Andreas is responsible for all activities around demand planning, supply chain and IT in South East Asia and Pacific. His main drive is developing a lean and efficient retail focused supply chain environment within his team to create availability on the shelf when the consumer demands it. We spoke to him about the importance of supplying, transforming and sustaining the supply chain in today’s consumer focused world.
Q: New technologies are consistently disrupting the practice of supply chain. How have you embraced these changes?
I see technologies as incredible opportunities. To stay up to date we permanently check with new business partners on new developments. For the implementation, we focus on a step by step approach. To give an example, currently large investors have identified eCommerce logistics as a growth area within South East Asia. As a consequence, new start-ups are emerging which offer integrated eCommerce IT technology combined with last mile delivery service including automatic invoicing. We have selected one of them as a partner in one of our SEA markets. Jointly we work on e2e integration to create full visibility.
“Technology will be the key enabler.”
Q: Ethical procurement is a major social and business concern. How do you approach this issue?
Within adidas Group there has been a high focus on ethical procurement for years. Improving working conditions in our suppliers’ factories and reducing our environmental impact as a business as well as responding to the needs of the communities where we operate lies within the field of action of the Social and Environmental Affairs (SEA) Team.
We have long term partnerships with our suppliers and jointly develop the sourcing strategy to determine the countries in which we will build up our production capacities. Part of our partnership is also to ensure that we meet ethical and social standards, for example, no child labour. As a further example, last year we divested from certain suppliers selected by our local Pacific organisation and moved the production to the global supply base in order to better manage adherence to these social and ethical standards.
Q: In today’s consumer focused industry, how can we tailor the supply chain to meet the customer’s demands?
In the sporting goods industry a lot is driven by marketing, designing the right products which fulfil on one side our high quality standards and on the other side the fashion trends.
The supply chain adds their part to make and deliver products that are available for the customer. Due to the stronger fashion element of sports products it is getting more difficult to predict trends. Therefore one key priority for me is reacting to sell-out. The question which drives me is how we move our supply chain from a sell-in focus to a sell-out focus. It starts with redesigning our supply chain to support shorter lead times. Then after collecting and analysing sell-out data from our customers, we can make decisions to speed up getting products back onto the shelf.
“It starts with redesigning our supply chain…”
Q: After working for the adidas Group for over a decade, what have been the biggest challenges you have faced and your most proud achievements?
My biggest challenge arose 7 years ago. At that time I worked in Europe, building up the Reebok Operations department. We adopted and implemented processes and initiatives from the Adidas organisation. One of the initiatives was to harmonise clothing sizing between the US and Europe. After the harmonization process we discovered that the larger sizes turned out to be 3 to 4 sizes larger than expected. This incorrect sizing translation resulted in 1.2 million pieces of clothing apparel not fitting our customer requirements.
We discovered the issue only a few days before Christmas Eve but we were still able to hire 60 temp staff and build up a tent beside our warehouse within 2 weeks. We were thankfully able to relabel a large portion of the products. But the nights have been short.A further challenge working in adidas is the constant environment of change. When you have a good idea, you just need to find some people supporting you and the company allows you to implement it. As a result, the company redefines itself permanently.
This ongoing change makes adidas a great place to work, as it allows you to implement your ideas. Therefore it is difficult to name the biggest achievement as we are in an ongoing implementation and achievement mode.
One achievement is that as I started in adidas, three young guys from different functions had the idea to implement eCommerce within the company as we believed this would be the future. It took us almost 2 years before we got the go-ahead for it, but in the end we got it and implemented it.
“Part of our partnership is also to ensure that we meet ethical & social standards.”
Q: Adidas has been recognised for having one of the “greenest” supply chains in China. In your role overseeing the South East Asia and Pacific region, how have you pursued sustainability?
The index which scores the “greenest supply chain” in China is mainly focusing on production. The production / sourcing organisation within adidas is responsible for this as well as maintaining and improving these standards for all our other sourcing locations, for example, Vietnam and Indonesia.
Within the supply chain function we focus a lot on costs, which – at the same time – support environmental sustainability. In our Distribution centres we have moved towards using energy saving lighting or increasing the use of natural lighting in our roofing structures.On the distribution side by maximising fill rates in our cartons we reduce transportation of “air” and also maximise truck loads by defining fixed delivery plans. To give an example, in Malaysia we now deliver to our key city retail shops in Kuala Lumpur every second day whilst to Borneo as an island we deliver lower volumes every second week.
Q: Looking to the future, where do you think supply chain practices are heading?
Years ago we talked a lot about CPFR models within the supply chain (collaborative planning, forecasting and replenishment) – so reading consumer trends and reacting to them. Today you do not read about CPRF anymore but you can see that it happens. Technology will be the key enabler. On one side technology will create the visibility of sell-out and inventory in different locations which creates the transparency we always wished to have across the supply chain. We have already began to connect customer and supplier data.
It still needs to be brought to the next level. Getting the transparency is one part, and now we need to learn to react accordingly. It is important that we are able to react fast to consumer trends with re-production.
I see the trend from warehouses as large consolidation hubs moving towards smaller warehouses closer to stores and delivery points. Furthermore, production facilities will move closer to demand in order to be able to react and deliver quickly.