Supply Chain Management of Nike Trainer

Running head: SUPPLY CHAIN MANAGEMENT OF NIKE TRAINER
SUPPLY CHAIN MANAGEMENT OF NIKE TRAINER
Name of the Student
Name of the University
Author Note

1SUPPLY CHAIN MANAGEMENT OF NIKE TRAINER
Executive Summary
The report is based on the analysis of the supply chain related activities of Nike. The product
that has been chosen for the analysis is Nike Trainer. The supply chain diagram of the
company provides the explanation of the organizations which are present in the upstream and
downstream of the supply chain. The various organizations that are involved in the supply
chain of Nike are discussed in the report. The analysis is based on the operations management
related processes of Nike and the ways by which these affect the organization are analysed in
the report. The lean operations of the company are analysed in the report in detail.
Recommendations are provided regarding the ways of improving the supply chain based
activities of Nike.

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Table of Contents
Introduction....................................................................................................................3
About the product and the company..............................................................................3
Supply chain diagram of Nike........................................................................................6
Different organizations involved in the supply chain....................................................6
Use of operations management to meet consumer needs.............................................10
Application of lean operations to supply chain............................................................11
Recommendations to improve supply chain................................................................13
Conclusion....................................................................................................................14
References....................................................................................................................15

3SUPPLY CHAIN MANAGEMENT OF NIKE TRAINER
Introduction
The process of supply chain management can be defined as the flow of the services
and goods which also involves the storage and the movement of inventory and the finished
goods of the organizations. The networks are interlinked or interconnected in nature which
together combine to provide the services or the products to the end-consumers. Supply chain
management can also be defined as the planning, designing, control, execution and further
monitoring of the different supply chain activities. The main objective of the supply chain
management system of the organization is to create net value, build the competitive
infrastructure and leveraging the logistics worldwide. The marketing channels of an
organization also play a major role in the supply chain based activities (Azadi et al. 2015).
The report will be based on the analysis of the supply chain activities of Nike which is
a well-known organization in the industry of sports related products. The analysis will be
further based on the link of supply chain activities and operations management in an
organization. The ways by which the company is able to meet the demands of the consumers
will be analysed in the report.
About the product and the company
Nike is a multinational organization of American origin which is engaged in
designing, developing and manufacturing of products related to footwear, equipment, apparel,
accessories and other services. The headquarter of the company is located near Beaverton,
Oregon. Nike has acquired the position of the largest supplier of apparel and athletic shoes in
the world. The company is also a major supplier of the sports related equipments. The
revenues that were earned by the company year 2017 amounted to 4.35 billion dollars. The
company has a huge employee base of more than 70,000 members. Nike also possesses high
brand value which has enabled the company to always stay ahead of its competition in the

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market (About.nike.com. 2018). The company was founded in the year 1964 with the name
of Blue Ribbon Sports, by Phil Knight and Bill Bowerman. The company was officially given
the name of Nike in the year 1971. The various products that are offered by the company to
the customers are Nike Golf, Nike Pro, Air Jordan, Nike+, Nike Blazers, Nike Dunk,
Foamposite, Nike Skateboarding and Nike Trainer. The company manufactures sports related
equipments and sportswear in the various retail stores of Nike. The organization sponsors
huge number of high-profile sports teams and athletes all over the world. Nike has been able
to create an effective position in the market in spite of the huge competition that has been
provided by the companies like Adidas. The products that are manufactured and supplied by
Nike mainly belong to the premium category where the customers are much more concerned
about quality as compared to the pricing of the products (Beske and Seuring 2014). The wide
range of products that are offered by the company are the main reason behind the huge
customer base that is enjoyed by Nike.
The product that has been taken into consideration for the supply chain analysis of
Nike is Nike Trainer. The Nike Trainers are the shoes that are manufactured by Nike for
training and sports related purposes. The Nike Trainers are considered to be the King of
Trainers and the products are provided for men, women and kids. The Nike Trainers are
available in the entire world and the look of the shoes are also different from the other
products of the company. The shoes can be mainly used for the purpose of training related
activities of the customers of different age groups (Brandenburg et al. 2014).
The supply chain management related activities that have been undertaken by Nike
are innovative in nature and the organization has been able to increase its growth with the
help of the efficiency in the supply chain. The supply chain related activities are important for
any types of organizations irrespective of the sectors to which they belong. Nike has become
the biggest seller of the athletic footwear and the apparels. The successful model of the global

