with assessment of their unidimensionality and reliability (SPSS software) Then, conceptual model and hypothesis were tested with the linear regression
Upon completion of data collection, descriptive statistics were performed to give an overview of the sample Subsequently, reliability tests and exploratory factor analysis (EFA) were utilized to evaluate the validity and reliability of the survey instrument This process aimed to assess and refine the scales measuring the constructs, focusing on enhancing both reliability and dimensionality.
4.4.1 Unidimensionality Analysis with Exploratory Factor Analysis (EFA)
Unidimensionality refers to the presence of a single underlying construct that corresponds to a set of items (Garver and Mentzer, 1999) Attaining unidimensional measurement is essential for effective theory testing and development, as it ensures that the measures proposed as alternative indicators for each construct are sufficiently unidimensional (Anderson and Gerbing, 1988, p.414) This concept emphasizes that a collection of items should reflect only one latent construct Moreover, testing for unidimensionality is critical prior to conducting reliability assessments, since reliability measures like Cronbach's alpha do not guarantee unidimensionality but rather assume its existence Therefore, researchers are advised to conduct unidimensionality tests on all multiple-indicator constructs before evaluating their reliability (Hair et al., 2006) Ultimately, it is vital that each set of indicators intended to measure a specific construct achieves unidimensionality.
4.4.2 Reliability Analysis with Cronbach’s Alpha
Reliability refers to the consistency of measurements across multiple assessments of a variable One method to evaluate reliability is test-retest, which examines the stability of an individual's responses over time A more prevalent approach is internal consistency, which assesses the coherence among items in a summated scale The rationale behind internal consistency is that all items should measure the same construct, ensuring a high degree of correlation among them (Hair et al., 2006) This research utilizes these diagnostic measures to evaluate internal consistency effectively.
- The item-to-total correlation exceed 0.5 and the inter-item correlation exceed 0.3 (Hair et al, 2006)
- Lower limit for Cronbach‟s alpha is 0.7 (Hair et al, 2006)
4.4.3 Assessment of Conceptual Model and Hypotheses
After refined by previous analysis stage, the remaining variables were processed linear regression
Linear regression assessment was used to test the conceptual model and hypotheses of the research The result was to confirm the relationship between SCM practices and SCP h
Empirical results of the research
Testing Hypothesis with Linear Regression
SSP1 Your company shares your strategies to your key partners by every fiscal year 4.61 0.575
SSP2 Your company includes your key partners in your planning and goal-setting activities 4.51 0.576
SSP3 Your company is fully aware of your partner‟s strategies 4.58 0.561
SSP4 Your company regularly solves problems jointly with your partners 4.52 0.558
SSP5 Your company helps your partners to improve their product quality and price 4.51 0.54
SSP6 Your company considers service, quality and price as criterion in selecting partners 4.51 0.54
SSP7 Your company share mutual benefits with your partners 4.51 0.558
SSP8 Your partners‟ strategies and your companys‟
Strategies impact much to your company‟s SCM and finance performance
PC1 Your company pro-actively supports your partners in new product development processes 4.52 0.558
PC2 Your company gets and provides all product specifications details/requirements from your partners in time
PC3 Your company capacity can satisfy the time line of product creation to your customers 4.26 0.661
PC4 Your company is able to adapt to the changing consumer preferences more quickly, flexibly and efficiently
PC5 Your company‟s product creation impacts much to your SCM and finance performance 4.38 0.527
PSP1 Your company‟s purchasing/supply planning is more competitive than other competitors 4.53 0.539
PSP2 Your company‟s purchasing/supply planning can help to reduce inventory management cost, lead time and logistics cost
PSP3 Your company‟s purchasing/supply planning plays a key liaison role to your customers in creating and delivering value
PSP4 Your partners highly evaluate your company‟s purchasing/supply planning 4.41 0.551
PSP5 Your company‟s purchasing/supply planning impacts much to your company SCM and finance performance
SP1 Sourcing production is one of your company‟s key strategies 4.37 0.587 h
SP2 Your company‟s production capability can meet your customers‟ expectations 4.29 0.563
SP3 Your company‟s sourcing production is aligned with your partner‟s strategy 4.32 0.617
SP4 Your sourcing production is working effectively in terms of cost reduction, quality, service and delivery improvement and flexibility
SP5 Your company‟s sourcing production impacts much to your company SCM and finance performance 3.97 0.685
