Corporate responsibility strategy

Supply chain management

Workers in our suppliers' factories play a central role in our programme. It was concern for their welfare and working conditions that led us to write our Workplace Standards and to establish a compliance management system covering all brands of the adidas Group.

Our supply chain is large, multi-tiered and varied. We have a detailed approach to managing relationships with our suppliers and we continue to develop approaches for engaging suppliers who are part of our direct and indirect supply chain.

Four primary areas are a critical part of our supply chain strategy:

  • Our internal direct relationships with suppliers, which are managed by the adidas Group sourcing organisation. It accounts for around 75% of our sourcing business in terms of sourced units
  • Our external indirect sourcing relationships we hold with agents and licensees
  • Management of those adidas Group entities which manage their own sourcing arrangements
  • Our immediate and mid-term efforts to support suppliers impacted by the global financial crisis.

Below we summarise our goals for each of these work areas.

Direct sourcing

For our direct sourcing relationships with suppliers we are looking for them to achieve self-governance, to internalise and manage their social compliance and fulfil the Workplace Standards. We expect them to achieve this through a committed leadership team, who are driving change through qualified, capable managers and effective management systems. We measure this through our Key Performance Indicator (KPI).

In 2008 we have revised our KPI so that it better reflects our suppliers' performance in terms of effective worker-management communication and freedom of association practices. We see this as a further step in driving self-governance in our direct supply chain. Find out more.

Indirect sourcing

For our indirect sourcing relationships we are looking to ensure that we are partnering with agents and licensees and developing supporting resources through external and independent monitors. That way we want to ensure we manage and control the risks inherent in a more disaggregated and smaller scale supply chain, one in which we have less leverage and often less committed business partners.

So in 2008 we conducted specific training to nominated external monitors in how to consistently and correctly apply adidas Group compliance policies and standards in their factory visits. Find out more.

Business entity relationships

For those business entities, which manage their own sourcing arrangements outside the adidas Group sourcing organisation, we will further strengthen communication and understanding of Group-wide systems, policies and procedures. Ultimately, the accountability for the supply chain rests in their hands, but we need to partner with them to drive change, to reduce risk and to safeguard rights.

In 2008, we made further progress in our work with business entities in disclosing their supply chains in the Fair Factories Clearinghouse (FFC) and shared information with other members of the FFC. Find out more.

Impact of the global economic crisis

With the prospect of a global recession, we are focused on transparently managing two issues that may directly impact our supply chain:

  • The sharp downturn in global consumption and the effect this may have on the financial stability of our suppliers and long-term business continuity
  • The future job security of workers who make our products.

For 2009 we have set a target to closely monitor our suppliers' internal cost-control measures and the impacts these may have on workers' wages and jobs. Find out more