Analysis of Nike's Supply Chain Management

The assignment examines the supply chain management system used by Nike, a leading athletic footwear and apparel brand. It discusses the importance of supply chain management in ensuring the delivery of premium quality products to customers. The report outlines the positive and negative impacts of supply chain practices on Nike's performance, and concludes that the company's success is due to its effective supply chain management system.

Global supply chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Supply chain management involves the process of planning and executing and managing
the flow of goods and services and involves the whole process that transforms all the raw
materials into the final products. Global supply chain means planning and managing a worldwide
network of the goods and services. Nike is an American multinational enterprise which is
involved in the designing, manufacturing and developing worldwide marketing and the selling of
apparels, footwear, accessories and services. The report will outline the impact of the global
supply management practices on the performance of the Nike.
MAIN BODY
Supply chain management is a combination of all the businesses which are
interconnected with each other either for manufacturing of the product or delivering the product
to the end users or promoting the product. For example a good manufactured by someone can be
the raw material for another manufacturer for producing another material. For instance, the
process of bread manufacturing (Tseng and Hung, 2014). Firstly the farmer sows seeds of wheat
and after their cultivation the wheat is sold to the bakers. These bakers then bakes the breads. So
in this the farmer manufactured wheat which is the final product for the farmer. Whereas it
became the raw material for the baker whose final product is the bread.
The supply chain management starts with the origin of the manufacturing of the product
and service and ends it the delivery and consumption of the product by the consumers. Supply
chain management can be properly defined as the network of all the businesses and people
involved in those business working together to convert the raw material into the finished goods
so that it can be consumed by the end users that is the consumers for whom the goods are being
manufactured.
Global supply chain management involves the planning of whole process that is how the
entire supply chain will be functioning on the global level with the aim of generating an optimum
level of customer service (Chin, Tat and Sulaiman, 2015). In simple terms it means outflow of
associated information and physical goods from the manufacturer to the consumer. It differs
from the concepts of the logistics. Logistics means transporting the goods from the one place to
another. Whereas supply chain management means the process of organizing the overall business
operations in such a way that it ends in achievement of the ultimate goals.
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There are many different types of the models through which the supply chain can be
managed and improved. Some of the models used by Nike are as follows-
The 'agile' supply chain management model- this model is ideal for those types of company
which manufacture the products according to the customers specification. In this model to ensure
quickness in the supply chain the manager needs to focus on having the ability of designing the
manufacturing process in such a way that the process is capable of doing work for small lot also.
Nike uses agile supply chain to use the competency, flexibility, and quickness to manage the
supply chain on daily basis (Alexander, Walker and Naim, 2014). The positive impact of this
type of supply chain for Nike is that it is able to focus eliminating the excessive stock and
avoiding the shortages. Another positive impact on Nike is that it enables the company to handle
the market volatility in the economy.
With this positivity there are also some negative effects of the agile system on the
company. The shortage will take place in factor of production or the resources because of a
sudden increase in the consumer demand and volume. And if there is a sudden drop in the
demand of the consumers then the products will not be sold which will be a losing situation for
the company. Also one more negative effect of using the agile model is that it requires more
highly skilled personnel is required to be hired for continuing the agile model.
The 'custom configured' model of supply chain management- this is model used by Nike.
This model is characterized by a high degree of relevance of the cost of the asset and multiple
configuration of the finished products. Generally here the product configuration is achieved by
an assembly process wherein some parts are assembled according to the needs and preferences of
the consumers (Rangel, de Oliveira and Leite, 2015). This model is ideal because the products of
Nike are multiple and have they require limited product configuration. The positive impact of
this model is that it combines the agile supply chain with the continuous supply chain. This
model also have an advantage of the high degree of the correlation between the cost of the asset
and the total cost. Other positive impact is that the company gets a competitive advantage and
position because it offers unique range and variety of the products and services and that also
according to the customers choices, taste, needs, requirements and preferences.
There are also some negative impact of the custom configured model. Here the processes
before the time of the product and service configuration is much lengthier than the configuration
itself and the downstream processes also. Also there is a negative impact that because of
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unlimited number of the possible finished products which is a result of the multiple combinations
of the parts or the raw materials it is practically impossible to make the accurate forecast.
Another negative impact is that it includes the finite or the fixed number of the raw material or
the pieces and the facts that the process of manufacturing happen prior to the configuration are
decided and scheduled according to the forecast or continuous replenishment model. This model
depends on the changeability and variability of the demand profile of the customers is also a
negative effect of the custom configured model on the Nike's performance.
The flexible supply chain model- this model is best for those types of companies or industries
which have high demand peaks followed by some extended periods of the low demand also. This
model has a very high adaptability and along with the capabilities of refiguring all the internal
manufacturing processes in order to meet the specific requirements and needs and preferences of
the customer and to resolve the customers problems and difficulties and queries if they have any.
The administration and the management of the company should focus on the ensuring and the
confirmation that there is sufficient and ample flexibility along with emphasis on the rapid and
fast response capability and having the extra capacity of using the critical resources and
developing a process flow with help of adequate technical strength and capability (Ross, 2015).
