Audits and training

Number of factory audits/visits and training sessions

1,451 factory visits (including 1,350 factory audits)

During 2010, 1,451 factory visits (including 1,350 factory audits) involving management and worker interviews, document review, facility inspections and training sessions took place at different levels in our supply chain. The SEA team conducted 193 training sessions and workshops for suppliers, licensees, workers and adidas Group employees.

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Number of factory audits/visits and trainings*

Number of factory audits/visits and trainings
2009Factory audits/visits 1,323 1,592 1,451  
2010Trainings 251 216 193  

* Including multiple audits/visits in the same factory conducted by the adidas Group SEA team and external monitors, but excluding FLA audits. Including audits in licensee factories; visits involving management and worker interviews, document review, facility inspections and trainings on-site.

Number of training sessions divided by region and type

193 training sessions (including 73 group training sessions ie. participation of more than one supplier, business entity or licensee)

For 2010, the total number of training sessions conducted by SEA was lower than in the previous two years. The number of fundamental and performance training sessions was reduced, whereas sustainability training sessions increased slightly. Although the total number is lower, the number of participants has remained almost the same.

Reasons for this were:

  1. There were less individual but more group (i.e. more than one supplier) training sessions undertaken that offer both higher efficiencies but also the added advantage of cross-learning and best practice sharing among suppliers.
  2. Due to longer term and more mature business relationships, the need for more sophisticated and advanced trainings (sustainability training sessions) was achieved.
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Number of training sessions divided by region and type1

Region Type and number of training
Fundamental2 Performance3 Sustainability4 Total
2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 20105
Asia 80 47 33 68 48 33 11 32 33 159 127 99
Americas 51 53 55 11 13 18 4 1 7 66 67 80
EMEA 24 19 12 0 0 0 2 3 2 26 22 14
Total 155 119 100 79 61 51 17 36 42 251 216 1936
  1. Trainings conducted for suppliers, workers, licensees, agents and adidas Group employees.
  2. Fundamental training covers: Workplace Standards & SEA introduction; FFC training; SEA policies & SOPs.
  3. Performance training covers: Specific labour, health, safety and environmental issues.
  4. Sustainability training covers: Sustainable compliance guideline & KPI improvement; Factory Self-Audits (factory internal audits).
  5. In 2010, more than 2,200 people participated in these trainings.
  6. Including 73 group training sessions, i.e. trainings with participation of more than one supplier, business entity or licence.

Supplier trainings by type in 2010

Supplier trainings by type in 2010

Number of audits divided by region and type

58% audit coverage of all active suppliers

In 2010, the SEA team conducted 1,350 social compliance audits (including external monitoring audits). The total number of Initial Assessments - this first approval stage for new entry factories - and Performance Audits for our established suppliers was fewer than in 2009. In addition to these audits, suppliers' sites were the subject of multiple other visits by compliance staff to discuss specific remedial issues, to follow up project work or conduct training sessions.

Completing a high volume of Initial Assessments remained a challenge in 2010, particularly in Asia where new factories were proposed in more remote locations and a wide range of countries. There was a total of 447 Initial Assessments, of which 79.4% were in Asia, with China accounting for 33.8% of all assessments conducted. Overall 20.8% of candidate factories were rejected either out rightly, or for failure to remediate threshold issues in a timely manner. See also data on Termination and Rejections.

Audits conducted by external monitors were commissioned by adidas Group entities, including licensees with indirect sourcing models.

In total, there was audit coverage of 58% of all active suppliers. The audit coverage of all active suppliers in region Asia was 74%, with countries like China, India, Indonesia, Thailand and Vietnam showing more than 80% audit coverage.

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Number of audits divided by region and type

Region Type and number of audit
Initial Assessment1 Performance Audit2 Total
2008 2009 2010 2008 2009 2010 2008 2009 2010
Asia 515 406 354 496 853 788 1,050 1,261 1,142
Americas 70 49 59 65 63 78 141 112 137
EMEA 41 28 34 28 47 37 70 75 71
Total3 626 483 447 589 963 903 1,261 1,448 1,350
  1. Every new supplier factory has to pass an Initial Assessment to prove compliance with the Workplace Standards prior to order placement.
  2. Audits conducted in approved supplier factories.
  3. Includes audits done in licensee factories. In addition, there was a considerable number of full environmental assessments conducted for selected suppliers in Asia.

Number of audits in supplier factories

Number of audits in supplier factories
2009SEA Team 861 948 844  
2008External Monitor 400 500 506  
2010Total 1,261 1,448 1,350  

Initial Assessment by country

Asia   Americas   EMEA
Bangladesh 7   Argentina 6   Belarus 3
Cambodia 15   Brazil 10   Eqypt 7
China 151   Colombia 1   Israel 1
India 68   Costa Rica 3   Jordan 2
Indonesia 23   Dom. Rep. 5   Kenya 1
Japan 1   El Salvador 3   Russia 6
Korea 15   Guatemala 6   South Africa 4
Laos 1   Honduras 1   Turkey 8
Madagascar 1   Mexico 18   Ukraine 1
Malaysia 1   Nicaragua 5   EMEA Total 33
Pakistan 13   Peru 1      
Philippines 6   Americas Total 59      
Sri Lanka 5            
Taiwan 8            
Thailand 10            
Vietnam 30            
Asia Total 355            

Number of audits conducted in licensee factories

276 audits conducted in licensee factories

The progress increase in audits from 181 in 2008 to 276 in 2010 reflects the increased participation of licensees in the SEA approved external monitoring system as well as an increased level of audit uploads to the FFC platform and subsequent audit maintenance.