ILP1 Your company is effectively implementing lead- time reduction and wastes elimination program from product development and commercialization to mass production
ILP2 Your company is effectively implementing lean program to eliminating wastes and improving efficiency 4.54 0.583
ILP3 Your company is using less input to produce at a mass production speed, while offering more variety to the end customers
ILP4 Your company strongly pushes partners to shorten lead-times and improve quality 4.55 0.538
ILP5 Your company‟s Internal Lean Practice impacts much to your company SCM and finance performance 4.54 0.539
SCP1 Your company delivers products with quality up to and over expectation of the standard from your customers 4.45 0.556
SCP2 Your company delivers products to customers on time 4.54 0.538
SCP3 Your company delivers accurate volume of product to customers 4.48 0.673
SCP4 Your company delivers products to customers at minimum cost 4.54 0.583
SCP5 Your company achieves good business results this year 4.57 0.536
SCP6 Your customers are very satisfied with your services 4.42 0.63
SCP7 Your SC is very flexible and be able to adapt to the customer various changing needs 4.36 0.611
Exploratory factor analysis (EFA) is a powerful multivariate statistical technique that effectively extracts information from large, interrelated datasets Its primary objectives include specifying the unit of analysis, summarizing or reducing data, selecting variables, and integrating EFA results with other multivariate methods (Hair et al., 2006) In this research, EFA is employed for data reduction by identifying representative variables from a larger set, simplifying subsequent multivariate analyses while retaining the original variables' nature and characteristics.
In this study, Principal Component Analysis (PCA) is employed as the extraction method, while Varimax rotation is utilized to enhance interpretability An a priori criterion is established to determine the number of factors, retaining the initial five factors to focus on their relationships rather than discovering new ones However, the number of items within each factor is adjusted during the analysis based on specific criteria.
- Value of factor loading equal or over 0.5 are general considered necessary for practical significance (Hair et al, 2006)
- Variable should generally have communalities of greater than 0.5 (Hair et al,
Factor analysis is a statistical method used to uncover underlying factors that explain correlations among observed variables It is commonly employed for data reduction, allowing researchers to identify a few key factors that account for the majority of variance in a larger set of manifest variables Additionally, factor analysis can help generate hypotheses about causal relationships and screen variables for further analysis, such as detecting collinearity before conducting linear regression.
Table 5.2 presents the results of the factor analysis, highlighting the factor loading values from the Rotated Component matrix The principal component analysis was conducted under the assumption that all variance is common, resulting in communalities of 1 prior to extraction.
Table 5.2 Factor loading analysis results
Dữ liệu từ các chỉ số ILP, SCP, PC, PSP, SP và SSP cho thấy sự phân bố và tương quan khác nhau giữa các biến Các chỉ số ILP như ILP1 (0.73), ILP2 (0.70) và ILP5 (0.82) thể hiện hiệu suất cao, trong khi SCP1 (0.61) và SCP4 (0.71) cho thấy mức độ ổn định Các chỉ số PC như PC1 (0.45) và PC5 (0.29) cho thấy sự biến động trong khi PSP1 (0.43) và PSP5 (0.31) có hiệu suất tốt Các chỉ số SP như SP1 (0.35) và SP4 (0.29) cũng cho thấy sự đồng đều trong kết quả Cuối cùng, các chỉ số SSP như SSP2 (0.07) và SSP8 (0.04) cho thấy sự biến động cao trong các giá trị.
Extraction Method: Principal Component Analysis
Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 7 iterations
Initial communalities represent the variance in each variable explained by all components or factors, while extraction communalities reflect the variance accounted for by the specific factors in the solution In this analysis, seven items—PC1, PC4, SP1, SP4, PSP1, PSP2—were identified for deletion to enhance the reliability and validity of the measures Although these seven items met the initial criteria, their complex structure and convergent issues warranted their removal Consequently, all other items remain suitable for further analysis.
To accurately reproduce the population factor pattern, it is essential to have a larger sample size, high communalities, and strong overdetermination, where each factor has at least three or four significant loadings and a simple structure with few nonoverlapping factors When communalities are moderate, around 5, and the factors are well-defined, a sample size of 100 to 200 subjects is recommended This aligns well with the current samples used in the study.
In this phase, reliability analysis evaluates the internal consistency among various measurement items related to the constructs To determine this internal consistency, specific criteria are applied.
