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 on 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

Establishing next-level supply chain responsiveness  

To increase speed to market in Greater China and respond to the changing consumer landscape there, Global Operations has set up an operating model in 2023 that enables end-to-end lead time reduction for articles requiring higher in-season responsiveness. We improved market order efficiency, increased China-for-China production, and shortened manufacturing and supply lead times for the Fall/Winter season 2023. We continue our efforts to drive responsiveness in our supply chain as we plan to draw on lessons learned and roll out the concept to additional markets from 2024 onward.

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 756 million pieces of apparel, footwear, and accessories and gear in 2023 (2022: 1,018 million pieces). The decrease in production volume was driven by reduced market demand for new buys to manage down inventory levels.

In 2023, we worked with 104 independent manufacturing partners (2022: 117) that were producing in 237 manufacturing facilities (2022: 259). The majority (78%) of our independent manufacturing partners are located in Asia (2022: 71%). We value long-term relationships: 74% of our independent manufacturing partners have worked with adidas for at least ten years, and 38% 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

Vietnam main sourcing country for footwear

Vietnam returned as the largest sourcing country in 2023 with 38% of the total volume (2022: 32%), followed by Indonesia with 32% (2022: 34%) and China with 14% (2022: 16%). Overall, 97% of our total 2023 footwear volume was produced in Asia (2022: 97%). In 2023, our footwear manufacturing partners produced approximately 311 million pairs of shoes (2022: 419 million pairs). Our largest footwear factory produced approximately 8% of the footwear sourcing volume (2022: 7%).

Cambodia main sourcing country for apparel

In 2023, we sourced 91% of the total apparel volume from Asia (2022: 91%). Cambodia was the largest sourcing country, representing 23% of the produced volume (2022: 22%), followed by Vietnam with 20% (2022: 17%) and China with 15% (2022: 17%). In total, our manufacturing partners produced approximately 328 million units of apparel in 2023 (2022: 482 million units). The largest apparel factory produced approximately 10% of this apparel volume (2022: 9%). Overall, apparel production remains more fragmented than footwear.

Turkey main sourcing country for accessories and gear

In 2023, 71% of our accessories and gear, such as balls and bags, were produced in Asia (2022: 72%). Turkey became the largest sourcing country in 2023, with 26% of the sourced volume (2022: 25%), followed by China with 22% (2022: 28%) and Pakistan with 22% (2022: 21%). The total accessories and gear sourcing volume was approximately 116 million units (2022: 117 million units), with the largest factory accounting for 26% of production (2022: 20%).

Agile and efficient distribution center network

By following a clear strategic framework, we enhanced our distribution center landscape in 2023 through process automation, system upgrades, and distribution center capacity-related initiatives. 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 65 distribution centers, enabling us to service our global demand efficiently and effectively. We operate distribution centers in all our markets, with 13 distribution centers in Europe, three in CIS, twelve in Emerging Markets, twelve in Asia-Pacific, eleven in Greater China, seven in North America, and seven in Latin America. Given the above-average dynamic economic environment, we continued across 2023 to further align the size of our network to the changing demands of the relevant markets.

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

Of the 65 distribution centers that make up our global network, 23 are owned and operated by adidas, while 42 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 the point of sale, 34 of our distribution centers are set up to serve all our channels. The other 31 have a channel- or service-specific set-up, in line with the needs and developments of the different markets. This includes a facility where adidas has established a proven dedicated returns concept for all channels to enhance the 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 around the world.

Performance KPIs to track product availability and on-time in-full delivery

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 requested date to our own retail stores and e-commerce consumers. Continuing the journey toward the 2025 OTIF ambition of 90%, in 2023 we have included e-commerce together with own retail as an aligned global metric (previous years: OTIF = own retail only).

In 2023, we reached an OTA level of 92% (2022: 82%), driven by all markets already performing above target level in the first quarter of the year, with the exception of market Europe, which, however, recovered during the second quarter.

OTIF performance was 89% (2022: 83%, own retail only), reflecting our diligent focus on operational excellence across systems, distribution centers, and outbound transportation to ensure stable delivery performance against the confirmed delivery dates for both our own retail stores and our e-commerce consumers.