Global Value Chain

Global Value Chain Analysis of Adidas

1. Introduction
Adidas, a name synonymous with sportswear supremacy, has carved a lasting impression on
the global stage since its inception in 1949. Founded by Adolf Dassler, the brand has consistently
been at the forefront of innovation, seamlessly blending performance and style. This brief
exploration delves into the essence of Adidas, tracing its evolution from a small German
shoemaker to an international powerhouse. Join us as we unravel the core elements that define
Adidas – a fusion of cutting-edge technology, iconic design, and an unwavering commitment to
excellence.

1.Primary activities

1.1 Inbound logistics

Inbound logistics for Adidas involve the management and coordination of various processes
related to the procurement, transportation, and storage of raw materials and components needed
for the production of their sports and lifestyle products. While the specific details of Adidas'
inbound logistics may not be publicly disclosed, a typical inbound logistics process for a
company like Adidas might include the following key components:

1. Supplier Management:
 Identification and selection of suppliers for raw materials, components, and other
inputs.
 Negotiation of contracts and agreements with suppliers.
 Monitoring supplier performance and ensuring compliance with quality standards.
2. Order Placement and Processing:
 Placing orders for raw materials based on production forecasts and inventory
levels.
 Processing and confirming orders with suppliers.
3. Transportation:
 Coordinating the transportation of raw materials from suppliers to Adidas'
manufacturing facilities.
 Choosing optimal transportation modes (e.g., sea freight, air freight, trucking)
based on cost, speed, and other factors.
 Tracking and managing the movement of goods during transit.
4. Warehousing and Inventory Management:
 Receiving and inspecting incoming raw materials at warehouses.
 Storing raw materials in an organized manner.
 Implementing inventory management systems to track stock levels and reorder
points.
  Regularly conducting inventory audits to ensure accuracy.

5. Customs Clearance:
 Managing customs clearance processes for imported raw materials, ensuring
compliance with customs regulations.
 Handling documentation and paperwork required for international shipments.
6. Quality Control:
 Conducting quality checks on incoming materials to ensure they meet Adidas'
quality standards.
 Addressing any quality issues with suppliers and taking corrective actions.
Efficient inbound logistics are crucial for Adidas to maintain a streamlined supply chain,
minimize lead times, and ensure that the production process is well-supported with the necessary
inputs. The company may also prioritize sustainability and ethical sourcing in its inbound
logistics practices, aligning with its corporate values and initiatives. Keep in mind that the
specific details of Adidas' inbound logistics may vary, and the information provided here is a
general overview based on industry practices.

1.2 Operations

Adidas, like many global companies, operates within a complex global value chain. A
global value chain encompasses all the activities and processes involved in the creation,
production, and delivery of a product or service on a global scale. Here is an overview of the
operations of Adidas within the context of a global value chain analysis:

1. Design and Product Development:

 Adidas invests in design and product development to create innovative and
marketable sportswear and footwear.
 Collaborations with designers, athletes, and influencers help in creating products
that resonate with consumers.
2. Supplier Relationships:
 Adidas has a network of global suppliers for raw materials, fabrics, and
components.
 The company establishes and maintains relationships with suppliers, focusing on
quality, ethical practices, and timely delivery.
3. Manufacturing:
 Adidas manufactures its products through a combination of company-owned
facilities and outsourced production to contract manufacturers.
 Manufacturing takes place in different countries, often in regions where
production costs are competitive.
4. Quality Control and Standards:
 Stringent quality control measures are in place to ensure that products meet
Adidas' high standards.
 Compliance with environmental and labor standards is a key focus, aligning with
the company's sustainability goals.
5. Logistics and Distribution:
 Inbound logistics involve the procurement of raw materials and components
necessary for production.
  Outbound logistics include the distribution of finished products to retail stores, e-
commerce channels, and other sales outlets globally.
6. Technology and Innovation:
 Adidas leverages technology for inventory management, supply chain visibility,
and process optimization.
 Continuous innovation in materials and manufacturing processes is a key aspect
of its operations.
7. Marketing and Branding:
 Marketing strategies are deployed globally to promote the Adidas brand.
 Sponsorships of sports events, teams, and athletes contribute to brand visibility
and loyalty.
8. Retail and E-Commerce:
 Adidas operates a global network of retail stores and sells products through e-
commerce platforms.
 E-commerce plays an increasingly significant role in reaching consumers directly.
9. Customer Service:
 Adidas emphasizes customer service to ensure a positive consumer experience.
 After-sales services, such as returns and warranties, are managed globally.
By analyzing its global value chain, Adidas can identify areas for improvement, optimize
processes, and respond to changing market dynamics.

