Supply Chain Management

Report on Supply Chain Networks of one Export

and one retail Business Fashion Firm.

Bachelor of Fashion Technology

Batch 2018-22

Submitted To
Prof. Nupur Chopra

Submitted By

Nandu Das K (BFT/18/491)

Sachin Kumar (BFT/18/593)
Fashion Retailer 2

ADIDAS 2
About Adidas 2
Brand Personality and Strategic focus 3
Sourcing Relationships 4
TYPES OF SUPPLIERS 5
RISK MAPPING 7
ONBOARDING NEW SUPPLIERS 9
MONITORING SUPPLIER PERFORMANCE (AUDITS) 9
STRATEGIC SUPPLIERS (C-KPI) 9
STRATEGIC SUPPLIERS (E-KPI) 10
LICENSEES (REPORT CARDS) 11

Export Firm 12

LI & FUNG Limited 12

About Li & Fung Limited 12
Supply Chain System 12
Supply Chain of the Future 13
Working with brands and retailers 13
Working with suppliers 14
Structure and Governance 15
Rapid Response System 16
 Fashion Retailer

ADIDAS

About Adidas
● Adidas was started by Adolf Dassler in his mother's house.
● Adidas AG is a German multinational organisation, established and headquartered in
Herzogenaurach, Germany, that plans and fabricates shoes, clothing and accessories.
● It is the biggest sportswear manufacturer in Europe, and the biggest within the world,
after Nike.
● The three stripes are Adidas' personality stamp, having been utilized on the company's
clothing and shoe designs as a promoting aid. The branding, which Adidas bought in
1952 from Finnish sports company Karhu Sports for the equivalent of 1,600 euros and
two bottles of whiskey, got so fruitful that Dassler depicted Adidas as "The three
stripes company".

Adi Dassler , founder of Adidas .

Brand Personality and Strategic focus

● It has made speed a vital need and its worldwide Capacities Operation may be a key
facilitator making a difference in bringing new thoughts to the market faster.
● It possesses a distinctive personality that is “positive, brave, undefeated and
confident” and through which it has owned a huge brand equity.
● Strategic focus
● Getting to be the primary fast sports company which suggests speeding things up
manifold.
● Creating a consistent customer experience since the buyer is in the middle of
everything.
● Transforming the way Adidas creates and manufactures.
● Sustainability Supply Chain Approach.
● Other than their claim laborers, laborers in their suppliers fabricating plants play a
central part in their maintainability program.
● The supply chain code of conduct, which also covers workers’ health and safety and
provisions to ensure environmentally sound factory operations.
● To enforce compliance with adidas Standards they have a multi-level monitoring and
enforcement process in place, including the use of an innovative rating system for the
assessment of their suppliers.
● The rating results are shared with their Sourcing teams and incorporated into the
overall supplier rating that influences their decision whether and to which extent they
continue the business relationship with a specific supplier.
● This transparency and integration with sourcing decisions is fundamental to the
success of their efforts to drive improvements in workplace conditions.
● Adidas has outsourced most of its production. Overall, They work with around 500
independent factories from around the world that manufacture their products in more
than 49 countries (Status: 2020). (Adidas, n.d.)
● Their supply chain is global and multi-layered, with many different types of business
partners, some of whom are directly contracted factories, while others are not.
(Adidas, n.d.)
● In 2020, the top four countries by sourcing volumes were: Vietnam, Indonesia, China
and Cambodia.
Sourcing Relationships
Their impact in terms of social and environmental compliance is connected to the quality of
their associations, and is frequently proportional to the scale and stability of the orders set
with their suppliers.

