Adidas points to new production patterns

The sports clothing and footwear company Adidas has recently been publicising its decision to build a new factory in Germany making running shoes. The 4,600 sq m “SPEEDFACTORY” facility in the Bavarian town of Ansbach is characterised by a high degree of automation. Outsourced to specialist engineering manufacturer, Oechsler Motion GmbH, it is scheduled to open in 2017 to be followed some time later by a factory in the US, with the long-term vision being such factories in all “major markets”. The projected output volume appears modest, at a few million shoes a year for a company making around 300m pairs a year.

Of course highly automated assembly plants are not new, but clothing manufacturers have been slow in adopting the technology. Aside from the ease with which shoe and clothing production can be moved to very cheap locations in Asia and elsewhere, making shoes with robots has up until now been tricky. Handling thin materials was difficult for machines, but now greater dexterity is underpinned by greater digital processing power.

A further major problem in managing highly automated plants in the clothing sector is its volatility of demand, making consistently high utilisation of fixed assets difficult. This might raise the question why Adidas is embarking on such a project. Possibly the increasing cost of production in China may have prompted the company to start exploring its options for a future when low cost locations are not so plentiful, although there are still numerous alternatives to China in places such as Bangladesh or South East Asia.

Superficially the main implication of such production facilities for logistics service providers is their location in developed markets. If such capabilities become attractive in the medium term it may have some implications for the pattern of freight transport demand, with staple products such as mass-produced shoes and clothing no longer sourced almost exclusively out of East Asia.

More profoundly, it illustrates that the nature of production is changing, with high levels of automation spreading into new areas of the economy. This will result in a demand for new types of logistics services, possibly pivoting around inventory management. Highly automated assembly facilities are less flexible and harder to schedule than those running on low-cost labour and therefore they demand more responsive logistics management. The implication is that that the demands from the clothing sector for more sophisticated logistics management systems may increase.

Source: Transport Intelligence, 1st June 2016

Author: Thomas Cullen