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business of Nike has been supported by the supply chain management policies of the
organization. The quality of the products is high and the technologies that are used in the
production are innovative in nature (Chen, Preston and Swink 2015). The supply chain
system of the organization has also been quite strong in nature. The model of supply chain of
the company provides huge support to the global business activities of Nike. The company
has further aimed to reduce its footprint on the environment by improving its supply chain
based activities. The brand mainly relies on the external sources for the sourcing of raw
materials and the manufacturing based process as well. The products are manufactured by the
independent contractors of the company in the whole world. Nike has a huge base of
suppliers which supports the growth of the business. The suppliers and the raw materials are
selected in a cautious manner by the company (Dubey et al. 2017). Nike has further
formulated a team which can take care of the global procurement related activities of the
organization. The entire process of procurement is organised by the global procurement team
of the organization. The supply chain strategy of the organization is based on the long term
agreements and the quality of the products. The supply chain practices of the organization
have further faced many controversies due to the supply chain practices with respect to labour
welfare (Ellram and Cooper 2014). This has increased the focus of the organization on ethical
supply chain based practices The sourcing strategy of the company is based on the suppliers
and the they are made a priority for the various organizational processes. The supply chain
partners of the company are agile and sustainable in nature which provide minimum impact
on the environment. The focus of the supply chain of the company has been related to the
culture of the organization based on diversity, safety and inclusion (Fahimnia et al. 2017).

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Supply chain diagram of Nike
Figure 1 – Source – (About.nike.com. 2018)
Different organizations involved in the supply chain
Nike is the largest apparel and athletic footwear supplier in the world and has
generated an average revenue of approximately 30.6 billion dollars in the year 2015. The
business of the organization is based on the design and the development of the products and
the marketing activities that are related to the products. The organization sells the products to
the retailers all across the world. The products of the company are also sold directly to the
customers with the help of their website. The various products of the organization are sold to
the consumers with the help of their retail shops as well. The company owns more than 900
retail based stores in the whole world (Fernie and Sparks 2014). The products of the company
are manufactured by the suppliers who are under contract of Nike. The key suppliers of the
company based on the apparel and footwear related products are manufactured by the

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independent suppliers who have their headquarters in the Southeast and the East Asian
countries. The operators in these areas work in the factories of the organization that are
located in the Indonesia, China and Vietnam. These factories account for more than 95% of
the total production of Nike per year. The apparel production based facility of Nike is mainly
concentrated between the suppliers who operate their factories in these areas (Formentini and
Taticchi 2016). Nike also depends on the suppliers of equipments, the technology providing
companies and the firms which provide professional services for the smooth operations of its
facilities all over the world. Some of the major suppliers of Nike are as follows,
Pou Chen Corporation – This organization is considered to be one of the
biggest manufacturer of footwear in the world. The company accounts for
around 20% of the total global sale of Nike. Pou Chen has manufactured more
than 230 million pairs of shoes in the year 2015 for Nike and other major
international brands. The organization has also been manufacturing shoes for
its retail business which is operating in China. The company is under contract
with Nike since the year 1990. Both the organizations are quite secretive about
the business relationships that they share with each other. The market
capitalisation of Pou Chen is around 3.8 billion dollars (Fredendall and Hill
2016).
PT Pan Brothers Tbk – Another major supplier of Nike in the market is PT
Pan Brothers Tbk which mainly operates in the industry of apparel
manufacture. The organization has its headquarters in Indonesia. The company
and its subsidiaries which produce all types of products that include, active
footwear, casual clothing, outdoor sportswear and the fashion apparels. The
organization operates under the contract of various international brands which
include, Nike, New Balance, Under Armour, Guess and Calvin Klien. The

