Operation and Supply Chain Management

Group Members: Anindhitta Chandriana, Annisa Nurrachman, Arya Perdana

THE “mi adidas” MASS CUSTOMIZATION INITIATIVE

These recent days, sport shoes manufacturers have the capability to provide several levels of
product differentiation, based on different tastes, activities and performances to every individual. The
market segments in this field is becoming narrower into small groups of people, on the basis of sets of
choices available. This offering of mass customization products indicate that producers are able to
respond to a differentiated demand, on the basis of the information coming from marketing research or
from the recording of users’ choices from the database.
Adidas was the three largest companies in footwear global market. The competitors were Nike
and Reebok. Mi adidas was the visualized as an image tool and a center of competence for the Forever
Sport Division (Forever Sport Division was the largest division of three consumer-oriented product
divisions). Basically on the Phase I, The mi adidas Pilot was very well planned in order to test the
consumers’ demand. The product focused on soccer boots. The event concept and communication
liaised with the local market research agency to do the questionnaire, on-site interview, delivery, and
even the phone follow-up interview. As result, the consumer feedback  Adidas consumer greeted mi
adidas with tremendous excitement. But then, several competitors came with similar service. Some of
them were successful as well as mi adidas, some were failed.
The Mi Adidas project adds a level of interaction between producers and users. In order to
collect user-specific information special Mi Adidas shop-departments were made. In these departments
the costumers measurements and selections were placed into a database and send directly to the
production-plant. Here the information were translated into product specifications, the shoes were
produced and then delivered to the costumer. Since the information management was critical
throughout the entire process like sourcing, production, distribution, payment and reordering, therefore
the appropriate IT backing is very important as used in information conversion factor to achieve a
successful mass customization. In the phase II of the mi adidas retail tours, there had been found the
technical problems around information management (such as in managing consumer data, product
options, biometric knowledge and product specifications that needed to be merged for order taking)
which had resulted in limited centralization and poor accessibility of data. The challenges faced in the
scope of IT infrastructure are as follow: the incapable of the IT system to handling mass customization
requirements automatically (the kiosk system for order creation does not have synchronizing
information like order numbers and customer records, between the ones generated off line and the ones
in the adidas backbone system like sales system, customer master database).
The need of a lot of human labor required to process orders, no support for processing orders with
individual consumer and detailed product information.
The need of IT systems for distribution to be extended for an organized distribution and return-process.
The consumer data captured via mi adidas could not be transferred to the adidas CRM system. The
recommendation for these problems: the information management processes of mass customization
must be integrated in corporate system for accessibility and centralization reasons, the expanding of
Mass customization and IT system would require reconfiguration of information systems design and
integration. Other than that, it ls also necessary to getting closer to customer to provide individual
service and after-sale services, which requires flexible and timely integration of needed information
management processes, it should find a way to link traditional mass production processes with the
possibilities of new communication channels to gather feedback, such as using social media.
The production system of adidas is not really well implemented for mass customization: it is not
adaptable to current processes, the mass customization has only too small lot sizes, mi adidas would
require an investment in a new kind of production line. We choose it should be maintained, if the
excellent PR tool brings very high customer satisfaction, if it is still continuously observing the market
for a possible future expanding, keep maintaining technology to answer possible efforts by competitors
in the future, always gathering information of customer preferences, and this mass customization
products will do have an exclusive brand. Then, we also recommend to expand it, but must with a
successful concept it will be possible to obtain real big profits, there is a possibility for being a huge
technological leader (the difficult process can make competitors cannot respond quickly, it is also
raising the barrier for market entry), giving supports of creative atmosphere and evolution in the
organization. However this expansion also requires extensive investments and organizational changes.
Several implementation plans to keep the products of mass customization in highly demand:
 when the new product launches, the total number of pairs of new products are divided into 5
different locations around the world twice a year
 controlling the demand to plan a well-organized mass customization production
 Mass Customization should be integrated to the marketing division: Creating a rare and wanted
image for mi adidas products, instead of applying mass customization promotions at the retail
stores, the products should be taken into premium locations to prevent downgrading of current
products
 Shoes produced where it causes the least disturbance
  Shoes are never be free, since price elevates status
Some other identified issues:
Issue #1 :
With the push into multiple categories, communication became more difficult. The extremely technical
and highly advanced customization process could not be adequately promoted as the mi adidas budget
didn’t support targeted messaging by category. Also since marketing saw MC as just one of many
initiatives so increasing the marketing spend is not an option.
Solution #1 :
Since mi adidas is personal customization product, the advertising strategy is also should be personal
and intimate with the customer. And also in order to budget efficiency, mi adidas can use internet as
their promotion media. They can create and built their database, content of the data users or fans of
adidas product, such as the date that they bought mi adidas, the pattern of how long they usually buy
again, customer birthday, etc. in order to retain their user, mi adidas can make a system of automatic
regularly personal email to their customer, content the promotion, advertising, etc. Time to sent an
email can see the pattern of how long they usually want to change their shoes after the previous one.
Customer’s birthday database can be use to give some discount to customer on they birthday. Mi adidas
can also built a attractive website that can be easily to use by their customer to create and show the
design of their customize shoes.
The objective is to retain their users with create customer satisfaction with good experience.
Issue #2 :
Although mi adidas had become bigger, the organizational set up had not substantially evolved. Much
of the support for the project from different functions of adidas was granted on a good will basis. As
time progress and volumes increased, it naturally became more difficult to persuade core business units
to fully support this initiative, specially out of their own cost centers. The annual budget for mi adidas
had basically stayed identical during its first year. The situation was not ideal.
Solution #2 :
Mi adidas should be better integrated into the existing matrix to be in sync with adidas core business,
because mi adidas is the initiative product of adidas. Mi adidas should representative of the whole
adidas brand, also their internal objective and budgeting. Adidas should create mi adidas’s team or
division that only responsible to mi adidas sales, budgeting, marketing, finance, accounting and
operational.
References:
1). https://noppa.tkk.fi/noppa/kurssi/tu-22.1320/harjoitustyot
2). http://vbn.aau.dk/files