“Supply chain in our business has a rare complexity… We have to deal with the width of an automobile spare parts supply chain, the shelf life of a perishable product supply chain and the newness of a fast fashion organization,” remarks Ankit Gupta, Senior Director, SCM, adidas Group India. During this exclusive interaction, Ankit shares with us the global supply chain best practices and how they are aligning themselves to win over Indian customers and be a preferred sports fashion brand.
Indian sport and fitness industry is on a high and more & more citizens are adapting to sports as way of life. For instance, today we have 350+ formal running events in India throughout the year and similar is the growing participation in other sports. So is the reflection on the commercial side of this industry. With the rising income and this changing attitude towards sport, demand for our products is increasing every day. The industry is growing at double digits annually and we, being the leaders in the industry, are happy to be in the driving seat.
Supply chain is a pretty interesting topic and especially for a person like me, who has spent close to 8 years in managing front end retail, it is an area which throws immense challenges and in turn leave behind a lot of learning. This is a very stimulating stream for anyone who enjoys pushing for excellence and keeps on looking for process improvements. There is never a dearth of options to innovate or as we call it in the adidas world ‘creating the new’. Interestingly, although supply chain is a very old topic and lot of systems and solutions have been developed in this field, still supply chain of every organization is different and has its own needs, the cookie cutter approach does not work here. Every time, we want to solve a problem in our business we are sure that similar problems would be faced by other organisations, but it is extremely difficult to find a ready solution in the market. So, most of the time you have to invest your resources in developing new systems suitable for your problem.
Supply chain in our business has a rare complexity. We have to deal with the width of an automobile spare parts supply chain, the shelf life of a perishable product supply chain and the newness of a fast fashion organization. In other words, we launch close to 3500 different SKUs in the market every month with every SKU having a shelf life of 90-120 days. To add to this, we have close to 1500 different doors where our products are delivered directly by us. This makes our chain extremely complex right from product creation till the time it is offered to the consumer.
At adidas, we work very closely with our parent company to make sure that we keep on getting the learnings of different markets and do not have to reinvent the wheel. Especially in functions like SCM, we leverage our global strength to ensure that all markets follow quite similar processes, which makes it easy to monitor performance and we learn from each other’s experiences.
Currently, as a part of our SBP 2020 strategy, SPEED is one of our 3 main pillars. It talks about spending our efforts in transforming our supply chains to be more responsive. We are experimenting with lot of different models of product creation and supply depending on the needs of different markets. In our bigger markets, we have invested in speed factories, where using manufacturing robots we can quickly turn around the product and it is made closer to the consumption base, making the complete chain fast and agile. We want to become the first fast sports company. Learning from these global experiments, we are also launching speed supply models like NOOS (Never Out of Stock) and ISC (In Season Creation) in India.
In the mid of 2014, when we needed to expand our DC base to accommodate the business demand, we instead decided to consolidate all our operations into one mega DC. This project was aimed at gaining efficiencies from consolidating all our operations into one place. At the same time, we also planned to outsource our operations to a 3PL player. This DC replaces the previous 5 DCs we were operating in India and is helping to streamline operations, drive efficiencies and provide the best-in-class supply chain services to cater to the growing consumer demand. Despite being 40% smaller in floor space, the new DC is equipped to cater for future business growth and has almost 40% more capacity due to a much smarter use of space and state-of-the art facilities. Located close to New Delhi and spread over 26,000 sqm, with a capacity of 5 million units, it is the largest DC of any sporting goods retailer in India.
Driving this project was a great learning opportunity for me in DC operations as well as project management space. The adidas Group teams in India, Emerging Markets and Global, along with DHL worked collaboratively together over the past months to bring this world class facility alive as per planned time. 18 months down the line, we have already started seeing the benefits of consolidation in our business.
Actually, supply chain is a very underrated field especially in our country. It is an extremely exciting field for someone who is curious to learn. In this extremely dynamic world, we see so many changes happening every now and then. It could be external factors like regulations / technology or the competitive landscape or internal like business processes change / changing organizational requirements, etc., and in supply chain, all these changes come with a new set of challenges and opportunities. Solving these keeps you always high on the learning curve. So, anyone who loves the dynamic world and has a quest for innovation and creativity, this is the place for you.
Also, from my experience I would suggest that we should make sure that our organizations don’t look at supply chain as a cost center rather as an enabler, spending some extra bucks here will only give you an added advantage in selling the product better but if in order to save cost, we miss connecting the product to the consumer in time, it is an opportunity loss which is extremely difficult to regain.
In the retail industry winners are going to be those that focus on controlling the inventory flow and reducing cycle times.We need to borrow from manufacturing-centric supply chains that have historically been focused on decreasing lead times and eliminating waste (Lean thinking).
Predictability in transit times is extremely important for an efficient supply chain, but with the current infrastructure of our country, it is very difficult to ensure on time deliveries. Most of the times in order to cover up for the bad infrastructure, organizations plan to deliver goods before time, leading to extra inventory costs for them. To ensure that we work Just In Time and our manufacturing base becomes more reliable, it is important for the government to spend massively on freight corridors for road as well as rail mode.
At adidas, we have a long track record of sustainability and always strive to improve to contribute more to the environment. You must have heard about our latest tie up with Parley, where we have made a footwear whose upper is made up from Parley Ocean Plastic, which is collected in coastal areas in the Maldives, as well as illegal deep-sea gillnets retrieved by Parley for the Oceans' partner organisation Sea Shepherd. Back home, we are also always doing our bit. In our endeavor towards energy saving, our new DC is built to use day lighting in all operational areas. We only use lights in some racks and shelves. We also reuse more than 80% outer packaging received from our suppliers. This saves a lot of paper and hence trees.
Additionally, recently we have launched our new program to help the weaker sections of society. We have tied up with a non-profit organization, Greensole, who will help us refurnish our defective shoes into slippers and provide them to the needy. We are piloting this with a few thousand shoes now, but we see this will become our prominent means to contribute to the society in coming years.
Yes, we are very excited about the company owned stores we are about to open. These will be our brand flagship stores and will create a whole new experience for our consumers. These stores will have an exclusive range and will run on a rapid replenishment model. On time and In Full delivery will be extremely important for these doors. Whatever number of stores we open, we are gearing up our supply chain to take on this new challenge.
Looking at the way e-commerce industry is booming today, it is easy for anyone to guess the future of the industry. In my opinion, there are three things driving the industry today – availability, convenience and discounting. Discounting is what the industry wants to get rid off and it will be done only when availability and convenience increases. Omni-channel is a model that will help exemplify these two levers and is the way to go. We at adidas India have been pioneers of this model in the country and launched the endless aisle (EA) program in 2015. Today more than 350 stores are connected via EA and our consumers get the benefit of getting a huge width available at all stores. We will very soon launch other programs like Ship-from-store and click & collect, which will add to the convenience for the consumer.
I believe that anything that can be simplified by automation, should be automated… and this gives me the fuel to innovate and improve my work at all times.