Adidas’ Strategic Supply Chain Localization
Adidas, the renowned retail brand, is making a significant shift in its supply chain strategy. Bjørn Gulden, CEO of Global Brands, revealed during a recent earnings call that the company is planning to stop sourcing US goods from China. “We have basically tried not to source any products anymore from China into the U.S.,” he stated.
This decision is part of Adidas’ broader efforts to localize its supply chains. The CEO emphasized that goods for the Chinese market would be produced in China, and similarly, Indian products would be manufactured in India. This localization strategy is expected to inject more speed and agility into the company’s operations.
The Impact of Tariffs on Supply Chain Decisions
While Adidas’ supply chain changes were not directly influenced by potential new US tariffs, the company is confident that it is in a “good shape” should such tariffs be imposed. The threat of higher tariffs on China-manufactured products has led many companies to diversify their supply chains to mitigate geopolitical risks.
Adidas currently has 82 factories in China, which account for approximately 23% of its Tier 1 suppliers. This is the highest percentage among countries on its 2024 Global Factory list. The US, on the other hand, accounts for 13 of Adidas’ Tier 1 suppliers.
Industry-Wide Shift Away from China
The shift away from China is not unique to Adidas. Other companies, such as Helen of Troy, the parent company of Oxo Pop and Osprey, are also working with their suppliers to move production areas outside of China. Similarly, Mattel, the parent company of Barbie, recently closed one of its Tier 1 supplier plants in China and is looking to continue shifting production away from the country.
In conclusion, Adidas’ decision to localize its supply chains and cease sourcing US goods from China is a strategic move that reflects broader industry trends. As companies continue to navigate geopolitical risks and potential tariff increases, supply chain diversification and localization are emerging as key strategies.
