Nike Value Chain Analysis

Nike Value Chain Analysis

1. Introduction

Value chain Analysis is a visual tool to analyze a company's business activities to create a competitive advantage. Value chain analysis can help a company find out which activities or services add value to gain maximum profit. The main goal of the business is to increase the value of doing business by exceeding the costs of running. For example, Nike's value chain analysis shows that the company is a global brand that maximizes its profit through an efficient supply chain, inbound logistics, marketing, and operations.

Michael Porter first introduced value chain analysis in the 1980s. He proposed to divide the business model into primary and support activities.

2. Background of Nike

Nike, Inc. started as Blue Ribbon Sports in 1964. It is an American sportswear company based in Beaverton, Oregon. It was founded by Bill Bowerman, a field coach at the University of Oregon, and his student Phil Knight. In 1978, they rebranded the company as Nike Inc. it is a global business with retail outlets and distributors in more than 170 countries.

From the late 1980s, Nike diversified its portfolio widely through numerous acquisitions. It acquired Cole Haan, Converse, Inc. shoe companies, and Canstar Sports Inc., a sports equipment producer. They ventured into products for extreme sports, sports technology products, along sportswear.

3. Nike Primary Activities

Primary activities in Nike value chain analysis are directly related to the creation of delivery of products. According to Porter's model, they can be grouped into five main categories: inbound logistics, operations, outbound logistics, marketing and sales, and service.

Nike Value Chain Analysis

Inbound Logistics:

Quality and sustainability are the foundation of Nike's success, so ultimately, they reflect the same in the inbound logistics. Nike has a supply chain that encompasses suppliers, transport, internal delivery, quality check to deliver up-to-the-mark goods and services. There are 567 factories globally in 42 countries manufacturing Nike products.

Nike also has a particular focus on environmental safety and pollution reduction. They prefer suppliers with the same principle strategy and concern for the environment, quality, and sustainability. Most of the products by Nike are manufactured by independent contractors. The manufactured products, after strict quality examination, are sold through different regional offices and distribution centers.

Operations:

Operations include the manufacturing, assembling, packing, and testing the products, but it also covers equipment repair and maintenance. Nike's value chain analysis shows the importance of operational activities in value creation and gaining a competitive advantage in the market.

Operations include both product manufacturing and services. The emphasis in operations analysis is on improving productivity, efficiency, and value creation such that the cost incurred is less than the revenue earned. This is an excellent foundation for achieving competitive advantage along with other activities.

Outbound Logistics:

Outbound logistics in the Nike value chain analysis include all the company's activities to store and distribute the products to customers. As we already discussed, there are around 567 factories in 42 countries that manufacture Nike products. The products are then delivered to the regional offices and distribution centers for sending into the retail market. The chain of regional distribution channels makes sure that the products are available to the customers as soon as they are released. The biggest distribution center is based in Tennessee. Another center covers the European logistics center and is based in Belgium.

Marketing and Sales:

Though Nike's quality, distinctive features, and brand identity attract many returning customers and new sports enthusiasts, the importance of marketing and sales strategy cannot be ignored in Nike's value chain analysis. Nike's marketing and sales activities are based on salesforce, promotional activities, advertising, pricing, and channel selection.

Nike uses effective and wisely integrated marketing activities employing all marketing channels, including Television, physical marketing, paper, and social media. Nike is a master of marketing by sensitive and touching storytelling, connecting with the customers, and relating celebrities with the Nike products.

Pre-sales and after-sales services play an essential role in customer retention and a better consumer experience. The result is a broad base of loyal customers. Nike also runs many programs to keep its customers engaged. For example, Nike's loyalty program had more than 100 million customers registered in 2017. These precious loyal customers spent three times more than the newcomers on the website. This speaks volumes about the success of rewards programs by Nike.

Customer signing up for a membership is also a part of the services aspect of Nike's value chain analysis. Nike keeps its fan base connected and engaged through follow-up emails as well.

Nike also uses a matrix for analyzing the trends in the market, level of customer satisfaction, engagement, and the success of its strategies. Examples of such matrices are trend analysis, attribution analysis, journey analysis, and customer retention analysis.

Nike Value Chain Analysis

4. Nike Support Activities

Secondary activities support the primary activities to achieve the goals of the company. They play a significant role and are common to many organizations. Most of these support activities cover all aspects of primary activities to provide a basic foundation.

Infrastructure

The firm infrastructure is a broad category of activities, including quality management, legal matters handling, financing, accounting, planning, and strategic management. Firm infrastructure activities in the Nike value chain allow the company to optimize the complete chain. These activities provide efficiency, cut overhead costs, and keep the overall working of the system in check.

Human Resource Management

Nike is a global company with its manufacturing plants, distribution centers, and retail outlets spread worldwide. Therefore, human resource management is a critical activity in the Nike value chain analysis. Nike has more than 70,000 employees globally, working in different capacities. The company provides a healthy environment for working and helps the employees to use their talents and identify with the company culture of diversity and inclusion. Rewards programs for employees are another incentive for employees to stay with the company. Nike is featured as America's best employer for diversity on Fortune.

Technology Development

Technology development and product quality play a critical role in the Nike value chain analysis because Nike markets itself as the leader in innovative sportswear. Nike has focused on using research and technology for product development and its equipment, machinery, manufacturing practices, and waste control.

Procurement

The procurement in the Nike value chain analysis involves the processes and practices involved in purchasing the raw materials, equipment, packing materials, machinery, and other stuff to manufacture products and run the overall system. Nike's Global Procurement team manages the procurement process. They select the suppliers with the best quality material at the optimum cost and those who believe in the same principles of sustainability and environmental safety.

5. Key Takeaways

The application of the Porter Value Chain model develops a clear understanding of how a business is conducted. Nike's value chain analysis is a complex study because of its broad portfolio and global business model. It is always a good idea to divide and rule when the model becomes so huge. Developing a global value chain analysis with child analyses diagrams for regional Nike systems helps to understand the processes clearly. EdrawMax Online is an excellent tool for creating drawing in less time with accuracy. You can even use the premade value chain templates available at to make the foundation for your drawing. This way, you will be able to highlight areas where Nike and any company is successful in creating maximum value.

6. References

Doing Business with NIKE, Inc. Nike News. Accessed August 26, 2021. Available at: https://about.nike.com/pages/doing-business-with-nike

Templates Gallery | EdrawMax. Accessed August 26, 2021. Available at: https://www.edrawmax.com/templates/

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Nike Value Chain

The nike value chain toolkit.

The Nike Value Chain is the set of activities, capabilities, and ways of working that bring inspiration and innovation to every athlete* in the world. Our value chain is what allows us to realize our business plans and the workflow required to achieve the Consumer Direct Strategy.

We've released a toolkit to help you understand the Nike Value Chain, from our Workflow to Decision Rights and Capabilities. This deck includes links to further resources, such as the new "Tear Sheet" infographic that provides a good synopsis of our value chain.

Don't miss the Decoding the Nike Value Chain learning pathway on The Source, our learning and development platform.  Use this comprehensive overview  to explore the different components of NIKE's Value Chain.

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Volume 12 Issue 4 December 2014

Nike versus New Balance: Trade Policy in a World of Global Value Chains

Case prepared by Simon BRODEUR1 and Professor Ari VAN ASSCHE2

United States Trade Representative (USTR) Michael Froman closed the door of his new office, walked to his window, and admired the glimmering Washington D.C. skyline. During his illustrious career as a government official, Froman had never wielded such power as he did now: he had just been nominated by President Obama to be the 11th USTR, serving as the president’s principal advisor, negotiator, and spokesperson on matters pertaining to international trade and investment. One of his main responsibilities would be to complete negotiations on the Trans- Pacific Partnership (TPP), an Asian-Pacific trading bloc built upon the pre-existing Trans-Pacific Strategic Economic Partnership Agreement between Brunei, Chile, New Zealand, and Singapore. As of 2013, numerous nations had participated in the TPP negotiations, namely the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam (Exhibit 1).

The TPP was the most promising trade liberalization initiative since the Doha round of world trade talks, which stalled in 2008, and would cover approximately 40% of the world’s GDP.3 The multilateral talks could potentially deliver huge benefits for the U.S. economy, as the TPP would provide American companies with unprecedented market access to key players in the Asia- Pacific, the largest and fastest growing region in the world.4 Furthermore, it would allow consumers and importers to enjoy wider and cheaper access to the goods and services of TPP countries.

Froman knew that the TPP negotiations would have to be conducted with caution, however; reducing U.S. barriers to trade and investment would put additional pressure on the country’s already frail manufacturing sector. Between 1999 and 2012, while the total number of U.S. jobs had increased by 2.3%, U.S. production occupations had fallen by 31.9% (Exhibit 2). Import competition from and offshoring to Asian manufacturing nations such as China and Indonesia − and TPP negotiating partner Vietnam − were widely blamed for the decline of U.S. manufacturing.

1 Simon Brodeur is an M.Sc. student at HEC Montréal. 2 Ari Van Assche is an Associate Professor in the Department of International Business at HEC Montréal. 3 “Free Trade Agreements: Opening Up the Pacific,” The Economist, November 12, 2011 (accessed October 17, 2013). 4 International Bank for Reconstruction and Development / World Bank, East Asia and Pacific Economic Update – April 2013 – A Fine Balance, 2013 (accessed October 17, 2013). © HEC Montréal 2014 All rights reserved for all countries. Any translation or alteration in any form whatsoever is prohibited. The International Journal of Case Studies in Management is published on-line (http://www.hec.ca/en/case_centre/ijcsm/), ISSN 1911-2599. This case is intended to be used as the framework for an educational discussion and does not imply any judgement on the administrative situation presented. Deposited under number 9 00 2014 001 with the HEC Montréal Case Centre, 3000, chemin de la Côte-Sainte-Catherine, Montréal (Québec) Canada H3T 2A7. Nike versus New Balance: Trade Policy in a World of Global Value Chains

When negotiating the TPP, it was therefore imperative for Froman to find the right balance between promoting American business interests abroad and protecting American interests at home.

In recent months, industry activists and politicians had focused on the downside risks of the TPP negotiations for the American footwear industry. U.S. footwear manufacturing had contracted by almost a third in the last decade due to increased import competition from China and Vietnam, and tariff reductions on Vietnamese imports would likely accelerate this decline.

Froman was aware that the footwear industry would be a major sticking point in the TPP negotiations. After consulting with various U.S. footwear lobby groups earlier that day, he knew that even among American companies, there was disagreement on the position the U.S. should adopt. The divide was especially wide between two major footwear companies: Nike Inc. and New Balance. On the one hand, New Balance was strongly opposed to the removal of tariffs on shoes from Vietnam, as they believed this would endanger footwear manufacturing activities in the U.S. On the other hand, Nike Inc. was adamant that the tariffs on footwear imports from Vietnam were detrimental to the U.S. economy. According to Nike, tariffs have led to higher footwear prices, which harm U.S. consumers and reduce the competitiveness of U.S. firms. If tariffs were eliminated, U.S. footwear manufacturers would be able to save on production costs and reinvest those savings in modern, high-value-added jobs in America.1

When he was sworn in as USTR, Froman had promised to use every tool at his disposal to level the playing field so that Americans could compete and win in the global economy.2 Yet discussions with representatives from New Balance and Nike had shown him that identifying the best negotiating strategy would be complex and require in-depth analysis of the impact of tariff elimination on the various footwear industry stakeholders. His stance on the TPP footwear dilemma required urgent deliberation, as the president had summoned all of his advisors to a conference call later that evening and expected them to advise him on the position the United States should adopt during the TPP negotiations.

The U.S. footwear industry

Froman had to first consider the U.S. footwear market and industry to determine the impact of the TPP on the domestic economy. The challenges facing the footwear manufacturing industry were similar to those of the U.S. manufacturing sector as a whole. Rising wages and heavy competition from low-cost countries were putting a strain on U.S. shoe factories. In 2012, only 13,290 people were employed in the footwear manufacturing industry, down from 19,440 in 2003. This decrease was due largely to a 41% decline in the number of production workers (Exhibit 3). In comparison, office and administrative support occupations in the footwear industry had dropped by just 25%, and management occupations had almost returned to 2003 levels.

1 Eric Martin, “New Balance Wants Its Tariffs. Nike Doesn’t,” BloombergBusinessWeek, May 3, 2012 (accessed October 17, 2013). 2 Office of the United States Trade Representative, “Statement by United States Trade Representative Michael Froman,” 2013: http://www.ustr.gov/about-us/press-office/press-releases/2013/june/amb-froman-statement (accessed October 17, 2013).

