Importance of CSR in Supply Chain Management: Nike and Puma

This report delves into the critical role of Corporate Social Responsibility (CSR) in shaping supply chain management, specifically focusing on the sportswear apparel industry, with Nike and Puma as case studies. It begins with an introduction outlining the research background, company profiles, problem statements, research aims and objectives, and research questions. The literature review explores the evolution of CSR, its importance to businesses, and its connection to supply chain management, including sustainable practices. The methodology section details the research approach, strategy, and methods employed, along with ethical considerations and limitations. Data analysis examines CSR and sustainability within the sportswear industry, with a deep dive into how Nike and Puma incorporate CSR into their supply chains. The report concludes with a critical analysis, discussion, and recommendations, addressing limitations and providing a comprehensive overview of CSR's influence on supply chain practices within the sportswear sector, emphasizing ethical behavior and sustainability.

Importance of Corporate
Social Responsibility in
shaping supply chain
management: The case of
sportswear apparel

Table of Contents
CHAPTER 1: INTRODUCTION..............................................................................................3
1.1 Background of the research....................................................................................................3
1.2 Company Background............................................................................................................5
1.3 Problem statement.................................................................................................................6
1.4 Value & Significance of Research............................................................................................7
1.5 Rationale................................................................................................................................7
1.6 Research Aims........................................................................................................................7
1.7 Research Objectives................................................................................................................7
1.8 Research questions.................................................................................................................8
CHAPTER 2: LITERATURE REVIEW.......................................................................................8
2.1 Introduction............................................................................................................................8
2.2 The evolution of corporate social responsibility (CSR) activities.............................................8
2.3 The importance of CSR activities and Supply chain management for Nike and Puma.............9
2.4 To ascertain the benefits which Nike and Puma will get with sustainable supply Chain.......11
2.5 To ascertain the ways through which CSR can improve the Supply chain management
practices of Nike and Puma........................................................................................................12
2.6 CSR and ethical behaviour ....................................................................................................13
CHAPTER 3: RESEARCH METHODOLOGY...........................................................................14
3.1 Introduction..........................................................................................................................14
3.2 Research approach...............................................................................................................14
3.3. Research strategy................................................................................................................15
3.4 Research Methods...............................................................................................................15
3.5 Ethical considerations...........................................................................................................16
3.6 Limitations ...........................................................................................................................16
CHAPTER 4: DATA ANALYSIS.............................................................................................17
4.1 Introduction..........................................................................................................................17
4.2 CSR and sustainability in the sportwear industry with backward referencing to sources used
in literature review. ...................................................................................................................17
4.3 How Nike incorporates CSR in its supply chain......................................................................18
4.4 How Puma incorporate CSR in their supply chain.................................................................19
4.5 DISCUSSION..........................................................................................................................19
CHAPTER 5: CRITICAL ANALYSIS DISCUSSION AND CONCLUSION.......................................21
5.1 Conclusion............................................................................................................................21
5.2 RECOMMENDATION.............................................................................................................22
5.4 LIMITATIONS.........................................................................................................................23

REFERENCES.....................................................................................................................24
CHAPTER 1: INTRODUCTION
Many Consumers do not know under which conditions the products are manufactured.
Many of the workers worked in unfavourable conditions, still the goods which are produced
are sold at higher prices. Some organisations use child labour, which is prohibited (Unicef,
2017). Practices like this must be abolished by companies as in order to perform their
operations ethically and bring up positive influence over the society (Grayson and Hodges,
2017). This is so because an organisation has to represent or publish the way they operate
thanks to Corporate Social Responsibility (CSR), which had made a massive impact on these
companies. This chapter involve an overview regarding the factors or areas that are involved
within this study. In addition to this it also represents the aims and objectives, background of
company as well as value of the research.
1.1 Background of the research
Corporate social responsibility (CSR) defines as the self-regulating business model,
which supports an organisation to remain socially accountable for its stakeholders, itself, as
well as the public (Crane, Matten and Spence,2019) It involves a set of activities performed
by an organisation that brings up a positive impact on the social, economic, and
environmental factors. The CSR practices play a significant role within the growth, and the
success of an organisation as a socially responsible company become able to gain the trust of
its stakeholder in a significant manner which in turn influence their decision in a positive way
for contributing towards organisation growth as well as success (Amini and Bienstock, 2014).
On the other hand, supply chain management refers to the process of managing the flow of
raw material, work-in-progress, inventory, goods, or services from the place of its origin to
final consumption (Daniel, 2020). Effective supply chain practices supports an organisation
to effectively manage the demand, deal with disruption, meeting customer demand, carrying
the right amount of inventory, etc. (Bostrom, 2014).The CSR practices not performed
individually by the owners of an organisation instead, it requires the involvement of all its
stakeholders for implementing practices related to social responsibility (Bernstein 2020).
Hence an organisation must focus on involving its close stakeholders in CSR practices for
bringing up positive responses.

