Adidas Malaysia: A Detailed Operations Management Report (MGT2034)

This report provides a comprehensive analysis of Adidas Malaysia's operations management, focusing on its manufacturing department. It examines the company's organizational structure, mission, and vision statements, providing context for its operational strategies. The report delves into the transformational processes employed by Adidas Malaysia, including volume, variety, variation, and visibility dimensions, highlighting how these factors influence production. It further explores the three levels of performance: societal, strategic, and operational, assessing how Adidas Malaysia aligns its activities with these objectives. The report also examines the company's performance objectives, including quality, speed, and dependability, illustrating how these are crucial for maintaining its competitive edge in the sports apparel market. The analysis draws on various academic sources to support its findings, offering insights into Adidas Malaysia's approach to operations management and its strategies for achieving its goals.

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Adidas Malaysia
OrganiZation background
Adidas originally began in Germany and has grown to become a multinational
company that deals with the manufacture of sports shoes, accessories and clothes. The Adidas
group has diversified the brands produced to include Reebok and Taylor, which is specially
made for golf. In 1994, Adidas merged with Adidas Malaysia as part of the plan to extend
the market to global markets. Adidas Malaysia has grown to become a world leader in the
production of Adidas branded sports wear and accessories. The company follows the strategy
set by the parent company to ensure achievement of set quality standards. Over the years,
Adidas has grown financially with net sales that hit 14.53 billion and has employed more than
50,000 employees. Additionally, Adidas has grown to become a world leader in sponsoring
sporting activities and personalities.
Adidas has a top-bottom structure of management with the chief executive officer
seating at the top of the apex. The CEO heads the board of directors and company
management. The board chairman and managing director report to the CEO on issues and
decisions facing the company. Below the board of directors is a supervisory committee that
performs auditory duties. The auditory duties include checking whether the Adidas Malaysia
satisfies various requirements such as risk management, quality control, strategic
implementation and fulfilling government requirements. The supervisory board is answerable
to the board of directors in the event of failure to fulfil the set standards.
Furthermore, the management is below the supervisory board with a responsibility of
ensuring that Adidas Malaysia performs daily operations in a proper manner. The
management work together with the employees in a supervisory role with duties such as
ensuring an adequate number of employees, resource planning, demand forecasting and

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satisfaction and making timely reports to the bodies above on the state of operations and
market performance.
Mission statement
Adidas Malaysia mission statement states that ‘the Adidas group strives to be the
global leader in the sporting goods industry with brands built on a passion for sports and a
sporting lifestyle.’ Adidas Malaysia intends to achieve the mission by acquiring a wide
market share across the globe. Therefore, the company engages in extensive marketing
activities (Anthony, 2015). On the other hand, Adidas Malaysia intends to uphold high-
quality products to beat competition from other companies such as Nike, Sketchers and
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Puma. Therefore, the company has acquired the best experts around the globe to ensure the
uniqueness of products.
Vision statement
The vision statement states that ‘to bring inspiration and innovation to every athlete in
the world. Nike Malaysia intends to achieve the vision by introducing revolutionary products
to the market that increase the comfort and safety of athletes. Additionally, Adidas introduces
products that suit the athlete’s specific characteristics to bring out optimal performance.
Adidas has also partnered with sporting clubs and personalities to assist in researching the
changes that take place in sports to enable adopting sports wear to specific demands
(Andreasen, 2012). Therefore, the company feels confident of achieving the vision statement
within a short time. Additionally, with the help of research and design coupled with
technology, Adidas Malaysia has the best chance of fulfilling the statement.
The report focusses on the manufacturing department of Adidas Malaysia.
Transformational process
Volume dimension
Adidas Malaysia manufacturing department has different approaches on the volume
of production depending on the product specifications and target market (Fabricius, 2014).
The department produces some sports wear and accessories in large numbers and others in a
few limited editions. The manufacturing department engages in mass production during peak
seasons when the world focuses on major sporting events such as the world cup and
Olympics. During such seasons a high demand for sports wear and accessories exists, which
calls for large volumes of production to satisfy demand. The high demand causes the
department to engage many employees in the production of sports wear resulting in capacity

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increment decisions such as hiring temporary employees (Cook, 2011). However, Adidas
Malaysia manufacturing department engages in low volume production when producing
limited editions of products such as the golden boot awarded to football stars such as Messi.
The department only produces a small number of boots to satisfy the number of employees to
reward.
Variety dimension
Adidas Malaysia manufacturing department focusses on a high variety of products to
satisfy different customers in the market (Bromiley, 2014). The department acknowledges
that different sports require specific equipment. Therefore, engaging in the production of
many sports equipment to satisfy demand. The major equipment produced include such as
balls, golf sticks, tennis racquets, time accessories and running costumes. The manufacturing
department is divided into sub-sections that focus on specific accessories and equipment to
ensure quality and quick market delivery (Corrigan, 2017). The variety dimension has
increased chances to become a world leader in the market due to the ability to ensure high-
quality products for different sports.
Variation dimension
The manufacturing department implements high product variation to fit specific
sporting demands (Cabeza, 2013). For example, producing running shoes for athletes in
different categories based on the sport participated. The department understands that athletes
include long and short races, which require different sports clothes and shoes. Therefore, the
section has engaged research and design experts to develop the best shoes that fit the different
sports. As a result, the department is able to develop marathon shoes and sprinting shoes to
provide safety and comfort when participating in different sports. Additionally, the
manufacturing department has managed to develop different boots for footballers depending

