May 11, 2015
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Adidas: Details offered about supply chain decisions in 2014

May 11, 2015

In 2014, Adidas Group, which owns Adidas, Reebok and two major golf brands, produced 258 million pairs of shoes, 309 million articles of clothes and some 99 million pieces of equipment. Inevitably, to produce such great quantities, the group seeks to work with many partners around the world. Its annual sustainability report, which was released in late April, offers insight into trends in its supply chain.

Adidas has subcontractors in 61 countries - Adidas

Adidas had 53,731 employees in 2014, as compared to 49,808 in 2013. Only 3% of them, however, were involved in manufacturing, since Adidas carries out almost 100% of its manufacturing through subcontractors. Nevertheless, the group estimates that over one million workers were involved in the production of its collections. Last year, there were on average 340 employees at each of its 1,133 factories. The biggest factories accounted for up to 11% of the group’s production in each segment (footwear, apparel, equipment).

China is the company’s number 1 partner 

At 83%, Asia remains by far the region accounting for the majority of the group’s production, and 27% of its partners are based in China. The Americas produce 9% by volume, Europe 7% and Africa less than 1%. Europe and the Americas produce in smaller quantities, since Asia-Pacific includes 64% of factories.

However, with each region, certain countries stand out. Thus, for footwear, 96% of which is manufactured in Asia, Vietnam increased its lead (39% as compared to 35% in 2013), followed by China (27% as compared to 31% in 2013) and Indonesia (23% as compared to 24% in 2013). 

As for apparel, China remains the company’s number one partner (31% as compared to 32% in 2013). Cambodia picked up steam (16% as compared to 12% in 2013), followed by Vietnam (13% as compared to 12%). In terms of equipment, China is the number one supplier (38% as compared to 42% in 2013). Turkey and Pakistan are growing (20% and 13% as compared to 19% and 10% in 2013).

A factory subcontracted by Adidas in Myanmar - Adidas

In total, Adidas has subcontractors in 61 countries and said it had reduced the number of partners it works with in China (259 factories as compared to 339 in 2013) and has exited from Laos. Conversely, the group has expanded it supply chain in South Korea (91 factories) and in Bangladesh (increasing from 4 to 9 factories). In North America, it has increased the number of direct subcontractors from 95 to 133 in the US, many of which were new suppliers engaged for the brand Five Ten. The group has reduced its numbers in Mexico, however, (going from 15 to 9 factories) and reduced its fleet in Canada (34-24). It also reduced the number of its factories in Germany (from 31 in 2012 to 21 in 2014). The group has, meanwhile, exited Russia, Greece and Estonia. 

Overall, Adidas said that it conducted 1,320 factory visits over the past year and stopped doing business with 104 factories that didn’t meet its safety and quality standards. 

Entrance to Myanmar

It’s also noteworthy that the group is now doing business in Myanmar. The country has regularly been singled out in the past for its failure to respect human rights. Adidas emphasized that its decision to work with a subcontractor in the country has been accompanied by the establishment of certain safeguards, including working alongside the International Labour Organization. 

As for workers’ relationship with subcontractors, the group highlighted its "SMS Hotline Worker" initiative. The hotline allows workers to express their concerns directly to company management. Last year, 160,000 workers around the world were covered by the hotline, and the company is aiming for 250,000 this year.

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