Adidas is working with its suppliers to increase capacity and using air freight to help meet customer demand following “supply chain shortages”.
In its first quarter results, Adidas said it was taking a number of steps to mitigate supply issues caused by a lack of capacity at manufacturing plants.
Kasper Rorsted, chief executive of Adidas, said: “We've gone to all of our suppliers and understood where we can get additional capacity and expanded with our current suppliers within the scope they had.”
The brand has also authorised increased overtime with some suppliers and bought additional capacity to help mitigate supply shortages, he said.
Rorsted said Adidas had put “contracts in place to ensure it has no supply constraints as of 2020”, and described the current supply shortage as a “temporary setback”.
He also confirmed Adidas would be increasing its use of air freight to help with supply shortages but warned the cost to the company would be “substantial” in the next two quarters of 2019.
Harm Ohlmeyer, chief financial officer for Adidas, added that the “supply chain challenges will be fixed by the end of the year”, noting air freight would begin to have an impact on supply in the second and third quarters of 2019.
In March 2019, Adidas said a lack of capacity at manufacturing plants would slow its growth in North America in the first-half of 2019, due to a strong increase in demand for mid-priced apparel.
At the time, Rorsted said: “We have an excess demand that we can’t cover due to inefficient capacity at our manufacturing plants. It’s predominantly related to apparel and it’s predominantly related to North America in the first two quarters.”
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