CASE STUDY ON LEAN

IMPLEMENTATION IN NIKE AND

INFERENCES DRAWN FROM IT

LEAN MANAGEMENT Assignment 1

SUBMITTED BY:

GARIMA SAHAY
SAMPURNA DAS
 Observation

Inference: Strategic planning is not only a tool for the future, but also

one of survival. Nike: As we know it ----

Nike, Inc. is an American multinational corporation that is engaged in the design,

development, manufacturing and worldwide marketing and sales of footwear, apparel,
equipment, accessories and services. The company is headquartered near Beaverton,
Oregon, in the Portland metropolitan area. It is one of the world's largest suppliers of
athletic shoes and apparel and a major manufacturer of sports equipment, with
revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of
2012, it employed more than 44,000 people worldwide. In 2014 the brand alone was
valued at $19 billion, making it the most valuable brand among sports businesses.

HOW NIKE HAS USED THIS PRINCIPLE:-

Sustainable innovation takes many forms at NIKE. Today innovation means a continuous
requirement to adapt and learn the surrounding environment. For example, in 2012
nike introduced the first product made using the innovative new NIKE Flyknit
technology and manufacturing process. The Flyknit Lunar 1+ running shoe, launched in
2013, reduces footwear waste in the upper part by 80% on average compared with
traditional production methods. To put a picture to that amount of waste, from its
introduction in 2012 through FY13 the total combined material savings from just the
uppers of the Flyknit Lunar 1+ compared to a traditional running shoe was 66,000kg.

Other opportunities, such as improving working conditions within its global supply
chain, are beyond the reach of any single organization and require collaboration with
other supply chain participants.
The case study has demonstrated a growing recognition of the importance of HRM
practices for which little attention has been paid. It stresses the importance of individual-
centred approaches listing six key practices:

(a) Coaching: a practice that questions the status quo and allows others to improve and
learn from mistakes. Moreover, inspires people to perform at their best by increasing
the cooperation and commitment to change.
(b) Communication: can be an effective practice to strengthen the change process, since
it allows the information sharing among all, facilitating the understanding about the
need for change.
(c) Involvement of employees: a practice that increases the commitment and
ownership of employees through the change process;
(d) Motivational incentives: a practice that includes the creation of an environment
that provides motivational incentives, ranging from how work is planned and designed
to the level of training that the staff receives.
(e) Recognition: a practice that implicitly favours the creation of a new performance
standard, occurring in a subtle but yet public way. Encourages individuals to
continuously perform at their best, and may be exercised in various forms other than
financial.
(f) Teamwork promotion: a practice that allows the construction of more significant
results during the change process.

Inference: HR practices, followed by Nike are the sole guarantor of sustainability.

More than technology it is the acceptance of the need to change for a better future,
which is more capable for bringing about a methodical approach for Nike.
Nike has 2 overarching goals in their strategy:
1. Make Today Better (Lean)
2. Design the Future (Innovate)

Make Today Better: Nike Lean Manufacturing

Nike has determined that their finished goods manufacturing is where they have the
largest impact on people and the environment. Within that context, they want to be a
catalyst for positive change. Consider these numbers:

 785 Contract Manufacturers

 Over 1 Million factory workers
 More than 500,000 unique products

HOW LEAN IS IMPLEMENTED AT WORK PLACE/ PRODUCTION HOUSES:-

1. They believe that implementing small changes which may reduce the time is
difficult in a large organization and thus the work is contracted to various
agencies where the supervision is easier and there are multiple agencies
responsible for maintaining efficiency in terms of time and capital spent.
2. Rigorous screening process to select the vendors.
3. Even in terms of time it takes to become a partner, it now takes Nike 152 days
versus 246 days. That means it takes Nike 38% less time evaluating a
manufacturing partner. Lean process starts from home.
4. Continuous assessment of performance by integrating improved practices with the
vendors.
5. Building trust in vendors. This is done by qualifying them for long term contracts
but only if they maintain efficiency in the processes. Routine evaluation of
performance is the key.
6. Inclusion of sub contractors in company value chain.
Conclusion:

We studied Nike’s history and methods of applying Lean methodology into their
processes, the problems faced and their solutions. In the process we could understand
how applying the Lean methodology to HR practices can make a process robust and
sustainable. Nike has applied these principles to its core and has yielded results. They
have not only been able to maintain customer satisfaction but also satisfaction of their
own employees. Safety in a Nike factory today doesn’t only mean maintaining a
hazardless working environment but also reducing hazards for the nature. Reducing
wastes has not only increased production efficiency but also reduced the effluents making
the organization greener in terms of work culture. Although there is still scope of
improvement as lean methodologies implementation is a never ending process. We must
remember that although adaptation of Six sigma processes are efficient in reducing
defects, reducing defects more that a certain limit won’t be economically viable. But lean
implementation is not only a process of reducing wastes only by using better efficiency
measures in the process but also methods of making the people realize the advantages of
using better processes. This seldom results is higher economic expenses and the gains
made are far greater, both economically and socially. So, Nike should continue its focus
on continuous improvements in terms of engaging its manpower in HR friendly practices,
reducing professional conflicts and making lean a norm of work. Further the vendor
system should undergo a stricter evaluation schedule, where it is ensured that all
workmen follow the system and ever changing norms without stress and the practices
make the workplace smoother to function and hazardless. Innovation is at the root of the
work culture for Nike, so the same must be continued and the innovators must be
counseled regularly to make them aware regarding the environmental and customer
satisfaction parameters being met by their work. This will keep Nike ahead in the game
and will enable it to maintain the position in the industry.