1 The item-to-total correlation exceeds 0.5 and inter-item correlation exceeds 0.3 (Hair et al, 2006)
2 Cronbach‟s Alpha exceeds 0.7 (Hair et al, 2006)
Reliability values reflect the extent to which operational measures are free from random error and consistently assess the intended construct Cronbach’s alpha is commonly used to evaluate reliability, with a coefficient of 0.70 or higher (ideally 0.80) indicating a reliable scale, as noted by Nunally (1978) Table 5.3 displays the reliability scores of the scales, all of which surpass the recommended threshold of 0.80.
The constructs demonstrated strong reliability, with Cronbach’s alpha values exceeding 0.8 for all categories (SSP=0.927, PC=0.842, PSP=0.920, SP=0.802, ILP=0.927, SCP=0.914), confirming that the items are cohesively aligned Additionally, satisfactory item-to-total correlations (all > 0.5) and inter-item correlations (all > 0.3) were observed, indicating no need for modification The retained items and constructs were subsequently utilized for further analysis.
Table 5.3 Results of Exploration Factor Analysis
SSP1 SSP2 SSP3 SSP4 SSP5 SSP6 SSP7 SSP8
ILP1 ILP2 ILP3 ILP4 ILP5
SCP1 SCP2 SCP3 SCP4 SCP5 SCP7
The descriptive statistics for each measurement variable, detailed in Table 5.4, reveal that the means are below 5, while the standard deviations range from 0.38 to 0.42, indicating a significant variation in the responses.
Table 5.4 Means and standard deviations
5.4 Testing Hypothesis with Linear Regression
Regression analyses are used to assess the strength of the relationship between independent and dependent variables Additionally, these analyses enable the creation of a regression equation, which facilitates the prediction of dependent variable values based on specified independent variable values.
This section utilized linear regression analysis to evaluate hypotheses H1 through H5, with Supply Chain Performance (SCP) as the dependent variable and five independent variables: Strategic Supplier Partnership, Product Creation, Purchasing/Supply Planning, Sourcing Production, and Internal Lean Practice Additionally, correlation analysis was performed to assess discriminant validity.
Table 5.5 The correlations of factors of SC
SSP PC PSP SP ILP
The correlations among the factors of supply chain (SC) presented in Table 5.5 suggest that these independent variables can effectively explain the dependent variable of supply chain performance (SCP) Composite scores for each study variable were calculated by averaging the scores of items representing that construct The correlation coefficients, ranging from 0.109 to 0.861, indicate a strong relationship among the variables, while none reached or exceeded 0.90, thereby supporting the empirical evidence for discriminant validity.
Based on the results of the multi-linear regression analysis on data of 199 responses,
The regression analysis yielded an R square value of 0.855 and an adjusted R square of 0.851, indicating a strong fit of the regression line to the data with minimal shrinkage This demonstrates a close relationship between the predictors and the dependent variable, confirming that the multiple linear regression model is appropriate and applicable for the population data.
Table 5.6 R Square and Adjusted R square
Model R R Square Adjusted R Square Std Error of the Estimate
1 925 a 855 851 16166 a Predictors: (Constant), ILP, SSP, SP, PSP, PC b Dependent Variable: SCP
Model Sum of Squares df Mean Square F Sig
Total 34.765 198 a Predictors: (Constant), ILP, SSP, SP, PSP, PC b Dependent Variable: SCP
Table 5.7 was showing the results of linear regression analysis with the following details analysis
Table 5.7 Results of linear regression analysis
H1: Strategic supplier partnership is not related to Supply Chain Performance
Conclusions and Suggestions
Theoretical contributions
Research indicates that the implementation of Supply Chain Management (SCM) can significantly enhance organizational performance, leading to improved inventory turnover, higher customer service levels, and reduced costs Empirical findings from this study support 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, confirming their reliability and validity through a comprehensive process that included literature review, survey testing, exploratory factor analysis (EFA), and linear regression analysis These validated measurement scales are applicable not only in the Asian region but also for global studies on the Adidas Group's supply chain Additionally, the research model, which has been suggested, tested, and refined, proves valuable for future SCM research in various regions The analysis methods employed, including EFA, reliability testing, and linear regression using SPSS software, are widely recognized and provided reliable results for further 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 contributes to the literature by addressing two key points: first, there has been no prior research on the determinants of adidas SCP in the Asian market; second, it identifies crucial determinants such as production creation, purchasing and supply planning, and internal lean practices, which are vital for the footwear industry and applicable across various sectors.
The revised model of determinants of SCP, illustrated in Figure 5.2, identifies three key factors that influence SCP at various levels This article discusses the managerial implications associated with each factor and its impact on SCP, based on comprehensive research findings.