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on the position and roles played in the field. The high-level of variation of products has put
Adidas as a top brand in the sports wear market (Corrigan, 2017).
Visibility dimension
Adidas Malaysia manufacturing department practices both low visibility and high
visibility of production depending on customer demands (Essawy, 2012). The department
performs low visibility when the customer does not place a specific product order. Adidas
manufacturing department has over the years managed to excite customers with revolutionary
products that meet customer taste and preferences, thus reducing customer’s need for
customisation.
On the other hand, the department offers a high visibility of production by working
with customers to produce customized sports equipment (Faulkner, 2013). For example,
working with top footballers to produce boots that meet specific needs depending on the
shape of the foot, role and position played.
Three levels of performance
Societal
The manufacturing department understands the responsibilities that come with being
an international brand with a large market share (Geldman, 2015). The department
continuously aims at ensuring that the customers feel comfortable and proud to use the
products. Therefore, the manufacturing section has developed organisational structures and
quality standards to meet and exceed customer expectations (Kumar, 2015). The
manufacturing department has increased the prestige of the brands through association with
celebrities and high performing athletes. Therefore, the customers experience an increase in
social appreciation when using Adidas prime products.
On the other hand, Adidas’ manufacturing department emphasises on environmental
responsibility by adopting green supply strategies (Jukić, 2019). The department ensures the

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use of recyclable materials for making and packing products. Therefore, the products do not
end up causing harm to the environment. For example, using bio-degradable material that
minimises environmental damage after disposal.
Strategic
Adidas Malaysia manufacturing department strives to achieve the strategy of
strengthening the brand and improve competitive position in the local and international
markets (Gillingham, 2012). The department plans to achieve the strategy through continued
research and design to develop innovative products. The products are tailored to meet the
changing needs in specific sporting activities.
Additionally, Adidas Malaysia manufacturing department engages in extensive
marketing in online and offline media to effectively reach customers (Leverington, 2010).
The marketing activities play a huge role in maintaining a wide market share due to the
competitiveness of the sports wear market. Adidas Malaysia manufacturing department
couples marketing activities with quality production to ensure effectiveness in meeting
customer expectations (Flanigan, 2016). The department has employed marketing and quality
experts to ensure that operations align with the set strategies.
Furthermore, the department uses technology to increase production to meet market
demands in the local and international markets (Rentschler, 2012). The manufacturing section
adopts both mass production and customization depending on the market requirements. The
department adopts production strategies depending on the ability to reduce production costs
and increase revenues.
Operation
Adidas Malaysia manufacturing department adopts an operating system that focuses
on customer satisfaction (Rist, 2013). The system ensures a high-quality of products to meet
specific needs. Therefore, the department has employed experts and integrated technology

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into operations to ensure quality. The operations have adopted a zero-tolerance for error
policy where the system detects errors in production and does automatic correction of the
products before reaching the output stage (Lockwood, 2010). Therefore, ensuring that the
market does not receive defective products.
Operations performance objectives
Quality
Adidas Malaysia manufacturing department upholds quality in performance to meet
customer expectation (Sax, 2018). The department emphasises on doing things right
according to market demands and specific customer requests. Therefore, Adidas Malaysia
manufacturing department has set-up systems to ensure the maintenance of high-quality
standards such as defect-free products that offer comfort and safety (Srinivas, 2012). The
production section acknowledges the high exposure to injuries faced by athletes, which calls
for high-quality products in terms of meeting the strenuous nature of sports. Therefore, the
manufacturing department looks for the best material to make products and ensure safety for
the players and other participants. On the other hand, the production focusses on quality in
terms of product durability (Sulistiyani, 2012).
Adidas Malaysia manufacturing department emphasises on quality to cultivate brand
loyalty through continued purchases due to high competition in the market (Van-Niekerk,
2011). Failure to produce high-quality products results in customers buying products from
other companies such as Nike and Puma. Additionally, with a high level of attachment of
products to celebrities, the market shifts fast to other producers. For example, when a star
player like Messi defects to Nike, then a wide market share made up of his fans is lost.
Therefore, quality is key in production to prevent failure in market performance (Vecchiato,
2012).
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Adidas manufacturing department understands the need to move with speed in the
market to prevent losing opportunities to competitors (Xiong, 2013). The department
understands the need to apply speed in introducing new products, signing up ambassadors
and entering new markets. The sports market is highly volatile and failure to engage in
research and design of new products causes a lag in the market since other companies
continuously introduce new products. Additionally, the customers stay loyal to the companies
that introduce products first to the market, which causes the need to act with speed (Zablah,
2012). Furthermore, the sports market requires speed in signing up promotional contracts
with superstars and great sporting teams. The manufacturing department has to move fast in
identifying and tying down sport protégés to long term contracts to enjoy the market share
brought by the fans. Failure to recognise upcoming stars results in reduced celebrities to
promote products in the market.
Dependability
Adidas Malaysia manufacturing department ensures the dependability of products by
delivering products to customers exactly when needed (O'Donoghue, 2015). The department
understands the sensitivity of time management in customer demands and failure to meet set
deadlines could result in disqualification of players resulting in high losses and legal
procedures. Failure to observe dependability in operations results in customers buying
products from other suppliers.
Moreover, the Adidas Malaysia manufacturing department understands that failure to
operate in a dependable manner could result in a negative image in the market. A negative
image affects the trust placed by the high profile customers in the sports industry. Therefore,
to ensure dependability, the company has adopted technology that ensures quick production
to meet deadlines faster. The company plans to adopt 3D printing technology to manufacture
sports wear and accessories within a short time (Zablah, 2012). Over the years, the

