adidas Case Study
Total Logistics Helps Sportswear Giant Find The Winning Formula
European supply chain specialist, Total Logistics, provided a supply chain rationalisation solution to adidas, leading worldwide supplier of sportswear and equipment. The successful project consolidated four distribution centres into a single, new 30,000 m2 facility at Trafford Park in Manchester, providing cost savings as well as capacity to deal with future volumes and expansion.
When adidas, one of the global leaders in the sporting goods industry, took over sporting brands Reebok and Rockport, the company wanted to take advantage of the synergies and efficiencies that could be achieved by consolidating inventory from five key brands – addidas, Reebok, TaylorMade, Rockport and Ashworth.
At this time, adidas’s Northern European operations, serving leading retailers in the UK, Ireland and Benelux, was split between four conventional warehouses, each using different systems and processes, with the overspill being handled by third parties.
An analysis of the merged company’s distribution network highlighted that an initial investment in supply chain rationalisation would achieve economies of scale, providing benefits which could shape the adidas distribution strategy for Europe and wider markets.
Total Logistics, appointed as lead consultants on the project, recommended and oversaw the rationalisation of four distribution centres into a single £20 million automated site in Trafford Park, Manchester.
Following Total Logistics’ recommendation, they developed a concept for a 30,000 m2 fully automated facility. This was implemented in just 18 months, including the implementation of a new warehouse management system. The procedures took into account the current requirements of all five brands, the new facility layout and requirements this brought, as well as the overarching adidas warehouse management system requirements.
The Trafford Park facility has become the best practice benchmark and set a framework for future adidas implementations throughout the globe. Some of the technologies used were new to adidas, and are now being adopted in other facilities within the adidas group.
Andy Keith, managing director at Total Logistics said: “Consolidation within any mature market such as sports retailing, often results in legacy systems being plugged together in the hope that bigger will mean better. As was proven with the adidas project, an understanding of the supply chain processes at a detailed level, can identify potential efficiencies on a scale that can provide significant results.”
“The key to the success of the adidas project was designing a system to support the organisation’s need for flexibility. Through automation, the new facility is able to handle orders for a range of customer formats, such as small orders for small stores, through to major launches of new football club kits. The initial aim for the new site to increase productivity by 66 percent was actually exceeded by almost 100 percent.”
The automated system handles over 65,000 SKUs and has allowed the area allocated to manual picking to be cut by two thirds. The automated system delivers further efficiency benefits over a manual operation as the seasonal nature of the business means the resource schedule continually changes. More than 40,000 loose items can now be picked per day. And, as a result of the space savings, contracted-out value added services have been accommodated in house.
Total Logistics successfully managed the entire construction, equipment installation, commissioning and go-live for the automated distribution centre. The project increased productivity and lowered the cost base for distribution in the UK, exceeding the benefits stated in the business case.
Tim Adams, global warehousing project director, adidas, is delighted with the success of the project; “Due to sheer volume, size and complexity, the project was seen as a tremendous challenge from the outset. Our expectations of the project’s value were exceeded and the independent contribution made by Total Logistics was invaluable.”
“Automation has allowed us to handle a lot of volume in a relatively small amount of space, which keeps our overhead costs down. It has allowed us to be far more flexible, enabling a range of possibilities from the picking of cartons to an individual pair of shoes and allows us to achieve greater order accuracy.”
“The system allows us to balance work over several peaks and troughs between brands and enables us to be more responsive to our customers – we’ve been able to turn around big orders in a very short period of time, and customers have fewer deliveries through consolidation.”
Following the acquisition of Reebok and Rockport, adidas wished to consolidate its UK distribution operations onto a single site. This required a cost-effective operational design.