Product creation significantly impacts adidas's supply chain performance (SCP), as highlighted in the introduction and literature review This research aims to provide insights into new product development and the application of supply chain concepts to enhance existing systems Many companies encounter unnecessary costs and delays in product introduction due to improper supply chain design or inherent process inefficiencies Additionally, marketing elements in product development, along with managerial guidelines and economic evaluations, are crucial for successful outcomes.
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 is essential for identifying the optimal product while also offering insights into potential enhancements for 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 h
Information feedback is utilised to vary objectives or evaluate corporate policies and controls significant new marketing opportunities
Strategic purchasing plays a crucial role in enhancing supply chain performance (SCP) by fostering close relationships and effective communication with key suppliers Selecting suppliers that meet specific quality standards significantly boosts adidas' supply chain efficiency Additionally, improved communication between purchasing and warehouse departments optimizes inventory levels, leading to cost reductions as purchasing teams can effectively convey needs to suppliers, ensuring synchronized deliveries.
In the context of "alliance capitalism," forming and managing supply-chain relationships is a vital organizational asset that can lead to a sustainable strategic advantage This paper explores how strategic purchasing enhances supply management capabilities, such as long-term orientation, a limited number of suppliers, and effective communication These capabilities ultimately improve customer responsiveness and financial performance for the buying firm Practically, the study highlights that purchasing not only impacts the firm's profitability but also serves as a crucial strategic partner in developing supply management capabilities that yield lasting advantages Furthermore, it reinforces existing research on the significance of managing buyer-supplier relationships for mutual benefits and illustrates how effective supply management enhances both operational performance, particularly in customer responsiveness, and financial outcomes for the buying firm Customer responsiveness is identified as an "output-based competency" that reflects the value delivered to customers, thereby bolstering the firm's image, reputation, and legitimacy among customers, suppliers, and other stakeholders.
Supply management is a complex construct that warrants further research into additional factors such as supplier selection, certification, and integration The significance of trust in fostering long-term, cooperative relationships while enhancing transaction value and reducing costs should be explicitly measured as a vital component of supply management This study primarily examined the buyer-supplier dyad from the buying firm's perspective, highlighting the necessity to explore the exchange relationship from the supplier's viewpoint to determine its reciprocity and mutual benefits Additionally, as these dyadic relationships exist within broader supply chain networks, future research should consider the "strategic network" framework to assess whether these networks enhance or undermine the competencies of member firms Despite these limitations, this study lays the groundwork for researchers and managers to leverage strategic purchasing for improved supply management capabilities.
Internal Lean Practices (Fast and Lean)
Research indicates that Lean practices are closely linked to several positive outcomes, including reduced unit production costs, improved product quality, shortened lead times, decreased manufacturing waste, and lowered inventory levels of raw materials and finished goods Specifically, reducing lead time from development to mass production is crucial for adidas's supply chain, with a goal to cut the lead time from 18 months to 12 months to enhance competitiveness This initiative involves value stream mapping to identify and eliminate inefficiencies Additionally, adidas mandates its contract factories and T2 suppliers to engage in continuous improvement (Kaizen) activities, which are shared quarterly to focus on quality stability, lead time reduction, and productivity enhancement Furthermore, a "Pull" production system is effectively implemented across contract factories and suppliers.
Improving delivery performance significantly relies on reducing cycle time, downtime, and inventory Adidas and its contract factories are actively encouraging suppliers to shorten lead times, particularly for materials, which is a crucial factor in evaluating supplier performance Consequently, 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 To further enhance internal lean practices, companies should aim to minimize development and commercialization lead times Additionally, effectively implementing Kaizen activities and adopting a "Pull" production approach, along with urging suppliers to reduce material lead times, are essential strategies for improvement.
This study identifies three key factors influencing 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 The research suggests that companies should focus on improving production creation, purchasing/supply planning, and internal lean practices to enhance their SCP However, given the unique nature and resources of each business, it is essential for companies to tailor their supply chain management practices to effectively improve their SCP.
Integrating additional supply chain management (SCM) performance measures, such as enhanced quality and reduced costs, into the existing framework can significantly impact organizational performance This is essential because SCM has strategic implications at both the firm and supply chain levels Furthermore, as noted by Trent (2004), successful SCM implementation requires the full engagement and understanding of the strategy by all units within the supply chain, rather than relying solely on management Ultimately, this framework provides SCM managers with valuable insights to identify critical factors and effectively execute SCM strategies.