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organization generates 5% of the total revenues from the supply of goods to
Nike (Jacobs, Chase and Lummus 2014).
Fulgent Sun International Holding Company – This organization is an outdoor
footwear and sports based manufacturer. The organization mainly
manufactures shoes independently under contract for the different brands like,
La Sportiva and Nike. The organization has its headquarters in Taiwan. The
company has its operations in the areas like, Cambodia and Vietnam. The
organization has also been supplying shoes to Nike for the last 10 years.
Around 5% of the total revenues of the organization has been generated by the
products that are supplied to Nike (Khalid et al. 2015).
Delta Galil Industries – Delta Galil Industries Ltd. is an organization which
designs, manufactures and markets products related to leisurewear and active-
wear. The organization manufactures goods under huge global brands like,
Nike, Walt Disney. The company is also for producing private label products
for the retailers like Wal-Mart. This organization is a major supplier of Nike
and produces a huge variety of products for the company. The supplier
operates two major centres of strategic development with Nike for the purpose
of focussing on the innovation related activities in socks and other products
(Mangan, Lalwani and Lalwani 2016).
Eagle Nice International Holdings – This company is also a major
manufacturer of sportswear and has a market capitalization of 138 million
dollars. The organization has been operating under contract with the
international brands like, Nike and Puma. The organization has its
headquarters in Hong Kong and the factories are situated in Indonesia and
China.

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The major supplier of Nike in UK is Branded Wholesale UK. This
organization has a website that operates for the supply of various goods that
are manufactured and produced by Nike. The website showcases all the major
products of Adidas and further delivers the products to retailers directly from
their warehouses (Martínez-Jurado and Moyano-Fuentes 2014).
The major suppliers of Nike are thereby operating in the different areas of East Asia
and South East Asia. The products of Nike are sourced from these areas for the purpose of
selling them in the different countries of the world where the organization has its operations.
Nike has a fruitful relationship with the different suppliers in the various countries or regions.
The company has a strong belief in diversity and they try to work together for gaining
competitive advantage in the market. The Global Procurement Team of Nike is mainly
responsible for managing the entire procurement and supply process, which includes the
selection of the right suppliers for right services and goods (Meixell and Luoma 2015). The
company has also formulated various strategic sourcing initiatives which have helped in the
reduction of its footprints and reduce the impact of its production process. The primary
methods based on the processing invoices are used to pay the suppliers for the indirect
services and the goods. The process of e-invoicing is also applied by Nike for the purpose of
providing invoices to the suppliers with the help of the various digital mediums like e-mails.
This has further enabled better levels of communication with the suppliers of the company.
The organization has also made huge investments in the supply chain related activities and
the relationships that are developed with the suppliers. The new technologies have also been
implemented in the supply chain of Nike for the purpose of making the process more
effective (Michalski, Montes-Botella and Narasimhan 2018).

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Use of operations management to meet consumer needs
Operations management is a major area related to management which is concerned
with the design and the control of the different processes of production. The management of
operations of the companies are also related to the redesigning of the different business
procedures and the production of services and goods. This further relates to the responsibility
so that the efficient operations of the business can be ensured which can meet the
requirements of the consumers. This process is thereby based on the management of the
entire production system which helps in converting the inputs into outputs. This refers to the
correct usage of the raw materials for the purpose of developing the end-products which will
be delivered to the consumers (Monczka et al. 2015). The process of operations management
is important for the functioning of the entire organization in an effective manner. The
management of the operations in an effective manner further leads to the successful
management all the other processes of an organization. The operations management process
is important for organizations operating in any sector or industry. The service industry and
the process of customer satisfaction also involves the successful management of operations
(Pagell and Shevchenko 2014).
Customer service is the major priority of the modern organizations as it enables them
to build a strong base in the market. This helps the organizations to gain the maximum share
in the market with the help of the loyal customer base. The globalization related changes that
have occurred in the modern business environment have caused many challenges for the
organizations. This has led to the introduction of new and improved technologies in the
manufacturing based capabilities, the materials, techniques and the procedures. The
management of service and production has thereby become important in the modern business
environment. The operational management process of organizations leads the path to achieve
the objectives with minimum efforts (Rushton, Croucher and Baker 2014). Operations

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management is the aspect of business organizations which is related to the handling the
service and production based systems. The activities that are based on the production of
goods and the delivery of the services to customers is also a major part of the operations
management process. These activities are the core of the organization and involve the
management of different assets and the expenditure related to the employees. The operations
management process plays an important role in the organizing, planning and the controlling
of various processes in the organization. The demands of the customers are thereby related to
the production of goods within the stipulated time which is a major duty of operations
management (Schaltegger and Burritt 2014). The services that are received by the customers
is also related to the success management and planning of the operations of an organization.
In case of Nike, the operations management process plays a major role in the production of
goods in the factories and delivering the goods to the customers with the help of the retail
stores and the website of the company. The relationships that the company maintains with its
suppliers is also based on the successful management of operations. Nike has implemented
well-understood and sophisticated systems related to the business procedures with the help of
cross-functional cooperation. The company has improved the operations management related
processes in a continuous manner (Schönsleben 2016). The production of the new product of
the company named Nike Trainer has also been based on the new systems of production that
are implemented by Nike. The volume of the production of Nike has increased after the
successful implementation of new and improved production processes. The demands of the
customers are thereby fulfilled in an effective manner by the company (Wolf 2014).
Application of lean operations to supply chain
Lean supply chain management is related to the ways by which the business
organizations can streamline their operations and eliminate the non-value added activities and
the wastes which are a part of the production process. The reduction of time, cost, and the