© HEC Montréal 2 Nike versus New Balance: Trade Policy in a World of Global Value Chains

The decrease in U.S. footwear manufacturing activities contrasts sharply with the steady growth of the U.S. footwear market. It is the world’s largest, valued at $71.7 billion in 2012, accounting for 27.9% of the global footwear market, and projected to continue developing in the short to medium term (Exhibit 4).

The main reason for America’s manufacturing decline is growing import competition from low- wage countries. Currently, almost 99% of the footwear sold in the United States is imported from low-cost manufacturing locations, especially in East and Southeast Asia.1 China alone accounted for 71.9% of U.S. footwear imports in 2012, while TPP negotiating partner Vietnam, a rapidly developing footwear behemoth, accounted for 10.1% of those imports (Exhibit 5). The pace of Vietnam’s growth in the footwear market is staggering: exports to the U.S. jumped an astounding 23.8% annually between 1997 and 2012, and that trend is expected to continue over the short term as wages in China continue to rise.

Vietnamese footwear industry

Ever since Vietnam signed the U.S.-Vietnam Bilateral Trade Agreement in 2001 establishing “normal trade relations,”2 it has been an increasingly important source of footwear products. In just fifteen years, Vietnam grew into America’s second largest supplier of footwear imports (Exhibit 5). In 2012, about 13% of its exports to the U.S. were footwear products, making this a strategic industry for Vietnam.3

Vietnam has a clear footwear production cost advantage over the U.S. A New Balance spokesperson estimated that producing a pair of shoes in the U.S. costs 25-35% more than in Vietnam,4 while a Nike representative estimated that it costs around US$20-25 to produce a pair of Nike running shoes in a Vietnamese factory.5

Low wages are a key driver of this production cost advantage. Earnings in Vietnam are more than 20 times lower than in the U.S. A study by the Congressional Research Service concluded that wages in Vietnam’s footwear and apparel manufacturing sector averaged US$0.51 an hour in 2012.6 This is significantly lower than in China.7

In addition to low wages, low labour and environmental standards help Vietnamese companies keep their production costs down. Vietnam has ratified eighteen conventions with the

1 Timothy Aeppel, “New Balance Sweats Push to End U.S. Shoe Tariffs,” The Wall Street Journal, February 27, 2013, (accessed October 17, 2013). 2 Embassy of the United States, Hanoi, Vietnam, “The U.S.-Vietnam Bilateral Trade Agreement (BTA) – Resources for Understanding,” n.d. (accessed October 17, 2013). 3 United States Census Bureau, “U.S. Imports from Vietnam by 5-digit End-Use Code, 2003 – 2012,” 2012 (accessed October 17, 2013). 4 See Aeppel, op. cit. 5 Jim Landers, “Vietnam Trade Deal Sparks a Running Battle on Shoe Tariffs,” The Dallas Morning News, December 27, 2012 (accessed October 17, 2013). 6 Michaela D. Platzer, U.S. Textile Manufacturing and the Trans-Pacific Partnership Negotiations, Congressional Research Service, October 5, 2012 (accessed October 17, 2013). 7 See Aeppel, op. cit.

© HEC Montréal 3 Nike versus New Balance: Trade Policy in a World of Global Value Chains

International Labour Organization (ILO).1 However, labour unions in Vietnam are not independent from the ruling communist party, and workers are not free to create or join unions. Furthermore, official strikes are rendered almost impossible due to government requirements. While collective bargaining exists, it is a relatively new concept and has yet to take root in the country. Finally, child labour, forced labour, and long hours are still a problem in Vietnam as the government struggles to enforce laws prohibiting such working conditions.2

Government support of the country’s strategic footwear sector also strengthens Vietnamese firms. Vietnam is officially still a communist country, and its footwear sector is dominated by large state-owned enterprises that enjoy large government subsidies and extensive support. For example, Vinatex, the state-owned textile and apparel consortium, is the tenth largest garment producer in the world and currently accounts for 40% of the country’s apparel production, 60% of its textile production, and close to 20% of its total apparel and textile exports.3 According to the National Council of Textile Organizations, Vinatex benefits from eleven different government subsidy programs that include low-cost loans and free land.4

A final advantage of Vietnam’s footwear industry is its heavy reliance on cheap imported yarn from China. Like Vietnamese footwear, Chinese yarn is predominantly produced by large state- owned enterprises that receive dozens of direct and indirect subsidies from the government. The allegedly unfair practices of Chinese yarn producers has led many countries, including those in the European Union, to impose antidumping tariffs on yarn originating from China.5

U.S. trade protectionism

Compared to other industries, the U.S. footwear sector is highly protected by import tariffs. While U.S. import tariffs on consumer goods average about 1.5%, the average tariff on imported footwear is approximately 10%.6 Moreover, they can run as high as 48% of the “free on board” (FOB) value of imported shoes, that is, the commercial value of the shoes before transportation costs are added to the price (Exhibit 6). These tariff rates substantially affect production costs; for instance, of their US$20-25 overall production costs, current tariffs on athletic shoes add US$3 to US$5 to the cost of midrange running shoes from Vietnam, increasing production costs by as much as 25%.7

While the United States has signed numerous free trade agreements (FTA) over the years, it has generally been reluctant to completely eliminate tariffs on footwear and has systematically

1 International Labour Organization, “International Labour Standards,” n.d. (accessed October 17, 2013). 2 Embassy of the United States, Hanoi, Vietnam, “International Labor Standards – Critical To Successful Economic Development – Workers’ Rights and Labor Standards,” n.d. (accessed October 17, 2013). 3 See Platzer, op. cit. 4 National Council of Textile Organizations, “Fact Sheet – Trans-Pacific Partnership Negotiations,” 2012 (accessed October 17, 2013). 5 Jonathan Steams, “China Faces Five-Year EU Tariffs on Automotive Yarn,” Bloomberg, November 29, 2010 (accessed October 17, 2013). 6 Erik Siemers, “Blumenauer: Footwear Tariffs Hurt Nike, Drive Up Costs,” Portland Business Journal, April 20, 2012 (accessed October 17, 2013). 7 See Aeppel, op. cit.

© HEC Montréal 4 Nike versus New Balance: Trade Policy in a World of Global Value Chains imposed a “yarn forward rule” to these FTAs. This rule of origin requires that the yarn used in shoe manufacturing be produced within the FTA countries to qualify for the reduced duties agreed upon in the trade agreements.1 This serves to protect the U.S. textile industry, a battered yet significant component of the manufacturing sector. Textiles are a US$53 billion industry that employed almost 240,000 workers in 2011. However, its prominence has declined steadily in recent years, with almost 300,000 fewer people working in the textile industry than in 2001.2

New Balance versus Nike Inc.

While Vietnam was pressuring the U.S. to reduce tariffs on imported footwear, interest groups inside the country were also pressuring Froman and the U.S. negotiators. Froman’s meetings with various lobby groups revealed that the widest divide was between American footwear companies New Balance and Nike Inc. On the one hand, New Balance argued that reductions in import tariffs would be detrimental to U.S. footwear workers and smaller footwear manufacturing companies. On the other hand, Nike Inc. contended that reducing tariffs on footwear would strengthen U.S. companies, create high-value footwear jobs in the United States, and lower consumer prices. Froman was particularly intrigued by this disagreement: which of the two companies was really defending American economic interests?

New Balance Athletic Shoe, Inc.

New Balance, an American firm headquartered in Boston , Massachusetts , has been a player in the footwear industry for many years.3 It was founded in 1906 under the name New Balance Arch Support Company by William J. Riley, a British immigrant who had the idea of designing arch supports shaped like a chicken’s three-clawed foot to maximize comfort, mostly for policemen and waiters. He later added ancillary products, and, in 1938, designed his first athletic shoe made of lightweight kangaroo leather with crepe soles for the Brown Bag Harriers Running Club in Belmont, MA. The company continued to grow and was bought in 1972 by Jim Davis, an entrepreneur and marathoner who still owns the firm. By 2012, his business acumen had led New Balance to becoming the fourth largest athletic footwear and apparel company in the world with annual sales of $2.4 billion in over 120 countries. In addition to its eponymous footwear and clothing brand, the New Balance family also includes the brands Avaron, Cobb Hill, Dunham, PF-Flyers, Brine, and Warrior.

Throughout its history, New Balance has focused on footwear innovation, resulting in a number of industry firsts: the first athletic shoe available in multiple widths; the first running shoe made exclusively for women; and the first shoe to incorporate flared heels for stability. More recently, the company has focused on custom shoes and its “Made in America” businesses. For US$115, a consumer can order a custom pair of shoes that is made in the United States, choosing any combination of twenty-six leather colours and five fabric colours for nine different shoe parts. And the company is taking customization much further than just the shoe’s appearance: it is

1 See Platzer, op. cit. 2 Ibid. 3 Information concerning the company’s history and statistics was obtained from New Balance’s Web sites and Responsible Leadership Report: http://www.newbalance.com/Overview/about_overview,default,pg.html (accessed October 17, 2013).

© HEC Montréal 5 Nike versus New Balance: Trade Policy in a World of Global Value Chains introducing a track-specific running shoe that uses 3-D printing to create a plate on the sole of the shoe that is supposed to enhance performance with every step. These custom shoes can be delivered in as little as four days and are a growing part of the firm’s sales.

Over the years, this focus on innovation has consolidated New Balance’s reputation: in 1976, the New Balance 320 was voted the best running shoe by Runner’s World, and the 990 “Made in the USA” series, produced in the company’s five U.S. factories, has been increasingly popular among U.S. consumers ever since it was launched in 1982. In 2008, New Balance inaugurated a state-of-the-art research lab next to its Lawrence, MA, factory that is exclusively dedicated to research into athletic footwear.

Unlike most of its competitors, New Balance does not outsource all of its footwear production to foreign contractors. Rather, it uses a hybrid system of insourcing and outsourcing. In New England , for example, New Balance owns five manufacturing plants that primarily produce for local markets: 90% of their output is for American consumers, accounting for about a quarter of the company’s total U.S. sales.1 While New Balance is currently the sole U.S. athletic footwear manufacturer to produce a portion of its shoes in the United States, it also relies heavily on foreign contractors in China, Indonesia, and Vietnam.2

New Balance has a number of U.S. suppliers for parts it does not manufacture itself, such as embroidery thread or the leather used in certain shoes (see Exhibit 7 for the various shoe parts). These suppliers, for which New Balance is a major client, employ an estimated 7,000 people in the U.S.3 Moreover, its factories in small U.S. cities are vital to local economies: for instance, in Skowhegan, Maine, a town of 8,500, it is the largest employer in the region and its presence supports a wide range of small businesses, such as restaurants. The fate of whole towns and communities is tied to the manufacturing presence of New Balance in their region.4

During the consultation meetings with Froman, New Balance reps expressed fierce opposition to tariff reductions on Vietnamese imports. According to their spokesperson, Matt LeBretton, it is already 25% to 35% more expensive to produce in the United States than in Vietnam. A tariff reduction is not necessary to make manufacturing activities viable in Vietnam and would only chip away at the tariff buffer that allows New Balance to produce in America.5 This, in turn, would force New Balance to close its U.S. factories and move all of its production facilities overseas. Thousands of jobs would be lost, in addition to hurting the company’s U.S. contractors and the small communities in which the company has manufacturing operations.

1 See Aeppel, op. cit. 2 See Martin, op. cit. 3 New Balance Athletic Shoe, Inc., “Made in the USA,” n.d. (accessed October 17, 2013). 4 See Martin, op. cit. 5 See Aeppel, op. cit.

© HEC Montréal 6 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Nike Inc. is a public company headquartered in Beaverton, Oregon, and the largest athletic footwear and athletic apparel company in the world in terms of sales,1 with over $24 billion in revenues for a total gross profit of over US$10 billion in 2012.2 Its high profit margins (43.4% in 2012) have been reflected in the price of its shares, whose value increased an average of 17% annually between 2003 and 2013.3 Nike Inc. offers a wide variety of products in seven key categories: running, basketball , soccer, men’s training, women’s training, action sports, and Nike Sportswear .4 In addition to the Nike brand, it also owns a few other highly popular apparel and sporting equipment brands such as Hurley, Converse , and Bauer Nike Hockey. Nike Inc. directly employs 37,715 people worldwide, but indirectly employs a much larger workforce in factories owned by contractors who may manufacture products for numerous companies including Nike Inc.5

Nike Inc. was founded in 1964 as Blue Ribbon Sports by two partners, Phil Knight and Bill Bowerman. They started as distributors of Japanese-made Tiger (now Asics) running shoes, but as the relationship between the firm and its Japanese supplier began to sour in the early 1970s, Knight and Bowerman decided it was time to start manufacturing their own shoes. The new line of Nike shoes debuted in 1972 for the U.S. Track & Field Trials, where Bowerman’s innovative design – a very light outsole with waffle-type nubs for traction – was a great success. Then, in 1979, Nike Inc. innovated once more by introducing its Nike Air technology in running shoes, paving the way for its IPO a year later. The firm quickly grew to become the industry leader; however, unlike New Balance, Nike Inc. didn’t position itself in the booming fitness sector and thus lost ground to its competitors.

