A run across the world

Welcome to Lead Time, a newsletter that takes you behind the supply chain of everyday products.

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Today, we dive deep into the supply, and value chain, of a running shoe.

We start at the very beginning - the refining of crude oil into petrochemical feedstocks. Then, we discover how companies use the final product from refined crude oil to manufacture a foundational part of your favorite running shoes.

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Ethylene-Vinyl Acetate (EVA) is a popular compound used to make midsoles for running shoes, providing you with support and stability on your morning run. Its value chain spans multiple continents.

Countries in Asia-Pacific are the largest consumer of EVA, which is not surprising given that China and Vietnam are the world's 1st and 2nd largest footwear manufacturers, respectively.

Since the 1960s, the value chain of running shoes has evolved, as brands went from vertical integration, with in-house production, to outsourcing most of their production to Asia. In recent times, brands are starting to bring their distribution in-house and capitalize on direct-to-consumer channels, while decreasing their reliance on wholesalers.

Starting at the beginning

It’s well known that running shoes are designed to withstand the wear and tear of our regular use. What isn’t well known is that the magic of a running shoe is in its midsole - which is typically made with Ethylene-Vinyl Acetate (EVA).

Without diving into its organic chemistry, what you need to know about EVA is that it's a naturally stretchy polymer made from a combination of ethylene and vinyl acetate. It has similar properties to rubber, but is softer and lighter, giving runners a whole lot of bounce. Initially adopted in the 1970s, EVA remains one of the most widely used cushioning materials by brands including HOKA, New Balance, Skechers, and Brooks.

The value chain of EVA starts with natural resources below the ground. The exploration process includes searching for potential oil and gas reservoirs, drilling wells, and developing facilities around wells that end up producing large quantities of hydrocarbons. This is the most high-risk aspect of the value chain.

While there are a number of ways to transport crude oil, one of the most common ways to do so is via pipelines. Pipelines are used on land and offshore to move oil from oil/gas separation units in the fields, and from gathering centers to port terminals. These pipelines deliver the oil from supply points to refineries and other destinations.

At the refineries, petrochemical products are made from hydrocarbon feedstocks through several processes and transformations. Some of the most prominent products include polymers and resins such as EVA, which when molded, shaped, and reformed, end up as consumer products, like the midsole of a running shoe.

From compound to finished product

As EVA moves down the value chain, one of the manufacturers from the graphic above will use it to make midsoles for running shoes, using two popular methods: injection molding and compression molding (CMEVA). Though both methods involve using a mold to shape the design and details of the midsole, there are some notable differences.

In compression molding, the EVA is compressed into the mold, resulting in a midsole with the same size and shape as the mold used to create it. Similar to a waffle iron, the manufacturer will grease the mold, making it easy for the sole to pop out and the next one to go in.

Injection molding involves heating the EVA liquid and injecting a blowing agent into a mold that is only about half the size of the final midsole. The mold sits for a period of time, and when it is removed, the EVA sole expands to its full size and shape.

The process of manufacturing a midsole from EVA illustrates the mechanics of a supply chain at work. Compared to a value chain, a supply chain is the network of businesses, activities, technologies, and resources that function together to make a product and distribute it to customers like you. Here, the operational steps taking place across the supply chain include the procurement of EVA from suppliers to the manufacturing of a midsole using modern industrial machinery.

Ultimately, a supply chain deals with the process of turning raw materials into finished products and getting them to customers, while the value chain focuses on enhancing the value of a product in various ways.

Headin' out East

In the 1960s, footwear brands were vertically integrated, handling a large portion of their business operations related to the production of shoes. By the 1980s, as Nike began outsourcing the production of its footwear to parts of Asia, particularly Japan and South Korea, other competitors continued to build production capacity in-house. However, by the mid-90s, most, if not all global brands had begun outsourcing production to Asia, and by the 2000s, almost none of the large footwear companies owned any manufacturing facilities.

Today, the center of gravity of athletic footwear production remains in Asia, particularly towards China and Vietnam, the world's 1st and 2nd largest footwear manufacturers, respectively. With this agglomeration of manufacturing activities in Asia, it’s no surprise that APAC is also EVA’s largest consumer.

Movin’ along the chain

If a single component like EVA can play such a pivotal role in the story of a running shoe, imagine what else we will discover as we make our way downstream of the value chain.

And that's exactly what we intend to do for the next few Lead Time newsletters.

We can't wait for you to join us!