Situation: The adidas sporting goods brand is famous across the world and, like any household name, it could potentially become the target of protests and media pressure if its parent company’s policies and practices fail to win public approval. Using an external supply-chain has allowed adidas-Salomon to keep its costs down and remain competitive. However, the company’s supply chain is long and complex, relying on about 570 factories around the world. In Asia alone, its suppliers operate in 18 different countries. Moreover, its cost-saving use of external suppliers is not without risks: in particular, the company has less control over workplace conditions at its suppliers’ factories than it would have at company-owned sites.
Targets: Outsourcing supply should not mean outsourcing moral responsibility. Recognizing this, and having regard to the risks and responsibilities associated with managing a global supply-chain, adidas-Salomon has designed and implemented a comprehensive supply-chain management strategy. That strategy is to source the company’s supplies from the cheapest acceptable sources rather than from the cheapest possible. The company has its own so-called “standards of engagement” (SOE) and the level of acceptability is based on the values of the company itself. Contractors, sub-contractors, suppliers and others are therefore expected to conduct themselves in line with adidas-Salomon’s SOE..
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