These difficulties were overcome by major marketing campaigns in the mid-eighties − first in 1985, when Michael Jordan, a young NBA rookie at the time, endorsed the company, and then in 1987, when the iconic Air Max commercial featuring the Beatles song Revolution was aired. By the end of the eighties, Nike Inc. had regained its title of largest footwear company in the world. Marketing then became a large part of Nike Inc.’s business strategy: in 1995, the firm sponsored the Brazil National Soccer Team and supplied its uniforms. One year later, a young golfer named Tiger Woods was signed for a reported annual compensation of $5 million. The company continued to expand, innovate, and skilfully market its products throughout the next decade. In 2012, it became the official sponsor of the National Football League (NFL).6

None of Nike Inc.’s 37,715 employees, roughly half of whom work in the United States,7 are factory workers. Rather, they are mostly involved in providing headquarter services, designing and engineering new equipment, promoting products, and selling them in Nike stores. As with

1 Barbara Brenner, Bodo B. Schlegelmilch, and Björn Ambos, “Inside the NIKE matrix,” in The New Role of Regional Management, Björn Ambos and Bodo B. Schlegelmilch (Ed.), Hampshire, Palgrave Macmillan, 2010. 2 Yahoo! Finance, “Nike, Inc. (NKE),” 2013 (accessed October 17, 2013). 3 Google Finance, “Nike Inc (NYSE:NKE),” 2013 (accessed October 17, 2013). 4 NYSE Euronext, “Nike Inc.,” 2013 (accessed October 17, 2013). 5 Nike Inc., Corporate Responsibility Report, 2012 (accessed October 17, 2013). 6 Nike Inc., “History & Heritage,” n.d. (accessed October 17, 2013). 7 Nike Inc., Corporate Responsibility Report, 2009 (accessed October 17, 2013).

© HEC Montréal 7 Nike versus New Balance: Trade Policy in a World of Global Value Chains most U.S. footwear companies (with the notable exception of New Balance), shoe manufacturing has been almost completely outsourced to foreign contractors in Mexico, Brazil, Argentina, Italy, Bosnia, India, China, South Korea, Japan, Indonesia, Taiwan, and Vietnam.1 In August 2013, it was estimated that Nike’s external contractors employed more than a million people in 774 factories in 42 countries. Vietnam supplies the most workers to Nike, with over 310,000 people producing footwear, apparel, and sporting equipment, followed by China and Indonesia, where contractors employ about 260,000 and 175,000 people respectively. Three quarters of Nike’s global workforce is located in these three countries (see Exhibit 8).

Contrary to New Balance, Nike Inc. was a strong supporter of reducing import tariffs, predicting that U.S. footwear manufacturers would be able to save on production costs and reinvest their savings in modern, high-value-added jobs in the United States. As Erin Dobson, a Nike Inc. spokesperson said, “The question comes down to, is one kind of job more important than another? What are the jobs for the 21st century? They’re not necessarily jobs that existed 30 years ago.”2

Nike Inc. also argued that being able to offshore footwear production without being penalized by tariffs would help to offset rising foreign labour and material costs, which would in turn make footwear more affordable to U.S. consumers. As argued by Oregon’s Representative Earl Blumenauer, whose constituency is home to Nike employees as well as the U.S. headquarters of Adidas , keeping the tariffs taxes millions of Americans on their footwear purchases to keep a few thousand manufacturing jobs.3 This argument is especially compelling when one considers that 99% of the footwear purchased in the U.S. is produced in other countries.

Eliminating Footwear Tariffs – A Blessing or a Curse?

Through his numerous meetings with lobbyists, industry spokespeople, and activists, Froman was able to map the major arguments for and against the elimination of footwear import tariffs under the TPP. While his determination to level the playing field so that Americans could compete in the global economy never faltered, it became obvious to him that no decision would have a purely positive impact on every stakeholder. Numerous realities and potential impacts had to be considered since adopting the wrong position could have ripple effects throughout the U.S. economy.

As the daylight faded, Froman was still pondering the various statistics and viewpoints. Should he side with New Balance and insist that footwear tariff reductions be kept off the negotiating table? Or would the elimination of tariffs as advocated by Nike Inc. be more beneficial to U.S. interests? Should the United States impose conditions on Vietnam for reducing footwear tariffs? His phone rang, and the numbers were still dancing in his head as he heard the beep indicating that he had joined the conference call.

1 Nike Inc., “Global Manufacturing,” 2013 (accessed October 17, 2013). 2 See Martin, op. cit. 3 Ibid.

© HEC Montréal 8 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 1 The 12 Negotiating Parties to the Transpacific Partnership

Source: Office of the United States Trade Representative, “The United States in the Trans-Pacific Partnership,” 2011 (accessed October 17, 2013)

© HEC Montréal 9 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 2 Production Occupations and Total Employment in the U.S., 1999-2012

Source: Bureau of Labor Statistics, “Occupational Employment Statistics,” 2013 (accessed October 17, 2013)

© HEC Montréal 10 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 3 U.S. Occupations in the Footwear Industry, 2003-2012

Office and Production Management Total administrative occupations occupations support occupations Average Average Average Average # # # # Year hourly hourly hourly hourly workers workers workers workers wage wage wage wage 2003 19,440 12.26 14,040 10.48 1,900 12.25 620 43.72 2004 19,170 13.14 12,120 10.35 2,410 12.79 810 42.77 2005 18,410 13.24 12,170 10.81 2,350 13.00 620 43.38 2006 17,340 13.77 12,300 11.31 1,930 13.51 600 44.66 2007 15,760 13.87 12,150 11.75 1,170 13.42 470 44.14 2008 16,290 14.40 12,650 12.21 1,100 14.47 490 46.56 2009 15,420 14.43 12,030 12.32 980 15.06 440 48.14 2010 13,790 15.89 9,770 12.56 1,170 15.73 470 54.62 2011 13,650 16.25 9,600 12.76 1,260 15.81 470 56.50 2012 13,290 17.61 8,340 12.70 1,420 15.87 590 56.23

© HEC Montréal 11 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 4 U.S. Footwear Market Value and Growth, 2008

Source: Marketline, U.S. Footwear in the United States, March 2013

© HEC Montréal 12 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 5 Growth of U.S. Footwear Imports, by Country of Origin, 1997-2012

Share of U.S. footwear imports U.S. Footwear imports (US$ Millions) Compound Annual (%) Growth (%) Country 1997 2012 1997-2012 1997 2012 China 7,737 17,876 5.74 53.03 71.90 Vietnam 102 2,512 23.83 0.70 10.11 Italy 1,244 1,230 -0.07 8.53 4.95 Indonesia 1,139 982 -0.99 7.81 3.95 Mexico 393 497 1.57 2.69 2.00 Rest of the world 3,560 1,233 3.62 27.24 7.09

Source: United Nations Comtrade Database: http://comtrade.un.org/

© HEC Montréal 13 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 6 Import Duty on a Pair of Athletic Shoes That Do Not Cover the Ankles with Outer Soles of Rubber, Plastics, Leather or Composition Leather, and Have a F.O.B. Value of More Than $6.50

Tariff Rate Harmonized Most Textile KORUS System Favoured NAFTA Upper FTA Code Nation F.O.B. value 20% + 90 6404.11.89 0% 0% $12 Leather 6403.99.90 10% 0% 0% upper

Source: United States International Trade Commission, “Harmonized Tariff Schedule of the United States,” 2013 (accessed October 17, 2013)

© HEC Montréal 14 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 7 A New Balance Shoe Made in the United States

Source: Timothy Aeppel, “New Balance Sweats Push to End U.S. Shoe Tariffs,” Wall Street Journal, February 27, 2013 (accessed October 17, 2013)

© HEC Montréal 15 Nike versus New Balance: Trade Policy in a World of Global Value Chains

Exhibit 8 Nike Inc.’s Manufacturing Network (data as of August 2013)

Global production Footwear production Number Number Workers Country Workers of Workers of (Nike factories factories brand) Vietnam 312,828 70 231,420 29 193,169

China 263,108 213 129,920 38 119,654

Indonesia 174,259 42 131,958 20 117,452

United States 13,670 65 77 2 0

Total (including 1,005,547 774 528,509 163 459,307 other countries

Source: Nike Inc., “Global Manufacturing,” 2013 (accessed October 17, 2013)  These statistics do not indicate the number of workers that are employed by Nike Inc., but rather the number of workers that are involved in the production of Nike Inc. products.

© HEC Montréal 16

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How is Nike changing the Supply Chain Game? MBA Case Study.

The Nike supply chain can be divided into three main stages: sourcing, manufacturing, and distribution.

Nike sources its raw materials from suppliers all over the world. The main raw materials that Nike uses are leather, rubber, and textiles. Nike works with its suppliers to ensure that they meet its high standards for quality and sustainability.

Nike’s sourcing process begins with identifying potential suppliers. Nike has a team of sourcing professionals who travel the world to visit potential suppliers and assess their capabilities. Nike also uses a variety of tools to identify potential suppliers, such as online directories and trade shows.

Once Nike has identified potential suppliers, it evaluates them based on a number of factors, including quality, price, sustainability, and delivery time. Nike also conducts audits of its suppliers’ factories to ensure that they meet its labor standards.

Once Nike has sourced its raw materials, it sends them to its contract manufacturers to be produced into finished products. Nike does not own any of its own factories, but instead relies on contract manufacturers to produce its products.

Nike’s contract manufacturers are located in over 40 countries. Nike works closely with its contract manufacturers to ensure that they produce its products according to its specifications. Nike also has a strict quality control process in place to ensure that its products meet its high standards.

Distribution

Once Nike’s products have been manufactured, they are shipped to Nike’s distribution centers. Nike has a network of distribution centers all over the world. Nike’s distribution centers help to get Nike’s products to retailers quickly and efficiently.

Nike’s distribution process begins with receiving products from its contract manufacturers. Once Nike has received products, it inspects them to ensure that they meet its quality standards. Nike then sorts and packages the products for shipment to retailers.

Nike ships its products to retailers using a variety of transportation methods, including air, ocean, and ground transportation. Nike also uses a variety of logistics providers to get its products to retailers.

Nike’s supply chain is essential to its success. Nike’s ability to produce high-quality products at a competitive price is due in large part to its efficient and effective supply chain.

Key Features of Nike Supply Chain

  • Global reach:  Nike’s supply chain is global in reach, with suppliers and contract manufacturers located all over the world. This allows Nike to take advantage of lower labor costs in some countries and to be closer to its target markets.
  • Efficiency:  Nike’s supply chain is very efficient. Nike uses technology and innovation to streamline its operations and to reduce costs.
  • Flexibility:  Nike’s supply chain is also very flexible. Nike is able to quickly respond to changes in demand and to new trends in the market.
  • Sustainability:  Nike is working to make its supply chain more sustainable. Nike has set a number of goals for itself, including reducing its environmental impact and improving the working conditions of its suppliers’ workers.
  • Transparency:  Nike is working to make its supply chain more transparent. Nike has published a number of reports on its supply chain, and it allows third-party auditors to inspect its suppliers’ factories.
  • Global reach:  Nike has a network of over 800 contract manufacturers in over 40 countries. Nike also has a network of distribution centers all over the world. This allows Nike to get its products to customers quickly and efficiently.
  • Efficiency:  Nike uses a variety of technologies to streamline its supply chain operations, such as RFID tags and automated picking and packing systems. Nike also has a strong focus on continuous improvement, and it is constantly looking for ways to improve the efficiency of its supply chain.
  • Flexibility:  Nike’s supply chain is designed to be flexible and adaptable. Nike has a number of suppliers and contract manufacturers that it can work with, and it is able to quickly shift production to different locations as needed. Nike also has a strong focus on product development, and it is able to quickly bring new products to market.
  • Sustainability:  Nike is working to make its supply chain more sustainable in a number of ways. For example, Nike is working to reduce its environmental impact by using more sustainable materials and by reducing its energy consumption. Nike is also working to improve the working conditions of its suppliers’ workers by implementing a code of conduct and by conducting audits of its suppliers’ factories.
  • Transparency:  Nike is working to make its supply chain more transparent by publishing a number of reports on its supply chain and by allowing third-party auditors to inspect its suppliers’ factories. Nike is also a member of a number of industry initiatives that are working to improve the sustainability and transparency of the global apparel supply chain.

