Procurement and Supply Chain Management Analysis of Nike

The report analyses the effectiveness of procurement and supply chain management in organisations. The report focuses on Nike and the ways it incorporates to maintain its supply chain. A thorough analysis is made of the supply chain strategies that are adopted by the organisation. Nike is one of the most famous footwear retail companies in the world. The report conducts an analysis of the effective application of the Bullwhip effects and the Dynamic Alignment model in order to understand the effectiveness of the strategies used in the company. The report also provides recommendations that can help in improving the supply chain management of Nike.

Running head: PROCUREMENT AND SUPPLY CHAIN MANAGEMENT
Procurement and Supply Chain Management
Name of Student
Name of University
Author Note

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Table of contents
Vision, mission and strategic goals of Nike...............................................................................3
Part A: Findings of supply analysis...........................................................................................3
Part B: Findings of operations analysis......................................................................................4
Part C: Findings of information analysis...................................................................................5
Part D: Findings of integration analysis.....................................................................................6
Part E: Findings of sustainability analysis.................................................................................6
Discussion of Nike's procurement and supply chain analysis....................................................8
Discussion of improvement programs.....................................................................................10
Improvement programs assisting Nike to achieve its vision, mission and strategic goals......11
Conclusion................................................................................................................................12
Reference..................................................................................................................................13

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Executive Summary
The report analyses the effectiveness of procurement and supply chain management in
organisations. The report focuses on Nike and the ways it incorporates to maintain its supply
chain. A thorough analysis is made of the supply chain strategies that are adopted by the
organisation. Nike is one of the most famous footwear retail companies in the world. The
report conducts an analysis of the effective application of the Bullwhip effects and the
Dynamic Alignment model in order to understand the effectiveness of the strategies used in
the company. The report also provides recommendations that can help in improving the
supply chain management of Nike.

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Vision, mission and strategic goals of Nike
Nike’s mission is to ensure that the athletes are inspired and they act in an innovative
manner while providing their performances in their respective fields.
The vision of Nike is to help its customers to achieve satisfaction by providing a
sustainable environment. This can help in maintaining a balance between three important
aspects in a business environment.
Nike needs to believe in the partnerships that it builds with potential stakeholders. The
relationship needs to be cordial so that effective collaboration can be maintained between the
organisation and stakeholders of the company (Nike.com, 2018).
Part A: Findings of supply analysis
The goal of Nike is to manage the footwear that is manufactured. The procurement
department manages the footwear in a manner that can help it to classify the products and
consequently provide proper supply in the competitive business environment. The important
products that Nike manufactures also include other leather items such as sports bags and
equipment.
The suppliers of the company are Fulgent Sun International Holding Company, Pou
Chen Corporation and PT Pan Brothers TBK. These are world famous suppliers and they
help in providing the best quality of raw materials to the company. The international
reputation of Nike, the geographical dispersion of the company spreads across various
countries (Myerson, 2015).
Reports have shown that Nike has lost quite a lot of market share in the recent times.
In the current scenario, the market of Nike has lost its firm hold in the footwear retail market.

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There have been reports about some of the shoes sold by Nike had wear and tear issues
(Nike.com, 2018). Nike can benefit from sourcing services so that a proper cost structure can
be developed and it can maintain its reputation in the business market.
Nike selects its suppliers based on the cost of the items that are required for selling the
products. Nike ensures that the suppliers are reputed and the raw materials are of the best
quality. This provides an advantage as the final products are also manufactured keeping the
quality of Nike intact. Hence, the development practices and the programs adopted by Nike
include a proper analysis of the competitors, as the suppliers may be involved in transactions
with them.
It can be said that some of the challenges faced by Nike may include maintaining the
cost of the products and the manner in which the immediate needs of the customers can be
analysed. At the same time, the supply chain may help Nike to gain benefits in the industry.
Part B: Findings of operations analysis
Nike has an international reputation and due to this the market in which it sells, its
products are vast. According to Monczka et al. (2015), having branches in every country
provides it with a competitive advantage. This can provide the company with an opportunity
to expand its growth and attain full global recognition.
To forecast a demand strategy, Nike has adopted the survey method. This is because
the company can analyse the responses of the customers and based on its strategies for the
future can be made. However, it has been stated that Nike uses a completely different
approach to predicting its sales in the market (Brindley, 2017). The method of cross-
examination the responses of the customers are done while analysing the sales.