● Direct sourcing model: Adidas holds direct legally connection with their suppliers
,which is centrally directed .Worldwide Operations oversees the improvement,
generation, arranging, sourcing and distribution of the endless majority of their
products.Those suppliers deliver the overwhelming share of the whole sourcing
volume of the company.
● Indirect sourcing model: The remaining minor portion of their product volume is
sourced by agents or is made under permit. Agents put orders with their preferred
suppliers. Licensees may either put orders specifically with their suppliers or utilize
agents as mediators. Their indirect supply chain complements their direct sourcing by
assembly particular necessities that cannot be serviced through Worldwide
Operations.
● Local market production: In arrange to rapidly seize short-term openings in their
local markets, to fulfill a specialty market requirement, or in a few cases to respond to
certain exchange directions, adidas backups may too source from neighborhood
suppliers in a particular nation that are not supervised by Worldwide Operations; these
providers do require authorization from the Social and Environmental Undertakings
group for production.
TYPES OF SUPPLIERS

Suppliers fall into five broad categories:

● Primary suppliers:- They have a direct legally binding relationship with Adidas for
the supply of items, whether for send out or domestic market utilization.
● Subcontractors:- These are manufacturing plants that have been subcontracted by
their suppliers to perform manufacturing operations the most suppliers are not able to
do in their own facility.
● Fabric and other benefit suppliers:- These suppliers may not have a coordinated
commerce relationship with Adidas, but supply products and administrations to their
primary suppliers.
● Licensees:- Autonomous companies which oversee the plan, generation and
dissemination of particular items, beneath permit to adidas.
● Agents:- Autonomous companies that act as middle people to source item
manufacturing, oversee the fabricating forms, and offer finished items to the
company.
● Strategic suppliers:- Those are suppliers who have been chosen for particular social
and environmental activities that go past common compliance monitoring. Vital
suppliers are distinguished by adidas’ Sourcing groups, based on a number of
particular criteria. They are suppliers who are viewed as long-term partners who
provide world class facilities, have meaningful business share with adidas as Tier 1
manufacturers or, if Tier 2 suppliers, are a key source of materials for their T1
manufacturers, strong management in development and manufacturing, economies of
scale, and advanced supply chain capabilities. (Adidas, n.d.)
RISK MAPPING
Mapping their supply chain risk is a very effective tool to ensure that all of their suppliers
produce in a socially and environmentally responsible way while using their resources wisely.
It combines regular processes to systematically monitor and support improvements with
ad-hoc tools enabling them to react quickly to critical situations as they may arise and limit
any negative effects this may have on workers or the environment. Basic sources of data for
risk-mapping work out incorporate the survey of information bases as given by governments
as well as regular engagement with civil society organizations, unions, employer leagues and
with workers directly.

Countries where they source product from and suppliers who they work with are regularly
mapped and monitored for human, labor rights and environmental risks. Nation and
manufacturing plant profiles decide the subject of issues to be prioritized as well as the
frequency of checking and remediation exercises. Custom-made risk-mapping approaches
and instruments that are connected are as follows:

● Nation Level Hazard Assessment: Country profiles are created based on in-depth
due constancy forms. Countries are categorized as high or low risk. Suppliers found in
high-risk nations got to be inspected at least once each two years.
● Business Entity Level Risk Evaluations: A Business Entity’s genuine performance
as laid out in its Key Compliance Arrange and Report Cards appears as its individual
execution and compliance risk. This impacts the frequency of performance audits and
impacts the longer-term business development.
● Manufacturing plant Level Risk Assessments: Standard reviews, KPI assessments,
plant risk-rating investigation. This data decides the recurrence of re-audits and
engagement with the production line.
● Emergency Protocol: Utilized by Trade Substances and manufacturing plants to
report on the details on high-risk issues. Based on the data they get, they may choose
to conduct location visits, reviews or other engagement with a Business Entity or
plant on a case-by-case basis.
● Month to month Announcing: To official administration inside adidas. Depending
on the issue, this may moreover lead to extra activity on a case-by-case basis.

ONBOARDING NEW SUPPLIERS

In close cooperation with their business function Global Operations and other Stheircing
entities, all potential new suppliers are assessed by the adidas Social and Environmental
Affairs (SEA) team, with the goal to make sure that new suppliers meet their standards. their
Sourcing teams can only place orders with a new supplier if the SEA team has given
approval. If factories do not meet their Standards, they reject them, but if the issues are ones
that can be fixed they give them a rigorous timeline to correct the issues. If they have
improved, they are approved as a supplier producing for adidas. By setting a high entry bar
for potential and new suppliers, they avoid getting into business relationships with suppliers
that have serious workplace issues and insufficient means of improving unacceptable
conditions.

