{"id":26113,"date":"2017-11-15T22:10:41","date_gmt":"2017-11-16T03:10:41","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/adidas-speedfactory-shoertening-its-supply-chain-with-3d-printing\/"},"modified":"2017-11-15T22:10:41","modified_gmt":"2017-11-16T03:10:41","slug":"adidas-speedfactory-shoertening-its-supply-chain-with-3d-printing","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/adidas-speedfactory-shoertening-its-supply-chain-with-3d-printing\/","title":{"rendered":"Adidas SpeedFactory: \u201cShoe\u201drtening Its Supply Chain with 3D Printing"},"content":{"rendered":"<p>In today\u2019s consumer-centric world of fast fashion and high performance, quickly adapting to changing preferences lies at the core of Darwinian survival. Companies that provide customized goods must enhance supply chain methodologies to allow for a faster go-to market strategy, thereby reducing lag-time between customer orders and delivery. Failure to do so would result in consumer demand moving in an unsynchronized manner with a firm\u2019s production, thereby making it difficult to maintain or grow market share or even incur large capital expenditures for production, given the delay between investment and harvesting phases. A key question for managers is: <strong><em>How can companies become first-movers in how they supply highly customized goods to customers in<\/em><\/strong><strong><em>\u00a0the age of digitization?<\/em><\/strong><\/p>\n<p>At Adidas, management has embraced 3D printing as a means to shorten its supply chain and better match supply and demand, while providing superior durability and athletic performance. While 3D printing offers many benefits to Adidas in lowering R&amp;D expense, accelerating its prototyping phase and providing higher quality trainers, such as those with \u201choneycomb\u201d nano-structure shock absorption technology [1], this essay focuses primarily on benefits from post-design supply chain optimization.<\/p>\n<p>In 2015, Adidas management introduced its SpeedFactory project, piloted in Ansbach Germany, which set to create several 3D-printing, automated production sites in various cities around the world to locally address its customers\u2019 needs [2]. In the short and medium term, Adidas hopes to tackle its traditional supply chain by harnessing the following principles:<\/p>\n<ul>\n<li><strong>Just-in-Time (JIT) Production &amp; Flexibility:<\/strong> By shifting the site of manufacturing closer to consumers and through JIT 3D printing with tiny white plastic beads [3], Adidas can manufacture without incurring large delays. Thus it can avoid large finished goods inventories of trainers that may quickly go out of style. Furthermore, the generic nature of the white beads as a production input allows its multi-purpose use across several shoe styles, thereby also reducing the raw material inventory. Adidas is set to begin production in 2017, eventually producing 500,000 shoes a year. [4]<\/li>\n<li><strong>Lower Shipping Costs:<\/strong> Traditionally, different parts of the trainer were manufactured in different areas, then assembled and shipped to the consumer. A recent article states, \u201cAn order to replenish an existing, in-demand design\u2026can take two or three months to reach shelves, unless the shoes travel not in a shipping container but a huge cost in the hold of an aircraft.\u201d [4] By producing closer to the consumer through 3D printing with generic inputs, Adidas can avoid large shipping costs between various points in its supply chain. It will likely only incur the shipping cost for raw materials, since highest percentage of the shoe\u2019s final production would occur at a local SpeedFactory site.<\/li>\n<li><strong>More Efficient D2C Channel:<\/strong> At a local SpeedFactory, Adidas can design and produce its trainer around particular geographic conditions, such heavy-rain [5]. This provides a higher-quality product with more variety, fewer delays, and better responsiveness to local consumer demand. Moreover, trainers can be on the market for a longer selling period given faster production.<\/li>\n<\/ul>\n<p>In the long-term, Adidas could plan to de-centralize further, shifting to retail stores and other more intimate outlets allowing customers to customize and manufacture at the point of sale.<\/p>\n<figure id=\"attachment_26176\" aria-describedby=\"caption-attachment-26176\" style=\"width: 2145px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-26176\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM.png\" alt=\"\" width=\"2145\" height=\"766\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM.png 2145w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM-300x107.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM-768x274.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM-1024x366.png 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Screen-Shot-2017-11-15-at-9.37.01-PM-600x214.png 600w\" sizes=\"auto, (max-width: 2145px) 100vw, 2145px\" \/><\/a><figcaption id=\"caption-attachment-26176\" class=\"wp-caption-text\"><strong>Source:<\/strong> Adidas, &#8220;SpeedFactory,&#8221; https:\/\/www.adidas.com\/us\/speedfactory, accessed November 14, 2017<\/figcaption><\/figure>\n<p><strong>Recommendation:<\/strong><\/p>\n<p>Adidas\u2019 supply chain will drastically change given the initiatives it has undertaken. Given the above bottleneck and costs may be greatly reduced, the bottleneck may shift to the design phase, thereby creating a need to reduce or parallel process various design phase elements.