Sourcing and manufacturing
Co-location within the supply chain
Transporting materials and goods between different manufacturing facilities - such as Tier 1 production factories and Tier 2 material suppliers - is a significant environmental impact in our manufacturing process. Any reduction in transport will have several benefits for both the environment and our business: not only will it reduce our carbon emissions, but it will also reduce the complexity of our manufacturing, which should lead to savings in both waste and time.
So during 2010 we looked closely at the locations of the manufacturing entities selected to produce the adidas Better Place products and have developed a programme to increase co-location.
The goal is to keep the Better Place supplier base as consolidated and aligned as possible, to facilitate fibre tracking, and to reduce the environmental footprint.
The spring/summer 2011 season saw the introduction of the new Better Place process, making the Tier 1/Tier 2 (T1T2) alignment a priority throughout product creation, fabric selection and allocation.
To facilitate the process, a T1T2 tool has been developed for use during fabric selection. For each business unit the tool identifies the best combination of T1 and T2 supplier - priority 1 is given to vertical suppliers, priority 2 is given when T1 and T2 share the same country of origin, and priority 3 when T1 and T2 have different countries of origin.
For the fall/winter 2011 season, the T1T2 alignment for organic cotton achieved 79% (the total of vertical suppliers and T1s with the same country of origin). For recycled polyester, the achieved alignment is only 3%. Currently, we rely on Taiwanese recycled material mills - in the future we will focus on sourcing materials locally and reduce the Taiwan share, with a target of 20% for locally sourced materials for fall/winter 2012.
Cost savings and environmental benefits
We are in the process of translating what we have achieved to date in the T1T2 alignment into cost savings that come from eliminating CIF costs (Custom/Insurance /Freight). We are also calculating the reduction of our environmental footprint, as a result of the carbon emissions savings.