The lower number of Initial Assessments and higher level of Performance Audits indicates a fewer number of new entries to the supply chain, and more in-depth compliance work being undertaken with existing suppliers.

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Number of audits conducted in licensee factories1

Region Type and number of audit
Initial Assessment2 Performance Audit3 Total
2008 2009 2010 2008 2009 2010 2008 2009 2010
Asia 106 97 58 44 151 171 157 248 229
Americas 13 7 13 2 8 18 15 15 31
EMEA 3 5 6 6 5 10 9 10 16
Total 122 109 77 52 164 199 181 273 276
  1. This might include factories which produce both, for the adidas Group directly as well as for licensees/agents. In addition, there was a considerable number of full environmental assessments conducted for selected suppliers in Asia.
  2. Every new factory has to pass an Initial Assessment to prove compliance with the Workplace Standards prior to order placement.
  3. Audits conducted in approved factories.

Number of audits in licensee factories by region

Number of audits in licensee factories by region
20082008 157 15 9  
20092009 248 15 10  
20102010 229 31 16  

Number of audits in licensee factories by audit type

Number of audits in licensee factories by audit type
2009IA 122 109 77  
2008PA 59 164 199  
2010Total 181 273 276  

Key Performance Indicator (KPI) Assessment and C-Rating

47.28 KPI assessment score of active factories

We audit our suppliers against our Standards and rate them according to their performance. We use an innovative way to rate the supplier on its ability to deliver fair, healthy and environmentally sound workplace conditions in an effective manner. The following table shows the average audit score by unit of measure for those active core suppliers that were rated against the six units of measure in the KPI to date. Each unit of measure is scored out of 100 percent.

In general, new factories that become part of our supply chain get low KPI scores which negatively affect the overall average KPI score. Relatively stable scores indicate that existing suppliers received higher KPI scores in 2010 compared to the previous years.

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KPI Assessment and C-Rating

KPI Unit of Measure - Average score in % 2008 2009 2010
Management commitment and responsiveness 40.12 43.43 43.61
Management systems 48.74 47.59 48.81
Worker-management communication and industrial relations 65.44 64.04 64.86
Compliance training for workers and management 58.80 59.25 58.49
Transparency in communication and reporting 71.79 70.46 70.29
Compliance performance 59.04 57.63 58.17
KPI Cumulative Score 47.79 47.41 47.28

In 2010, we have adjusted our C-Rating system for factory assessment raising the bar for factory performance and increasing the 2C threshold to an average score of 30 percent or more. The revised clustering for our C-ratings is shown below.

KPI score (%) New C-rating
0-29 1C
30-59 2C
60-79 3C
80-89 4C
90-100 5C

The bar graph shows comparable data for the past three years using the new rating classification. The number of factories that were subject of KPI assessments in each specific year is indicated in the footnote.

In 2010, SEA increased the issuance of warning letters to non-performing suppliers, where serious and ongoing issues were not resolved despite close engagement. A warning letter immediately downgrades a factory's KPI score, hence the increased number of 2C suppliers overall. There was some improvement of poorly performing 1C suppliers, which also contributed to an increase in the number of factories graded 2C, as did new entry suppliers that are normally rated 2C after the close out of threshold issues.

The total number of 3C and 4C factories increased, but in percentage terms this is masked by the number of new factories that received an initial KPI score in the 2C range.

Percentage of KPI-assessed factories by C-Rating*

Percentage of KPI-assessed factories by C-Rating
20082008 24% 36% 31% 9% 0%  
20092009 21% 40% 29% 9% 1%  
20102010 19% 48% 25% 7% 1%  

* Number of factories which were subject of KPI assessments: 2008 (128), 2009 (347) and 2010 (547).

Independent FLA audits

16 independent FLA audits

Since joining the FLA in 1999, more than 250 Independent External Monitoring (IEM) audits and verification visits have been conducted at adidas Group suppliers. The number of conventional independent monitoring visits conducted by FLA accredited monitors has gone down because more of the conventional IEM requirements of the FLA have been redirected to an engagement in value-added FLA projects focused on reducing and eliminating chronic non-compliance issues or improving monitoring methodologies.

In 2010, FLA activities included four independent external monitoring visits. Four factories participated in FLA 3.0 exercises and one factory received an external verification visit. Seven factories participated in FLA special projects in Asia, EMEA and Central America. These so-called re-directed audits are FLA participating company engagements in specific project work that addresses resolution of chronic compliance issues in the global workplace and the development of new auditing tools and methodologies, such as the Sustainable Compliance Initiative, which will standardise labour, health and safety monitoring across a number of participating brands. Re-directs are substituted for independent external monitoring visits to factories. This substitution option is only available to FLA-accredited programmes. The term derives from the 're-direction' of IEM fees to financially support specific project work by the FLA to address chronic compliance issues.

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Independent FLA Audits1

FLA Year Period No. of audits
4th2 Jan - Dec 2005 30
5th Jan - Dec 2006 43
6th Jan - Dec 2007 15
7th Jan - Dec 2008 19
8th Jan - Dec 2009 16
9th Jan - Dec 2010 16
  1. As part of the FLA membership; the numbers include Independent External Verification audits.
  2. Including audits conducted for Reebok before it was acquired by the adidas Group in 2006.

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