Overall, at the end of 2018, the ‘first-time rejection rate’ of 30% of all new factories visited
was similar to the previous year (2017: 29%) and the ‘final rejection rate’ was at 3% (2017:
2%). (Adidas, n.d.)

MONITORING SUPPLIER PERFORMANCE (AUDITS)

Internal as well as external audits are conducted at suppliers’ factories to ensure they are
complying with their standards for social and environmental compliance.

STRATEGIC SUPPLIERS (C-KPI)

● The technique connected to providers they have a direct relationship with is based on
a long-term vision of self-governance where they take possession of their compliance
program.
● To assist these suppliers, they conduct plant reviews, surveying dangers and
recognizing root causes of non-compliance. With the Compliance Key Performance
Indicator (C-KPI) rating instrument they assess six crucial components of social
compliance counting administration commitment, the quality of administration
frameworks in place, worker-management communication, training delivered,
transparent announcing and measurement of compliance activities. Concurring to the
above, providers are evaluated with a C-rating score between 1 and 5 (with 5 being
the finest rating).
● Their target for 2020 is to have at least 80% of vital suppliers appraised at 4C or way
better. By the conclusion of 2018, 62% of vital Level 1 providers come to 4C rating or
way better (2016: 51%), which reflects working administration systems and viable
worker’ communication and grievance channels. Vital providers account for around
75% of all generation volume. (Adidas, n.d.)
STRATEGIC SUPPLIERS (E-KPI)

● Within the area of environmental compliance, a tool called ‘E-KPI’ measures

suppliers’ environmental compliance in general and surveys their execution and
advance toward the 2020 targets.
● Using a benchmarking approach, the E-KPI permits for a high level of transparency
into suppliers’ real utilization concentration, thus supporting them in characterizing
suppliers’ indicated regions for advancement and preparing needs that match their
respective situation.
● Adidas will proceed to support suppliers to distinguish asset efficiency measures and
rollout in our supply chain.
● They have set ambitious decrease concentrated targets for their strategic suppliers at
Level 1 and Level 2 level, pointing to methodically improving their environmental
execution. By 2020, Adidas anticipate them to decrease their by and large vitality
utilization, water utilize and waste volume by 20% compared to their execution in
2014.
● They too set a 35% target for diminishment in water utilisation for their key apparel
fabric suppliers 2 at Level 2 level. 2018 comes about and the promising efforts they
are putting into driving resource productivity.
● Suppliers are on track to meet their 2020 decrease targets over all categories
(footwear, apparel, and accessories and gear), with overachievers compensating low
performers within the totaled decrease results.(Adidas, n.d.)

LICENSEES (REPORT CARDS)

● A few adidas trade entities source items through middle people such as agents, and
they also create new market openings with licensees who freely manage production.
● They call this preparation indirect sourcing of items. adidas licensees are obliged to
receive their 'in-house' observing approach to ensure compliance within the indirect
supply chains as well as commission reviews by adidas endorsed outside screens who
confirm the results of the compliance plans and exercises.
● A licensee’s yearly compliance performance is at that point measured by employing a
comprehensive Report Card. Their target for 2020 is to have at slightest 80% of
 strategic licensees in a mode that allows them to screen their claim supply chain
adjusted with SEA guidelines, and back their providers to persistently make strides
working environment conditions (“self-governance”). By the conclusion of 2018,
80% effectively inserted administration frameworks, supply chain administration,
obtaining refine and item security compliance necessities into their business practices.
● 20% accomplished a ‘Sustainability Leadership’ level, signaling that in expansion to
accomplishing high scores in other areas, they moreover scored over 80% within the
supportability section of the Report Card, which measures the existence of approaches
and usage, partner engagement, open detailing and communication.(Adidas, n.d.)
 Export Firm

