The company
The adidas Group is comprised of the adidas, Reebok and TaylorMade brands which together produce a range of sports products, including footwear, apparel, accessories and sports gear for customers in virtually every country around the world.
The adidas Group employs over 42,500 people through its headquarters in Herzogenaurach, Germany and key corporate units, creation centres, development departments and production and assembly sites in countries around the world. Additionally, to minimise production costs, the adidas Group outsources over 95% of its production to more than 1,200 independent suppliers in over 65 countries, mostly located within the Asia Pacific region of the world.
The drivers
Like sport and its athletes, the adidas Group is driven by performance, passion, integrity and diversity in all of its operations. They believe that understanding and engaging with all of the adidas Group’s stakeholders (i.e. employees, authorisers, business partners, workers, opinion-formers and customers) is fundamental to achieving these values throughout its business development.
With the adidas Group’s strong focus on international and out-sourced production, stakeholders have been increasingly concerned with the ethical management of the supply chain, particularly welfare and working conditions for workers in supplier, licensee and operational departments.
Taking action
As part of the adidas Group’s continued efforts to achieve more effective and sustainable practice within its supply chain, the Group has initiated a complex system of multi-level and cross-functional training sessions with its network of suppliers around the world.
In 2010, the adidas Group trained 2,210 staff and personnel through 386 training sessions. These programmes are defined across five platforms:
(1) Fair Factories Clearinghouse:
Fair Factories Clearinghouse (FCC) is an external, non-profit programme which utilises technology to encourage members to share information and collaborate to increase productivity and allow for the facilitation of safe, humane working conditions.
The adidas Group’s Social and Environmental Affairs (SEA) Team trains select factories within its supply chain in the FCC system to encourage detailed and transparent reporting.
The adidas Group has participated in the FCC platform since 2006 and has used the platform to share supplier audit and monitoring information since 2008.
(2) Human Resources Management Systems:
The adidas Group’s Human Resource Management Systems (HRMS) training programme was begun in 2006 and focuses on training human resource managers in factories in the Asia Pacific region – specifically China and Vietnam, in job descriptions, recruitment policies, compensation and benefit systems, training and job development systems and target setting and performance evaluations. As a result of the HRMS training programme, the adidas Group has reported an improved HR manager network, an increase in operational efficiency and improvements in regards to the adidas Group’s key performance indicators.
(3) Better Work Programme:
Initiated with the adidas Group in 2007 by a federal mandate to improve working conditions in Cambodia’s garment sector, the Better Work (BW) Programme is a partnership between the International Labour Organization and the International Finance Corporation.
The adidas Group is monitored externally by BW which also maintains its own training programmes involving, among others, labour standards, worker rights, human resource management, supervisory skills, and occupational health and safety.
The adidas Group now participates in BW in both Cambodia and Vietnam. The adidas Group is also currently considering expanding its operations to include BW programmes in its factories in Haiti, Nicaragua and Jordan.
(4) Environment, Health & Safety Academy:
Developed in collaboration with corporate and governmental bodies, the adidas Group uses the Environmental, Health, & Safety (EHS) Academy to improve an existing health and safety training programme in the adidas Group and lower the high turnover rate for previous newly trained H&S officers due to their high skills set.
With a 2009 partnership with a Chinese university and official endorsement from the Guangdong Bureau of Labour and Social Security, the adidas Group is now in the process of developing a government-sanctioned EHS certificate as part of its training programme. In 2010, the adidas Group opened a second EHS Academy in China and is considering establishing a similar programme in other sourcing countries in Southeast Asia.
(5) Occupational Health and Safety Officer Programme:
Although operational at the adidas Group since 2006, the Occupational Health and Safety Officer (OHSO) Programme was redesigned in 2010 as a three-year programme designed for site Health and Safety Officers across a range of management levels in accordance with pre-existing skills and local requirements.
In 2010, 250 trainees from 174 suppliers participated in the OSHO programme in the Asia Pacific region.
Challenges
As a global company, the adidas Group benefits from worldwide focus and attention. Although this is a positive aspect reflecting the international presence they have, it also poses significant challenges in terms of focus on its supply chain and stakeholder. The adidas Group responds to this by endeavouring to be open, transparent and accountable; by being environmentally responsible and reducing its carbon footprint; by being a good corporate citizen through support of its local communities; and by being competitive but, as the adidas Group states, “not at any price”.
The adidas Group outsources the majority of its production to supplier factories around the world, a business strategy which produces significant challenges within its supply chain. To address this, each supplier is given a yearly score reflecting effective sustainability performance and uses the adidas Group’s range of ongoing supplier training programmes in order to continuously improve its supply chain and minimise risks.
Business benefits
The adidas Group believes that utilising suppliers who are genuinely committed to safe, fair and environmentally sustainable policies benefits stakeholders and employees alike; and by taking direct responsibility for its supply chain, the adidas Group is committing itself to good governance and is strengthening its own and its business partners’ position within the global market.
This commitment was recognised by the international community as well when, in 2011, the American organisation Ethisphere named the adidas Group as one of the “World’s Most Ethical Companies” because of its commitment to going beyond corporate responsibility words and turning them into positive action.
Why is it CSR?
“The task before us is a marathon, not a sprint,” is the view of the adidas Group. By understanding stakeholder concerns and utilising knowledge of past difficulties, the adidas Group has been able to focus on its supply chain proactively and make significant changes which benefit the well-being of current suppliers’ employees as well as their financial bottom line. Importantly, the adidas Group is taking a long-term view of its supply chain activities – and these benefits are far-reaching: the programmes initiated are not only beneficial now, but they also allow for increasing employee and customer retention as well as a significant increase in highly-skilled workers, thereby providing the adidas Group with increased productivity as well as high quality products. It is a system which ultimately benefits suppliers, customers, and other key stakeholders.
For more information on adidas Group's supply chain training programmes, please contact Frank Henke.
© Article 13 – CSR Case Study Series, July 2011
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