Adidas, in its press release on 11 November 2019, announced that it will close its speedfactories in Ansbach, Germany and Atlanta, Georgia, USA within 6 months. Beginning from the end of 2019, the company plans to use its speedfactory technology to manufacture athletic footwear through some of its suppliers in eastern Asia. As a result of this press release, the company’s shares dropped by 1% in Frankfurt trading on the day of this announcement. Yes – it does show that stakeholders do measure us by efficiency as a metric!
Adidas embarked on this experiment in 2016 when it established the speedfactory in Ansbach, Germany. This was followed by the opening of another speedfactory in Atlanta, Georgia, USA in 2017. Apparently, the venture was not successful with certain products which is why the speedfactories will be closed by April 2020. It is highly likely that the 160+ jobs will either be discontinued or shifted.
This type of activity, however, is not to be confused with the highly efficient practices of robotic process automation (RPA) which we implement in office automation, alongside intelligent AI chatbots. (read more about RPA here on the official Avi Benezra website https://www.avibenezra.com/chatbots/the-interaction-between-rpa-software-robots-and-chatbots/)
Why are the speedfactories closing?
The idea behind the establishment of the speedfactories was to decentralize manufacturing processes. At that time, like many other industries, Adidas produced their products in eastern Asia where labor costs and overheads are more affordable and then ship them to various destinations. The problem with that business model, according to Adidas, is that fashion and athletics move fast but the distribution of the products from Asia by air and sea is slow. Therefore, the intention of establishing speedfactories was to have local micro-factories where the customers are in order to speed up delivery of new fashion styles. However, automation proved to be more difficult than expected and the strategy did not work out as planned.
Adidas is not the only company that rushed to automate its production. Various companies have done that and overcommitted themselves when the robotic technology was far from being ready. While automation is ideal for repetitive tasks and saves time and labor costs, robotic factories are not easy to reconfigure or repurpose each time a pattern is changed. Specialized knowledge is required to set up everything. While manufacturers of robotics are making progress in making robots, it is still more difficult to configure the robots to perform the work than to train human beings to use standard tools when producing a different pattern. It is possible that Adidas experienced such problems in their speedfactories.
Will the speedfactory technology continue to be used?
Adidas claims that they have learned a lot of lessons from running these speedfactories. As Martin Shankland, member of the executive board of Adidas for global operations, said, the speedfactories helped Adidas to expand their manufacturing innovation and capabilities. He says they even managed to provide select customers with extremely relevant products for moments that mattered through shorter product development and production lead times which was their initial goal. Now they want to use the lessons learned combined with other advancements made with their suppliers to become more flexible and economic as they expand their product range.
Starting some time in 2019, the speedfactory technology will be used to produce athletic wear in two of their suppliers’ factories in Asia. It is hoped that the production processes tested in speedfactories will be used to speedily manufacture running shoes and other shoe styles in Asia. It is not clear what this will entail and more information is needed from Adidas.
What is the way forward for the technology?
The expensive experiment will not be wasted. Using the lessons learned from the two speedfactories, Adidas says it plans to continue to “develop, improve and test manufacturing processes in Germany.”
The speedfactories were created in collaboration with Oechsler, a high-tech company. Adidas will continue to collaborate with Oechsler in other manufacturing areas. When asked to comment about the impending closure, Dr. Claudius Kozlik, CEO of OECHSLER AG, said his company regrets the decision but they also understand it. His company looks forward to continued cooperation with Adidas in 4D sole printing. The other areas of collaboration will be production of soles for football shoes and soles for shoes using Boost technology.
Existing technical knowhow, new production methods developed in the speedfactories and continued research and development will, hopefully, result in faster production of footwear and more design flexibility in the future. Adidas will therefore be able to respond faster to consumer needs.