Nike Quotes from Advertisements

  • “Yesterday you said tomorrow. JUST DO IT.”
  • “Greatness is not born, it is made.”
  • “Run the day. Don’t let it run you.”
  • “Be legendary.”
  • “With each step comes the decision to take another. You’re on your way now. But this is not the time to dwell on how far you’ve come.”
  • “Don’t believe you have to be like anybody to be somebody.”
  • “If people say your dreams are crazy, if they laugh at what you think you can do, good. Stay that way. Because what the non-believers fail to understand is that calling a dream crazy is not an insult. It’s a compliment.”
  • “You’re in a fight with an opponent you can’t see but you can feel among your heels. Feel them breathing down your neck. You know what that is? That’s you. Your fears, your doubts, and insecurities all lined up like a firing squad ready to shoot you out of the sky. But don’t lose heart. While they’re not easily defeated, they’re far from invincible.”
  • “What you do is up to you. Just do it.”

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Nike Supply Chain Issues – How They Turned a Crisis into Opportunity

  • | January 23, 2012

Nike’s response to a supply chain crisis repositioned it as a sustainability leader, and raised the bar for an entire industry.

In April 2005, Nike surprised the business community by releasing its global database of nearly 750 factories worldwide. No laws required the company to disclose the identity of its factories or suppliers. Yet, between the early 1990s and 2005, Nike went from denying responsibility for inhumane conditions in its factories to leading other companies in disclosure. This response to a supply chain crisis was a strategic shift. This shift illustrates how a firm can use transparency to mitigate risk and add value to their business.

Making the Shift toward a Sustainable Supply Chain

David Doorey (York University) conducted a case study of this transformation, drawing on interviews with company executives, industry professionals, and representatives of unions and NGOs involved in the push for factory disclosure. In the early 1990s Nike executives began to see reports of abusive labour conditions in their supplier factories as a risk to their brand image. Nike’s traditional line denying responsibility for conditions in these factories no longer satisfied a growing number of customers. On top of that, media images of children sewing Nike soccer balls and running shoes sent social activists, academics and journalists into a costly anti-Nike campaign.

Nike leaders realized they were facing a supply chain crisis. They needed a new strategy to deflect the growing criticism and improve their suppliers’ performance. Starting with the creation of a new labour practices department, Nike introduced a series of changes to enable better monitoring of sources of risk associated with suppliers’ labour practices. These changes included:

Conduct a basic audit: Nike introduced the SHAPE internal monitoring system to provide it with an initial assessment of whether a proposed new factory was near satisfying the code of conduct. Factories flagged as high risk would also undergo a more comprehensive “M-audit.”

Create a corporate responsibility and compliance division: Senior management created a new division to facilitate the integration of corporate responsibility issues throughout the business. This brought together sustainability and compliance employees working across product groups.

Assign field managers: Nike assigned field managers to the various regions. They were responsible for monitoring day-to-day compliance with labour laws and the Nike code.

Establish a global database: Head office developed a comprehensive database to help track the global supply chain and access audits conducted in the field.

Initiate external expert review: In 2004, Nike invited a panel of external experts to review a draft of its 2004 corporate responsibility report. The committee concluded that Nike would not receive the credit it craved from the NGO community unless it released the names and addresses of its entire factory database.

From Supply Chain Crisis to Sustainability Leadership

These monitoring and enforcement systems created confidence internally, which was necessary before releasing the list externally in 2005. Nike turned this unprecedented response to its supply chain crisis into a lucrative marketing opportunity that outweighed competitive risks associated with factory disclosure. It advertised its new transparency as evidence of its new commitment to labour practices. In fact, the company turned its full disclosure into a badge of honour among the apparel industry.

Seeing the success that Nike enjoyed from this move, many of Nikes competitors disclosed their factory lists, including Levis, Timberland, Puma, Adidas and Reebok.

Better Strategies for Supply Chain Management

What can other organizations take from Nike’s experience to avert their own supply chain crisis?

A systematic supply chain monitoring mechanism can help address the worst practices. Moreover, this mechanism is foundational prior to adopting greater transparency. If you don’t know about it, you can’t fix it.

A defensive strategy is not a realistic long-term approach. Companies have difficulty hiding from the media and should replace defensiveness with a proactive strategy that uses code monitoring and enforcement — and eventually full disclosure — to their advantage.

Companies should replace defensiveness with a proactive strategy that uses code monitoring and enforcement — and eventually full disclosure — to their advantage.

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The case is set in January 2020 and the case protagonist is John Donahoe, Nike's new CEO. Nike is the largest company worldwide in the athletic footwear, apparel, and equipment business. The case…

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The case is set in January 2020 and the case protagonist is John Donahoe, Nike's new CEO. Nike is the largest company worldwide in the athletic footwear, apparel, and equipment business. The case focuses on the challenges Donahoe faces as he attempts to drive Nike to the goal of $50 billion in annual revenues by 2021. The case focuses on Nike's competition, the convergence of technology with apparel and footwear, as well as the company's corporate social responsibility issues. Donahoe has to address internal as well as external challenges. Donahoe was appointed CEO at a time when the Oregon sports and apparel company faces a number of controversies, including when Nike-sponsored athletes were caught up in scandals; the ban of Alberto Salazar, Nike's top running coach amid doping allegations; as well as continued concerns about Nike's workplace culture after an internal employee survey leaked describing the company as run by a boys club that is hostile towards women. Nike faces tough competition in all of its market, as well as along the value chain. Rapid advances in mobile technology and the development of the Internet of Things (IoT) could fundamentally change the industry. Nike is also moving further into ecommerce to offset the "Amazon effect." The fast-growing Chinese market, moreover, may provide an avenue for needed future growth.

Oct 26, 2019

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nike value chain case study

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Case Study | Inside Nike’s Radical Direct-to-Consumer Strategy

Inside Nike's Radical Direct-to-Consumer Strategy Case Study

  • Chantal Fernandez

In October 2020, in the middle of a global pandemic that had infected 188 countries, causing record sales damage across the retail sector, Nike’s share price hit an all-time high.

Like other retailers, Nike had been forced to close most of its network of more than 900 stores across the world, as had its key wholesale partners like Nordstrom and Foot Locker.

But the American sportswear giant’s performance during the pandemic, when its online sales spiked, signalled to many that Nike had the competency to prosper long term, in a future that will be increasingly defined by e-commerce and digital brand connections.

It was a validation of a strategy that Nike prioritised three years ago, dubbing it “Consumer Direct Offense,” but the seeds of the approach go back almost a decade.

Above all, Nike is a marketing company. It doesn’t just sell sneakers; it sells the brand aspiration that imbues those sneakers with meaning. But to achieve the reach required to scale its business, Nike’s distribution strategy had long-relied on third-party retailers to sell its products, even if the consumer experience offered by those partners diluted its brand.

But in a future increasingly defined by e-commerce, fast-moving trends and, above all, the rising power of branding to drive consumer preference when competitors are just a click away, Nike realised that in order to thrive, it needed to take control of its distribution to better manage its brand and deepen its connection with consumers.

It was definitely architecting a new retail, and a bold, retail vision for Nike.

Such an evolution is easier said than done, especially for a business as large as Nike in a category as competitive as sportswear. But by radically cutting back on its wholesale distribution and raising the bar for brand experience with the third-party partners that remained; expanding its focus on content, community and customisation to keep customers close; investing in its data analytics and logistics capabilities; and rethinking the role of the store as a brand stage, Nike drove a veritable direct-to-consumer revolution.

When the pandemic hit, these shifts went into overdrive.

“It was definitely architecting a new retail, and a bold, retail vision for Nike,” said Heidi O’Neill, Nike’s president of consumer and marketplace, and one of the most prominent executives leading the brand’s new strategy in recent years. “But it started with our consumer, and we knew that consumers wanted a more direct relationship with us today.”

In this case study, BoF breaks down Nike’s pioneering direct-to consumer strategy and how it has worked to the brand’s advantage, propelling its share price to new heights during the global crisis of 2020.

Click below to read the case study now.

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An Insight Into Nike’s Supply Chain Strategy

An Insight Into Nike's Supply Chain Strategy

Nike is an American multinational and is undoubtedly the most important player in the modern textile business as it is one of the most recognized sports brands in the world. Nike sells hundreds of millions of shoes and other products annually, and a tremendously intricate supply chain lies behind them. DFreight is a digital freight…

Nike is an American multinational and is undoubtedly the most important player in the modern textile business as it is one of the most recognized sports brands in the world. Nike sells hundreds of millions of shoes and other products annually, and a tremendously intricate supply chain lies behind them.

DFreight is a digital freight forwarder that brings you comprehensive information about Nike’s supply chain strategy in this blog post.

Table of Contents

An Overview

The design, development, production, marketing, and sales of footwear, clothing, equipment, accessories, and services are all activities of Nike, Inc. , an American multinational corporation. The business’s main office is in the Portland metro region, close to Beaverton, Oregon. It is a significant producer of sports equipment in addition to being among the biggest providers of athletic footwear and apparel worldwide.

Nike benefits from a powerful brand, efficient distribution methods, and an alluring product lineup. Supply chain excellence has been boosted in recent years and is now seen as a competitive weapon due to new market entrants with superior service and lead times, as well as fashion brands, entering their market sector.

How Does Nike’s Supply Chain Work ?

The biggest sportswear and running shoe manufacturer in the world is Nike. The American multinational is undoubtedly the most important player in the contemporary textile business because it is one of the most well-known brands in the world. Nike sells hundreds of millions of shoes and other products annually, and a tremendously intricate supply chain lies behind them. Nike’s proactive approach to supply chain management has been regarded by many as a fundamental factor to its amazing success, even though there are obviously considerable problems involved in managing this complexity.

In the previous blogs, we looked into the supply chains of famous and leading companies, which you can read about each of them in the section below.

How Is Nike Changing the Supply Chain Game ?

Here are four things about how Nike is changing the supply chain game:

NIKE -

New Regional Service Centers

By constructing new regional service centers, Nike is making an effort to increase capability, speed, and precision more sustainably. Nike will be able to deliver goods to customers more quickly and accurately thanks to the change, which will also lessen its environmental effect. The Netherlands , China , and the United States will be the locations of the new service centers. They will be driven by Nike’s in-house digital platform , which enables the business to communicate with its worldwide supply chain more rapidly and effectively.

Implement Automation and Technology

Nike is one of the most recognized brands in the world and is also a leader in automation and supply chain technology. In the past, Nike’s supply chain was largely manual and heavily reliant on manpower. Nike’s supply chain is now almost fully automated, allowing them to drastically cut costs and increase efficiency. Nike’s journey to an automated supply chain began in the early 2000s when they began investing in new technologies.

Keep, Package, Ship, and Refurbish Products

Nike is changing the supply chain game by making it easier for customers to keep, package , ship and refurbish their products. The company is working with UPS to make it easier for customers to return Nike products that they have purchased online. Customers can now drop off their Nike products at UPS locations and have them shipped back to Nike for free. Nike is also working with Best Buy to make it easier for customers to recycle their old Nike products. Customers can now drop off their old Nike products at Best Buy locations and have them recycled for free.

Empowering the People Who Power Nike

Nike is on a mission to change the way the world looks at supply chains. The company has long been an industry leader when it comes to sustainability and social responsibility, but it is now taking its commitment to a new level with its Powering the People Who Power Nike initiative. The initiative is focused on ensuring that the workers in Nike’s supply chain are treated fairly and paid a livable wage. To do this, Nike is working with its suppliers to implement a new business model that puts workers at the center. Under the new model, suppliers will be required to provide workers with a livable wage, health benefits, and access to education and training.

In addition, Nike will work with suppliers to ensure that workers have a voice in the decision-making process and that their rights are respected. This new initiative is an important step in Nike’s journey to create a more sustainable and responsible supply chain. It is also a reflection of the company’s commitment to its employees and to the communities where it does business.

Nike’s Supply Chain Transformation

Several overarching principles of Nike’s supply chain transformation include:

  • Focus on the vital few prioritize: Linked investments with business strategy and profit
  • Simplify end-to-end: Eliminate waste and complexity from the process before enabling
  • Avoid customization: Standardize solutions to enhance workflows
  • Copy-paste companywide: Duplicate successful strategies across brands, regions, and business units.
  • Lead the change: Make an investment in project and transition management
  • Accelerate the pace: Adapt fast to unique business requirements
  • Deliver business results: finish what we start through business benefits achievement

Challenges to Managing a Global Supply Chain

Nike is a global company with a vast supply chain that includes suppliers from around the world. Managing this supply chain is a complex and challenging task. There are a number of potential risks and challenges that Nike must manage in order to keep its supply chain running smoothly.

One of the biggest challenges is managing supplier relationships. Nike works with thousands of suppliers, many of whom are located in countries with different legal systems and cultural norms. Nike must ensure that its suppliers adhere to its standards and that they are treated fairly. This can be a challenge when dealing with suppliers in countries with different legal systems and cultural norms.

