Our supply chain
The adidas Group has outsourced most of its production. We work with more than 1,200 independent factories from around the world that manufacture our products in 69 countries. Many of these are in one of the following five countries: China, India, Indonesia, Thailand and Vietnam.
Our supply chain is global and multi-layered, with many different types of business partners, some of whom are directly contracted and others who are not.
In 2010, the top five countries per region by number of supplier sites were:
- The Americas: United States, Brazil, Canada, Mexico and Argentina
- Asia: China, India, Indonesia, Vietnam and Japan
- EMEA: Germany, United Kingdom, Italy, Spain and South Africa/Turkey
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.
Supplier factories by region 2010
Different sourcing relationships
Direct sourcing model
The adidas Group holds direct contractual relationships with its core suppliers who are centrally supervised by Global Operations. Global Operations manages product development, commercialisation and distribution and also supervises the manufacture of apparel, footwear and accessories for the adidas, Reebok and TaylorMade-adidas Golf segments. In addition, Global Operations leads our Group's efforts in supply chain optimisation.
These suppliers produce the predominant share - approximately 75% of the total sourcing volume of the Group - and can be characterised as our 'direct supply chain'. There are other parts of our business that have direct sourcing arrangements which lie outside of the central control of Global Operations. These include Rockport footwear, CCM Hockey sticks and TaylorMade clubs.
Indirect sourcing model
The other part of our product volume is sourced by agents or is made under licence. Agents place orders with their preferred suppliers. Licensees may either place orders directly with their suppliers or use agents as intermediaries.
Our indirect supply chain complements our direct sourcing by meeting specific requirements that cannot be serviced through Global Operations.
Local market production
In order to quickly seize short-term opportunities in their local markets, to satisfy a niche market requirement, or in some cases to react to certain trade regulations, adidas Group subsidiaries may also source from local suppliers that are not overseen by Global Operations but do require its authorisation. Local purchases, however, account only for a minor portion of the Group's total sourcing volume.
The multiple sourcing relationships are recorded and tracked through the Fair Factories Clearinghouse (FFC), the adidas Group's primary factory compliance tracking system.
Read more about how we work with the FFC.
The adidas Group is one of the very few companies in the industry that has fully disclosed its global supplier list on its corporate website. The list is updated twice a year can be found here.
Types of suppliers
Our suppliers fall into five broad categories:
- Main suppliers
- Material and other service providers
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.
These are factories that have been subcontracted by our suppliers. Although they have no direct contractual relationship with the adidas Group, 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 to develop specific fabrics and components.
Independent companies which manage the design, production and distribution of specific products, under licence to the adidas Group. In 2010, the adidas Group worked with 45 licensees whose suppliers sourced products from 307 factories in 45 countries.
Independent companies that act as intermediaries. They determine where products are manufactured, manage the manufacturing processes, and sell finished products to the Group.
Supplier Relationships overview
Major trends in our supply chain in 2010
In response to the 2009 global economic crisis suppliers significantly reduced their production capacities, only to face pressure when 2010 saw an upswing in demand for athletic footwear and sports apparel. This caused considerable production peaks at many of our suppliers' factories, with associated working hours' issues. The additional hours however also increased workers' pay through overtime premiums.
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 operate factory facilities in multiple countries.
- Growth in licensee and agents business as the adidas Group develops new business segments and product lines.
- Growth of athletic footwear production outside of China, as a result of trade restrictions. New factory capacity has been developed in Indonesia and Cambodia, which are highly unionised countries.
- Relocation of suppliers from southern China and coastal areas to inland provinces continues as business partners look for lower fixed operating costs and access to new sources of labour.
- With stakeholders increasingly concerned about primary material sources, including cotton production, there is a growing demand for more transparency along the supply chain and improvements in tracking materials.