Supply Chain Management Case Study
There are many strategies that Adidas has implemented to get rid of out-of stocks and lose sales.
Mass Customization: Adidas deals with changing customers' demand by adopting a “Mass Customization” strategy. The idea is to develop, market and deliver the product categories that most customers want. The steps towards mass customization is to offer product choices. Very few variations often disappoint customers and too many variations will postpone the buying decision. Adidas asks its key suppliers to produce customized soccer cleats in order to achieve the economy of scale. This may take longer than expected. To compensate a long waiting time, air freight or courier service is used for dispatching. The customized products which are sold directly to customers often have higher profit margin to offset the high transportation cost.
DSI System: Adidas utilize the DSI system (day sales of inventory) to implement the functionality for warehouse management of soccer cleats. DSI functionality include information about product style, size, and color implementation of zone wise picking to work with materials management. The communication of the warehousing operation is fed back into the SAP system. Adidas uses the latest technology to its advantage (Slideshare.net, 2015). It uses the warehouse management system from Manhattan (one of the leading WMS providers) to ensure the best services. DSI provide customized development to integrate data from devices such as wireless, handheld radio frequency and SAP. This is used for transactions, including goods receipt, movement of goods, replenishment, cycle counting, and zone picking. With DSI, the company solve their problem of availability of stock having recognized the need of automated data collection via wireless handheld device.
POS data information: With POS (point-of-sales system), Adidas processes and ships their goods to distributor and retail outlet within 24 hours. This avoids late delivery to the distributor or retail outlet, so that the company does not lose sales due to out-of-stocks. The POS system is fast and cost effective. It matches the goods and correct dispatch notes, produces shipping label and transfers the goods to the distributers or retail outlet (Kell, 2015).
Use of technology: Adidas has put much efforts in inventory management to relationship management with its customers. A good inventory management avoids out of stock, and gives real-time information about inventory and shipping status. Because of this reason, the company can provide good customer service to hold its customer, and avoid losing best customer. Losing customer means losing profit. Adidas has learned this well. They provide employees with the tools to perform their jobs properly which helps Adidas retailers to be happy and continuously consume in their stores. Adidas has an Enterprise Resource Planning (ERP) system that includes core finance and Human Resource, accounting, marketing, and Information Technology functions which interfaces with the whole supply chain. The benefits Adidas having visibility throughout company, having a better sense of operational control over improvements (Guide, 2015). As an example, even when Adidas sales representatives are travelling, and retailers ask questions the sales reps ca check with their ERP database by opening an application and tapping into the ERP system. They are able to place an order, determine the status existing orders, and answer retailer's question right on the spot with greater accuracy and speed.
In totality Adidas, supply chain is robust and well integrated across all its product lines. This ensures perfect delivery, less out-of-stocks, less lost sales and enhanced customer satisfaction. Adidas has a huge logistic network which is an advantage for Adidas to build relationship between suppliers, manufacturers, retailers and customers.
Slideshare.net,. (2015). Adidas Corporate Strategy. Retrieved 3 April 2015, from http://www.slideshare.net/divya-mishra/adidas-corporate-strategy
Kell, J. (2015). Adidas top exec: We need to look cool again in the U.S.. Fortune. Retrieved 3 April 2015, from http://fortune.com/2015/01/22/adidas-usa-turnaround-plan/
Guide, S. (2015). Supply Chain Case Study: the Definitive Guide. Supplychainopz.com. Retrieved 3 April 2015, from http://www.supplychainopz.com/2014/06/supply-chain-case-study.html#sthash.FHiU2cnV.dpuf
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