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required inventory is also related to the process of lean management. The organizations
thereby need to examine the different areas of supply chain for the purpose of creating the
lean management of operations (Silvestre 2015). The companies are always under the
pressure to improve the processes that are used by them for creating a competitive advantage
in the market. They feel the stress of the reduction of costs, inventory and time to make their
supply chain more efficient.
Nike has also implemented the lean process of supply chain management by reducing
the lead times related to manufacturing. The company has thereby been able to benefit from
the successful implementation of the lean manufacturing based processes. The defects in the
products of the supply chain has also been reduced with the help of the shorter lead times.
The factories of the company where the lean manufacturing process was implemented had
shown lower rates of defects as compared to those which were operating using the normal
process (Stadtler 2015). The sustainable operations in Nike have been helpful in evolving the
business model of the company. The organization also collaborated with the NGOs and the
manufacturers related to the initiatives of the lean manufacturing. The lean processes involve
working with the Fair Labour Association so that the key performance indicators can be
created. The sustainable sourcing and launching of the Sustainable Apparel Coalition has led
to the manufacture of various products of the company using the lean processes. The Sweat
Shop related issue that was faced by Nike in the year 1990 was related to the lack of
corporate responsibility of the company. This had led to huge revolts and the company had to
face boycott from the consumers (Waters and Rinsler 2014). The application of the lean
methods of production had improved the image of the company and increased the revenues
gained. The company had started facing lack of demands in the year 1998. The management
thereby took over the entire responsibility of the incidents and tried to increase its
commitments towards the social responsibility. The lean manufacturing processes were

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effective in increasing the value of the consumers and taking steps in the minimization of
waste. The working conditions of the various factories of Nike were improved and this had
helped in the increase of revenues of the company (Wisner, Tan and Leong 2014).
Recommendations to improve supply chain
The changes that occur in the regulations of different where Nike operates affects the
profitability of the company. The trade relate tariffs in the global market affects the revenues
that are earned by Nike in these areas. The infrastructure of the company and the various
factories are affected by changes that occur in the policies and the regulations of different
countries. The company therefore needs to analyse the markets in which it operates on a
regular basis. This will help Nike in changing its operations according to the changes in the
policies.
Another major challenge that is faced by Nike in the different markets is related to
maintaining the balance between the flexibility and the costs that are related to manufacture.
The differences that occur in the costs related to global or local sourcing of the raw materials
is a challenge for the company. This issue can be solved by the global procurement team that
has been formulated by Nike. This team will be able to find out the most effective ways of
sourcing the materials from the overseas suppliers of the company. As has been discussed
earlier in the report that the majority of the suppliers of Nike are present in Asia. The
effective management of these suppliers is therefore important for maintaining the costs of
the company.
The poor conditions of working in the various factories located in Indonesia had
affected the reputation of the brand top huge levels. The problems had been addressed by the
company in the year 1996 and the company started paying much more attention towards the
social responsibilities that they have. The organization took the responsibility of monitoring

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the different areas of the supply chain to ensure that the issues that were faced previously do
not occur. The management of Nike has to take utmost take that the issues that were faced by
the company previously do not occur again. The increase of the visibility of the supply chain
is the best way of improving the supply chain of Nike. This will help the company to
maintain the social image that it has created.
Conclusion
The report can be concluded by stating that Nike has maintained the supply chain
related activities in an effective and efficient manner. This has helped the company to fulfil
the needs and the demands of the consumers within the stipulated time. The company had to
face some issues in its operations related to the lack of the social responsibility that was
shown in the 1990s. Nike has been able to overcome the challenges that have been faced
previously by implementing lean methods related to the manufacturing of products in the
factories. This has enabled the company to stay in the topmost position of the market and
maintain its competitive advantage.

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