SCM & ERP Software Implementation At Nike: from Failure To Success

GR OUP - E ARVIND ACHANTA HARINI CHODAGAM MANISH KHURANA MUDITA MEHROTRA NITHEEN PATRIC PRATEEK BAJORIA SAKET KHANDELWAL S P PARHI SWATI

OVERVIEW OF THE CASE

Introduction: NIKE Supply chain management NIKES supply chain i2s debacle Reasons for i2s software failure Implementing SAP AFS Benefits Conclusion

Introduction: NIKE
Founded in 1957 by Philip Knight. Manufacture:
Sports equipment Sports wear Apparels Accessory products

Products sold in over 140 countries.

SUPPLY CHAIN MANAGEMENT

SCM is a business network covering from buying, making, moving, warehousing to selling
Making Buying Moving

Selling

Ware housing

NEED FOR SCM

NIKES SUPPLY CHAIN

In 1975, Nike introduced Future Program. Supply Chain Management was inadequate. 1998, Nikes global operations were broadly divided into 5 geographic regions. Nikes profit dropped by 50% from US$ 798 million to US$ 399 million. Launched NSC Project. Initiative of Shelley Dewey, Vice President of Supply Chain and Steele. Implement its ERP, Supply Chain, & CRM Software onto a single SAP Platform.

NSC PROJECT

NSC IMPLEMENTATION STRATEGY

i2s Software Implementation

First part of supply chain strategy. Cost of this project was US $40 million. To match supply with demand. To reduce the amount of raw material. Used it as a legacy system rather than as apart of SAP ERP project.

i2 Trade Matrix Plan Solution

Solution Objective Challenge Capability Benefit

Strategic Planning

Maximize profitability by optimally allocating resources Anticipate and influence demand

Unclear parameters

Optimization

Long term profitability

Demand management

Accurate demand estimation is difficult

Demand planning, channel collaboration

Improved customer service

Supply planning

Determine what to make and when and how to profitably distribute supply Determine what to produce and when

Size and complexity of problem

Collaboration, optimization, Speed

Global visibility and coordination , fast reaction to changes Reduced inventory, Improved due date performance

Production

Managing material & capacity trade offs is complex

Fast finite material & capacity planning & scheduling

REASONS FOR i2S SOFTWARE FAILURE

Third party integrator. Inexperience of i2. Customization. Trying to forecast too far out ahead. Pilot test.

Continued. . .
Problems in smooth integration. Inadequate information. Changing market conditions. Complication of NSC project. Review meetings.

Implementing SAP Apparel and Footwear Solutions (AFS)

SAP E RP Projec t

Big Bang Approach

Single Instance Strategy

R/3 Variant

Purchased in1998

Im pl e

Continued. . .
a il t l Bu ba o Gl plate m Te

me nt a n ti o

e los sC er tn Par ip h
n itio ng ns Tra Traini g , lan estin P &T

After Learning the Lesson

i2 Software

The SAP AFS

Just Do It

BENEFITS

Measures to overcome demand forecasting problem

Importance of demand forecasting

Determining the quantities. "make to stock" rather than "make to order Reduces supply time. Efficient forecasting

Ways to avoid supply chain problems

Lessons Learned
Be Patient Define a business Goal Re-engineering Process Just Do It Over Keep your eye on the price

CONCLUSION
Implementation is a complex process. Evaluating pros and cons. Continuous assessment. Adaptability Importance of pilot test.

T an yo h k u
Just do it