1.3 Outbound logistics

Outbound logistics for Adidas involves the management and coordination of processes
related to the distribution and delivery of finished products to customers and retail outlets. Here's
an overview of the outbound logistics for Adidas.

1. Distribution Centers:
 Adidas operates distribution centers strategically located around the world to
efficiently handle and process outgoing shipments.
 These distribution centers play a crucial role in managing inventory, order
fulfillment, and shipping logistics.
2. Order Processing:
 Once customer orders are received through various channels (retail stores, e-
commerce platforms, etc.), the orders are processed through an order management
system.
 This involves verifying product availability, confirming payment, and preparing
the order for shipment.
3. Warehousing:
 Finished products are stored in warehouses before being shipped to retail stores or
directly to customers.
 Warehousing involves inventory management, including tracking stock levels,
restocking, and organizing products for efficient retrieval.
4. Packing and Packaging:
 Products are carefully packed and labeled for shipment.
 Packaging may include branding elements, product information, and labels for
easy identification.
5. Shipping and Transportation:
  Adidas employs various modes of transportation, including air freight, sea freight,
and ground transportation, to deliver products to different regions.
 The choice of transportation depends on factors such as delivery time, cost, and
the destination of the products.
6. Global Supply Chain Network:
 Adidas has a global supply chain network that enables it to distribute products to
a wide range of markets worldwide.
 The distribution strategy considers regional demands, market trends, and the
company's overall sales strategy.
7. Retail Store Distribution:
 Products are shipped from distribution centers to Adidas-owned retail stores and
franchise locations.
 Inventory is managed at the retail level to ensure that popular products are
adequately stocked.
8. Collaboration with Third-Party Logistics (3PL) Providers:
 Adidas may partner with third-party logistics providers to enhance its outbound
logistics capabilities, especially in regions where it doesn't own distribution
centers.
Efficient outbound logistics are critical for Adidas to meet customer expectations,
minimize lead times, and ensure products are delivered in good condition. The company's global
reach and diverse distribution channels contribute to its ability to serve a broad customer base.

1.4 Marketing Sales

1. Brand Positioning:
 Adidas has positioned itself as a leading global sports brand, emphasizing
innovation, performance, and style.
 The brand often collaborates with athletes, celebrities, and designers to create
products and campaigns that resonate with a wide audience.
2. Product Range:
 Adidas offers a diverse range of products, including athletic footwear, apparel,
and accessories for various sports and lifestyle activities.
 The company continually introduces new collections and product innovations to
stay relevant in the market.
3. E-commerce and Retail Presence:
 Adidas has a strong e-commerce presence through its official website, allowing
customers to shop online and access exclusive products.
 The brand also maintains a global network of retail stores, including company-
owned stores and franchise locations.
4. Marketing Campaigns:
 Adidas invests heavily in marketing campaigns to promote its products and
enhance brand visibility.
 The company often uses digital marketing, social media, and traditional
advertising channels to reach a global audience.
5. Sponsorships and Endorsements:
 Adidas has a history of high-profile sports sponsorships and athlete endorsements.
 Partnering with athletes and teams helps the brand build credibility and connect
with sports enthusiasts.
6. Collaborations and Limited Editions:
  Collaborations with fashion designers, celebrities, and other brands contribute to
unique and limited-edition product releases.
 Limited-edition releases often create hype and drive demand among consumers.
7. Data and Analytics:
 Like many modern companies, Adidas likely employs data analytics to
understand consumer behavior, preferences, and market trends.
 Data-driven insights inform marketing strategies and help optimize sales and
promotional efforts.
To obtain the latest and most accurate information on Adidas' marketing and sales performance,
please refer to the company's official communications, financial reports, or reputable financial
news sources.

1.5 Service

The service component of Adidas within the global value chain analysis refers to the activities
and processes related to providing support and services to customers after the sale of its products.

