Australian university the Royal Melbourne Institute of Technology (RMIT) is engaged in a US$207,000 research partnership with sportswear company adidas to develop sustainable manufacturing practices, focusing on the company’s supply chain. The objective of the alliance is to help adidas achieve excellence in sustainable manufacturing of sports apparel and footwear across its business, starting with Indonesia. RMIT researchers will investigate trends in sports technology and methods to reduce energy consumption, water use, waste and emissions.

“They are targets that are considered very important by adidas and, in particular, targets that they wish to achieve across the entire supply chain,” says Professor Aleksandar Subic, the project leader and head of the School of Aerospace, Mechanical and Manufacturing Engineering at RMIT. He notes a conscious effort in recent years by multinationals to improve their sustainability practices in regions such as Asia, in particular.

RMIT beat an impressive field of global organisations for the grant, which Professor Subic believes represents an opportunity for the Melbourne-based university to make a mark in the international research field. “It’s a strategic area of research that is of great importance to that industry sector worldwide, not just adidas,” he says.

Chain Reaction

Sustainability has become a buzzword for multinationals as their customers and even employees demand improved practices across many areas, including the environment, human rights and supply chains. The big companies are, in turn, putting the heat on their suppliers to meet the highest standards. Negative publicity in the 1990s over so-called manufacturing sweatshops in Asia led sportswear giants such as adidas and Nike to clean up their practices. The quest to keep evolving and improving those supply chains continues.

Professor Subic says sustainable policies and processes are crucial on two key fronts for companies such as adidas: protecting their brand, and ensuring they engage in best-practice innovation and production. “A world-class brand needs to be associated with world-class practice in sustainable manufacturing and sustainability in general,” he says.

While the adidas-RMIT project will initially focus on Indonesia, Professor Subic says it represents the “next frontier”, as the initiative will aim to build supplier excellence and implement new sustainability strategies across the brand’s entire supply chain.

William Anderson, head of Social and Environmental Affairs, Asia Pacific, at adidas, has commented that RMIT is well placed to contribute to the project because of its proximity to the manufacturing sites and its interest in Asia.

“RMIT was appointed following a global search for an institution which would be best placed to support adidas Group in our drive to improve sustainability in our supply chain.

“RMIT secured this assignment based on their strengths in engineering, depth of understanding of sustainable manufacturing processes and their ongoing commitment to education in the region, which is exemplified by their Vietnam campuses.”

Team Effort

The adidas Group, which includes the adidas, Reebok, TaylorMade and Rockport brands, has been manufacturing in Asia for many years. This research partnership will identify any problems in adidas’s regional supply chain and develop a training system for in-country manufacturers.

Professor Subic says it is appropriate that Australia should play a role in developing sustainable practices in Asia because of its geographic location. “Australia has a very important role to play in this domain in the Asia-Pacific region. It’s a real niche for Australia and I think the more we do it the better we will become across many different sectors, not just the sports industry.”

Business Sense

Feel-good factors aside, there are clear reasons why businesses should opt for sustainable practices. An A.T. Kearney report, Green Winners: The Performance of Sustainability-Focused Companies in the Financial Crisis, reveals that organisations with a commitment to sustainability outperform industry peers. The analysis of 99 firms on the Dow Jones Sustainability Index and the Goldman Sachs SUSTAIN focus list of green companies tracked stock price performance for six months in 2008. In 16 of 18 industries reviewed, businesses classed ‘sustainability focused’ did better than their peers.

Yet Professor Subic says the breadth of multinational operations can make it difficult to track corporate objectives, such as sustainability and fair labour practices, across a supply chain.  They may also have varying degrees of control over the practices of their suppliers. However, scale can also be an advantage. RMIT’s research will make this process easier. The new partnership aims to establish methods of providing assistance to manufacturing firms and better ways of collaborating to develop their capabilities in sustainable manufacturing. The work, expected to take about three years, will include visits to Jakarta, the Indonesian capital, and direct engagement with selected suppliers of sports apparel and sports footwear. However, the research will primarily be undertaken in Melbourne with the aid of teleconferencing facilities and Webex conferences involving key stakeholders.

The establishment of a regional Sustainable Manufacturing Institute, a standardised training facility for manufacturing operations in Indonesia, China and Vietnam, will be considered in the final phase of the project. Professor Subic says rather than protecting trade secrets, adidas and RMIT will share the findings of the research with other companies facing similar challenges. “This is a novel approach to how you treat the outcomes of research.”

According to Professor Subic, the adidas grant is an exciting chance for RMIT to demonstrate its stellar research credentials. “This, for us, is a unique opportunity to integrate our efforts across disciplines and to focus on a high-impact project with a quality international company,” he says. “A clear benefit for us is developing this relationship and partnership with adidas because it is a world-class company that is recognised by excellence in design and excellence in manufacturing. There is a very clear focus on sustainability, which gives us the scope to really further develop in that area.”