Another challenge is managing the flow of goods across borders. Nike’s products are sold in markets all over the world. This means that Nike must manage the flow of goods across many different borders. This can be a challenge due to different customs regulations and procedures in different countries.

Nike must also manage the risk of disruptions to its supply chain. This can include things like natural disasters, political instability, and supplier bankruptcies.

Nike must have plans in place to deal with disruptions when they occur. Finally, Nike must continuously adapt its supply chain to changing market conditions. 

An Insight Into Nike's Supply Chain Strategy

What Makes Nike’s Supply Chain Unique and Effective?

The key principles behind Nike’s supply chain are outsourcing and diversification. Nike contracts 100% of its manufacturing for footwear and apparel out to independent suppliers. It was one of the earliest multinationals to adopt this approach. Thanks to effective management, Nike’s supply chain team quickly learned to manage the additional logistical complexity involved in this outsourcing and has seen significant cost savings over the years as a result. Outsourcing is inherently a risky approach, but by extensively diversifying its supplier base, Nike successfully mitigated this risk from the beginning.

Nike’s supply chain functions around three core organizational principles:

  • Outsourcing: to save costs
  • Diversification: to minimize risk
  • Corporate social responsibility: to manage its impact on the world it works in

Under focused and experienced management, its supply chain has grown from these principles into one of the most effective and responsible large international supply chains.

Supply chain management is critical for businesses to be successful. An efficient and effective supply chain can make a big difference in a company’s bottom line. Good supply chain management can help businesses to keep their costs down, improve their customer service, and increase their profits.

If you are looking for a digital freight forwarder that can help you streamline your supply chain and make it more efficient, look no further than DFreight. We are a leading provider of digital freight forwarding services and can help you manage your supply chain more effectively. We offer a range of services that can help you improve your supply chain management, including online tracking , real-time visibility, and automated documentation. We also have a team of experts who can help you with any questions or concerns you may have about your supply chain. Contact us today to learn more about how we can help you streamline your supply chain and make it more efficient.

What is a successful supply chain strategy?

A successful supply chain strategy should be able to provide a company with a competitive advantage by achieving the following objectives: – Cost reduction – Increased efficiencies – Improved customer service 

What are some of the key components of a successful supply chain strategy?

There are a few key components of a successful supply chain strategy, which include: – Defining the company’s value proposition – Understanding customer needs and requirements – Designing and implementing an efficient supply chain network – Managing and measuring performance

How can I create a supply chain strategy?

There are a few steps you can take to create a supply chain strategy. First, you need to understand your business goals. Next, you need to assess your current supply chain. Finally, you need to develop a plan to improve your supply chain. 

What are some common supply chain problems?

There are a few common supply chain problems. One problem is that the supply chain can be very complex. This can make it difficult to manage and optimize. Another problem is that the different parts of the supply chain may not be integrated. This can lead to inefficiencies and waste. 

How can I optimize my supply chain?

There are a few ways you can optimize your supply chain. One way is to streamline your processes. Another way is to use technology to automate and improve your supply chain. Finally, you can outsource your supply chain to a third-party provider .

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Nike Inc. Operations Management: 10 Decisions, Productivity

Nike Inc 10 strategic decisions of operations management and productivity areas, sports shoes, case study analysis

Nike Inc. is a leading global manufacturer and seller of sports shoes, apparel, and equipment. This market position is partly a result of effective and efficient operations management (OM). To ensure success, Nike’s managers must continually examine and improve strategies and approaches used in the 10 strategic decision areas of operations management. These areas pertain to the main decisions in managing streamlined operations and productivity that effectively address business goals and objectives. Nike’s operations management considers talent management, product development, and total quality management as some of the most important variables in these 10 strategic decision areas.

The 10 strategic decisions of operations management (OM) at Nike Inc. cover a wide variety of issues, considering the company’s global market for sports shoes, apparel, and equipment. Nike effectively addresses these decision areas through standards consistently applied in operations management throughout the global organization.

Nike’s Operations Management, 10 Decision Areas

1. Design of Goods and Services . This strategic decision area deals with the design of Nike’s athletic footwear and other products. The operations management objective is to ensure that product design aligns with organizational capabilities and business goals. In this case, Nike Inc. focuses on designs based on advanced technology and current market preferences. Also, the company’s products are designed with consideration for the factors of innovation and brand distinction, which are emphasized in Nike’s mission statement and vision statement . Through successful product innovation, operations management supports the company’s goals for its business positioning in the sporting goods industry.

2. Quality Management . Nike emphasizes quality in its processes and products. The objective in this strategic decision area is to satisfy consumers’ expectations about product quality. The company’s operations management addresses this concern through high quality standards and the application of total quality management (TQM) in the production of sports shoes, equipment, and apparel. Process quality supports innovative capacity, which is one of the strengths noted in the SWOT analysis of Nike . Thus, effective quality management contributes to the competitiveness of the sporting goods business.

3. Process and Capacity Design . This strategic decision area requires that Nike’s operations management must prioritize streamlining and efficiency of production. The objective is to ensure adequate, effective, and efficient production. At Nike, operations managers apply continuous improvement strategies to support the company’s production goals and needs based on market dynamics.

4. Location Strategy . Physical location is the typical concern in this strategic decision area of operations management. The objective is to optimize costs and efficiency through proximity to employees, suppliers, and the target market. In the case of Nike Inc., the operations managers apply a corporate strategy that chooses production facility locations based on costs and nearness to the most significant markets. For example, Nike Inc. has sports shoe suppliers in Southeast Asia because of the cost advantage based on cheaper labor in the region.

5. Layout Design and Strategy . Nike’s operations management deals with the layout design of its facilities. The objective in this strategic decision area is to optimize workflow based on human resources, capacity requirements, technology, and inventory requirements. Nike’s operations managers apply corporate layout design and strategy to company-owned facilities only. For example, the firm uses office layouts where employees can move easily. The factories that manufacture Nike’s products are not under the company’s control in terms of layout design and strategy.

6. Job Design and Human Resources . Human resource adequacy and maintenance are the objectives in this strategic decision area of operations management. Nike Inc. satisfies this concern through internal leadership development, along with coaching and mentoring. The company also has regular evaluations of job assignments to ensure person-job fit.

7. Supply Chain Management . Nike has excellent supply chain management, which facilitates efficient production to support the global sports shoes, apparel, and equipment business. The objective in this strategic decision area of operations management is to align the supply chain with the company’s overall strategic aims. Nike Inc. satisfies this objective through supply chain automation and optimization of transport distances among suppliers, production facilities, distributors, and retailers.

8. Inventory Management . The objective in this strategic decision area is to maintain operations management that minimizes inventory costs while maximizing its effectiveness and efficiency. Nike’s operations managers apply the perpetual method of inventory management, which involves continuous monitoring and movement of inventory from the supply chain to the distributors and retailers.

9. Scheduling . Nike’s scheduling approach is primarily concerned with corporate operations and the coordination of the supply chain with distribution and retail operations. In this strategic decision area of operations management, the aim is to maximize resource utilization. Nike Inc. managers satisfy this aim through automation. Corporate office schedules are standardized, while supply chain schedules are adjusted according to the conditions of the market. Nike applies changes to the supply chain based on market demand for its athletic footwear, equipment, and apparel.

10. Maintenance . Nike’s maintenance strategy considers adequacy of all resources. Adequacy of human resources, facilities and capacity is the objective in this strategic decision area. Nike’s operations management implements continuous recruitment programs to support HR needs, as well as reward programs and career development strategies for maximum retention of employees. For facilities, the company has dedicated teams to regularly evaluate facility and equipment integrity and requirements. The companies that manufacture Nike shoes, apparel and equipment are responsible for their own maintenance.

Productivity at Nike Inc.

Nike Inc. operations management supports maximum productivity of corporate offices, the supply chain, distribution network, and company-owned retail facilities. There are a variety of measures applied to determine actual productivity levels. In this case, Nike uses the following criteria to measure productivity in some business areas:

  • Revenue per square foot (Productivity of Nike’s retail stores)
  • Pair of shoes per hour (Productivity of Nike suppliers)
  • Items per day (Productivity of inventory personnel)
  • Documents per day (Productivity of Nike’s corporate offices)
  • About Nike .
  • Chen, X., Deng, T., Shen, Z. J. M., & Yu, Y. (2023). Mind the gap between research and practice in operations management. IISE Transactions, 55 (1), 32-42.
  • Nike, Inc. – Form 10-K .
  • Nike, Inc. – Responsible Sourcing .
  • Sahoo, S., Kumar, S., Abedin, M. Z., Lim, W. M., & Jakhar, S. K. (2023). Deep learning applications in manufacturing operations: A review of trends and ways forward. Journal of Enterprise Information Management, 36 (1), 221-251.
  • Venkatesh, V., Raman, R., & Cruz-Jesus, F. (2023). AI and emerging technology adoption: A research agenda for operations management. International Journal of Production Research , 1-11.
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Supply Chain Management of Nike

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Global supply chain Management - case study Nike

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Nike has evolved from an organization that manufactures for professional athletes to a company that is manufacturing for all ages, demographics and fashion inclined too through technological innovations. Nike is an Ideology based on pursuit of excellence, its not about shoes or clothes, it’s a way of life, its about selling sports.

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This report is all about to show a Marketing plan for Nike’s products; with reference to older offerings the report shows the plan that how can Nike offer new products in the market. With respect to this the report contains comprehensive marketing plan components including company analysis (Nike’s current and future status), situation or market analysis and competitors analysis; the report shows the Nike’s objectives and marketing strategies in terms of its 4ps that is it is shown that Nike can offer and increase its product range by offering other related products as aerobic products to its customers and set value-based pricing strategy accordingly, and for new offerings it can increase its other media other than commercials that is it can focus more on social media to promote its new products and it may expand its business in other countries as China, Middle-East etc. Beside this, the financial budget of this marketing plan has been discussed which is been forecasted by reviewing Nike’s previous years revenue and marketing expenses figures. Also execution plan as well as contingency plan has been shown which is thoroughly depends upon Nike’s senior management and team work which would make its objectives possible new offerings.

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The user has requested enhancement of the downloaded file. All in-text references underlined in blue are added to the original document and are linked to publications on ResearchGate, letting you access and read them immediately.

Madeeha Kanwal

Strategy is about the most crucial and key issues for the future of organizations. Strategy is also important to explore several strategic options, investigating each one carefully before making strategic choices. The study incorporates a rigorous and systematic effort to uncover the strategies and its impact on the company's performance by analysing case studies, articles and the annual report of Nike Inc. and Adidas Inc. The study attempts to find out the relevance of the strategies adopted by these companies, which are globally successful athletic apparel companies in the context of Bahrain. The findings of the study highlight Nike's strategies which focus on innovation and emphasis on its research and development department, provision of premium pricing for its customers, broad differentiation strategy, market Segmentation Strategy and Closed-Loop strategy. The Adidas strategies focus on the broad differentiation, innovation, trying to produce new products, services and processes in order to cope up with the competition. It embraces a multi-brand strategy, emphasis on expanding activities in the emerging markets, continuously improving infrastructure, processes and systems, foster a culture of challenging convention and embracing change, foster a corporate culture of performance, passion, integrity and diversity. These strategies coupled with its resources and unique capabilities form the basis of sustainable competitive advantage for both the companies. INTRODUCTION: The strategy is a path towards achieving the optimum goals of individuals, groups and organizations. In addition, it leads to a best use of companies' available resources and it also guides the company to stay in a business successfully and continuous improvements for its processes. The definition of strategy could be differ from one author to another, but the most common definition is that the strategy is long term plans and approaches towards the intended visions and objectives. It is a general framework that specified the organizations' plans, policies and approaches to meets its objectives, goals and end results. The way an organization used to shape its strategies could be differentiate from other organizations in order to make its products unique and remarkable. Globally, companies formulate their strategies based on their visions and reaching the satisfaction of customer's needs, requirements and expectations. Subsequently, they use those strategies as a baseline to compare their actual performance with planned ones, to evaluate the end results and ensuring the continuing organizational excellence. There are many kinds of strategies that are pursued by the companies; Such as cost leadership, differentiation and the focus strategies (Porter, 1985), services strategies, growth strategies. Based on the goals, the companies form those strategies and they rank them upon the priorities. It is more than important for any organization to put strategies and not any strategies; the correct strategies which are formulated after a long time of studying and after numerous number of brainstorming among the top management members. Therefore, those strategies then to be implemented by converting the organization's plans and policies into real actions through the best use of available resources such as: human resources, budgets and technological advance; in order to enhance the organization's performance, productivity and sustainability.

