Final answer:
Adidas can reduce outsourcing risks by leveraging technology to enhance supply chain visibility, investing in human and physical capital for better oversight, promoting sustainable practices, and focusing on key industries for world-class production capabilities.
Step-by-step explanation:
To minimise outsourcing risks, Adidas could adopt a multifaceted procurement strategy that encompasses several approaches. First, by integrating technological advancements in supply chain management, Adidas can enhance visibility and control over outsourced operations, thus reducing risks related to imperfect information which can otherwise affect price, quantity, and quality. Secondly, the company could invest in human and physical capital to strengthen relationships with suppliers and develop expertise in critical areas, ensuring better oversight and compliance with labor rights and safety regulations.
Moreover, it would be strategic for Adidas to participate in or even lead industry-wide initiatives to promote sustainable practices and reduce environmental impact, such as the Fashion Industry Charter for Climate Action.
This helps align Adidas with consumer expectations of brand responsibility towards both labor conditions and environmental stewardship. Additionally, focusing on a few select industries that align with the company's core competencies can lead to world-class production capabilities, which can be bolstered by suitable market-oriented economic incentives.