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manufacturing department has maintained a dependable relationship with the customers,
which has created loyalty and affection towards the products. Additionally, the ability to
deliver in time has developed a trustworthy image resulting in signing huge contracts with
teams to supply sporting equipment.
Flexibility
Adidas Malaysia manufacturing department has managed to implement flexibility into
operations to ensure customer satisfaction (Pack, 2012). The department has ensured
flexibility to meet demand during peak and off-peak season. The peak seasons occur during
major sporting seasons such as world cup, Olympics and league competitions. The
manufacturing department manages to increase capacity by acquiring additional employees
and machinery to produce more sports wear and accessories.
On the other hand, Adidas manufacturing department alters production systems to
match the changes in customer tastes and preference (O'Donoghue, 2015). For example, the
current sporting world demands products fashionable and stylish products unlike in the
previous years. Therefore, the management engages stylists and fashion icons to develop
unique and sleek sports wear and equipment. As a result, the department has managed to
satisfy current customer tastes and remain relevant to the upcoming young generation of
athletes.
Costs
The manufacturing department has various approaches to the cost of products
delivered in the market depending on the nature of the brand (Xiong, 2013). The department
has premium brands of products that sell at high prices in the market. The premium brands
target celebrities and wealthy personalities in the society. Therefore, the premium products
consumer expensive raw materials such as using gold to coat shoes and accessories. The

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department often produces the products for specific customers and in limited edition to
increase demand.
On the other hand, the department reduces the costs of production to achieve low
prices for products in the market (Pack, 2012). The department engages in mass production to
produce similar products at low costs, which enables setting affordable prices in the market.
Furthermore, the price wars in the market prompt the production to reduce the cost of sports
wear in the international markets.
Trade-off considerations
Adidas Malaysia manufacturing department addresses dependability and quality
above other performance objectives. The department understands that sports wear and
accessories customers consider the quality of products in terms of meeting expectations,
safety and providing comfort. On the other hand, production acknowledges the need to
deliver early before customer deadlines (Sax, 2018). The sports wear market is made up of
customers who observe strict deadlines of entry and participation in competitions.
Additionally, the training roasters require strict observance, which calls for product delivery
early in time for use.
Adidas manufacturing department ensures that products protect customers from
injuries and provide comfort due to the strenuous nature of sporting activities (O'Donoghue,
2015). For example, marathon runners and sprinters have a high chance of falling on slippery
tracks, which calls for the production of shoes with a tight grip to prevent injuries such as
broken limbs. Additionally, other sports such as football require shoes that do not tear quickly
after contact with the ball or other players. Therefore, the production should develop high-
quality products that last for a long time.
On the other hand, the market judges the products based on quality and dependability
(Piętak, 2014). Therefore, the manufacturing department faces the responsibility of creating a

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good image for products by delivering sports wear and accessories that meet customer
expectation and are available when needed. The continued observation of dependability and
quality on the products has resulted in customer loyalty and a top brand position in the
market.
Hayes and Wheelwright four-stage model
Internal neutrality
Adidas Malaysia manufacturing department has managed to overcome internal
neutrality problems by improving operations to ensure the quality of products (Rubin, 2010).
The department has adopted a zero defect tolerance principle that ensures early detection of
errors and performs the automatic correction. The operations perform in an optimal manner to
ensure that satisfaction of market demands. The manufacturing systems have integrated
technology to operations to include machinery that correct errors in products and notify
operations managers of possible shortages in meeting demand. Consequently, supplying the
market with products that are free from errors to maintain a positive market reputation.
Internally supportive
Adidas Malaysia manufacturing department has managed to implement the best
performance to match and exceed the operations adopted by competitors (Sandmo, 2010).
The department has managed to introduce high-technology procedures and experts in
operations to produce the best products. The operations align with the strategy of becoming a
world leader in supplying high-quality sport wear to the market. The operations have been
able to overcome internal supportive challenges to convey market competitiveness. The
operations have adopted lean operations strategies to reduce wastes and production costs with
a bid to reduce the market prices of products.
External neutrality