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One of the safest and reliable approaches adopted by Nike is the Just In Time
approach so that it can manage its inventories. According to Estenson (2016), the JIT
approach can help the company manufacture the products at the appropriate time. Despite
this, there remains one drawback to the technique. The fact that the rate of failure of the
suppliers in this technique is high may result in the failure to reach the target of the company.
At the same time, it can be said that the important challenge that the company faces is
the fact that despite its high revenue, Nike spends the excess amount in areas that are not
useful for the company. Excess cash on an irrelevant purchase may hamper the company
from spending in important matters (Christopher, Harrison & van Hoek, 2016).
Part C: Findings of information analysis
According to Padmanabhan et al. (2009), the bullwhip effect is a distribution channel
that can help in determining any inefficiency in the supply chain management. The causes
and remedial factors of the effect may help Nike to analyse the shift in the demand of the
customers. The supply chain capabilities that Nike possesses can ensure that the remedial
factors of the company can be kept in mind by analysing the effects in the market.
In the modern world, information technology plays an important role in the success of
an organisation. Therefore, Nike can use the information technology to improve its supply
chain management so that it can engage in the online conference method. Therefore, Nike can
improve its supply chain management by analysing the work of the competitors and develop
its capabilities. Hence, information technology can help Nike to continue its growth in the
effective supply chain management (Stadtler, 2015).
It is necessary that the collaboration with the suppliers and customers be maintained
so that Nike can maintain its position in the competitive market. A proper foundation can be

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formed with the stakeholders and therefore, the company to ensure expansion and growth can
gain an opportunity. At the same time, Beske and Seuring (2014) stated that Nike may also
face certain challenges that can prevent the company to have a positive impact on the minds
of the customers.
Part D: Findings of integration analysis
Nike has its own inventory management system that helps it to maintain its
partnerships with the suppliers. As analysed earlier, Nike takes in the raw materials from
reputed suppliers across the world. At the same time, the application of technology can help
the company to gain credits in the supply chain management policy. Apart from this, Just In
Time approach provides the company with a slight risk of being unable to meet its target.
Pagell and Wu (2009) are of the opinion that Nike can use the 9-step framework to
analyse the level of integration in the supply chain management. Based on the analysis of the
application it has been seen that Nike is placed at the third level. This means that Nike can
validate the base line of the supply chain model and analyse the possibilities that Nike may
get in order to gain a competitive advantage in the market. Nike can also use the Triple-A
approach with effectiveness.
The Triple-A model displays the agility of service delivery of Nike. It has been
reported that Nike takes about 72 hours for delivering a particular product to the customers.
Despite being formed in the early years, Nike has managed to adapt its strategies with time
and ensure that a third party logistics can help in delivering the products on time.
Part E: Findings of sustainability analysis
It has been seen that in the modern world, sustainability plays an important role in the
success of an organisation. Various ways are adopted that can help in maintaining

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sustainability in the environment. Nike maintains sustainability by focusing on the proper
manufacturing of the products. This includes identifying the best method that can help in
preventing any type of environmental degradation (Diaconu, 2014). For example, excess
emission of the pollution or slaughtering of animals needs to be reduced so that the local
environment can be protected. This can help Nike to maintain its position in the market and
ensure an increase in the sale of goods.
By applying the model proposed by Triggers, it can be seen that Nike is staged that
the signal stage. The characteristics of the signal stage include the high ability and high
motivation. This is indicative of the motivational factors and the ability of the company to
maintain its competitiveness in the market. This can help in analysing the internal as well as
the external factors as the two characteristic pertains to both the environment that requires
excessive analysis. According to Stevenson and Sum (2015), the high motivation factor
indicates that the company takes the interests of the employee into account.
Figure 1: Triggers model

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(Source: Seuring & Müller, 2008)
Discussion of Nike's procurement and supply chain analysis
It has been seen that Nike maintains a proper relationship with suppliers and
therefore, improve its supply chain management. The location of the company provides it
with an opportunity to ensure competitive advantage is maintained and that customer
satisfaction is attained. The products manufactured by Nike need to be delivered to the
suppliers in a manner that can help it to thrive in the business market. Mangan, Lalwani and
Lalwani (2016) stated that the place of interception of the products is the starting point from
which Nike procures its supplies to the customers.
Nike also maintains effective collaboration with the customers. The satisfaction of the
customers is important for the company as they are an important stakeholder (Hugos, 2018).
Therefore, the responses of the customers can help the company to understand the type of
products they need to manufacture. One important concern for Nike is that it needs to ensure
that situations such as the flaws identified in the Jersey shoes do not occur again. Therefore, it
is necessary that the company take certain precautions to decrease the return of the products
and ensure that customer satisfaction is maintained effectively (Nike.com, 2018).
In order to gain success in the competitive market, Nike can use the dynamic
alignment model. Hence, it is necessary that Nike maintain a couple of things that are
important in the application of the model. The first is the continuous improvement of the
products so that innovation and quality can be delivered together. The second thing that needs
to be done is align the interests of the leaders and managers with the strategies of the
organisation. Therefore, the four-part dynamic alignment model can be used by Nike to
analyse the current supply chain of the company. It also helps to improve the level of
interaction with the partners.