1. Customer Service:
 Adidas invests in customer service to address inquiries, provide product
information, and assist with any issues or concerns.
 Customer service channels may include online chat, email support, and helplines.
2. Warranty and Returns:
 Adidas typically offers warranties on its products, ensuring that customers receive
quality items.
 Efficient returns processes are in place to handle product exchanges or refunds,
contributing to a positive customer experience.
3. Product Education:
 Adidas provides information about product features, technologies, and care
instructions to educate customers on how to maximize the benefits of their
purchases.
4. Online Platforms and Apps:
 Adidas may offer digital platforms or mobile apps that enhance the customer
experience, providing personalized content, exclusive access, and order tracking.
5. Customization Services:
 Depending on the product line, Adidas may offer customization options, allowing
customers to personalize their footwear or apparel.
6. Community Engagement:
 Adidas engages with its customer community through social media, forums, and
events, fostering a sense of belonging among its customer base.
7. Training and Events:
 Adidas may organize training events or sports-related activities to promote its
products and encourage customer participation in sports and fitness.
8. Digital Innovation:
 Utilizing digital technologies, Adidas may provide interactive experiences, virtual
try-on features, or augmented reality tools to enhance the online shopping
experience.
By incorporating these service elements into its global value chain, Adidas aims to create a
holistic customer experience, building loyalty and driving repeat business.
2. Support Activities

2.1 Procurement

Procurement for Adidas involves the process of sourcing, acquiring, and managing the goods and
services needed for the company's operations.

1. Supplier Selection and Management:

 Adidas engages in a careful selection process to identify and choose suppliers for
raw materials, components, and services.
 The company considers factors such as quality, reliability, cost, and adherence to
ethical and sustainability standards when choosing suppliers.
2. Negotiation and Contracting:
 Adidas negotiates contracts with suppliers to establish terms and conditions,
including pricing, delivery schedules, and quality standards.
 Contracts may cover a range of materials, from textiles for apparel to rubber for
footwear.
3. Quality Standards and Assurance:
 Ensuring the quality of raw materials and components is crucial for Adidas. The
company sets and communicates its quality standards to suppliers.
 Regular quality control processes and audits may be conducted to maintain
consistency.
4. Cost Management:
 Cost efficiency is a key consideration in procurement. Adidas works to optimize
costs without compromising quality.
 Negotiation strategies and bulk purchasing may be employed to achieve favorable
pricing.
5. Risk Management:
 Adidas assesses and manages risks associated with its supply chain, including
geopolitical, environmental, and economic factors.
 Strategies are in place to mitigate potential disruptions to the procurement
process.
6. Ethical and Sustainable Sourcing:
 Adidas places importance on ethical sourcing and sustainability. The company
may implement policies to ensure that suppliers adhere to ethical labor practices
and environmental standards.
 Initiatives related to sustainable materials and processes are incorporated into
procurement practices.
7. Innovation and Technology Adoption:
 Procurement processes may involve seeking innovative solutions from suppliers.
 The adoption of technology, such as procurement software and digital platforms,
enhances efficiency and transparency in the procurement lifecycle.
8. Supplier Diversity:
 Adidas may prioritize supplier diversity, working with a range of suppliers to
promote inclusivity and foster innovation.
9. Collaboration with Stakeholders:
 Collaboration with key stakeholders, including suppliers and internal teams, is
important for effective procurement.
 Communication and alignment of goals contribute to a streamlined procurement
process.
By managing procurement effectively, Adidas can secure a reliable supply of materials and
services, control costs, and contribute to its overall business objectives.

