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Team GB Adidas Olympic kit stumbles at supply chain CSR hurdle

Hot on the heels of the story about poor conditions for workers in the Apple-Foxconn manufacturing partnership comes news that the Team GB Olympic kit designed by Stella McCartney is being manufactured under sweatshop conditions in Indonesia. This attracts bad press for the 2012 London Olympics, and reputational damage for Adidas as it emerges that the brand expects to make around £100 million from its Olympic lines made by Indonesian workers that earn as little as 34p per hour.

For the Olympic Movement there is an embarrassing sub-text in the form of a double standard:

Athletes from all nations may compete on a level playing field but workers across the broader Olympic supply chain do not.

Once again this demonstrates that it is perilous to ignore CSR (Corporate Social Responsibility) issues across the supply chain. We may accept that there are significant differentials in earnings, lifestyles, costs and standards of living between workers in developing compared to developed nations; however, what is unacceptable are practices such as physical and verbal abuse, forced overtime working and punishment for failing to reach targets.

Unfortunately it also suggests that there is a yawning gap between what some manufactured goods cost to produce compared to the premium price to buyers; ultimately such a perception makes the brand look exploitative. But is this perception correct?

This story was uncovered by The Independent. Although it is a quality newspaper, its reporters or editors cannot understand the business reality of being an international sportswear brand. The only one that truly understands Adidas’ business is… Adidas. If your business needed to defend itself against such allegations, how could you go about it?

One way to mount a credible defence in a case like this would be to present complete calculations of supply chain costs. Elements such as design, materials, manufacturing, labour, shipping, import and local sales taxes are critical to understanding margin calculations and proving that retail prices are reasonable.

A NetSuite cloud-based ERP solution provides you with a costs audit trail that would enable your wholesale distribution business to defend a position like this. For the foreseeable future, organisations operating in the global market are likely to face business challenges that require complete visibility of the supply chain; on top of that they need systems that offer unrivalled efficiency, flexibility and ease of access.

NetSuite provides supply chain clarity while avoiding the need to purchase hardware and software, and the steady ongoing drip of upgrades, maintenance and administration costs. It offers 24/7 access anywhere in the world connected to the internet. To gain accreditation as a UK NetSuite 3 Star Award solution provider BlueBridge One has demonstrated that it takes the time to understand the needs of mid-market customers before custom fitting NetSuite ERP. If you want your supply chain to be better able to help meet your business challenges, click here and register with BlueBridge One for a 14-day FREE trial of NetSuite.

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