Supply Chain Management-Nike

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Supply Chain
Management-Nike
Ihab Itani
Jul. 24, 2015 • 14 likes • 68,280 views
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Supply Chain Management-Nike

1. Supply Chain Management Corina Botnarevschi, Ehab
Etani, Akbar Khan, Amir Garranah
2. It started with a handshake. Two visionaries, Bill
Bowerman and his University of Oregon runner Phil
Knight, thought they could do a better job of designing
and selling shoes to runners. They were right. Today NIKE,
Inc. is the world’s leading innovator in athletic footwear,
apparel, equipment and accessories.
3. World largest seller of footwear, sportswear, clothing
and sports equipment supplier Headquarters – Oregon,
USA Sponsors many high-profile athletes and sports
teams around the world. Nike has extremely strong
supply chain relations
4. • Elevating product excellence and innovation at the
factory level. • Helping to lead industry e!orts to integrate
sustainability into product creation and manufacturing. •
Managing sourcing through a balanced approach, taking
into account environmental, social, quality and cost
impacts. • Developing and testing new models of
manufacturing that serve to improve worker
compensation, skills and livelihood. • Consulting with,
coaching and building capacity with contract factories to
optimize labor and environmental capabilities.
5. Profile of NIKE, Inc. Contracted Factories Globally by
Product Engine, Region and Fiscal Year Region Total
Apparel Equipment Footwear FY09 FY10 FY11 FY09 FY10
FY11 FY09 FY10 FY11 FY09 FY10 FY11 Americas 161 202 189
118 135 117 24 26 25 19 41 47 EMEA* 115 99 78 70 67 53 33
26 18 12 6 7 N. Asia 517 508 471 268 244 217 170 172 156 79
92 98 S. Asia 241 203 192 175 149 142 35 30 29 31 24 21
Total 1,034 1,012 930 631 595 529 262 254 228 141 163 173 *
Europe, Middle East and Africa
6. Globally, Nike have moved toward establishing long-
term relationships with fewer factories as trusted partners,
rather than having short-term transactional relationships
with a larger number of factories. Nike Supply Chain
7. drives innovation. And if done e!ectively, managing
diversity and working together can lead to a competitive
advantage Favorable impacts on our business by: •
Creating more competition in the supply chain •
Maintaining a connection to the consumer base • Providing
economic stimulus to the community • Contributing to the
enhancement of our brand Nike`s goal is to o!er suppliers
real procurement opportunities as they arise, and all
purchasing is done in a competitive marketplace.
8. • Nike has a reputation for designing not manufacturing
their products, the manufactures are outsourced • Nike
hired subcontractors (are individuals who performs a
specific task as part of the overall project and is normally
paid for services provided to the project by the originating
general contractor) in China, Indonesia, Vietnam and
Thailand Why? to reduce costs or to mitigate (Reduce)
project risks • As well as independent factories in
Argentina, Brazil, India and South Africa to manufacture
their products
9. • The reason for outsourcing is lower wages and lower
costs of production than its in the United States • This
strategy resulted in cash savings generating more profit • In
the these countries employees put 40 to 50 hours of
overtime per month • It is widely reported that workers
earned below the minimum wage of 45$ per month
10. • Labor costs in the US are much higher • The cost of
production for labor manufacturing is lower than in the
US. • Cost of Shipping goods has dropped, because of the
improved e!iciencies in shipping technologies. • Free
Trade agreements between north America and other
international countries. • Reduced costs for consumers
11. • Overhead reduction, which is what every profit
making company will look to achieve • E!iciency, Nike
became more e!icient through outsourcing to cheaper
countries. • According to Thomas Business News, the
estimates for Nike firm in key outsourcing areas can be as
high as 75% • This permits firms to lower prices and
become more competitive • The main advantage of
outsourcing is that organizations are able to concentrate
their e!orts in their core competencies like marketing,
designing and new product development thus creating
competitive advantage.
