Supply Chain Management for Nike: Processes, Challenges, and Recommendations

This article discusses the supply chain management of Nike, including its processes, challenges, and recommendations for improvement. It covers the company's use of vertical integration, lean and agile supply chain, and its relationship with suppliers and customers.

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Supply Chain Management
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Supply Chain Management
Nike has been one of the leading companies in designing, developing and manufacturing
of footwear, equipment, apparel, accessories and services (Bob, 2012, P. 201). In Kuwait, this
company is located at 360 Mall and serves people within the Kuwait city and other parts of the
country. Although Nike strives to position itself as the best in footwear, equipment and apparel,
it faces competition from various companies that include, Adidas and other local firms that
produce similar products.
According to Sarkar (2017, P. 98), products moves through different stages before they
reach to the final consumer. For sports shoe from Nike for instance, which is my recent purchase,
it passes through various processes, including the use of Nike’s reuse-A-shoe program which
helps the company to recycle its sneakers to produce new footwear. Other raw materials
involved in making this product comprise of Polyurethane, Phylite, Phylon and synthetic rubber.
According to Fbci (2011, P. 115), this company uses a supply chain that is lean, fast,
agile and centered on its customers. The company has contracted various factories to undertake
produce its products because does not own a manufacturing plant. At upper stream, its supply
chain comprise of tier 3, tier 2 and tier 1(contract suppliers) who deliver the products to Nike.
After this receiving the brands from its contract suppliers, the company uses distributors to link it
with retailers who finally sell the products to consumers.
In its supply chain, the company uses vertical integration which ensures its operations are
vertically integrated in every segment of the value chain from manufacturing down to sales. The
vertical integration that exist in the supply chain is between manufactures, suppliers, retailers and

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distributors (Bob, 2012, P. 204). This kind of integration makes its management to ensure the
company has positive working relations with all stakeholders.
Because the company has already established a strong brand name in not only Kuwait but
also in other countries, it keeps high levels of inventory in its stores to ensure different levels of
demand are met. For proper relationship between the company and customers, the Nike ensures
its suppliers are very ethical and follow different standards set by the company to ensure they act
responsibly while conducting business with the company (Sarkar, 2017, P. 95). The reason why
this company values this kind of relationship is that it believes consumers are among the most
important assets because they are the reason why the company is in operation.
Although Nike has established a supply chain that fosters positive relationship between
the customers, suppliers and the company, there are various problems associated with its
distribution strategy (Charles, 2013, 69). One of the major problems is that the company does not
have adequate control of the inventory because it has many suppliers and it does not own a
manufacturing plants.
For Nike to succeed in its supply chain, it should have high level of control on its
inventory through having the required number of suppliers. Having minimal control in this case
may make its management to experience challenges in making some of the key decisions
concerning production and customer satisfaction (Fbci, 2011, P. 112). The other
recommendation is that Nike should have its own manufacturing plant in order to to make proper
decisions concerning delivering products when demand is still available through minimizing lead
time. Having its own manufacturing plans instead of depending on contract suppliers will also
make the company to reduce the size of its supply chain, and also observe the quality of its
products.

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References
Bob, K. C. (2012). Consumers from Emerging Markets: Perceptions and Attitudes toward Global
Sporting Brands. Sport Marketing Quarterly, 21(1), 201-215.
Charles, F. (2013). Intelli-Sourcing to Replace Offshoring as Supply Chain Transparency
Increases. Journal of Supply Chain Management, 49(2), 68-81.
Fbci, B. A. (2011). A Supply Chain Management Guide to Business Continuity. New York:
American Management Association.
Sarkar, S. (2017). The Supply Chain Revolution: Innovative Sourcing and Logistics for a
Fiercely. New York: AMACOM.