EXPECTATION OF SUPPLIERS

Global Sourcing is a key organization of the adidas Group and our primary responsibility is the creation and implementation of sourcing strategy, supporting the diverse needs of all the brands (adidas, Reebok and TaylorMade-adidas Golf), product divisions, categories and regions within the Group. We strive to become the leading organization in the industry by establishing an adaptive supply network which excels in speed, innovation, agility and connectivity. This could not happen without the support and commitment of our product suppliers. Thus this is essential for them to share the same values and principles so as to drive the success of the supply chain as a whole. What do we look for in our product suppliers? Overall Competence Regarding our product suppliers as strategic business partners, we recruit them based on a number of criteria which comprise the overall competence of a supplier: 1. Vision With a vision to become the leading organization in the industry through establishing an adaptive supply network which excels in speed, innovation, agility and connectivity, we expect our suppliers to share this vision, and participate proactively in developing these core capabilities and contribute to the overall supply chain. 2. Supplier Partnerships based on Shared Values adidas Group seeks suppliers who have close alignments with our values and demonstrate great passion for adidas Group products and brands. Our suppliers should strive to become leaders in the fields of performance culture, social and environmental affairs, quality, efficiency, price/value, and innovation. 3. Technical Capability We seek product suppliers with advanced technical capabilities, not only limited to product innovation and quality, but also with the ability to perform business electronically and flexibly enough to upgrade their systems to adapt to future market demands. Our suppliers should continuously promote communication and information visibility throughout the supply chain. 4. Leadership adidas Group seeks suppliers who have a clear and aligned vision for their organization. Our suppliers’ leadership teams are expected to build positive working culture and lead their workforce to achieve improvement and performance targets on a continuous basis. 5. People Management We look for suppliers who commit to talent management. Suppliers should maintain a professional organization structure which includes dedicated development / merchandizing, planning, industrial engineering, quality and information technology teams, as well as committing to deliver lean operations, competitive cost structure, and cost transparency. 6. Workplace Standards and Ethics We believe better working conditions yield higher quality, efficiency and flexibility to meet customer needs. Suppliers should provide their workers with competitive wages, safe and good working and living environments as well as proper incentives for higher quality and productivity (e.g. lower average working hours in general, decent accommodation and fringe benefits, etc.). 7. Financial Stability We seek suppliers who are financially stable and comply with international and local statutory regulations for the interest of maintaining a viable supply chain and protecting adidas Group shareholders and consumers in the long term. Suppliers should be willing to share selective financial information with adidas Group upon request. Risk Management To minimize risks in our business operations, the adidas Group and its suppliers should actively build and take action plans to manage the following types of risks: Social – we adhere to our established Code of Conduct, the "Workplace Standards" of Engagement (SOEs) Political – we minimize asset and cash exposure in countries which are considered to be politically unstable. Regulatory – we actively review and adjust sourcing strategies annually to minimize trade restrictions exposure Legal – we utilize extensive legal procedures to combat counterfeit operations in order to minimize the risk of infringement of trademarks and patent rights related to adidas Group products Natural – we maintain high safety standards and have disaster recovery plans in place to deal with such circumstances Business Culture To ensure our business operates in an efficient and effective manner, adidas Group has established a unique business culture which comprises the following: Right Product at the Right Time - Suppliers are expected to deliver the right products at the right time and in the right quality. The aim is to shorten the end-to-end supply chain lead time from raw materials sourcing to the delivery of final products. Quality Excellence – Quality is one of the main focuses for adidas Group. Our suppliers should ensure all products manufactured meet the defined set of standards. Continuous Improvement – Product suppliers are expected to continuously embrace and drive positive changes and make necessary investments to achieve operational improvements in their organizations. End-to-End Mindset – Suppliers are expected to share equal responsibilities with adidas Group in building an optimum supply network so as to achieve maximum and sustainable total profitability for all stakeholders. Performance Culture – Suppliers should instill a performance culture by continuously setting and meeting aggressive yet reasonable business targets. Customer-Focused In today’s fast-moving world with ever-changing consumer needs and demands, it is crucial for adidas Group and our supply base to keep abreast with the changes and align our development and product allocation strategies closely to market trends. We expect our suppliers to instill this customer-focused mindset and be fully committed to the implementation of our development and product allocation strategies. Cost Efficiency As part of a global organization, we focus on the best interest of the entire supply network. We achieve this by driving Performance Culture, Quality, Reliability and Innovation which will enable our suppliers to offer leading price and value. Our suppliers are expected to collaborate on improvement programs that continuously increase efficiency and reduce cost. This means that suppliers should utilize productivity and efficiency gains to offset increasing cost drivers and minimize impact on customer prices.