MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY --- oOo --- NGUYEN NGOC QUOC DETERMINANTS OF ADIDAS’S SUPPLY CHAIN PERFORMANCE IN ASIA PACIFIC REGION MASTER OF BUSINESS ADMINISTRATION THESIS Ho Chi Minh City – 2011 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY --- oOo --- NGUYEN NGOC QUOC DETERMINANTS OF ADIDAS’S SUPPLY CHAIN PERFORMANCE IN ASIA PACIFIC REGION MAJOR: BUSINESS ADMINISTRATION MAJOR CODE: 60.05 MASTER THESIS INSTRUCTOR: DR. VO THI QUY Ho Chi Minh City – 2011 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS I would like to express my deepest gratitude to my research Instructor, Dr. Vo Thi Quy for her intensive support, valuable suggestions, guidance and encouragement during my study. I would like to express my sincere gratitude to all of my teachers at Faculty of Business Administration and Postgraduate Faculty, University of Economics Ho Chi Minh City for their teaching and guidance during my MBA course.
Also, I fully appreciate those who were willing to participate in interview and survey session. My sincere thanks are extended to Ms. Hoa Ly (Footwear Country Manager of adidas Viet Nam) and Mr. Woj (Head of Operation of NEO label category) for their comments on my proposal as well as the approval to conduct the survey within adidas supply chain.
Last but not least, the deepest and most sincere gratitude go to my beloved parents, my wife, my sons and my closest friends for their boundless support, abundant love and encouragement throughout my period of study. I, therefore, dedicate this work as a gift to all of them. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT It goes without saying that supply chain management has played major role in every business locations under globalization and intensive world-wide competition. More and more firms have been aware of importance of supply chain management (SCM) and attempt to enhance the effectiveness of SCM in order to secure their competitive advantages.
This paper aims at investigating the relations between supply chain practices (Strategic supplier partnership, Product creation, Purchasing/Supply planning, Sourcing Production (manufacturing), internal lean practices (Fast and Lean)) and adidas supply chain performance in a pull-based supply chain. A framework expressing the hypothesized relations among the above-mentioned variables has been developed and validated by examining the validity and reliability of measurement scale, the findings add credence to the positive effects of Product creation, Purchasing/Supply planning, Internal lean practices (Fast and Lean) as antecedents to higher performance in the supply chain. This work can support managers in taking supply chain design decisions and in defining countermeasures to mitigate their effects on supply chain performance. Keywords: Supply chain; Supply chain management; supply chain practices, 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS Chapter 1: Introduction to study ------------------------------------------ 10 1.
Background or Rationale. Research questions and research objectives. Scope and Limitation of research. Structure of research.
18 Chapter 2: Introduction to adidas Limited Sourcing Company ---- 20 2. Introduction about adidas group. Major locations and partnerships. Business performance in FY09 and its action plans in FY10 .2 Its Action Plan in FY10.
27 Chapter 3: Literature Review ---------------------------------------------- 34 3. Strategic supplier partnership. Purchasing/Supply planning. Internal lean practices (Fast and Lean).
Postponement-Inbound Customs, Order Fulfillment/Warehouse and Outbound/Point of Sale .7 Supply Chain Performance. 48 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Conceptual framework and Hypotheses. 53 Chapter 4: Research method ----------------------------------------------- 54 4.
Measurement scale development. Sampling technique and Data collection. Data analysis methods. Unidimensionality Analysis with Exploratory Factor Analysis.
Reliability Analysis with Cronbach‟s Alpha. Assessment of Conceptual Model and Hypotheses. 63 Chapter 5: Empirical results of the research --------------------------- 64 5. Exploration Factor Analysis.
Testing Hypothesis with Linear Regression. 71 Chapter 6: Conclusions and Suggestions -------------------------------- 77 6. Limitations and Suggestions for Future Researches .82 References ---------------------------------------------------------------------- 84 Appendix 1 --------------------------------------------------------------------- 88 Appendix 2 --------------------------------------------------------------------- 92 Appendix 3 --------------------------------------------------------------------- 94 Appendix 4 --------------------------------------------------------------------- 95 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1.2 Structure of the study .1 Global Operations in Go-to-Market Process .2 Suppliers by footwear production by region .1 adidas Product Creation Process .1 Structure of chapter 5 .The revised model of determinants of Supply chain Performance .76 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLE Table 3.1 Studies related to sourcing strategy .1 Constructs for SCM practices, Supply Chain Performance .3 Statistical information about collected samples .1 Descriptive statistics results .2 Factor loading analysis results .3 Results of Exploration Factor Analysis .4 Means and standard deviations .5 The correlations of factors of SC. R Square and Adjusted R square .7 Results of linear regression analysis.
73 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABBREVIATIONS EMEA Europe, Middle East and Africa GPS Global Procurement System ILP Internal Lean Practice ILS International Logistics Planning System PC Product creation PSP Purchasing/Supply Planning R&D Research and Development SAP Systems, Applications and Products in Data Processing SC Supply Chain SCM Supply chain management SCP Supply chain performance SP Sourcing Production SSP Strategic Supplier Partnership 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1 INTRODUCTION TO THE STUDY 1. Background or Rationale: It goes without saying that supply chain management (SCM) has played major role in every business locations under globalization and intensive world-wide competition. An increased focus on SCM as an operational phenomenon that can be leveraged to achieve superior organizational performance (e., Hult, Ketchen, &Slater, 2004) has been studied. A supply chain (SC) is defined as the “network of facilities and activities that performs the functions of product development, procurement of material from suppliers, the movement of materials between facilities, the manufacturing of products, the distribution of finished goods to customers, and after-market support for sustainment” (Mabert & Venkataramanan, 1998, p.SCM is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996).
