Business Operations of Nike

This document provides an overview of the business operations of Nike, including the sourcing of raw materials, manufacturing process, quality tests, and distribution methods. It also describes the supply chain of Nike using a diagram and discusses the information flows across the supply chain. Additionally, it explores the types of supply chain, inventory management, and logistics strategies used by Nike. Finally, it suggests improvements to make the supply chain more competitive.

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1. Briefly describe the business operations of the organisation of the product assigned
to you.
Nike is an organization that deals with the manufacturing of shoes and it ships its products to
different parts of the world. The company engages in different operations to make sure that the
products get to reach the customers when they are in good shape and at the right time (Angeles,
2014). The following are business operations that take place at Nike;
a. Sourcing of the raw materials
Nike uses different raw materials and the major ones are polyester and rubber. China and
India are the major sources of polyester that Nike uses and Malaysia, Indonesia, and Thailand are
the major sources of the rubber that Nike uses. Nike is very careful when it comes to sourcing its
raw materials and this is because it believes in protecting the environment (Khanna, 2015).
Therefore, the raw materials that are brought to the company must be environmental friendly.
b. Manufacturing products
Manufacturing is the core process of Nike. It is at this stage that the company converts the
raw materials into the design of products that it has in place. The following processes are
involved in manufacturing;
i. Sorting the raw materials
ii. Designing
iii. Combining all components of a product
iv. Finishing
c. Quality tests

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Quality test is an essential practice in any manufacturing company because it makes sure that
the goods that have been manufactured meet the needs and expectations of the customers
(Reuters, 2019). The process is taken seriously by Nike because the company has created a
positive reputation of manufacturing quality products and therefore it must make sure that the
products that are released to the market meet the desired quality.
d. Distributing products to the customers
Nike has different methods that it uses to make sure that goods get to the customers. The
company has been able to be the largest seller of footwear because of its strategies as far as
supplying its products to the customers is concerned (Hitt, Carnes, and Xu, 2016). Nike uses
online platforms, Nike-owned retail shops, and independent distributors to make sure that its
products reach the targeted customers.
2. Please describe the supply chain of the organisation using a diagram showing the
suppliers, manufacturers, distributors and customers.
Nike gets its raw materials from five different countries and this is based on the quality of raw
materials that it needs to promote the quality of goods. The countries are China, Thailand,
Indonesia, Malaysia, and India. One fascinating fact is that the company gets all its raw materials
from one region and that is Asia. The entire manufacturing process takes place at Nike. When it
comes to distribution, the company uses its retail stores, online platforms and independent
distributors (Nike Inc., 2019). The targeted customers are governments which buy products in
bulk for schools and sports departments, organizations; especially sports organizations, and
individual buyers who buy the products of the company in smaller units.

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SUPPLIERS
China, India, Indonesia,
Malaysia, Thailand
CUSTOMERS
Organizations, governments,
individual buyers
DISTRIBUTORS
Nike retail shops, online
platforms, independent
distributors
MANUFACTURER
Nike

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3. What information flows across the supply chain in this organisation?
Nike is an organization that deals with three essential components of supply chain namely
sourcing, manufacturing, and distributing. Therefore, it means that the information that flows
across the supply chain must be in line with the operations of the company (Reddy, 2016). The
information is divided into different category;
a. Costs
Costs affect the supply chain both directly and indirectly. The organization has to know the
costs of all goods and operations. To make sure that an organization stays profitable, it must
know the costs that it is likely incur during supply and value chain (Kato et al. 2015). The costs
help the organization to also come up with reasonable and fair prices of its goods.
b. Logistics
Supply chain entails the processes of making sure that goods are moved from one point to
another. Information about the best methods to use and the infrastructure is essential and this is
because it prepares the company to move goods and raw materials from one point to another
(Khanna, 2015). Information about legal considerations and requirements also comes in handy to
make sure that the company adheres with all rules that are in place.
c. Human Resource
The information about human resource is essential in the supply chain. All operations are
spearheaded by employees and that means that there is a dire need to make sure that the
company gets to know the labour that is needed to make sure that effectiveness in production is
promoted.