LI & FUNG Limited

About Li & Fung Limited

● Li & Fung was established against a background of great change in China. Fung
Pak-liu, an English educator, and Li To-ming, a dealer, built up Li & Fung in 1906 as
one of the primary companies financed exclusively by Chinese capital to send out to
the Li & Fung Limited.
● This two-person startup at first centered on exchanging porcelain and silk from China
some time recently differentiating into bamboo and rattan products, jade and other
painstaking work. With the war in China, Fung Hon-chu, grandfather of the current
CEO, moved from Guangzhou to Hong Kong to set up Li & Fung’s to begin with the
abroad department, a little 12-person group in Central.
● From these humble beginnings, Li & Fung presently works one of the foremost broad
global supply chain systems within the world. With a few 15,000 individuals in more
than 230 workplaces and distribution centers over 40 distinctive markets, Li & Fung
Constrained utilize our broad worldwide reach, depth of involvement, showcase
information, and innovation to assist brands and retailers react rapidly to advancing
shopper and generation trends.
● Over 114-plus a long time, in spite of major changes and disturbances, development
and inventiveness proceeds to drive business. Interfacing shining minds and
crowdsourcing thoughts, utilizing plan considering, collaborative work spaces and
fast prototyping are a few of the ways Li & Fung Limited enhance at Li & Fung each
day.

Supply Chain System

Li & Fung makes customized, end-to-end supply chain and coordination arrangements for
brands and retailers around the world. What sets them separated is the high degree of
adaptability and versatility which is unrivaled in industry.Millions of shopper products pass
through Li & Fung’s supply chain each year. For that to happen, their worldwide supply chain
interfaces thousands of providers and sellers with leading brands and retailers, all with the
objective of assembling customer requests. Li & Fung Limited center on overseeing
complexity and chance to maximize profitability.

Starting with product design and development and including everything from compliance to
raw material and factory sourcing, manufacturing control, logistics, and more, we offer
end-to-end services for all stakeholders in the consumer goods supply chain. Our offices and
teams are based in over 50 sourcing and production markets, giving us the expertise and
extensive network of supply chain partners needed to meet the diverse needs of our global
customers.

Supply Chain of the Future

Beginning with product plan and advancement and counting everything from compliance to
raw fabric and production line sourcing, manufacturing control, logistics, and more, Li %
Fung offers end-to-end administrations for all stakeholders within the shopper products
supply chain. The workplaces and groups are based in over 50 sourcing and generation
markets, giving the skill and broad arrange of supply chain accomplices required to meet the
different needs of worldwide customers.
Working with brands and retailers
Li & Fung Limited offers the adaptability for clients to select from a number of distinctive
business models (counting that of an agent, importer, distributor or supplier). This interest
demonstrates empowers to work with any sort of client from extravagance brands to
hypermarkets, whether they offer online, offline or multi-channel, and beneath any sort of
partnership. From apparel, general merchandise and domestic, to embellishments and
footwear, at the heart of our commerce may be an enthusiasm to form wonderful items that
upgrade the lives and encounters of customers around the world.

Working with suppliers

Li & Fung Limited accomplishes with providers to focus on capacity building, empowering
them to better oversee their production lines, presenting more noteworthy productivity and
supporting our providers to progress manufacturing plant working conditions to meet
ever-changing industry desires, for the good thing about specialists, and all industry
participants.
 ● Li & Fung Limited created the supply chain by creating unused and innovative ways
to convey end-to-end supply chain and logistics arrangements for worldwide brands
and retailers.
● Li & Fung Limited plan, source and convey an assorted extent of items – counting
attire, embellishments, furniture and family items, among others – from an
organization of 10,000 providers in over 50 generation nations, to over 2,000 clients
universally.
● Li & Fung Limited are upgrading visibility into the supply chain through
digitalization and collaborating with suppliers and other industry stakeholders to make
strides in industry measures and practices at scale. The aiming effect is to have all the
items that pass through the supply chain, in any case of the end client, production
country or production line, made in secure working environments that meet core
social and natural standards.

Structure and Governance

Li & Fung is committed to the standards of great administration. The Corporate

Supportability & Compliance (CSC) group sits at the Fung Group level and keeps up its
freedom from other outside and inside partners by detailing specifically to the Office of the
Group Chairman. Assist oversight is given by Li & Fung’s Risk Management &
Sustainability Committee (RMSC), a Board-level committee, which is driven by the
Privileged Gather Chairman and meets quarterly to audit the Company’s administration of
supply chain and other dangers and give proposals for change, as well as report on execution
to the Board. CSC has over 50 workers based in 14 nations over the globe, from North and
Central America to Europe and the Center East to Asia, with a central administration group
based in Hong Kong. Supply chain arrangements of Li & Fung are all approximately making
a difference to clients by conveying speed and effectiveness over their worldwide supply
chains and empowering edge upgrade and innovation.