12. Vertical integration – Nike's operations are vertically
integrated with a presence in every segment of the value
chain from manufacturing down to sales. - Vertical
integration that exists in the supply chain is between the
suppliers, manufacturers, distributors and retailers. Nike
makes sure that all the firms are in a close working
relationship. Nike occasionally sends Research and
Development sta! to various production factories in order
to ensure that there is smooth production of the products
thus avoiding any miscommunications that might threaten
relationships when they arise.
13. • Nike manages demand for its products by use of
futures program that requires retailers who stock Nike’s
products to order 80% of their inventory six months in
advance in order to be guaranteed delivery. • According to
the futures ordering system (Innovation) permits Nike to
lower levels of inventory held, time spent in fulfilling
retailers’ orders as well as the non delivery risk
14. - is a business system and continuous improvement
philosophy that aims to deliver the highest-quality product
while eliminating waste, including lost time and material. -
Nike Delegated processes that allowed for high dynamic
and fluid markets and flexible production system that is
demand driven and allows for transfer of production from
one country to another in less time. • Nike introduced a
new supply chain that used the just in time approach to
facilitate faster shipment of products to customers in
Europe and America.
16. Nike changed its organizational structure to better
integrate sustainability within traditional corporate
functions. The company uses a matrix organizational
structure • in which managers report to multiple
departments. Based on business unit goals, employees
develop strategies and plans detailing their
multidisciplinary responsibilities. • Internal scorecards are
used to report progress towards the goal.
18. The principles of lean are aligned with sustainability
best practices such as Reducing resource use and waste
Valuing the workforce, and reducing downtime All
managed under a continuous improvement system • This
can lead to both increased worker satisfaction and gains in
business performance.
19. • Transparency enables collaboration. And
collaboration is essential to building sustainable and self
sustaining supply chains. • Our aim is to build business
partnerships characterized by long- term, trust-based,
transparent interactions. • Nike remain Committed to
sharing Data About their suppliers. • Example Nike
Manufacturing Map
20. At the end of 2011, 80% of footwear, 57% of apparel
and 11% of equipment was made at Nike’s contract
factories using processes meeting Nike’s minimum
baseline definition of lean. In addition to their
phenomenal sales, Nike has marketed itself so thoroughly
that it has literally become a household name.
21. • The company has no control of the inventory since it
has too many suppliers. • The company does not own any
manufacturing plants & focuses on outsourcing production
• Uses a large range of In developing countries where low
wages and child labour conditions are being adopted
22. • Over the years Nike has taken it’s toll of criticism over
these issues • In response they have set out a new code of
conduct • All suppliers have to comply with code with the
help of training from Nike adhering to society’s/customer’s
expectations and standard. In an aim to heighten CSR. • In
some products cases there are some expensive technical
components and their implementations
23. • Nike’s supply chain technology consists of Electronic
Data Interchange (EDI) which transmits the data between
di!erent companies using networks, such as VAN or the
Internet; Value Added Network (VAN) • To run their supply
chain, Nike’s uses HP servers, this technology helps Nike
review its supply chain past performance, monitor current
performance and predict when and how much of certain
products need to be produced.
24. • Besides monitoring current and past performance
activities, Nike’s advancement in technology has allowed
them to fully enhance their supply chain to create trail
from the consumer’s, address purchasing shoes on the
Nike home page to the supplier’s required to bring
together the components of the customized shoe. • The
information trail from IT allows planning, tracking and
estimating lead times based on real data which is
accessible in the system where managers analyze, plan
activities and make decisions based on information from
the entire supply chain.
Editor's Notes
1. -As a result, in situations where some
suppliers cannot play their part in the
supply chain, production can be brought
to a stand still which will in turn have a
negative impact to the company’s
operations-Nike does not own any factory
where manufacturing takes place and
instead strategizes on outsourcing
production to suppliers in least
developed countries, this strategy usually
encourages low wages and sweat shop
conditions as suppliers compete on costs
charged.
2. -backbone for supply chain links
companies to their suppliers and vice
versa (Web portals) and is also used to
connect with customers (Nike’s home
page)
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