Amer Sports' supply chain, IT and manufacturing

Supply chain management encompasses all of Amer Sports’ business functions from product innovation to product manufacturing to outbound logistics like supply planning, manufacturing, procurement, and logistics. IT management encompasses for all Amer Sports: SAP support, extended business services, security and infrastructure.

Reliable, efficient and timely supply chain management is an important part of Amer Sports’ strategy, and the company has continued to strengthen its supply chain organization in recent years. In 2008, Amer Sports created a new Supply Chain and Information Technology (SC&IT) function. The new function is responsible for managing the integrated supply chain at the Group level. The function is divided into three integrated shared platforms (IT, sourcing, and distribution and transportation), and two communities of practice to roll out harmonized processes, tools, performance leadership and global programs. Sourcing in Asia is managed from the Group’s sourcing office in Hong Kong, and global IT and distribution and transportation from Amer Sports Munich office.

Amer Sports is in the process of further integrating its supply chain functions and continues to seek more synergies and opportunities. The aim of the ongoing integration process is to develop a worldwide, globally managed supply chain, designed to provide a high level of customer service at lower cost and inventory levels.

This process includes the following initiatives:

  • further integrating logistics and transportation management;
  • broadening the role of Amer Sports’ Asian sourcing organization to further leverage the Group’s scale, negotiating power, and talent base;
  • further harmonizing global business processes and the rollout of a global enterprise resource planning (ERP) system (SAP) in the Group;
  • harmonizing global inventory and product availability management through centrally-led sales and operation planning; and
  • rolling out of the “Lean and Operations Excellence” methodology within Amer Sports and in its subcontractor operations.


2009 was year one for the newly created SC&IT team. During the year, the Lean and Operations practice, the global shared logistics platform and Amer Sports’ sourcing organization for apparel, footwear and accessories have been set up. We rolled out our harmonized SAP template in the four Nordic countries and focused very successfully to improve our inventory with a reduction of more than 30 percent at constant service level.

Manufacturing and sourcing

Amer Sports maintains its own production facilities in Austria, France, Finland, Canada, Bulgaria, and the United States.

In 2006 and 2008, Amer Sports restructured the production of its winter sports equipment. As a result, the manufacturing of Salomon’s and Atomic’s winter sports equipment was combined. The number of manufacturing sites was reduced from ten to six, including subcontractor sites. Amer Sports also acquired its Bulgarian subcontractor. Salomon and Atomic skis, bindings and boots are now supplied through owned and subcontractor factories in Austria, Bulgaria, Romania, and Hungary. Amer Sports has also decided to move Precor’s fitness strength production unit from California to the more cost-effective state of North Carolina. This new plant is expected to be operational from early 2010.

Amer Sports purchases the raw materials it requires for its facilities from a number of sources. Amer Sports uses steel, rubber, and oil-based raw materials and components in its products. Such raw materials are used in the manufacture of plastic components for bindings and ski boots, carbon-fibers or rackets, and metal parts for fitness equipment, binding components and ski edges.

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Outsourcing

Amer Sports has increasingly sought to outsource the production of end-products and components to gain operational efficiencies and cost-savings. Currently, Amer Sports outsources the majority of its manufacturing to subcontractors. Most of the apparel and footwear under the Salomon, Wilson, Arc’teryx, Mavic, and Bonfire brands are manufactured in Asia. In addition, Amer Sports outsources the manufacture of all racquet sports and golf as well as most team sports products.

Amer Sports has also outsourced the manufacture of products and components for a variety of Mavic, Suunto, and Precor products to Asia. As of December 2009, the Asian sourcing function employed 230 people in the region. The Amer Sports sourcing organization in Asia started operations in 2007 and its role was expanded in 2009 when it took over the main responsibility for the sourcing of apparel, footwear, and accessories at the Group level. The sourcing office in Hong Kong is responsible for qualifying vendors, ensuring product quality and service levels, negotiating prices, administering exports, and seeking to ensure that subcontractors follow Amer Sports’ standards for ethical operations.

Amer Sports generally prefers to have at least two vendors for its most critical products and components. Amer Sports has a good relationship with its vendors and it will continue to secure a sufficient supply of high-quality products in a timely manner and on competitive economic terms.

Quality Control

Quality specifications and quality assurance are of prime importance to Amer Sports’ production process, especially since Amer Sports manufactures a number of products for active sports where injuries caused by defective equipment may subject Amer Sports to product liability claims. Products are subjected to quality control tests before production commences and before products are sold to customers. In addition, Amer Sports conducts quality testing several times during the production process in order to ensure that the products meet its quality requirements. In general, quality control is handled by Amer Sports’ own quality control personnel who carry out extensive testing and inspection of products. Amer Sports also requires its third-party suppliers to arrange for certain testing to be performed at the manufacturing site. In Asia, the Hong Kong sourcing office supervises outsourced production closely to ensure that all products and components meet a particular brand’s product specifications and quality control standards. If an item is returned or recalled, Amer Sports analyzes and investigates the product and liaises with its third-party suppliers aiming to ensure that such fault will not be repeated.

In most countries in which they operate, Amer Sports’ companies provide product warranties based on local laws. The scope and term of the warranties vary between geographic markets and product categories.

Distribution and transportation

Amer Sports has two primary distribution hubs serving several brands: one in Germany (Überherrn) serving the EMEA region, and one in the United States (Nashville). In addition, Amer Sports’ logistics facilities include factory-related warehouses and regional or country-specific warehouses. From the distribution centers, products are transported to trade customers or Amer Sports’ own stores. Amer Sports uses third-party transportation companies to transport its products by truck, rail, plane, and sea.

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