2.2 Technology Development (R&D)

1. Product Innovation:
 Adidas invests in R&D to create innovative products with advanced materials,
designs, and performance features. This could involve developing new footwear
technologies, textile innovations, and sports equipment enhancements.
2. Digital Technology Integration:
 Incorporating digital technologies into sportswear and equipment is a key focus.
This may include smart textiles, wearable technology, and integration with mobile
apps for fitness tracking and personalized experiences.
3. Sustainability Initiatives:
 R&D efforts may be directed towards developing sustainable materials and
production processes. Adidas has shown a commitment to sustainability, and
ongoing R&D is likely geared towards reducing environmental impact.
4. Data Analytics and Customer Insights:
 Utilizing data analytics to understand consumer behavior, preferences, and trends
is crucial. R&D efforts may involve developing and implementing advanced
analytics tools for better decision-making.
5. Customization and Personalization:
 R&D may focus on technologies that enable customization and personalization of
products. This could involve 3D printing, customizable designs, and personalized
fit solutions.
6. Supply Chain Optimization:
 Implementing technologies to enhance supply chain visibility, efficiency, and
responsiveness is vital. This may involve the use of blockchain, IoT (Internet of
Things), and other technologies to optimize the end-to-end supply chain.
7. Augmented Reality (AR) and Virtual Reality (VR):
 Implementing AR and VR technologies for virtual try-ons, interactive shopping
experiences, and immersive marketing campaigns is an area of interest for many
companies in the retail and fashion industry, including sportswear brands.
8. Collaborations and Partnerships:
 Adidas may engage in collaborations with tech companies, startups, and research
institutions to leverage external expertise and stay at the forefront of technological
advancements.
9. Digital Commerce and E-commerce Platforms:
 R&D efforts may be directed towards improving the user experience on Adidas'
digital platforms, including its official website and mobile apps. This involves
enhancing features such as online shopping, product customization, and order
tracking.

2.3 Human resource management

Human Resource Management (HRM) at Adidas involves the strategic management of the
company's workforce to support its business objectives, foster a positive work culture, and
ensure the well-being of employees.

1. Talent Acquisition:
 Adidas focuses on attracting and hiring top talent globally. This includes
recruiting individuals with diverse skills and backgrounds to contribute to the
company's innovation and growth.
2. Training and Development:
 Adidas invests in training and development programs to enhance the skills and
capabilities of its employees.
 Continuous learning opportunities are provided to ensure that employees stay
current with industry trends and advancements.
3. Diversity and Inclusion:
 Adidas emphasizes diversity and inclusion in its workforce. The company works
to create an inclusive work environment where employees from different
backgrounds feel valued and can contribute their unique perspectives.
4. Performance Management:
 Adidas implements performance management systems to set clear expectations,
provide regular feedback, and evaluate employee performance.
 Performance assessments may be linked to career development and compensation
decisions.
5. Employee Engagement:
 Strategies to engage employees and boost morale are crucial. Adidas may
implement initiatives such as employee recognition programs, wellness
initiatives, and team-building activities.
6. Compensation and Benefits:
 Adidas offers competitive compensation packages and benefits to attract and
retain top talent.
 Compensation structures may include base pay, bonuses, and incentives based on
individual and company performance.
7. Work-Life Balance:
 Adidas recognizes the importance of work-life balance and may offer flexible
work arrangements to support employees in achieving a healthy balance between
their professional and personal lives.
8. Health and Well-being Programs:
 Employee health and well-being are prioritized. Adidas may offer health and
wellness programs, including fitness initiatives, mental health support, and access
to healthcare resources.
9. Career Development and Mobility:
 Career development opportunities are provided to help employees grow within
the organization.
 Adidas may support internal mobility, allowing employees to explore different
roles and career paths within the company.
10. Leadership Development:
 Adidas invests in developing leadership skills at various levels of the
organization.
 Leadership programs and mentorship initiatives may be in place to nurture the
next generation of leaders within the company.
 Adidas' HRM practices aim to create a supportive and dynamic workplace that enables
employees to contribute their best to the company's success.

2.4 Firm Infrastructure

This includes activities such as strategic planning, finance, accounting, legal, and other functions
that form the foundation for the company's operations.

1. Strategic Planning:
 Adidas engages in strategic planning to define its long-term goals, objectives, and
the direction of the company.
 This involves analyzing market trends, competitor actions, and identifying growth
opportunities.
2. Financial Management:
 Managing financial resources is crucial for Adidas. This includes budgeting,
financial forecasting, and ensuring the financial stability of the company.
 Financial activities involve managing revenue, expenses, and profitability.
3. Legal and Regulatory Compliance:
 Adidas adheres to legal and regulatory requirements in all the regions where it
operates.
 Legal teams handle contracts, intellectual property protection, and compliance
with labor laws and other regulations.
4. Information Technology (IT) Infrastructure:
 A robust IT infrastructure is essential for Adidas' operations, including e-
commerce platforms, supply chain management systems, and data analytics.
 Cybersecurity measures are implemented to protect sensitive information.
5. Risk Management:
 Adidas assesses and manages various risks, including supply chain disruptions,
geopolitical factors, and financial risks.
 Strategies are in place to mitigate potential risks and ensure business continuity.
6. Management Information Systems (MIS):
 MIS supports decision-making processes by providing timely and accurate
information to managers.
 It includes data analytics, reporting tools, and dashboards to monitor key
performance indicators.
7. Human Resource Management (HRM):
 HRM is a crucial part of the firm infrastructure. It includes activities related to
talent acquisition, training, performance management, and employee engagement.
 HR practices contribute to creating a positive workplace culture.
 R&D activities are part of the firm infrastructure, focusing on product innovation
and technological advancements.
 Innovation contributes to the competitiveness of Adidas in the sportswear
industry.
These elements collectively form the firm infrastructure that supports Adidas' overall value
chain. They enable the company to operate efficiently, manage resources effectively, and align its
activities with strategic objectives.

