Thoughts on Supply Chain Trends in the Footwear Industry
Nike was one of the first companies to breakthrough in the “modern” footwear industry by using the now famous slogan “Just Do It” and selecting Saturday mornings as the universal day of the week when new Air Jordan shoes were released. Since that time, the footwear industry has continued to evolve and has embraced several trends as companies battle to stay ahead of the curve. Let’s examine a few of these:
- 3D Printing – This technology is now bleeding into the footwear industry. Under Armour recently used 3D printing within the design of its UA Architech This shoe has a 3D-printed lattice-structure midsole which is considered the “secret sauce” of the shoe. It allows the running shoe to be “soft enough and strong enough to protect and provide structure, but with cushioning underfoot”. This shoe sold out online within a few hours after its release. The next step in this evolution will be customized shoes via 3D printing. New Balance, Nike and Adidas will quickly follow suit with the use of 3D printing in the shoe game.
- Market Driven Distribution Networks – The rise of e-commerce and increased online orders has left many footwear distribution centers stretched to keep up with nationwide demand. In many cases, footwear companies only have a single distribution center located on one of the coasts in the US. This oftentimes causes customer service issues, slow and/or expensive shipping to customers, and an overall network that is not optimized for the new business reality. We have spoken with several footwear manufacturers who are looking at expanding their footprint to the other coast and/or distributing from the center of the country where overall shipping costs are less due to the closer proximity to customers’ homes. ASICS America saved millions of dollars when they followed this blueprint a few years ago. Many other footwear companies have followed the same path or are looking to do so.
- Faster Speed to Market – Adidas has publicly stated that their goal by 2020 is to take a shoe from idea to store shelf in 45 days. This is a staggering goal that, if accomplished, could finally launch Adidas ahead of Nike as the #1 brand in footwear in the world. The combination of cloud technology, localized production and an open ecosystem will be the three main strategies that Adidas follows to accomplish this goal. It is possible, but it won’t be easy.