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 affect the generalizability of the results to other contexts Additionally, the analysis relied solely on data from manufacturers, indicating that insights from suppliers and end consumers could enhance understanding of supply chain performance factors Therefore, future research should consider incorporating data from suppliers or employing a dyadic approach to gain a more comprehensive perspective.
Future research should broaden its scope to include diverse regions and cross-cultural perspectives, while longitudinal studies could yield deeper insights The current study relied on perceptual data from a single informant per firm, which may introduce biases like over-evaluation To enhance the reliability of findings, future studies should consider alternative research designs that incorporate objective data, multiple informants, and longitudinal data collection.
Future research can enhance the construct of supply chain management (SCM) practices by incorporating additional dimensions such as total quality management, cross-functional coordination, and internal integration It should also consider inter-organizational relationships, including trust, commitment, shared vision, risk and reward sharing, and agreed supply chain leadership The primary focus of upcoming studies should be on testing and validating this comprehensive construct.
This study presents a foundational model that identifies the key determinants of the supply chain (SC) in the shoe industry, providing valuable insights into this sector By establishing a strong theoretical basis and employing rigorous methodologies, the research bridges the gap between existing knowledge on shaping supply chain performance (SCP) and the practical needs of scholars and industry managers Furthermore, our findings highlight the importance of integrating three critical areas of literature: production creation, purchasing and supply planning, and internal lean practices.
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Determinants of Supply chain performance of adidas Sourcing Limited in Asia Pacific region
This paper aims to identify the critical factors influencing supply chain management (SCM) practices that affect adidas' supply chain performance in Asia, as well as to evaluate the relationship between these practices and overall performance Your insights on this research are invaluable and will greatly contribute to its success Please note that all responses will be kept confidential and used solely for research purposes, with no right or wrong answers.
Industry: (please select from the list):
Footwear (adidas, T1) [ ] Synthetic leather [ ] Textiles [ ] Leather [ ] Lace/Webbing [ ] Rubber [ ] Chemical [ ] Other [ ]
B Information regarding Supply Chain Practices of surveyed companys
Directions: Indicate to what extent you agree or disagree with the statements listed below by selecting one of the following
1 means that you strongly disagree with the statement (SD)
2 mean that you disagree with the statement (D)
3 mean that you are undecided about the statement (U)
4 mean that you agree with the statement (A)
5 mean that you strongly agree with the statement (SA)
1 Your company shares your strategies to your key partners by every fiscal year (SSP1)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ] h
2 Your company includes your key partners in your planning and goal-setting activities ( SSP2)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
3 Your company is fully aware of your partner‟s strategies.( SSP3)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
4 Your company regularly solves problems jointly with your partners.( SSP4)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
5 Your company helps your partners to improve their product quality and price.( SSP5)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
6 Your company considers service, quality and price as criterion in selecting partners.( SSP6)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
7 Your company share mutual benefits with your partners ( SSP7)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
8 Your partners‟ strategies and your companys‟ Strategies impact much to your company‟s SCM and finance performance.( SSP8)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
9 Your company pro-actively supports your partners in new product development processes.( PC1)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
10 Your company gets and provides all product specifications details/requirements from your partners in time.(PC2)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
11 Your company capacity can satisfy the time line of product creation to your customers.(PC3)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
12 Your company is able to adapt to the changing consumer preferences more quickly, flexibly and efficiently.(PC4)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
13 Your company‟s product creation impacts much to your SCM and finance performance.(PC5) h
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
14 Your company‟s purchasing/supply planning is more competitive than other competitors.(PSP1)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
15 Your campany‟s purchasing/supply planning can help to reduce inventory management cost, lead time and logistics cost (PSP2)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
16 Your company‟s purchasing/supply planning plays a key liaison role to your customers in creating and delivering value.(PSP3)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
17 Your partners highly evaluate your company‟s purchasing/supply planning.(PSP4)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
