Professionals in supply chain jobs at Adidas have some significant changes to make in their operations following their newly-released annual report. It warned of diminished sales growth for the first half of 2019 due to ‘supply chain shortages.’
The report is sparse on details about how the shortages arose, but it is public knowledge that the sportswear giant had experienced an unexpected spike in demand for its mid-range apparel in the North American market. Industry experts with insights into this problem believe that the company’s woes may offer salutary lessons for senior practitioners in managerial supply chain jobs so that their own firms can avoid a similar fate.
Supply chain management expert, Simon Croom of the University of San Diego, said: “Essentially it’s a classic case of having a low responsive supply chain (in outsourced manufactured products) when demand changes are substantial. In essence, it is a form of bullwhip effect that is more connected to inappropriate supply chain design than either procurement or planning.” Adidas’ CEO conceded that the firm hadn’t responded fast enough to the demand signal, a revelation indicating that the demand forecast itself wasn’t the problem – it was the execution that ‘went south.’
According to Nick Finill, senior analyst of intelligent supply chain at the research firm ABI said the ability to rapidly execute a demand plan was crucial but that it required considerable flexibility from one end of the supply chain to the other. For Finill, the solution resides in how data is stored. It must be shared collaboratively across departments, not sealed in silos within the supply chain. He added: “The supply chain should be viewed as a web, rather than a linear chain.” Finill went on to say that a further step would be to harness the power of predictive analytics, which can be rapidly fed through to suppliers. Supply chain pros, including supply chain interims, have some valuable food for thought from Adidas’ troubles.