3. Linkages within the Value Chain

The concept of linkages within the value chain refers to the interconnections and relationships
between different activities and processes that collectively create value for a company.

1. Design and R&D Linkages:

 The design and research and development (R&D) activities are closely linked.
Innovative product designs require research and development efforts to create
new materials, technologies, and performance features.
2. Procurement and Quality Control Linkages:
 There is a direct linkage between Adidas' procurement and quality control
processes. Procurement activities impact the quality of raw materials and
components, and effective quality control ensures that these materials meet
Adidas' standards.
3. Manufacturing and Logistics Linkages:
 The manufacturing and logistics processes are interconnected. Efficient
manufacturing requires a well-organized supply chain and timely delivery of raw
materials. Close coordination with logistics ensures a smooth flow of materials to
production facilities.
4. Marketing and Sales Linkages:
 Marketing and sales activities are tightly linked in the value chain. Effective
marketing campaigns influence product sales, and sales data provides feedback
for adjusting marketing strategies. The success of one directly impacts the other.
5. Customer Service and Returns Linkages:
 Customer service is linked to the returns process. Addressing customer inquiries
and handling returns efficiently contributes to customer satisfaction and loyalty.
6. Technology Development and Manufacturing Linkages:
 The development of new technologies can impact the manufacturing process. For
example, the introduction of new manufacturing technologies or materials
developed through R&D can influence the production methods.
7. Logistics and Retail Linkages:
 Logistics and retail are closely connected. Timely and accurate logistics
operations ensure that retail outlets have sufficient stock to meet customer
demand. Efficient inventory management contributes to retail success.
8. Sustainability Initiatives and Procurement Linkages:
 Sustainability initiatives often influence procurement decisions. Adidas'
commitment to sustainable practices may drive the company to source materials
from suppliers that adhere to environmental and ethical standards.
9. Training and Development and Manufacturing Linkages:
 Training and development programs for employees in manufacturing can enhance
production efficiency and product quality. Skilled and knowledgeable workers
contribute to a more effective manufacturing process.
Understanding and optimizing these linkages are crucial for enhancing overall efficiency,
reducing costs, and delivering value to customers.

4 Recommendations and Conclusions

Conclusions:

1. Adidas maintains a robust global brand recognized for innovation, quality, and
collaborations with athletes.
 2. The company's commitment to sustainability and eco-friendly practices aligns well with
evolving consumer expectations.
3. E-commerce growth and digital adaptation showcase Adidas' responsiveness to changing
market dynamics.
4. Community engagement through sponsorships and events contributes positively to brand
image.

Recommendations:

1. Continue investing in digital technologies to enhance the online shopping experience and
engage tech-savvy consumers.
2. Strengthen sustainability initiatives to maintain leadership in ethical and environmental
standards within the industry.
3. Foster a culture of innovation to consistently introduce new and unique products to the
market.
4. Enhance the overall customer experience through personalized marketing, efficient
logistics, and exceptional customer service.
5. Explore opportunities for market expansion, especially in emerging markets, tailoring
products to diverse consumer demographics.
6. Prioritize employee development and well-being to ensure a skilled and motivated
workforce.
7. Strengthen the agility of the supply chain to respond quickly to changing market
demands.

Bibliography

https://www.adidas-group.com/en/sustainability/social-impacts/supply-chain/

https://cheshnotes.com/hrm-organizational-culture-at-adidas/

https://dfreight.org/blog/an-insight-into-adidas-supply-chain-strategy/

https://www.researchgate.net/publication/
370593535_How_Effective_Supply_Chain_Management_of_Adidas

https://www.adidas.com/us/blog/932571-adidas-logos-history-and-meaning