18 Your company‟s purchasing/supply planning impacts much to your company SCM and finance performance.(PSP5)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
19 Sourcing production is one of your company‟s key strategies.(SP1)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
20 Your company‟s production capability can meet your customers‟ expectations.(SP2)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
21 Your company‟s sourcing production is aligned with your partner‟s strategy.(SP3)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
22 Your sourcing production is working effectively in terms of cost reduction, quality, service and delivery improvement and flexibility.(SP4)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
23 Your company‟s sourcing production impacts much to your company SCM and finance performance.(SP5)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
24 Your company is effectively implementing lead-time reduction and wastes elimination program from product development and commercialization to mass production.(ILP1) h
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
25 Your company is effectively implementing lean program to eliminating wastes and improving efficiency.(ILP2)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
26 Your campany is using less input to produce at a mass production speed, while offering more variety to the end customers.(ILP3)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
27 Your company strongly pushes partners to shorten lead-times and improve quality.(ILP4)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
28 Your company‟s Internal Lean Practice impacts much to your company SCM and finance performance (ILP5)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
29 Your company delivers products with quality up to and over expectation of the standard from your customers (SCP1)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
30 Your company delivers products to customers on time (SCP2)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
31 Your company delivers accurate volume of product to customers (SCP3)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
32 Your company delivers products to customers at minimum cost (SCP4)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
33 Your company achieves good business results this year (SCP5)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
34 Your customers are very satisfied with your services (SCP6)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
35 Your SC is very flexible and be able to adapt to the customer various changing needs (SCP7)
Strongly disagree [ ] Disagree [ ] Undecided [ ] Agree [ ] Strongly agree [ ]
Thank you very much for your feedback! h
Appendix 2 Major Locations and partnership MAJOR LOCATIONS
EUROPE adidas Group Headquarters, Herzogenaurach, Germany 01 adidas International Finance, Amsterdam, Netherlands 02 adidas International Trading, Amsterdam, Netherlands 03 adidas Group Russia, Moscow, Russia 04
NORTH AMERICA adidas North America, Portland/Oregon, USA 05
Reebok International Headquarters, Canton/Massachusetts, USA 06
The Rockport Company Headquarters, Canton/Massachusetts, USA 07
Reebok–CCM Hockey Headquarters, Montreal/Quebec, Canada 08
TaylorMade-adidas Golf Headquarters, Carlsbad/California, USA 09
Sports Licensed Division Headquarters, Canton/Massachusetts, USA 10
ASIA adidas Group Asia, Hong Kong, China 11
LATIN AMERICA adidas Group Latin America, Panama City, Panama 12
Orange Africa Cup of Nations 2010, Angola January 10 – 31, 2010 A adidas Official Match Ball Supplier
EHF Handball EURO 2010, Austria January 19 – 31, 2010 B adidas Official Partner of European Handball Federation
NFL Super Bowl, Miami/Florida, USA February 7, 2010 C Reebok Official Outfitter of National Football League
NBA All-Star Game, Dallas/Texas, USA February 14, 2010 D adidas Official Outfitter of National Basketball Association
IAAF Indoor World Championships, Doha, Qatar March 12 – 14, 2010 E h adidas Official Partner
Boston Marathon, Boston/Massachusetts, USA April 19, 2010 F adidas Official Apparel and Footwear Outfitter
Flora London Marathon, London, UK April 25, 2010 G adidas Official Sponsor
UEFA Europa League Final, Hamburg, Germany May 12, 2010 H adidas Official Match Ball Supplier
ICC World Twenty20, West Indies April 30 – May 16, 2010 I adidas Official Supplier of Australia and England cricket teams
UEFA Champions League Final, Madrid, Spain May 22, 2010 J adidas Official Ball Supplier for UEFA Champions League
French Open, Paris, France May 23 – June 6, 2010 K adidas Official Partner of Roland Garros
2010 FIFA World Cup™, South Africa June 11 – July 11, 2010 L adidas Official Partner of Fédération Internationale de Football Association,
Official Match Ball Supplier of FIFA
MLB All-Star Game, Anaheim/California, USA July 13, 2010 M Reebok Official Licensee of Major League Baseball fan and lifestyle apparel and Official Authentic Collection Footwear Supplier
UEFA Super Cup, Monaco August 27, 2010 N adidas Official Match Ball Supplier
2010 FIBA World Championship, Turkey August 28 – September 12, 2010 O adidas Official Supplier real,– Berlin Marathon, Berlin, Germany September 26, 2010 P adidas Official Partner
Sources: http://www.adidas-group.com h
Appendix 3 adidas’s suppliers and factories location in the world
No of suppliers (excluding own factories)
No of own factories Total
Number of supplier factories per country
Sources: http://www.adidas-group.com/en/ourgroup/OurGroup_AreaStart.aspx h
No of suppliers (excluding own factories)
No of own factories Total
Number of supplier factories per country
Sources: http://www.adidas-group.com/en/ourgroup/OurGroup_AreaStart.aspx h