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About Company

The “mi adidas” vA Short History of adidas: 1920-2001 (See Exhibit-2)

vDelivering state-of-the-art sports footwear, apparel and accessories for more
than 80 years
Mass Customization Initiative vIn 2001, total net sales reached €6.1 billion and net income amounted to €208
million.
vMain brands were
Hasmukh Gajjar Ø adidas with a 79% share of sales
Ø Salomon with 12%, and
Ø Taylor Made-adidas Golf with 9%.
vemployed 14,000 people
va global leader in the sporting goods industry with 15% market share worldwide
vEurope accounted for 50%, North America for 30%, Asia for 17% and Latin
America for 3% of total sales.

What does Mass Customization mean to you? Mass Customization(MC)

v Is it marketing gimmick? vMC is…
ØCustomer interaction vUse of flexible resources and processes
ØHigher perceived value
ØEmphasizing brand image
ØFit with customer needs/preferences vTo provide varied and individually customized products and services
vIs it operational excellence? according to customers orders
Ø“Mass” and “Customization” : Seem to be contradictory
Ø”Mass”: Is it similar to Mass Production? vat a price competitive with standardized, mass-produced alternatives
ØCustomized solution: Is it similar to Job-shop?
ØBatch-size? Segment size?

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THE “mi adidas”: MC Initiative Rollout Plan of mi adidas project

INTERNATIONAL

This document is authorized for use only in CCBMDO (SCM) by Hasmukh Gajjar at IIM - Indore from January 2013
Exhibit 4
Mass Customization Rollout Plan

v“mi adidas” was envisaged as an image tool and a center of competence for the Permanent MC
Quick response
Forever Sport Division. Phase IV
units in adidas stores
and selected
SMU’s 4,000 pairs
Permanent MC unit
in Roland Garros
2003 via specialty retailers
vmi adidas was launched in April 2000 to provide consumers with the chance to specialty retailers

create unique athletic footwear produced to their personal specifications.

Vertical Category Expansion Plan

Precision “VI” Supernova (RX) Bromium Barricade
20,000 pairs 1,400 pairs 100 pairs 500 pairs
vThe idea was not entirely new, as adidas had provided tailor-made shoes to top Phase III Retail/Events/Promo Retail Partners Direct Direct

athletes for many years. 2002 add Japan

all year
7 Major Marathons
April- Oct
8 US College Teams
Sept-Oct
Roland Garros
May-Jun

to February 2013.
Progress to Date
vNow mi adidas could be experienced by many consumers at top sporting events Predator Precision Boston Supernova
and select retailers. Phase II 5,000 pairs
Retail/Events/Promo
200 pairs
Retail Partners
2001
vThe project initially offered only soccer boots but was to be expanded in 2001 to add US
Retail (Jun-Aug)
Berlin Marathon
Sept
- Legend -

offer running shoes.

Events (all year) Product
Target Quantity
Predator Precision Distribution Channel
vFor 2002 the plan was to further build volume and expand the offering into the Phase I 300 pairs
Direct Trial
Location

customization of basketball and tennis footwear. 2000 UK/D/S/F/I/NL

Date

Aug-Oct
vRefer Exhibit-4 for mi-adidas rollout plan. Soccer Running Basketball Tennis
Horizontal Category Expansion Plan

Source: Berger, C. “The Customized Revolution at adidas.” Kundenindividuelle Massenproduktion: Von Businessmodellen zu erfolgreichen Anwendungen. Eds. M. Schenk,
R. Seelmann-Eggebert, F.T. Piller. Die dritte deutsche Tagung zur Mass Customization, Frankfurt, November 8, 2001

Four Phases of mi adidas project Four Phases of mi adidas project

vPhase-I: vPhase-III:
ØRolled out in April 2000 ØJapan was to be added
ØDirect effort (not via distributors) to reach customers in Europe ØSoccer trials to be extended to 20,000 pairs
Ø300 trials of soccer shoes in this roll-out at six different sporting events in ØRunning category was expanded to seven major marathons and 14,000 pairs
Europe ØExpansion in Basketball and Tennis shoe categories
vPhase-II: vPhase-IV:
ØAdidas decided to expand project to 5000 pairs of soccer shoes at retail ØTo have permanent MC units at adidas stores and selected specialty retailers
outlets in summer during 2001
ØIntroduced concept in the category of running shoes at the Berlin Marathon
in Sept 2001 with 200 pairs of shoes

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Scale-up Issues in different areas

mi adidas Pilot
while offering MC via retail channel
vWas it successful? Should they have done it differently? v Project Management
vAdvantages ØStill relying on other divisions for manpower support
ØSuccessful for Market Research purposes ØNot understood full cost of offering MC
ØGood PR Building vProduct
ØGood consumer feedback – they liked the product ! Free? ØCustomization on which dimensions? Any limit?
ØOpportunity to address supply-chain issues ØRapid changes in product portfolio
vDisadvantages vInfo-Technology
ØThe product was free ØCurrent system is good for order-capturing only
ØCustomer based was rather selective ØSynchronization, accessibility of data
ØSmall and very niche roll-out. Are 300 trials sufficient to gain knowledge?

Scale-up Issues in different areas Scale-up Issues in different areas

while offering MC via retail channel while offering MC via retail channel
v Production v Marketing
ØScheinfeld factory refused to take mi adidas on board ØCommand 20 to 30% premium
ØInventory Issues for such diverse requirements ØOther projects a3 and ClimaCool also need support
vDistribution vStrategy
ØSold mi adidas concept directly but now ØFitment/Alignment with existing product portfolio
Øneed to distribute via retailers ØLong-term objectives of mi-adidas
vRetailers vCompetition
ØSelection of retailers ØIs it difficult for competitors to copy?
ØManaging dropped out retailers ØNike already started offering some customization via its website
ØTechnology investment

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The future of mi adidas Going Forward: Three Alternatives

v Phase-1 (Pilot) had been very successful
vadidad developed and refined important new capabilities
vConsumer feedback was enthousiastics
vRetailers fared much better during repeat offerings of mi adidas
vHowever, initial rollout plan (Phase-II) had been somewhat slower the Soccer World Cup and world marathon series.
than projected.
Ø40% to 50% short of the established target
vNeed to provide now clear direction to mi-adidas
vWithdraw – Celebrate the success and PR effect accomplished to
date but quietly withdraw from MC in order to focus on adidas’ core
business.
vMaintain – Maintain the developed capabilities and selectively run
mi adidas fairs and planned retail tours following top events such as
vExpand – Expand mi adidas to multiple product categories and
permanent retail installations; elevate it to brand concept status while
further building volume and process expertise.

Alternative-1: Withdraw Alternative-2: Maintain

vPros vPros
ØCost saving ØDifferentiation
ØFocus on core ØCustomer database
ØNo internal troubles ØNo additional cost
vCons vCons
ØDisappointments ØNo organizational capabilities/commitments
ØLost sales/opportunity ØLimited opportunities
ØLack of differentiation

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Alternative-3: Expand Summary

vPros vMC is an ideal; in reality we have to limit choices
ØMarket Differentiation vConsumers usually like varieties but much likely to want to pay or
ØFashion Trends : Building higher image wait for it.
ØExpand market
ØHigher margins and growth prospects
vDiscussion on MC is more on operational issues but we should
consider market alignment first
vCons
vMC should be viewed as one way to organize work, rather than as
ØMore investment
the ultimate goal
ØMore risk
ØOrganization/SCM Turnaround