Breaking the form of a conventional sourcing agent, Li & Fung offer a range of arrangements
to plants, factories and other vendors helping them explore supply chain complexity and
expanded compliance to quicken the creation of sustainable supply chain solutions. Trend
engine pulls motivation from best patterns within the industry giving brands the creative
flexibility to plan items on time to capture the trend wave.

Global collaboration may be a virtual workspace where retail groups can collaborate remotely
and get to all of the tools such as materials libraries, pieces and designs for end-to-end 3D
items creation.
Virtual 3D design permits partners to move rapidly from proof of concept to testing and final
plan. Not as it were, sampling and adoption time cut from weeks to hours, the computerized
assets are reusable, permitting designs that can go specifically to promoting or ecommerce
destinations and to be utilized for costing and future plan. There's near zero incremental cost
for product improvement cycles and squander from superfluous samples and shipping is
minimized.

Through the Vendor Platform , companies can work with over 10,000 suppliers as partners,
ensuring the best fit for any project in any capacity through our networks. By using dynamic
costing tools that enable commercially-led merchandising, linking design decisions with
business outcomes. Scenario-based analysis, forecasting and pre-costing with real-time
changes is helping bring about speed, allowing for faster decisions and matching orders with
the right factory. Li & Fung Limited are also developing an enhanced capacity management
tool to improve production flow with factories, allowing vendors to reap the benefits from
increased operational efficiency and productivity and enhanced digital connectivity with Li &
Fung. Other solutions for vendors and suppliers include: trade credit services, vendor
compliance and sustainability, vendor supply chain services, manufacturing excellence, smart
factory solutions.

Through the Vendor Stage , companies can work with over 10,000 suppliers as partners,
guaranteeing the finest fit for any project in any capacity through our systems. By utilizing
dynamic costing devices that empower commercially-led merchandising, linking design
choices with business results. Scenario-based examination, forecasting and pre-costing with
real-time changes is helping bring approximately speed, permitting for faster choices and
matching orders with the proper manufacturing plant. Li & Fung Limited are moreover
creating an upgraded capacity administration tool to move forward production flow with
manufacturing plants, permitting merchants to procure the benefits from expanded
operational proficiency and efficiency and upgraded advanced network with Li & Fung.
Other arrangements for merchants and suppliers incorporate: exchange credit administrations,
vendor compliance and supportability, seller supply chain administrations, manufacturing
excellence, keen manufacturing plant solutions.

With the history of solid connections with suppliers, Production Platform, counting
computerized arrange following framework and quality asset optimization apparatuses keep
way better associated with the suppliers in over 40 generation markets around the globe. By
bringing clients pros and timely understanding and permitting Li & Fung to work with
merchants and production lines real-time, meaning less layers and quicker decisions.All the
apparatuses on four stages are collaborative and can be customized for each customer.
Rapid Response System
Speed may be a basic portion of supply chain strategy. Li & Fung Restricted point is to
extend speed like never before, helping clients diminish production lead times and increase
speed-to-market. This implies making choices closer to time to showcase, giving them speedy
reaction to patterns, moved forward stock control and diminished stamp down – all with the
point of making strides profitability. The figure appears how Li & Fung Restricted worked to
empower a speedier item cycle a, taking the industry normal of 40 weeks and slicing it 60%
to 16 weeks.
 References

● Adidas. (n.d.). SUPPLY CHAIN APPROACH. SUPPLY CHAIN APPROACH.

https://www.adidas-group.com/en/sustainability/managing-sustainability/human-right

s/supply-chain-approach/#/monitoring-supplier-performance-audits/

● lifung. (n.d.). Supply chain innovation.

https://www.lifung.com/supply-chain-innovation/our-business/#content-area

●
● https://www.lifung.com/wp-content/uploads/2018/08/LiFung_AR_our_supply_chain2
018.pdf