The following pages present an in depth business plan on Adidas developing a customized footwear line. This is the updated version of the preliminary plan submitted previously. This project plan describes in detail the necessity of Adidas developing a customized shoe line in accordance with the strategy behind NikeID. The project objectives, scope and deliverables have been updated in order to satisfy the changing needs that Adidas must face on environmental level. Project risk and the responsibility matrix have also been improved as a requirement of project plan updates. The Schedule and Constraints section addresses each activity included in the project in detail.
The competitive environment in which Adidas develops its activity requires the company to establish innovative strategies on product development and marketing. With Nike investing significant resources in product innovation, but also in modern marketing techniques, Adidas is forced into copying its competitor's strategy in order to maintain its position on the market, and to improve this strategy in order to become the leader of the footwear industry.
The necessity of developing a project on product innovation of Adidas' footwear that is focused on customizing the company's products is determined by the activity of its main competitor, Nike. The company understands the fact that it is more efficient to target several different customer segments with little differentiated footwear, by allowing customers to customize their footwear themselves (Nike, 2013). This is intended to address customers that are interested in the sports qualities of the footwear, customers that want their footwear guaranteed by celebrities, and customers for which footwear represents a fashion statement. Basically, the footwear developed by NikeID segment has little variation, but customers can customize it in accordance with their preferences.
The reasons behind developing this project are represented by Adidas' need to pursue its main competitor, Nike. The company's NikeID product range success requires that Adidas also develops a strategy based on product customization. Such a strategy is able to address several types of different customers more efficiently.
The goals that this project must reach on corporate level are represented by increasing sales, improving customer satisfaction, an increasing the flexibility of Adidas' product range. In addition to this, the company intends to diversify the customer segments it targets through this project, and to challenge Nike's position on the market. These goals are supported by financial, technical, and human resources.
The objective of this project is represented by developing a strategy that allows Adidas to successfully develop a customized footwear line.
The project's deliverables are represented by a supply chain management that is in accordance with the customized shoes line, developing an online platform for customizing and purchasing these shoes, and developing in person mechanisms through which customers can personalize these shoes.
The efficiency of the supply chain will be measured by the time of days it takes from receiving a customized shoes order to the customer receiving the products. The measures for the online platform are represented by the number of orders for customized shoes in comparison with orders for regular Adidas shoes.
In the case of regular footwear lines, Adidas established its supply chain and stocks based on analyses of previous sales and market trends estimations. But in the case of customized shoes, the production process is longer. The production process is finished after the client makes an order and selects how he wants his shoes to look like. The production and client delivery are likely to add to four weeks. During this time, Adidas' supply chain is charged with customized shoes that are in different production stages. Therefore, it is necessary that the company develops a flexible supply chain management strategy.
Other deliverables of the project are represented by the online platform that will allow customers to customize and purchase their shoes, as well as in-person mechanisms for placing customizing orders in Adidas stores or in other stores that sell Adidas shoes.
An important assumption that is associated with this project is that Nike is likely to reduce the prices of its customized shoes after Adidas' customized footwear line is launched. Initially, Adidas will be forced to have higher prices for its customized shoes line in order to return its investment. Another important assumption that must be made is that the success of this project can significantly increase if Adidas reduces the period from the customer's order to customized shoes and its delivery. In the case of NikeID this usually takes a place within four weeks. This can be considered a long period to wait for shoes to be delivered. Some impatient customers might not enjoy this, and purchase regular shoes. If Adidas manages to reduce this period, it is likely that some of NikeID's customers can purchase Adidas customized shoes.
Nike has found a simple strategy in order to increase its sales and customer satisfaction: customized shoes. This product line satisfies the needs of several types of customers. It addresses customers that are into fashion footwear, customers that want their footwear guaranteed by sports celebrities, and customers that are interested in the technical benefits of footwear. In this context, Nike gains new customers. Therefore, it is required that Adidas develops such a project also.
Project Risk and Uncertainty
In addition to tight schedule, inventory risk, cost escalate, product innovation, logistics, and suppliers risks Adidas must add the risk of overcharging the production line. Adidas' production line is scheduled on working in order to satisfy current demand. If the company develops a customized shoes line its demand is likely to increase. This means that Adidas must also expand its product line in order to keep pace with its innovation.
Research and Development Department
Production line scheduling
Raw materials necessary
The customized shoe line requires the cooperation between most of Adidas' departments. This is a team effort. In order to reach the project's objectives it is important that a project team is formed with members from all departments.
The initiation of the project is attributed to the Marketing Department. The Production department is in charge with establishing the raw materials necessary by developing a customized shoes line, with the scheduling of the production line, and of actually performing the production process of the footwear in case. The Sales department must develop a sales plan in accordance with the investment level and return on investment determined by the Finance department. The IT department must optimize Adidas's website in order for it to support a larger number of user operations associated with customized footwear orders. The Research and Development department basically develops the new products that will be developed by Adidas based on market requirements.
Schedule and Constraints
The schedule has modified since the preliminary stage of the process. Several activities have been added to the schedule as a necessity determined by the project's objectives. These are activities attributed to each department.
The project will start with the Marketing department conducting a research survey among footwear users in order to determine their satisfaction with the current product offering, and to identify their needs and preferences on customizing shoes. The results of the study will be discussed with the Research and Development department that will develop the shoe prototype in accordance with customers' needs. During this time, the Finance department will determine how much and at what prices the company has to sell the new products in order to return its investment.
The marketing department will also develop the marketing strategy intended to help reach the sales level established by the Sales Department. In addition to this, it is the IT department's job to expand the online platform in order for customers to be able to order and customize their shoes on Adidas' website. Each department will assign members in the project team.
Calendar, Duration, Network
06 nov 2013
20 nov 2013
Project team creation
Project team discussions
Production capacity, raw materials necessary
Marketing strategy development
The project will require internal and external human resources. The external resources will be used in conducting the market study. The budget that is estimated for labor is of $545,000.
Non-labor budget, for raw materials, travel and others is estimated at $30 mil.