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Marketing Process Analysis

Segmentation, targeting, positioning, marketing strategic planning, marketing 5 concepts analysis, swot analysis & matrix, porter five forces analysis, pestel / pest / step analysis, cage distance analysis international marketing analysis leadership, organizational resilience analysis, bcg matrix / growth share matrix analysis, block chain supply chain management, paei management roles, leadership with empathy & compassion, triple bottom line analysis, mckinsey 7s analysis, smart analysis, vuca analysis ai ethics analysis analytics, nike (f1) porter value chain analysis & solution/ mba resources.

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Introduction to Porter Value Chain

EMBA Pro Porter Value Chain Solution for Nike (F1) case study

Concerns a specific strategic decision--should the apparel division expand rapidly? The teaching plan would highlight the pros and cons of such a move.

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Topic : leadership & managing people, related areas : entrepreneurship, managing people, emba pro porter value chain analysis approach for nike (f1).

At EMBA PRO , we provide corporate level professional Marketing Mix and Marketing Strategy solutions. Nike (F1) case study is a Harvard Business School (HBR) case study written by C. Roland Christensen, David C. Rikert. The Nike (F1) (referred as “F1 Nike” from here on) case study provides evaluation & decision scenario in field of Leadership & Managing People. It also touches upon business topics such as - Marketing Mix, Product, Price, Place, Promotion, 4P, Entrepreneurship, Managing people. Our immersive learning methodology from – case study discussions to simulations tools help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the Leadership & Managing People field, competitive advantage, steps to value chain analysis,industry analysis,primary activities, support activities, inbound outbound logitics,marketing & services, and more.

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Porter Value Chain Framework

Value Chain is developed by management guru Michael E. Porter and it was a major breakthrough in business world for analyzing a firm’s relative cost and value. Value Chain was first introduced in 1985 in Harvard Business Review article and Porter’s book “Competitive Advantage”. Value Chain is also known as “Porter’s Value Chain Framework” and it is extensively used to analyze relevant activities of a firm to shed light on the sources of competitive advantage. According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry.

Porter Five Forces & Porter Value Chain

Porter started with the quintessential question – “Why are some companies more profitable than others?” He answered the question in two parts – How companies benefit or limited by the structure of their industry, and second a firm’s relative position within that industry. To conduct industry structure analysis Porter developed Five Forces Model, and to understand the sources of competitive advantage of the firm in relation to competitors in that industry Porter developed Value Chain Analysis Method. The strengths of the Porter’s Value Chain Analysis are - how it disaggregates various activities within the firm and how it put value to value creating activities in an industry wide context.

What is Competitive Advantage?

According to Michael Porter – “If a strategy is to have real meaning then it should reflect directly into a company’s financial performance”. If F1 Nike have a real competitive advantage, it means that compared to its rivals F1 Nike is - operating at lower costs, commanding a premium price, or doing both. Competitive advantage is about superior performance and it is a relative term. When all rivals in the F1 Nike’s industry try to compete on the same dimension, no one firm gains a competitive advantage.

Key Steps in Porter's Value Chain Analysis

Step 1 - start by laying out the industry value chain.

How far upstream or downstream do the industry’s activities extend?

Compare the value chains of rivals in an industry to understand differences in prices and costs

What are the key value-creating activities at each step in the chain?

Step 2 - Compare firm in Nike (F1) case study value chain to the industry’s value chain

Present vs Alternative Value Chain - You should design an alternative value chain and map out areas where improvements can be made. Comparing two or more alternative value chains can provide a good insight into bottlenecks within the industry.

Step 3 - Zero in on price drivers, those activities that have a high current or potential impact on differentiation

Align price drivers in the value chain. Often price drivers are customer expectations that customers are willing to pay more for. For example customers are willing to pay more for flawless uniform experience in Apple products even though Apple products are not the cutting edge products.

Step 4 - Zero in on cost drivers, paying special attention to activities that represent a large or growing percentage of costs

If the strategy dictates cutting cost to be profitable then F1 Nike should focus on areas that are not adding value to customers' expectations, and costs that are there because of operational inefficiencies.

Value Chain Analysis of Nike (F1) Case Study

Porter Value Chain Analysis Nike (F1)

Value Chain and Value System

F1 Nike value chain is part of a larger value system of the industry that includes companies either upstream (suppliers) or downstream (distribution channels), or both. Manager at Nike (F1) needs to see each activity as part of that value system and how adding each activity or reducing each activity impact the Nike (F1) value chain. The decision is regarding where to sit in the value system.

Value Chain Activities – Primary Activities & Support Activities

As per the Value Chain model there are broadly two generic categories of activities – Primary Activities and Supporting Activities.

What are Primary Activities in Porter’s Value Chain?

As illustrated in the Value Chain diagram, F1 Nike has five generic categories of primary activities –

Inbound Logistics

These activities of F1 Nike are associated with receiving, storing and disseminating the inputs of the products. It can include material handling, warehousing of physical products, as well as architecture to receive and store customer information for digital media company. F1 Nike at present has outsourced most of its inbound logistics activities.

Activities that help the organization to transform raw material into finished products. For the purpose of this article the definition is broad – it can mean using customer data to serve advertisements based on usage behavior to clients, moulding plastic to make products etc.

Outbound Logistics

F1 Nike under takes these activities to distribute the finished products to channel partners and final buyers. Outbound logistics activities include – scheduling, distribution network, warehousing, processing, and wholesalers and retailers order fulfillment.

Marketing and Sales

These activities are undertaken by F1 Nike to create means through which the buyer can buy a firm’s products. These activities include – pricing, channel selection, advertising and promotion, marketing, sales force management etc.

F1 Nike needs to provide after sales services and maintenance for successful usage of the product. Service activities of F1 Nike can include – product forward and backend alignment of software, training, post sales maintenance, part supply, and installation services.

What are Support Activities in F1 Nike Value Chain?

As the name explains, Support Activities of F1 Nike are the one that supports the firm’s Primary Activities. Porter divided the Support Activities into four broad categories and each category of support activities is divisible into a number of distinct value activities that are specific to the industry in which F1 Nike operates. The four generic support activities are –

Firm Infrastructure

Firm infrastructure support activities at F1 Nike consists activities such as – general management, finance and accounting, legal services, planning and quality management. Firm infrastructure activities at F1 Nike supports entire value chain though the scope varies given that F1 Nike is a diversified company even within the industry. For example the finance and planning at F1 Nike are managed at corporate level while quality management, accounting and legal issues are managed at business unit level.

Human Resources Management

In an environment where each organization is striving to become a learning organization, Human Resources Management is key to the success of any organization. HRM support activities include – Recruiting, Selection, People Planning, Skill Assessment, Training & Development, Hiring and Compensation at both business unit level and corporate level. Human resource management affects competitive advantage in any firm, but in some industries it is defining factor. For example in the consulting companies HR is the main source of competitive advantage.

Technology Development

Technology supports almost all activities in modern day organization. In the technology industry, technology development has become a source of competitive advantage. Technology development at F1 Nike may include activities such as - feature design, process engineering, technology selection, field-testing, and component design.

Procurement Activities at F1 Nike

Procurement activities at F1 Nike include activities that are undertaken to purchase inputs that are used by F1 Nike’s value chain. It doesn’t include purchase inputs themselves. Purchased inputs may include - raw materials, supplies, machinery, laboratory equipment, office equipment, and buildings. Like all other value chain activities procurement also employs technology for things such as – procedures, vendor management, information system, and supply chain partner qualification rules and ongoing performance evaluation.

Metrics and KPIs to Avoid while Analyzing Nike (F1) Value Chain

Growth or market share is also not a very reliable goal as often firms end up pursuing market share at the cost of profitability.

Shareholder value, measured by stock price, is not a good barometer to analyze value chain. It is preferred by top management but it is only useful in long run rather than competitive strategy in short to medium terms.

Growth in sales is not a good goal for value chain analysis as every managers know that boosting sales is easy to do by reducing the prices dramatically.

5C Marketing Analysis of Nike (F1)

4p marketing analysis of nike (f1), porter five forces analysis and solution of nike (f1), porter value chain analysis and solution of nike (f1), case memo & recommendation memo of nike (f1), blue ocean analysis and solution of nike (f1), marketing strategy and analysis nike (f1), vrio /vrin analysis & solution of nike (f1), pestel / step / pest analysis of nike (f1), case study solution of nike (f1), swot analysis and solution of nike (f1), references & further readings.

M. E. Porter , Competitive Strategy(New York: Free Press, 1980) C. Roland Christensen, David C. Rikert (2018) , "Nike (F1) Harvard Business Review Case Study. Published by HBR Publications. O. E. Williamson , Markets and Hierarchies(New York: Free Press, 1975)

Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications.

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Please note you do not have access to teaching notes, co‐creating value through customers' experiences: the nike case.

Strategy & Leadership

ISSN : 1087-8572

Article publication date: 5 September 2008

This case aims to demonstrate how leading firms are learning how to sustain competitive advantage by co‐creating experiences of value with customers.

Design/methodology/approach

The shoe company Nike provides a glimpse of the next “best practices” of value co‐creation with customers. By engaging with informed, connected, and networked customers around the globe, Nike has found their shared experiences to be a new source of value.

The paper finds that customers are now informed, connected, networked, and empowered on a scale as never before, thanks to search engines, engagement platforms, the growth of internet‐based interest groups, and widespread high‐bandwidth communication and social interaction technologies. Customers have learned how to use these new tools to make their opinions and ideas heard.

Practical implications

A few leading companies like Nike are involving customers in the value creation process by offering Internet sites where they can share their interactions and experiences. These range from customers' ideas about how to improve or customize products to their feelings when they use products.). For Nike, the learning from these interactions creates new strategic capital. The company can now learn directly from customers' direct input on their preferences. Nike can build relationships and trust with the Nike+ community and experiment with new offerings, all the while enhancing its brand.

Originality/value

The strategic opportunity for Nike is to build and promote the use of Internet engagement platforms through which the firm can build customer relationships on a scale and scope as never before. Effectively managing these new initiatives initially posed a new challenge for Nike, a traditionally product‐centric organization. Now their viewpoint is reversed. “In the past the product was the end point of the consumer experience. Now it is the starting point.”

  • Value added
  • Customer information
  • Social interaction
  • Consumer marketing
  • Customization

Ramaswamy, V. (2008), "Co‐creating value through customers' experiences: the Nike case", Strategy & Leadership , Vol. 36 No. 5, pp. 9-14. https://doi.org/10.1108/10878570810902068

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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Case Study 16: Nike’s 100 Million Dollar Supply Chain "Speed bump"

Case Study 16 – Nike’s 100 Million Dollar Supply Chain Speed bump

“This is what you get for 400 million, huh?” 

Nike President and CEO Phil Knight famously raised the question in a conference call days before announcing the company would miss its third-quarter earnings by at least 28% due to a glitch in the new supply chain management software. The announcement would then send Nike’s stock down 19.8%. In addition, Dallas-based supply-chain vendor i2 Technologies, which Nike assigned blame, would suffer a 22.4% drop in stock price.

The relationship would ultimately cost Nike an estimated $100 million. Each company blamed the other for the failure, but the damage could have been dramatically reduced if realistic expectations had been set early on and a proper software implementation plan had been put in place. Most companies wouldn’t overcome such a disastrous supply chain glitch or “speed bump,” as Knight would call it, but Nike would recover due to its dominant position in the retail footwear and apparel market.

In 1999, two years before Knight’s famous outburst, Nike paid i2 $10 million to centralize its supply, demand, and collaboration planning system with a total estimated implementation cost of $40 million. Initially, i2 was the first phase of The Nike Supply Chain (NSC) project. The plan was to implement i2 to replace the existing system and introduce enterprise resource planning (ERP) software from SAP and customer relationship management (CRM) software from Siebel Systems.  

The goal of the NSC project was to improve Nike’s existing 9-month product cycle and fractured supply chain. As the brand experienced rapid growth and market dominance in the 1990s, it accumulated 27 separate order management systems around the globe. Each is entirely different from the next and poorly linked to Nike’s headquarters in Beaverton, Oregon.

At the time, there wasn’t a model to follow at the scale Nike required. Competitors like Reebok struggled to find a functional supply chain solution specific to the retail footwear and apparel industry. In an effort to solidify its position as the leader in sportswear, Nike decided to move forward quickly with i2’s predictive demand application and its supply chain planner software.

"Once we got into this, we quickly realized that what we originally thought was going to be a two-to-three-year effort would be more like five to seven," - Roland Wolfram, Nike’s vice president of global operations and technology.

The NCS project would be a success, and Nike would eventually accomplish all its supply chain goals. However, the process took much longer than expected, cost the company an additional $100 million, and could have been avoided had the operators or both companies taken a different approach to implementation.