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d. Market
In the case of market, the information that flows is about the demand of the products in the
market, the competitors, and the inflow of competitive products in the market. The company
supplies to meet the needs of the customers and therefore it must have information on how the
market is performing (Khanna, 2015). Knowing the nature of the market helps the company to
know how to price its goods, the units to manufacture at a specific time, the aspects of quality to
concentrate on, the type and quantity of raw materials to focus on, and the best strategies of
availing the products to the market.
4. Describe the types of supply chain, inventory management, and logistics strategies
the organisation uses.
Nike uses the mixed supply chain and this is one of the most effective supply chains in
business. The company has different ways of making sure that goods get to the customers at the
customer’s convenient time. The first type is through retail shops that are owned and managed by
Nike. The company has adopted a strategy that has been adopted by some of the most successful
organizations such as Apple Inc. and McDonald’s. Getting the products of Nike only needs one
to access the retail shops of the company where the products are available at any given time. The
supply chain type is strategic and this is because there are no inconveniences since the company
supplying the products is the same company that sells them to the customers.
Nike has also invented a technological method that makes sure that customers can place
orders of their products and get the products through third party suppliers. Nike has an online
platform where customers can place orders and get them shipped to their respective areas. The
company also works with independent distributors. These are distributors who have a great

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influence on the retail market and therefore they are likely to sell a lot of units at a given period.
The company benefits by working with the independent distributors because of different reasons.
The first reason is associated with the storing and warehousing costs. As soon as the products are
delivered to the distributors, they assume all other costs and risks and that means that Nike
escapes the burden of warehousing and security costs (Hitt, Xu, and Carnes, 2016). The second
reason is associated with the distribution of the products. Most of the distributors have
established close relationships with retailers and that means that they can reach more retailers
than Nike. When distributors have the ability to reach more customers, the company benefits by
a significant percentage because the sales increase. When the distributors take the role of
marketing their goods on the market and distributing them, they also help the company to save
on the costs of marketing and distribution.
5. As an Operations Manager what improvements can you suggest to make the supply
chain to be more competitive?
The first improvement would be associated with the sourcing of the raw materials. Nike is an
organization that is established and its manufacturing capacity attracts a lot of suppliers. The
company should take advantage of the high demand that is evident when it comes to suppliers
that want to work with it and reduce the cost of transport (Haksever and Render, 2017). The
company should make sure that the suppliers of all its raw materials assume the costs of
transport. Doing so would not fail the ethical test and this is because Nike is also expected to
cover the costs of shippings its products to its distributors.
The second improvement would be to work together with online selling platforms. Nike has
an online selling platform but it is evident that it cannot be as effective as other online shopping

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platforms that are globally recognized. A good example in this case is Alibaba. Alibaba is a
Chinese online shopping company that has thousands of wholesalers from all over the world and
they sell their products to customers in all parts of the world (Knight, 2018). Because Alibaba is
well known, a retailer is likely to look for wholesale products from Alibaba than from Nike’s
website. The reason behind it is because Alibaba has strongly placed itself in the market as a
company that has all wholesale products. By using established online shopping platforms, Nike
will be riding on its strong brand and the strong brand of the online selling company. As a result,
Nike will reach more customers than it would have reached when it was marketing and selling
using its website alone (Reuters, 2019. The famous online shopping sites like Alibaba and
Amazon have loyal customers, sellers, and marketers. Nike gets a chance to utilize such
resources and that is likely to boost its sales by reaching more customers.

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References
Angeles, R., 2014. Using the Technology-Organization-Environment Framework for Analyzing
Nike's Considered Index Green Initiative, a Decision Support System-Driven System. J. Mgmt.
& Sustainability, 4, p.96.
Haksever, C. and Render, B., 2017. Service and Operations Management. London: World
Scientific Publishing Company.
Heizer, J., Render, B., Munson, C. and Sachan, A., 2017. Operations management: sustainability
and supply chain management, 12/e. New York: Pearson Education.
Hitt, M.A., Carnes, C.M. and Xu, K., 2016. A current view of resource based theory in
operations management: A response to Bromiley and Rau. Journal of Operations
Management, 41(10), pp.107-109.
Hitt, M.A., Xu, K. and Carnes, C.M., 2016. Resource based theory in operations management
research. Journal of Operations Management, 41, pp.77-94.
Kato, T., Nakajima, T., Saito, T., Okitsu, J., Shiga, Y. and Miki, Y., Hitachi Ltd,
2015. Operations management methods and devices thereof in information-processing systems.
U.S. Patent 9,128,704.
Khanna, R.B., 2015. Production and operations management. New Delhi: PHI Learning Pvt.
Ltd.
Knight, P., 2018. How 3D printing is changing the way Nike approaches production and
innovation. Available at https://rctom.hbs.org/submission/how-3d-printing-is-changing-the-way-
nike-approaches-production-and-innovation/

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Nike Inc., 2019. Nike Inc.: Business Description. Available at
https://csimarket.com/stocks/NKE-Business-Description.html
Reddy, G., 2016. Digital marketing impact on the consumer decision making process in Nike's
customer retail operations in South Africa (Doctoral dissertation, University of Pretoria).
Reid, R.D. and Sanders, N.R., 2015. Operations Management, Binder Ready Version: An
Integrated Approach. New York: John Wiley & Sons.
Reuters. 2019. Nike Inc. (NKE.N). Available at
https://www.reuters.com/finance/stocks/company-profile/NKE.N