<\/p>\n<ul>\n<li><strong>Complement Data Analytics with Existing 3D Printing Technology:<\/strong> Using data analytics to discern particular trends may accelerate the time it takes to design the product, allow for more versatility in the product that can be printed or spot problems earlier in the supply chain, much like GE spotted in its jet engine components.[6]<\/li>\n<li><strong>Implant Sensors in Shoes to Discern User Activity:<\/strong> By understanding which designs lead to better performance based on user activity, Adidas can focus on harnessing designs quickly and can do so in parallel with one another.<\/li>\n<li><strong>Adopt an Efficient Test &amp; Learn Strategy:<\/strong> Adidas can put products out quickly and conduct A\/B testing to discern which products are superior. The speed benefit from Adidas\u2019 compressed supply chain can allow for better and faster testing and iteration, which can further set it apart from competitors.<\/li>\n<\/ul>\n<p>A recent HBR article writes that in 500 days the hearing aid industry was able to convert to 100% 3D manufacturing [7]. Failure to be a first-mover in mainstream production can be hard to recover from. While companies like Adidas, which require a fast time-to-market strategy, are embracing 3D printing, two aspects still linger. Can 3D printing become truly scalable and mass market for Adidas? Additionally, how will Adidas\u2019 supply chain cope with cybersecurity and hacking threats?<\/p>\n<p>(791 words)<\/p>\n<p>[1] Katherine Bourzac, \u201c3-D-Printed Sneakers, Tailored to Your Foot\u201d April 7, 2017, MIT Technology Review, <a href=\"https:\/\/www.technologyreview.com\/s\/604058\/3-d-printed-sneakers-tailored-to-your-foot\/\">https:\/\/www.technologyreview.com\/s\/604058\/3-d-printed-sneakers-tailored-to-your-foot\/<\/a>, accessed November 12, 2017.<\/p>\n<p>[2] Adidas, \u201cFrom Robots To Your Home: Adidas\u2019 First SpeedFactory Lands in Germany\u201d December 9, 2015, <a href=\"http:\/\/news.adidas.com\/us\/Latest-News\/-From-Robots-To-Your-Home--adidas--First-Speedfactory-Lands-In-Germany\/s\/f4d890b6-e38d-4a32-b20d-ebc9683972ec\">http:\/\/news.adidas.com\/us\/Latest-News\/-From-Robots-To-Your-Home&#8211;adidas&#8211;First-Speedfactory-Lands-In-Germany\/s\/f4d890b6-e38d-4a32-b20d-ebc9683972ec<\/a>, accessed November 12, 2017.<\/p>\n<p>[3] Richard Weiss, \u201cAdidas Brings the Fast Shoe Revolution One Step Closer\u201d October 5, 2017, Bloomberg Businessweek, <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2017-10-05\/adidas-brings-the-fast-shoe-revolution-one-step-closer\">https:\/\/www.bloomberg.com\/news\/articles\/2017-10-05\/adidas-brings-the-fast-shoe-revolution-one-step-closer<\/a>, accessed November 12, 2017.<\/p>\n<p>[4] The Economist, \u201cAdidas\u2019s high-tech factory brings production back to Germany: Making trainers with robots and 3D printers\u201d January 14, 2017, <u>https:\/\/www.economist.com\/news\/business\/21714394-making-trainers-robots-and-3d-printers-adidass-high-tech-factory-brings-production-back<\/u>, accessed November 12, 2017.<\/p>\n<p>[5] Stephanie Pandolph, \u201cAdidas uses Speedfactory to localize shoe designs\u201d October 9, 2017, Business Insider, <a href=\"http:\/\/www.businessinsider.com\/adidas-uses-speedfactory-to-localize-shoe-designs-2017-10\">http:\/\/www.businessinsider.com\/adidas-uses-speedfactory-to-localize-shoe-designs-2017-10<\/a>, accessed November 12, 2017.<\/p>\n<p>[6] Tomas Kellner, \u201cBig Data Meets 3-D Printing: Big Data to Monitor Laser-Printed Jet Engine Parts\u201d June 4, 2013, General Electric, <a href=\"https:\/\/www.ge.com\/reports\/post\/77209216443\/big-data-meets-3-d-printing-big-data-to-monitor\/\">https:\/\/www.ge.com\/reports\/post\/77209216443\/big-data-meets-3-d-printing-big-data-to-monitor\/<\/a>, accessed November 12, 2017.<\/p>\n<p>[7] Richard D\u2019Aveni, \u201cThe 3-D Printing Revolution\u201d May 2015, Harvard Business Review,<\/p>\n<p><a href=\"https:\/\/hbr.org\/2015\/05\/the-3-d-printing-revolution\">https:\/\/hbr.org\/2015\/05\/the-3-d-printing-revolution<\/a>, accessed November 12, 2017.<\/p>\n<p>[8] <em>Feature Image:<\/em> Adidas, \u201cFutureCraft.4D\u201d <a href=\"http:\/\/www.adidas.com\/us\/futurecraft\">http:\/\/www.adidas.com\/us\/futurecraft<\/a>, accessed November 15, 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is the promise of 3D printing finally becoming an operational reality? Here&#039;s how Adidas is using 3D Printing to re-imagine its supply chain. <\/p>\n","protected":false},"author":10404,"featured_media":26114,"comment_status":"open","ping_status":"closed","template":"","categories":[2123,2029,17],"class_list":["post-26113","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digitalization","category-digitization","category-supply-chain","hck-taxonomy-organization-adidas","hck-taxonomy-industry-apparel-and-accessories","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Adidas SpeedFactory: \u201cShoe\u201drtening Its Supply Chain with 3D Printing - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/adidas-speedfactory-shoertening-its-supply-chain-with-3d-printing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Adidas SpeedFactory: \u201cShoe\u201drtening Its Supply Chain with 3D Printing - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Is the promise of 3D printing finally becoming an operational reality? 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