"I think it will, in the long run, be a competitive advantage." – Phil Knight

In the end, Knight was right, but there are many valuable lessons to learn from the Nike i2 failure.

If you want to make sure your business critical project is off to a great start instead of on its way on my list with project failures? Then a New Project Audit is what you are looking for. If you want to know where you are standing with that large, multi-year, strategic project? Or you think one of your key projects is in trouble? Then a Project Review is what you are looking for. If you just want to read more project failure case studies? Then have a look at the overview of all case studies I have written here .

So, before we get into the case study, let’s look at precisely what happened...

Timeline of Events

1996 - 1999

Nike experienced incredible growth during this period but was at a crossroads. Strategic endorsement deals and groundbreaking marketing campaigns gave the company a clear edge over Adidas and Reebok, its two most substantial competitors in the 80s and 90s. However, as Nike became a world-renowned athletics brand, its supply chain became more complex and challenging to manage.

Part of Nike’s strategy that separated itself from competitors was the centralized approach. Product design, factory contracting, and order fulfillment were coordinated from headquarters in Oregon. The process resulted in some of the most iconic designs and athlete partnerships in sports history. However, manufacturing was much more disoriented.

During the 1970s and 80s, Nike battled to develop and control the emerging Asian sneaker supply chain. Eventually, the brand won the market but struggled to expand because of the nine-month manufacturing cycle.

At the time, there wasn’t an established method to outsource manufacturing from Asia, making the ordering process disorganized and inefficient across the industry. In addition, Nike’s fractured order management system contained tens of millions of product numbers with different business rules and data formats. The brand needed a new way to measure consumer demand and manage purchasing orders, but the state of the legacy system would make implementing new software difficult.

At the beginning of 1999, Nike decided to implement the first stage of its NSC project with the existing system. i2 cost the company $10 million but estimated the entire project would cost upwards of $400 million. The project would be one of the most ambitious supply chain overhauls by a company of Nike’s size. 

i2 Technologies is a Dallas, Texas-based software company specializing in designing solutions that simplify supply and demand chain management while maximizing efficiency and minimizing cost. Before the Nike relationship, i2 was an emerging player in logistics software with year-over-year growth. Involvement in the Nike project would position the company as the leading name in supply chain management software.

Nike’s vision for the i2 phase of NSC was “achieving greater flexibility in planning execution and delivery processes…looking for better forecasting and more profitable order fulfillment." When successfully implemented, the manufacturing cycle would be reduced from nine months the six. This would convert the supply chain to make-to-order rather than make-to-sell, an accomplishment not yet achieved in the footwear and apparel industry.

Predicting demand required inputting historical sales numbers into i2’s software. “Crystal balling” the market had substantial support at the time among SCM companies. While the belief that entering numbers into an algorithm and spitting out a magical prediction didn’t age well, the methodology required reliable, uniform data sets to function.

Nike decided to implement the “Big Bang” ERP approach when switching to i2 for the supply chain management. The method consists of going live where the business completely changes without phasing out the old system. Nike also opted for a single instance strategy for implementation. The CIO at the time, Gordon Steele, is quoted saying, “single instance is a decision, not a discussion.” Typically, global corporations choose a multi-instance ERP solution, using separate instances in various regions or for different product categories.

By June of 2000, various problems with the new system had already become apparent. According to documents filed by Nike and i2 shareholders in class-action suits, the system used different business rules and stored data in various formats, making integration difficult. In addition, the software needed customization beyond the 10-15% limit recommended by i2. Heavy customization slowed down the software. For example, entries were reportedly taking over a minute to be recorded. In addition, the SCM system frequently crashed as it struggled to handle Nike’s tens of millions of product numbers.

The issues persisted but were fixable. Unfortunately, the software was linked to core business processes, specifically factory orders, that sent a ripple effect that would result in over and under-purchasing critical products. The demand planner would also delete ordering data six to eight weeks after it was entered. As a result, planners couldn’t access purchasing orders that had been sent to factories.

Problems in the system caused far too many factory orders for the less popular shoes like the Air Garnett IIIs and not enough popular shoes like the Air Jordan to meet the market's demand. Foot Locker was forced to reduce prices for the Air Garnett to $90 instead of the projected retail price of $140 to move the product. Many shoes were also delivered late due to late production. As a result, Nike had to ship the shoes by plane at $4-$8 a pair compared to sending them across the Pacific by boat for $0.75.   

November 2000

According to Nike, all the problems with i2’s supply chain management system were resolved by the fall. Once the issues were identified, Nike built manual workarounds. For example, programmers had to download data from i2’s demand predictor and reload it into the supply chain planner on a weekly basis. While the software glitches were fixed and orders weren’t being duplicated or disappearing, the damage was done. Sales for the following quarter were dramatically affected by the purchasing order errors resulting in a loss of over $100 million in sales.

Nike made the problem public on February 27, 2001. The company was forced to report quarterly earnings to stakeholders to avoid repercussions from the SEC. As a result, the stock price dove 20%, numerous class-action lawsuits were filed, and Phil Knight famously voiced his opinion on the implementation, "This is what you get for $400 million, huh?"

In the meeting, Nike told shareholders they expected profits from the quarter to decline from around $0.50 a share to about $0.35. In addition, the inventory problems would persist for the next six to nine months as the overproduced products were sold off.

As for the future of NSC, the company, including its CEO and President, expressed optimism. Knight said, "We believe that we have addressed the issues around this implementation and that over the long term, we will achieve significant financial and organizational benefit from our global supply-chain initiative."

A spokeswoman from Nike also assured stakeholders that the problems would be resolved; she said that they were working closely with i2 to solve the problems by creating “some technical and operational workarounds” and that the supply chain software was now stable.

While Nike was positive about the implementation process moving forward, they placed full blame on the SCM software and i2 Technologies.

Nike stopped using i2’s demand-planning software for short-and-medium range sneaker planning; however, it still used the application for short range and its emerging apparel business. By the Spring of 2001, Nike integrated i2 into its more extensive SAP ERP system, focusing more on orders and invoices rather than predictive modeling.

What Went Wrong?

While the failures damaged each company’s reputation in the IT industry, both companies would go on to recover from the poorly executed software implementation. Each side has assigned blame outward, but after reviewing all the events, it's safe to say each had a role in the breakdown of the supply chain management system.

Underestimating Complexity

Implementing software at this scale always has risks. Tom Harwick, Gigi Information Group’s research director for supply chain management, said, “Implementing a supply-chain management solution is like crossing a street, high risk if you don't look both ways, but if you do it right, low risk.”

One of Nike's most significant mistakes was underestimating the complexity of implementing software at such a large scale. According to Roland Wolfram, Nike’s operators had a false sense of security regarding the i2 installation because it was small compared to the larger NSC project. "This felt like something we could do a little easier since it wasn’t changing everything else [in the business]," he says. "But it turned out it was very complicated."

Part of the reason why the project was so complicated was because of Nike’s fractured legacy supply chain system and disoriented data sets. i2’s software wasn’t designed for the footwear and apparel industry, let alone Nike’s unique position in the market.  

Data Quality

Execution by both parties was also to blame. i2 Technologies is on record recommending customization not to exceed 10-15%. Nike and i2 should have recognized early on that this range would be impossible to accommodate the existing SCM system.

Choosing a Big Bang implementation strategy didn’t make sense in this scenario. Nike’s legacy system data was too disorganized to be integrated into the i2 without making dramatic changes before a full-on launch.

Poor Communication

Communication between Nike and i2 from 1999 to the summer of 2000 was poor. i2 claimed not to be aware of problems until Knight issued blame publicly. Greg Brady, the President of i2 Technologies who was directly involved with the project, reacted to the finger-pointing by saying, "If our deployment was creating a business problem for them, why were we never informed?" Brady also claimed, "There is no way that software is responsible for Nike's earnings problem." i2 blamed Nike’s failure to follow the customization limitations, which was caused by the link to Nike’s bake-end.

Rush to Market

At the time, Nike was on the verge of solidifying its position as the leader in footwear and sports apparel for decades to come. Building a solid supply chain that could adapt to market trends and reduce the manufacturing cycle was the last step toward complete market dominance. In addition, the existing supply chain solutions built for the footwear and apparel industry weren’t ready to deploy on a large scale. This gave Nike the opportunity to develop its own SCM system putting the company years ahead of competitors. Implementing functional demand-planning software would be highly valuable for Nike and its retail clients.

i2 also was experiencing market pressure to deploy a major project. Had the implementation gone smoothly, i2 would have a massive competitive advantage. The desire to please Nike likely played a factor in i2’s missteps. Failing to provide clear expectations and communication throughout the process may not have happened with a less prominent client.  

Failure to Train

After the problems became apparent in the summer of 2000, Nike had to hire consultants to create workarounds to make the SCM system operational. This clearly indicates that Nike’s internal team wasn’t trained adequately to handle the complexity of the new ERP software.

Nike’s CIO at the time reflected on the situation. "Could we have taken more time with the rollout?" he asked. "Probably. Could we have done a better job with software quality? Sure. Could the planners have been better prepared to use the system before it went live? You can never train enough."

How Nike Could Have Done Things Differently

While Nike and i2 attempted to implement software that had never been successfully deployed in the global footwear and apparel industry, many problems could have been avoided. We can learn from the mistakes and how Nike overcame their challenges with i2 to build a functioning ERP system.

Understanding and Managing Complexity

Nike’s failure to assess the complexity of the problem is at the root of the situation. Regardless if the i2 implementation was just the beginning of a larger project, it featured a significant transition from the legacy system. Nike’s leadership should have realized the scale of the project and the importance of starting NSC off on the right foot.  

i2 also is to blame for not providing its client with realistic expectations. As a software vendor, i2 is responsible for providing its client with clear limitations and the potential risks of failing to deploy successfully.

See " Understanding and Managing Your Project’s Complexity " for more insights on this topic.

Collaborate with i2 Technologies

Both companies should have realized that Nike required more than 10-15% customization. Working together during the implementation process could have prevented the ordering issues that were the reason for the lost revenue.

Collaboration before deployment and at the early stages of implementation is critical when integrating a new system with fractured data. Nike and i2 should have coordinated throughout the process to ensure a smooth rollout; instead, both parties executed poor project management resulting in significant financial and reputational blows.  

See " Solving Your Between Problems " for more insights on this topic.

Hire a 3rd Party Integration Company

Nike’s lack of understanding of the complexity of SCM implementation is difficult to understand. If i2 had been truthful in that they did not know about problems with their software, Nike could have made a coordinated decision not to involve the software company during the process.

Assuming that is the case, Nike should have hired a 3rd party to help with the integration process. Unfortunately, Nike’s internal team was not ready for the project. Outside integrators could have prevented the problems before the damage was done.

Not seeking outside help may be the most significant aspect of Nike’s failure to implement a new SCM system.   

See " Be a Responsible Buyer of Technology " for more insights on this topic.

Deploy in Stages

A “Big Bang” implementation strategy was a massive mistake by Nike. While i2 should have made it clear this was not the logical path considering the capabilities of their software and Nike’s legacy system, this was Nike’s decision.

Ego, rush to market, or failure to understand the complexities of the project could all have been a factor in the decision. Lee Geishecker, a Gartner analyst, stated that Nike chose to go live a little over a year after starting the project, while projects of this scale should take two years before deployment. In addition, the system should be rolled out in stages, not all at once.

Brent Thrill, an analyst at Credit Suisse First Boston, is on record saying he would have kept the old system running for three years while testing i2’s software. In another analysis, Larry Lapide commented on the i2 project by saying, "Whenever you put software in, you don't go big bang, and you don't go into production right away. Usually, you get these bugs worked out . . . before it goes live across the whole business."

At the time, Nike’s planners weren’t prepared for the project. While we will never know what would have happened if the team had been adequately trained, proper preparation would have put Nike in a much better position to handle the glitches and required customizations.

See " User Enablement is Critical for Project Success " for more insights on this topic.

Practice Patience in Software Implementation

At the time, a software glitch causing a ripple effect that would impact the entire supply chain was a novel idea. Nike likely made their decisions to risk the “Big Bang” strategy, deploy in a year without phases and proper testing, and not seek outside help because they assumed the repercussions of a glitch wouldn’t be as catastrophic.

Impatience resulted in avoidable errors. A more conservative implementation strategy with adequate testing would have likely caught the mistakes.

See " Going Live Too Early Can Be Worse as Going Late " for more insights on this topic.

Closing Thoughts

One of the most incredible aspects of Nike’s implementation failure is how quickly the company bounced back. While Nike undoubtedly made numerous mistakes during the process, NSC was 80% operational in 2004.