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After the analysis, it can be seen that Nike follows all the parts that are required for
maintaining the effective supply chain. Nike conducts proper strategic planning and
establishes clear goals that can be easily attained and understood by the employees. The
performance of the company is solely based on the accountabilities and the manner in which
the customers respond to the products of the company. It has been seen that the Nike allows
its employees to participate in every decision-making session of the company. This indicates
the motivating factor of Nike as seen from the analysis of Triggers model (Nike.com, 2018).
The company also has the ability to recruit talented employees that can help it to continue
work and perform in a manner that can help in establishing an advantage in the market.
At the same time, the analysis of the cause and remedy of the bullwhip effect shows
that Nike maintains an air of enthusiasm among the employees. This helps the leaders reach
the target and elevates the company that is culturally driven by the partnership it endures with
the suppliers and the customers. Fernie and Sparks (2014) observed that such analysis suggest
that Nike belongs to mid-level of a hierarchical group with an emphasis on the supply chain
management. Therefore, improvement can be made so that Nike can develop the process in
the future.

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Figure 2: Dynamic alignment model
(Source: Jabbarzadeh, Fahimnia & Seuring, 2014)
Discussion of improvement programs
Nike has a supply chain that includes fostering a society that helps in developing a
strong work culture. It has been seen that the cultural foundation of Nike is that it maintains
the values it posses and ensures that sustainable business practice is maintained. The focus is
on sustainability that helps in the development of the products in a manner that can address
the environmental issues of a country (Nike.com, 2018). Therefore, in order to maintain it,
improvement strategies can be considered so that the effectiveness of the company can be
maintained.
Gunn (2015) is of the opinion that the strategies adopted by Nike can assist it in the
development and effectiveness of the market. As such, an improvement programme can be
made that can be useful in analysing the products manufactured by the company. The
manufactured products need to maintain the sustainability so that the factors that affect the

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sustainability process can be maintained. For example, shoe manufacturing may emit
chemical fluids and pollutants are usually harmful to the community. Hence, Nike needs to
ensure that such methods are not adopted that can create a hindrance in the society and
deviate the company from its cultural values and goals. Thus, proper supply chain
management can be maintained in this case.
Nike also needs to take care of its inventories so that excess manufacturing of the
products can be maintained. At the same time, it needs to reduce the flaws and for this reason,
maintaining a benchmark is necessary for the company.
Improvement programs assisting Nike to achieve its vision, mission and strategic goals
Nike can be a successful leader in the footwear industry. The analysis shows that
significant improvement can get Nike to continue its business. Nike needs to ensure that
major changes are not made in the manufacturing of the company mostly because it does not
have to go beyond the natural process of manufacturing. It is important to maintain the
mission, vision and goals of the company so that effectiveness in the business can be attained.
This can be done by developing a new strategic plan that so that Nike can continue with the
sustainable development of its business. Thus, the improvement programmes of Nike need to
be based on the policies followed by the company (Jacobs, Chase & Lummus, 2014).
The changed plan can help Nike in keeping the customers aware of the type of
retention policies that need to be adopted. The inventory management of the company can be
improved and Nike can work its way up to gaining its mission and vision. With the
application of the benchmarking process, Nike can ensure that it analyses the competitors.
Thereby as stated by Lee, Padmanabhan and Whang (2015) can analyse the strengths of the
competitors and develop self-strategies to mitigate the strengths. Therefore, the new system
can help Nike to maintain its goals and align it with mission and vision of the organisation.

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Conclusion
Based on the analysis conclusion can be made that Nike follows a stable supply chain
management. Supply chain management is important for the organisations as the business
activities need to be maintained based on its analysis. Nike posses a superior supply chain
management over its competitors and because of it, the company is one of the most reputed
companies in the world. This can help in attaining the vision of the company and develop its
sustainable practices. Nike can even maintain its dominance in the footwear market and
continue to design attractive products.

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