Global Operations Information

 Global Operations manages the development, production planning, sourcing, and distribution of our company’s products. The function strives to increase efficiency throughout the company’s supply chain and ensures the highest standards in product quality, availability, and delivery. With the consumer in mind, we deliver competitively priced products that drive our sustainability ambitions and are available when and where the consumer wants them.

Global Operations delivers upon our mission to be the best sports brand in the world. The function aims to create the best products by establishing state-of-the-art infrastructure, processes, and systems that enable us to focus on innovative and sustainable materials and manufacturing capabilities. Moreover, Global Operations is focused on delivering the best services through flexible and agile distribution capabilities, enabling product availability through an omni-channel approach. Thereby, Global Operations contributes to delivering the best experience to our customers and consumers.

Global Operations in Go-To-Market process

Production through independent manufacturing partners

To keep our production costs competitive, we outsource almost 100% of our production to independent manufacturing partners. While we provide our manufacturing partners with detailed specifications for production and delivery, they possess excellent expertise in cost-efficient, high-volume production of footwear, apparel, and accessories and gear. Overall, our independent manufacturing partners produced 1,018 million pieces of apparel, footwear, and accessories and gear in 2022 (2021: 938 million pieces).

In 2022, we worked with 117 independent manufacturing partners (2021: 114) that were producing in 259 manufacturing facilities (2021: 234). The majority (71%) of our independent manufacturing partners are located in Asia (2021: 71%). We value long-term relationships: 72% of our independent manufacturing partners have worked with adidas for at least ten years, and 37% have a tenure of more than 20 years.

All our manufacturing partners are subject to specific performance criteria, which are regularly measured and reviewed by Global Operations. To ensure the high quality that consumers expect from our products, we enforce strict control and inspection procedures of our manufacturing partners and in our own factories. Effectiveness of product-related standards is constantly measured through quality and material claim procedures. In addition, we track the delivery and efficiency performance of our partners. Adherence to social and environmental standards is also promoted throughout our supply chain. The current list of our independent manufacturing partners can be found on our website. see SUSTAINABILITY adidas-group.com/sustainability

Indonesia remains largest footwear sourcing country

Indonesia represented our largest sourcing country in 2022 with 34% of the total volume (2021: 36%), followed by Vietnam with 32% (2021: 30%) and China with 16% (2021: 15%). Overall, 97% of our total 2022 footwear volume was produced in Asia (2021: 96%). In 2022, our footwear manufacturing partners produced approximately 419 million pairs of shoes (2021: 340 million pairs). Our largest footwear factory produced approximately 7% of the footwear sourcing volume (2021: 8%).

Cambodia remains largest source country for apparel

In 2022, we sourced 91% of the total apparel volume from Asia (2021: 91%). Cambodia was the largest sourcing country, representing 22% of the produced volume (2021: 21%), followed by Vietnam with 17% (2021: 15%) and China with 17% (2021: 20%). In total, our manufacturing partners produced approximately 482 million units of apparel in 2022 (2021: 482 million units). The largest apparel factory produced approximately 9% of this apparel volume (2021: 11%). Overall, apparel production remains more fragmented than footwear.

China remains main source country for accessories and gear

In 2022, 72% of our accessories and gear, such as balls and bags, were produced in Asia (2021: 69%). China remained our largest sourcing country, accounting for 28% of the sourced volume (2021: 34%), followed by Turkey with 25% (2021: 29%) and Pakistan with 21% (2021: 15%). The total accessories and gear sourcing volume was approximately 117 million units (2021: 116 million units), with the largest factory accounting for 20% of production (2021: 21%).

Worldwide production volumes by country

Total production volumes by category¹

Agile and efficient distribution center network

By following a clear strategic framework, we enhanced our distribution center landscape in 2022 through process automation, system upgrades, and distribution center capacity expansion. These enhancements helped us to improve e-commerce service levels and provide more delivery choices with an overall broader product availability.

Overall, our global distribution network consists of 66 distribution centers, enabling us to service our global demand efficiently and effectively. We operate distribution centers in all our markets, with 29 distribution centers in EMEA, eleven in Greater China, twelve in Asia-Pacific, seven in North America, and seven in Latin America. In view of an above-average dynamic economic environment, the end of 2022 was characterized by close monitoring of consumer behavior and adjusting the size of the network to changing demand.

adidas vs. partner-owned and -operated distribution centers per region

Of the 66 distribution centers that make our global network, 23 are owned and operated by adidas, while 43 are owned and operated by logistics partners, allowing for the operational flexibility and agility to best service our customers and consumers.

To enable a broader range of products to be available at point of sale, 32 of our distribution centers are set up to serve all our channels. The other 34 have a channel- or service-specific set-up, in line with the needs and developments of the different markets. This includes three facilities where adidas is testing a dedicated returns concept to enhance consumer experience and increase the efficiency of the overall network. This diverse combination of distribution centers allows us to be agile and efficient in distributing our products to our customers and consumers across the globe.

On-time in-full delivery to our consumers

Global Operations strives to develop, produce, source, and distribute ordered articles on time and in full. Therefore, we track two KPIs: ‘On-Time Available’ (‘OTA’) and ‘On-Time In-Full’ (‘OTIF’). OTA measures on-time-available products at the distribution center for both our wholesale customers and our own retail stores. OTIF represents the in-full delivery of our products by the request date to our own retail stores only.

During the first half of the year, we continued to experience external disruptions including covid-19-related factory shutdowns in Asia, container shortages, port congestions, and carrier disruptions which impacted our ability to provide the highest product availability in our distribution centers. From the third quarter onward, the ongoing supply chain disruptions and slowing consumer demand led to an increase in excess inventory that exceeded the storage capacities of our distribution centers. Despite these challenges, mitigating actions such as leveling out production periods, expediting factory to port flows, and selectively prioritizing airfreight resulted in OTA KPI improvement to pre-crisis levels in the fourth quarter. In 2022, 82% of adidas products were available on time (2021: 87%) and in the last quarter, the figure was 87%, which means we achieved our target for the full year. 

Despite the availability challenges, through diligent focus on operational excellence across systems, outbound transportation, and distribution centers, we ensured stable delivery performance throughout the year for our own retail stores against the request dates. In 2022, adidas delivered 83% of its adidas brand products on time and in full (2021: 83%), continuing the journey toward the 2025 OTIF ambition of 90%.