The positive effect of this type of model is that this model is capable to meet the
unexpected demands at the time of the peak demands and long periods of the low work loads.
Another positive effect of this model is that this model has the characteristic of adaptability
which refers to the capability to reconfigure the internal processes in order to meet the
consumers specific needs, demands and to solve the customer's problems and the complexities.
This model is more beneficial for the service company because it focuses on the handling of the
unexpected situations including the situation of contingencies and the conditions of the
emergencies.
The negative impact of this model is that because company using this type of model
needs to keep a record of all the resources and need to make a pool of the resources because of
the unexpected situation which can be easily result in the demand exceeding capacity. Another
negative effect of flexible supply chain model is that the company needs to maintain a strong
collaborative relationship with the suppliers and other companies. Another impact is that is that it
is not possible to make a pool of the resources because firstly the resources are scarce and other
reason is that the company requires different types of the resources like low to medium capacity,
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medium to high capacity and high to low capacity which is not always possible in the
environment (Emmett and Crocker, 2016).
Other than these models there are some general ways of supply chain management also.
Nike is the largest maker of the athletic footwear and apparel store world wide. This brand is
successful because of the fact that it uses a successful supply chain management system. Along
with the great quality product and services and innovative and creative channels and methods of
marketing and the promotion the company also has a strong supply of the chain management.
The main reason for the success of the company's global business is the strong and managed
supply chain system.
For the availability and procurement of the raw materials the company relies totally on
the external sources of the raw materials. All the products of Nike are manufactured by
independent contractors who have a broad base of the suppliers who support their businesses for
further growth prospects. For Nike the quality of the product is of the utmost priority in the
supply chain. The company keeps and maintains great attentiveness regarding the quality and the
selection of the good quality of the raw material. Nike has created a global procurement team
who obtains the raw material at the world wide level and also takes care of the entire process of
procurement from selecting the place from where to buy raw material to the contracting of the
right and accurate suppliers so that the goods and services are produced of utmost good quality.
Also Nike's supply chain extends to many several other nations. The products of the
company are manufactured in 42 different types of countries where 567 independent factories are
operating and they employ around more than 1 million workers in these factories and the outlets.
Also 124 footwear factories which are located in 13 different countries. With this Nike has also
328 apparel factories located in the different 37 countries and it supplies all the goods produced
to the Nike retail store chains.
For maintaining the quality of the products Nike has also courted many several
controversies over the supply chain practices related to the labour welfare (Ayers and Odegaard,
2017). For this the company focuses and enhances the ethical supply chain practices more
stronger and efficient. The strategies of company focuses on those suppliers and makes them
priorities who have shown their interest in adopting the policies of corporate social
responsibilities (CSR) and sustainability. And with all these the suppliers who have offered and
followed more than the minimum quality standards earlier to other companies.
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Nike has also set a code of conduct and code of leadership standards to be followed by
the suppliers to make sure that the suppliers follow the prescribed and mentioned practices and
strategies only which are mentioned in the code of conduct provided by the company.
Apart from the network of the suppliers the organisation also has an efficient and strong
distribution system. A strong distribution system efficiently and effectively caters the needs and
the requirements of the customers (Rushton, Croucher and Baker, 2014). The company has
established a smarter and modern logistic and distribution networks which helps in the faster
shipment and quick and fast fulfilment of the customers demand and the needs. The distribution
system of the company improved the ability of the Nike to deliver the premium quality products
to their customers in a more faster, efficient and effective manner with the aim of satisfying the
needs of the customers.
CONCLUSION
After studying the whole report it can be concluded that the supply chain is a network
which includes individuals, resources, organisations, activities involved in the manufacturing and
promoting and selling the products and services. Global supply chain management refers to the
integration of all these resources at the global level. Nike is the largest maker of the athletic
footwear and apparel store world wide. This brand is successful because of the fact that it uses a
successful supply chain management system. The report outlined the impact that is both the
negative and the positive impact of the supply chain practices on the Nike's performance.
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REFERENCES
Books and journals
Alexander, A., Walker, H. and Naim, M., 2014. Decision theory in sustainable supply chain
management: a literature review. Supply Chain Management: An International
Journal. 19(5/6). pp.504-522.
Ayers, J.B. and Odegaard, M.A., 2017. Retail supply chain management. CRC Press.
Chin, T.A., Tat, H.H. and Sulaiman, Z., 2015. Green supply chain management, environmental
collaboration and sustainability performance. Procedia Cirp. 26. pp.695-699.
Emmett, S. and Crocker, B., 2016. The relationship-driven supply chain: creating a culture of
collaboration throughout the chain. Routledge.
Rangel, D.A., de Oliveira, T.K. and Leite, M.S.A., 2015. Supply chain risk classification:
discussion and proposal. International Journal of Production Research. 53(22).
pp.6868-6887.
Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain
management. Springer.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Tseng, S.C. and Hung, S.W., 2014. A strategic decision-making model considering the social
costs of carbon dioxide emissions for sustainable supply chain management. Journal of
environmental management. 133. pp.315-322.
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