Nike turned the project around by making adjustments and learning patience. Few companies can suffer a $100 million “speed bump” without filing bankruptcy, but Nike is in that position because of its resilience. The SAP installation wasn’t rushed and resumed many aspects of its original strategy. In addition, a training culture was established due to the i2 failures. Customer service representatives receive 140 to 180 hours of training from highly skilled “super users,” All employees are locked out of the system until they complete their required training courses.

Aside from the $100 million loss, the NSC project was successful. Lead times were reduced from nine months to six (the initial goal), and Nike’s factory inventory levels were reduced from a month to a week in some cases. Implementing a new SCM system also created an integration between departments, better visibility of customer orders, and increased gross margins.

While Nike could have executed far more efficiently, Phil Knight’s early assessment of the i2 failure turned out to be true. In the long run, the process gave Nike a competitive advantage and was instrumental in building an effective SCM system. 

In a nutshell: A failure to demonstrate patience, seek outside help, and rush software implementation can have drastic consequences.  

> Nike says i2 hurt its profits

> I2 Technologies, Inc.

> How Not to Spend $400 Million

> i2-Nike fallout a cautionary tale

> Nike rebounds: How Nike recovered from its supply chain disaster

> Scm and Erp Software Implementation at Nike – from Failure to Success 

> I2 Says: "You Too, Nike"

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Nike Sustainability and Labor Practices 2008-2013

The case discusses Nike’s sustainability and labor practices from 1998 to 2013, focusing on the successful steps Nike took up and down the supply chain and in its headquarters to make its products and processes more environmentally friendly, and the challenges and complexities it was still facing in its efforts to improve labor conditions. Nike’s labor practices were the subject of high profile public protests in the 1990s, and CEO Mark Parker said the company still had a lot of work to do in that area. The case also details how making sustainability a key part of the design process led Nike to develop more innovative and high-performing products, such as a breakthrough running shoe called the Flyknit, which was widely worn at the 2012 Olympics. Following protests in the late 1990s over unsafe working conditions, low wage rates, excessive overtime, restrictions on employee organizing, and negative environmental impacts, Nike began shifting from a reactive to a proactive mode. During the 15 years covered in this case, Nike made significant changes in its sustainability practices, including moving its Corporate Responsibility team much further upstream in the organization, where it could have a greater impact on decisions by providing input early in the process. The company also developed multiple indexes that measured its sustainability practices and those of its independent contract manufacturers. The indexes had metrics for measuring the relevant impacts of product waste, water, chemistry, labor, and energy. Nike’s critics said many labor issues had not been resolved, but Nike made progress in that area through collaboration with governments, NGOs and labor unions, and through management compliance trainings. If a contract factory did not score high enough on the company’s sustainability and labor ratings scales, Nike would impose sanctions on the factory or even drop it from the supply chain. These actions took Nike off the top of most activists’ target lists.

Learning Objective

The learning objective of the case is for students to understand how a large, high-profile global company is navigating the complexities of becoming more sustainable and improving labor practices.

nike value chain case study

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The pandemic has brought supply chain to focus, and organizations recognize dynamic supply assurance as a critical capability for their business. Chief Supply Chain Officers (CSCO) and other executives seek to optimize their supply chain by infusing AI, modernizing their technology and addressing sustainability goals.

Over the next decade, CSCOs will need to solve key industry challenges: supply chain disruptions due to climate events; regional conflicts such as Ukraine or Middle East; the desire for convenience and personalization; awareness of the environmental impact of consumption; meeting delivery expectations; fears about trade disruptions and fluctuations in cost. All of these challenges can be solved with more connected, agile and sustainable supply chains.

Organizations that proactively address these industry challenges can see some typical outcomes related to stock, including a 4-8% improvement of lost sales from stock outages, increased stock turnover, improved management of product risk, perishability and age, as well as increased management of lead time (a leading indicator of stock overage) and a reduction of days on hand. In addition, there can be financial benefits, such as a solution cost savings of 10%, reduced holding costs and improved gross margin return on investment. Finally, they may also see customer-facing benefits, including a reduced return rate, the ability to manage unusual supply chain interruption events including weather or natural disaster, and an overall improvement in customer satisfaction.

To help organizations address these industry challenges, IBM and Red Hat teams developed this whitepaper and supporting assets through an IBM Academy of Technology Industry Affiliate Initiative.

Download the whitepaper to learn more

This whitepaper provides an executive summary, business challenges and overall solution followed by specific business scenarios. For each business scenario, we will discuss the business challenges, business value, and business outcomes and then provide automation and modernization actionable steps organizations can take to drive innovation and move toward a digital supply chain. Actionable steps will be developed through the lens of use cases on how the main risk factors can be transformed into opportunities.

The specific business scenarios covered in this whitepaper are demand risk, loss and waste management, product timeliness, perfect order, last mile delivery, sustainable supply chain, supply chain returns and disaster readiness. For each business scenario, we present the business scenarios, solution overview and architectures.

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IMAGES

  1. Analyse complète de la chaîne de valeur de Nike

    nike value chain case study

  2. Nike Value Chain Analysis

    nike value chain case study

  3. Nike Value Chain Analysis

    nike value chain case study

  4. Nike Value Chain Analysis

    nike value chain case study

  5. nike value chain case study

    nike value chain case study

  6. Group 11-Nike Value Chain

    nike value chain case study

COMMENTS

  1. Nike Value Chain Analysis

    Nike's value chain analysis is a complex study because of its broad portfolio and global business model. It is always a good idea to divide and rule when the model becomes so huge. Developing a global value chain analysis with child analyses diagrams for regional Nike systems helps to understand the processes clearly.

  2. Nike Value Chain

    The Nike Value Chain Toolkit. The Nike Value Chain is the set of activities, capabilities, and ways of working that bring inspiration and innovation to every athlete* in the world. Our value chain is what allows us to realize our business plans and the workflow required to achieve the Consumer Direct Strategy.

  3. Nike's Strategy to Improve Conditions in its Global Supply Chain

    Value Chain Innovation Initiative ... Nike's Strategy to Improve Conditions in its Global Supply Chain - A Case Study. By Angharad Porteous Sonali Rammohan. ... Operations, Information & Technology. Social Impact. Download. Nike's approach to managing supplier responsibility has greatly evolved since the 1990s, when the media uncovered ...

  4. Nike Versus New Balance: Trade Policy in a World of Global Value Chains

    Nike Inc. is a public company headquartered in Beaverton, Oregon, and the largest athletic footwear and athletic apparel company in the world in terms of sales,1 with over $24 billion in revenues for a total gross profit of over US$10 billion in 2012.2 Its high profit margins (43.4% in 2012) have been reflected in the price of its shares, whose ...

  5. How is Nike changing the supply chain game? MBA Case Study

    Nike uses technology and innovation to streamline its operations and to reduce costs. Flexibility: Nike's supply chain is also very flexible. Nike is able to quickly respond to changes in demand and to new trends in the market. Sustainability: Nike is working to make its supply chain more sustainable. Nike has set a number of goals for itself ...

  6. (PDF) Global Ethical Sourcing: The Case of Nike

    Abstract. The current study analyses Nike's journey to responsible sourcing in the global market. The study discusses how the problem of Nike's sweatshop supply chain emerged and how the company ...

  7. Nike Supply Chain Issues

    Nike's response to a supply chain crisis repositioned it as a sustainability leader, and raised the bar for an entire industry. ... This shift illustrates how a firm can use transparency to mitigate risk and add value to their business. Making the Shift toward a Sustainable Supply Chain. David Doorey (York University) conducted a case study of ...

  8. Nike versus New Balance: Trade Policy in a World of Global Value Chains

    In 2013, Michael Froman, the newly appointed United States Trade Representative, was responsible for leading the U.S. negotiating team in the formulation of the terms of the Trans-Pacific Partnership (TPP). During the negotiations, Froman had to adopt a position on the sensitive issue of tariffs on imported footwear. On the one hand, Vietnam, a TPP member country, was America's second largest ...

  9. Nike, Inc.

    The case is set in January 2020 and the case protagonist is John Donahoe, Nike's new CEO. Nike is the largest company worldwide in the athletic footwear, apparel, and equipment business. The case focuses on the challenges Donahoe faces as he attempts to drive Nike to the goal of $50 billion in annual revenues by 2021. The case focuses on Nike's competition, the convergence of technology with ...

  10. A case study on NIKE's environment footprint valuation of whole value chain

    Download Citation | A case study on NIKE's environment footprint valuation of whole value chain | As a global famous brand specializing in sports products business, NIKE is on a road to conduct ...

  11. Case Study

    The American sportswear giant's success is rooted in a radical direct-to-consumer strategy built around content, community and customisation, and conceived for a post-internet world where brand connections are everything. Loading... In October 2020, in the middle of a global pandemic that had infected 188 countries, causing record sales ...

  12. An Insight Into Nike's Supply Chain Strategy

    January 30, 2023. Nike is an American multinational and is undoubtedly the most important player in the modern textile business as it is one of the most recognized sports brands in the world. Nike sells hundreds of millions of shoes and other products annually, and a tremendously intricate supply chain lies behind them.

  13. Nike Inc. Operations Management: 10 Decisions, Productivity

    Nike's Operations Management, 10 Decision Areas. 1. Design of Goods and Services. This strategic decision area deals with the design of Nike's athletic footwear and other products. The operations management objective is to ensure that product design aligns with organizational capabilities and business goals.

  14. Supply Chain Management of Nike

    For a company, supply chain management (SCM) has been playing an increasingly important role. Therefore, how to improve the SCM of an enterprise will be a key issue. This paper focuses on solving Nike's SCM problems in stock, which can be divided into stock shortage and overstock. Nike's inventory is highly volatile, leading to errors in both parts, especially during Corona Virus Disease ...

  15. Global supply chain Management

    Global supply chain Management - case study Nike. Chukwuemeka Ogbuehi. Nike has evolved from an organization that manufactures for professional athletes to a company that is manufacturing for all ages, demographics and fashion inclined too through technological innovations. Nike is an Ideology based on pursuit of excellence, its not about shoes ...

  16. Solved Porter Value Chain : Nike (F1) Analysis

    Step 2 - Compare firm in Nike (F1) case study value chain to the industry's value chain . Present vs Alternative Value Chain - You should design an alternative value chain and map out areas where improvements can be made. Comparing two or more alternative value chains can provide a good insight into bottlenecks within the industry.

  17. (PDF) Nike-A Case Study Just Do It

    Narsee Monjee Institute of Management Studies. Nike has gone 35% digital and is planning to reach 50% by 2025. It has shown immense growth and is expected to close year 2022 with over 50-billion ...

  18. Co‐creating value through customers' experiences: the Nike case

    A few leading companies like Nike are involving customers in the value creation process by offering Internet sites where they can share their interactions and experiences. These range from customers' ideas about how to improve or customize products to their feelings when they use products.). For Nike, the learning from these interactions ...

  19. 3. Analysis of Nike's the Supply Chain

    The below Figure 5 illustrates the size and span of Nike's global supply chain. Its goods are produced in 41 countries at 533 factories with more than 1 million workers. Raw materials are ...

  20. Summary

    Case study: Nike and Its Global Supply Chain. Course. Global Supply Operations (SCM 300) 116 Documents. Students shared 116 documents in this course. University Arizona State University. Academic year: 2014/2015. Uploaded by: Anonymous Student. This document has been uploaded by a student, just like you, who decided to remain anonymous.

  21. Nike Supply Chain Management Case Study Essay

    February 19, 2022. by ilearnlot. Case Studies. 10 min read. Case Study of the Nike Supply Chain Management with Essay; Nike enjoys a strong brand, well-managed distribution processes, and a compelling product offering. However, with new competitive entrants with better service and lead time, and even fashion brands moving into their market ...

  22. Case Study 16: Nike's 100 Million Dollar Supply Chain "Speed bump"

    In 1999, two years before Knight's famous outburst, Nike paid i2 $10 million to centralize its supply, demand, and collaboration planning system with a total estimated implementation cost of $40 million. Initially, i2 was the first phase of The Nike Supply Chain (NSC) project. The plan was to implement i2 to replace the existing system and ...

  23. Nike Sustainability and Labor Practices 2008-2013

    The case discusses Nike's sustainability and labor practices from 1998 to 2013, focusing on the successful steps Nike took up and down the supply chain and in its headquarters to make its products and processes more environmentally friendly, and the challenges and complexities it was still facing in its efforts to improve labor conditions.

  24. Supply Chain Optimization: Business scenarios and architecture

    FDA FSMA: Providing value beyond compliance . 5 min read - The supply chain plays a pivotal role in delivering goods and services to both businesses and consumers, serving as the connective thread between industries, nations, communities and all components of the value chain. Our dependence on supply chains is most pronounced in ensuring food supply.

  25. Marketing Case Study: Nike's Global Marketing Strategies

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