SCM is also “a key strategic factor for increasing organizational effectiveness and for better realization of organizational goals such as enhanced competitiveness, better customer care and increased profitability” (Gunasekaran et al.The major goals of SCM are to minimize non-value-added activities and associated investment cost and operating cost, increase customer responsiveness and flexibility in the supply chain, and enhance bottom-line performance and cost competitiveness (Stewart 1995). A recent study conducted by Petrovic-Lazarevic and Sohal (2002) reported that effective management of the supply chain has been identified as being of significant importance to achieving and sustaining a competitive advantage for firms in the Australian textiles, clothing, and footwear industry. Supply chain performance (SCP) is affected by exogenous variables (e. demand and lead time variability), SCM and planning decisions and supply chain design decisions (Forrester, 1961; Sterman, 2000; Lee et al., 1997a, b; Chen et al., 2000; Sezen, 10 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
More recent work has identified such emerging themes as value networks (e., Ehret, 2004), learning within these networks (e., Håkansson, Havila, & Pedersen, 1999), and conceptualizing industrial marketing networks as a series of resources, activities, and actors (Gadde, Huemer, & Håkansson, 2003). Another reason is that while an increasing number of firms are interested in supply chains, some have considered the literature to date descriptive and anecdotal (e., Handfield & Nichols, 2003; Moore, 1999). In reality, there is a huge potential improvement to reduce the inefficiencies caused by poor performance of suppliers, unpredictable customer demands, and uncertain business environment. An integrated SC has a clear advantage on the competitiveness of the individual companies.
As a result, the chain-chain competition has started to take over the enterprise-enterprise competition, although many enterprise-enterprise competitions do exist particularly in the less developed economies (Koh et al. Many companies are trying to find tools for performance improvement in response to turbulent business markets and for efficiently controlling their business activities. The objectives of performance measurement are to improve the efficiency and effectiveness of a SC (Beamon 1999; Gunasekaran et al. In addition, Keeber (2000) also stated that the purpose of performance measurement is to reduce operating costs and customer service in logistics activities, improve firm‟s revenue growth, and enhance shareholder value.
Consequently, organizations began to realize that it is not enough to improve efficiencies within an organization, but their whole SC has to be made competitive. It has been pointed out that understanding and practicing SCM has become an essential prerequisite to staying in the competitive global race and to growing profitably (Power et al., 2001; Moberg et al. Sportswear is a globalised industry, with major production undertaken in Asian countries, and three international brands dominating worldwide sales – Nike and Rebook from the US, and Adidas from Europe (Just-style. Moreover, sports superstars, TV sports programs and sports activities have great influence on this market.
11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com The sportswear market possesses the same characteristics as the fashion market: strong seasonality, short product life, volatile demand, and high impulse purchasing (Christopher and Peck 1997; Fisher et al. 1994; Fisher et al. The seasons are affected not only by weather but also by the sporting calendar (Ashford 1997). The costs of stockout and markdown for big companies like Sport Obermeyer would be more than 10% of sales (Fisher et al.
Thus, SCM in the sportswear market is critical to ensure that stock does not become out dated with the short product life cycle resulting in stockout and markdowns, thus reducing profits at the retail level. The SC in Asia possesses special socio-economic characteristics such as a preponderance of small independent retailers with big international suppliers dominating the market. Moreover, there are many other reasons why Asia accounts for such a big part of the sourcing volume and SC. Besides the lower labor costs in comparison to other areas, Asia offers many other advantages, e.
relatively lower political, economical and financial risks, better conditions in terms of infrastructure, qualified employees, etc. and the domestic demand within Asia keeps growing, which makes this market more attractive, especially China, India, Japan. Research problem: There are many previous empirical studies investigating factors affecting SCP. Some researches have focused on certain aspect of the internal SC, such as total quality management practices (Tan et al., 2002), internal integration (Pagell, 2004 and Braganza, 2002), agile/lean manufacturing (Womack and Jones, 1996, Naylor et al., 1999 and McIvor, 2001), and postponement (Beamon, 1998, Naylor et al., 1999, Van Hoek, 1998 and Van Hoek et al.
On the other hand, some research have focused on supplier side, such as supplier selection, supplier involvement, and manufacturing performance. (Choi and Hartley 1996 and Vonderembse and Tracey, 1999), the influence of supplier alliances on the organization (Stuart, 1997), success factors in strategic supplier alliances (Monczka et al., 1998, Narasimhan and Jayaram, 1998 and Stuart, 1997), and supplier management orientation and supplier–buyer performance (Shin et al. 12 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Studies such as those by Clark and Lee (2000) and Alvarado and Kotzab (2001), focus on the downstream linkages between manufacturers and retailers. A few recent studies have begun to consider both the upstream and downstream sides of the SC simultaneously.
Tan et al. (1998) explores the relationships between supplier management practices, customer relations practices and organizational performance; Frohlich and Westbrook (2001) investigate the effects of supplier– customer integration on performance. Tan et al. (2002) studies SCM and supplier evaluation practices, Min and Mentzer, 2004 S.
Mentzer, Developing and measuring supply chain concepts, Journal of Business Logistics 25 (2004) (1), pp.Min and Mentzer (2004) develops an instrument to measure the supply chain orientation and SCM at conceptual levels. Cigolini et al. (2004) develops a set of supply chain techniques and tools for examining SCM strategies.