Our supply chain

We work with more than 1,070 independent factories from around the world who manufacture our products in 67 countries. Many of these are in one of the following six countries: China, India, Indonesia, Thailand, Turkey or Vietnam.

Our supply chain is global and multi-layered, with many different types of business partner, some of whom are directly contracted and others who are not. Our influence in terms of social and environmental compliance is linked to the strength of our partnerships, and is often proportional to the scale and stability of the orders placed with our suppliers. For this reason we plan a further consolidation of the Group’s supply chain: contracting fewer, larger factories, with higher order volumes.

The adidas Group’s Global Operations function manages product development, commercialisation and distribution and also supervises the major part of manufacturing for the adidas, Reebok and TaylorMade-adidas Golf segments. In addition, Global Operations leads our Group’s efforts in supply chain optimisation.

Due to different sourcing requirements in their respective fields of business, Rockport, Reebok-CCM Hockey, Sports Licensed Division, TaylorMade and specific business segments are not serviced through Global Operations but instead use their own purchasing organisations that are used to sourcing products through intermediaries such as agents.

In order to quickly seize short-term opportunities in their local market or react to certain trade regulations, Group subsidiaries may also source from local suppliers that are not overseen by Global Operations. Local purchases, however, account only for a minor portion of the Group’s total sourcing volume.

Types of supplier

Our suppliers fall into five broad categories:

  • Main suppliers
  • Subcontractors
  • Material and other service providers
  • Licensees
  • Agents.

Main suppliers

These are suppliers that have a direct contractual relationship with the adidas Group for the supply of products, whether for export or domestic market consumption. We call these Tier 1 suppliers. The largest of these have multiple factories and manufacturing sites across several countries.

Subcontractors

These are factories that have been subcontracted by our suppliers. They have no direct contractual relationship with the adidas Group; however, we do require them to be compliant with our Workplace Standards before authorising them as subcontractors.

Material and other service providers

These suppliers may not have a direct business relationship with the adidas Group, but supply goods and services to our main suppliers. Within this category, there are nominated material suppliers with whom we work.

Licensees

Independent companies which manage the design, production and distribution of specific products, under licence to the adidas Group. In 2007, the adidas Group worked with 44 licensees whose suppliers manufactured products in 248 factories in 38 countries.

Agents

Independent companies that act as intermediaries and determine where products are manufactured, manage the manufacturing processes, and sell finished products to the Group. Reebok has historically placed a significant number of apparel orders through agents and licensees. In 2007, Global Operations phased out Reebok’s former sourcing agents. This means that Reebok-branded apparel is now primarily sourced through our own supply base, utilising the established network of the adidas brand. Other Reebok apparel business units continue managing supplier relationships through agents or licensees.

Supplier relationships overview [Click image to enlarge - opens new window]

Supplier relationships overview

Major trends in our supply chain

We see several major trends in our supply chain that have a direct bearing on the scale and focus of our social and environmental programme:

  • Growing business with our strategic suppliers producing for the international export market. These suppliers have invested in additional production capacity and established factory facilities in various countries.
  • Associated reduction in the number of agents managed by Global Operations.
  • Growth in licensee business as the adidas Group develops new business segments.

In 2007, the top five countries per region by number of supplier sites were:

  • The Americas: United States, Canada, Brazil, Mexico and Argentina
  • Asia: China, Vietnam, Japan, Korea and India
  • EMEA: Turkey, Italy, Spain, South Africa and Russia.
  • Our influence in terms of social and environmental compliance is linked to the strength of our partnerships, and is often proportional to the scale and stability of the orders placed with our suppliers.