June 13, 2016      

Robots as change agents
Adidas (ADS:GR) , the sportswear giant that closed most of its factories in Germany in the 1990s, has returned home after three decades.

“When I started at Adidas in 1987, the process of closing factories in Germany and moving them to China was just beginning,” said the company’s CEO Herbert Hainer during an interview with the Financial Times. “Now, it’s coming back. I find it almost uncanny how things have come full circle.”

Robot-driven automation is the key to launching a new “speed factory” in Ansbach, Germany, and another in the U.S., with production scheduled for 2017.

In terms of large-scale shoe production, the new factories will be modest, manufacturing half a million shoes per year within three to five years, per factory, added Gerd Manz, head of innovation and technology. “The new factories will not immediately replace Asian sub-contractors.”

In comparison, Adidas produced 301 million pairs of sport shoes in 2015 and wants to manufacture another 30 million pairs per year to reach its growth target by 2020.

The term “speed factory” is an Adidas twist on the EU’s future Factory 4.0 concept. The Adidas plants, fully automated and staffed with robot workers, are scheduled to have no more than 160 human workers in each.

Hainer added, “As a sports company we know that speed wins…we defined speed as one of the key choices of our strategic business plan. With the Adidas “speed factory” we are revolutionizing the industry.”

What’s a speed factory?
Speed factories, as the name implies, are built for fast manufacturing, but in addition, for fast customization, whereby the factory can rapidly crank out shoes custom designed by the customer, be it a customer of one or a retailer for many. Generally speaking says Manz in a recent interview, “We’re going to be much faster reacting to consumer needs, whether it’s individual or market needs.”

To that end, he adds, the race has just begun. “We’re going to run that marathon really fast, but our vision is we want to have a decentralized, flexible manufacturing network that can react locally to consumer demands.”

The Ansbach plant in Bavaria is now and will be more so in the future a totally automated facility using “intelligent robotic technology” that will operate alongside the more traditional mass production methods the company currently employs.

“We started looking into this quite a while ago and we’ve moved away from looking only at product innovation, which is traditionally the case in our industry. We’ve been trying to look more at innovation in experience as well, trying to start higher up the value stream.”

“We don’t see this as a competition; we see it as complementary to what is going on right now. Frankly, we are growing so fast at the moment we have a hard time finding capacity in our existing supply chain. This new model we are creating will talk to a different consumer. It is a market no one is in yet.”

Since last December, Ansbach’s 49,500 square feet of operating space has been used to test both the company’s new manufacturing process and a new production model.

Once operational, Ansback will be run by Adidas’ strategic partner Oechsler Motion. Gizmag reports that “in addition to being able to produce goods faster than ever before, the factory will help to reduce shipping emissions and the use of adhesives.”

New plant, new process, new product
Adidas is not only building new automated facilities but also seriously flirting with new production methods like 3D printing. PSFK reports that Adidas has a partnership afoot with 3D printing provider Materialise, which the new partners dub as the “first real step in the frequently promised new mode of shoe printing. Rather than looking to print an entire shoe-a step that requires a few developments in material printing technology-they’re printing just the midsole insert. They’ve dubbed this insert the Futurecraft 3D.”

“Most major shoe brands…have been flirting with 3D manufacturing for the past two to three years. For the brands, it represents a chance to cut several steps out of a costly, complex and sometimes ethically questionable supply chain. For consumers, this means an opportunity to wear custom-fitted shoes at an off-the-rack price point.

One big advantage of Adidas’s robot-led factory is efficiency, reports the Financial Times. “Adidas says it will need to carry out larger production runs before it can quantify the gains precisely.

“But the consultancy BCG [Boston Consulting Group] estimates that by 2025 advanced robots will boost productivity by as much as 30 percent in many industries, and lower total labor costs by 18 percent in countries such as the US, China and Germany.”