Strategic developments

Improving compliance performance in India

The following case study looks at our 2010 efforts to improve performance with the lowest scoring suppliers (1C) in our Indian supply chain.

In the past few years, India has enjoyed strong economic growth. Over that period the adidas Group has increased its sourcing activities in India, for the international export market but even more so to fulfil domestic demand.

Challenge to improve compliance levels

We have faced an ongoing challenge to upgrade the compliance performance of our suppliers in India. Some of the challenges arise because too few suppliers appreciate the importance of sound compliance practices for their operation, nor do they recognise them as a competitive advantage in their industry. The slow pace of improvement in workplace conditions shown by the majority of the suppliers there has become a real concern for us. It is supported by the fact that the numbers of suppliers with the lowest compliance KPI rating of 1C in India are higher in proportion compared to other countries in the region.

Devising a programme with Sourcing

These challenges prompted us to develop an approach based on partnership, transparency and establishing mutual trust. Supported by our Sourcing organisation we devised a 15-month improvement programme which was launched in September 2010 and will be implemented in several stages through 2011.

The short-term goal of this programme is to ensure all suppliers will reach at minimum a 2C compliance rating by the end of 2011. The longer-term goal is to establish a firm foundation of partnership working and build the capacity of the suppliers so that they can continuously improve their compliance performance in a sustainable way.

The compliance improvement programme is structured as follows:

1 Preparation stage

  • Supplier summits: a high-level briefing about the programme for the suppliers' top management and the local sourcing management
  • Suppliers are to develop comprehensive action plans to address chronic non-compliance issues and upgrade their overall compliance management system
  • SEA staff to provide consultation for each supplier on their action plan.

2 Implementation stage

  • Suppliers are to execute the action plans as per the agreed timeline
  • Progress Pulse-check: KPI assessment will be done to measure the progress in December 2010/January 2011
  • SEA is to monitor the progress of the implementation, provide technical advice as needed and engage external consultants should there be a need for additional resources to support factory improvement.

3 Measurement and evaluation stage

  • Suppliers are to execute the action plans as per the agreed timeline
  • Ongoing consultation with SEA on the progress of factories' action plans
  • Final evaluation - KPI assessment will be conducted by the end of 2011 in all factories.

We strongly believe that direct collaboration between SEA, our Sourcing organisation and suppliers is the most effective way to deliver a sustainable compliance model at the factory level. It fosters a stronger partnership with our suppliers and provides them with the necessary support and encouragement to improve workplace conditions.

Reading this report

Performance counts and reporting is about making performance clear to readers.

So in this year's report each page identifies which Global Reporting Initiative (GRI) indicators it addresses, complementing the GRI Index.