The current report is based on the topic “Importance of Corporate Social
Responsibility in shaping supply chain management: The case of sportswear apparel Nike
and Puma” and for conducting this study Nike and Puma is taken into consideration, which
are both large multinational organisations and deals in offering products or services related
with footwear and apparels along with the accessories in sports category. Both the
organisations are proliferating by providing a variety of products or services associated with
sports and other divisions by maintaining a range of physical as well as online channels for
offering its commodities to customers (Gualandris and Kalchschmidt, 2014). To protect its
brand, in 2004, Nike became active and acknowledging human rights and increased their
monitoring efforts on their plants and factories (Nisen, 2013). As a result of that, in 2005,
Nike became the first company in its industry to provide a thorough list of the factories they
worked with and the revealed working conditions and wages (Poker, 2016).
This success becomes possible due to the effective management of the supply chain,
but it is not remaining enough to sustain in the market. As companies related with apparels as
well as accessories involve tremendous amount of wastage or a manufacturing process that
directly harms the environment, therefore, to deal with this issue majority of organizations
started getting involved in CSR practices, Nike and Puma are two among them by putting
more emphases toward the set of activities performed by the suppliers. Majority of
organisations putting emphasis on encouraging the supplier towards achieving eco-friendly
activities by reducing wastage, pollution, controlling gas emissions, and encouraging them to
comply with government regulation and policies (Ayers and Odegaard, 2017). So that they
can contribute towards the safety and welfare of environment by getting involved in several
CSR practices and at the same time maintain profitability. Therefore, nowadays, CSR
practices are also involved by the organisations in its supply chain management which helps
them in increasing their profitability while reducing the cost as well as wastage. This is so
because while supplying the raw material and other things through different channels, there is
a more substantial number of issues that may get arises at a different end of the supply chain
cycle, which leads to an increase in wastage. These waste materials usually aren’t properly
disposed of by the channel members and as a result of which it directly harms the
environment. These things are especially prevalent in the footwear sector, where the
organisation is using such material for manufacturing that can't get adequately disposed of,
such as plastic, rubber, etc. (Tippayawong and Tippayawong, 2017). Hence the waste
material from all these do not get disposed of fully, and on the other side also brings a huge
influence over the environment. Therefore, it can be said that CSR helps in shaping up the

supply chain management as CSR practices involve making use of raw material that is eco-
friendly and does not harm the environment (Chkanikova and Mont, 2015). Despite this, it
also consists in using raw material in an efficient manner so that wastage can be minimized
which in turn brings efficiency in supply chain management and when the activities are
governed as per the government regulations and practices then it generates fewer chances of
legal compliances which ensure smooth flow of operations (Collier, 2018).
Pressure groups find it challenging to get the attention of global brands, so they now
look into where brands like Nike and Puma source their products. (Amaneshi et al. 2008).
The rise of multimedia communication makes it easier for any unethical practices by their
suppliers to be brought to the public’s attention.
A perfect example is Nike's, case which brought them negative attention as a
company. Their production sites were making use of child labour and poor wages (Teather,
2005). Even though Nike wasn’t directly doing this, they were forced to take responsibility
for the impudent behaviours of their suppliers to protect their brand.
1.2 Company Background
Both the organisations come under the apparel, accessories, and sports equipment as they
mainly offer products related to footwear as well as sports-related things. Both the
organisation are competitors of one another as both deals in the same market and offer similar
kinds of products or services. The background of both organisations is mentioned below:
Nike: - The Nike Incorporation is an American multinational organisation that works
toward designing, developing, manufacturing as well as marketing and sales of footwear,
equipment, apparel, and accessories. Nike was founded in the year 1964 and headquartered in
the Portland metropolitan area with Beaverton, Oregon. Within the early 21st century, Nike
had its retail outlet as well as distributor within more than 170 countries, and after that, its
logo, a curvy checkmark known as "swoosh," get recognised throughout the world (Nike,
Inc., 2020).
Later in year 1980s, Nike steadily expanded its business and diversified the product
line through several acquisitions that include shoe companies Cole Haan, Converse Inc.,
athletic and equipment company Umbro, and Canstar Sports Inc. Later on, the company
started offering sports technology accessories which include heart rate monitors, high altitude
wrist compasses. The main reason for its success is that the brand adopts an endorsement
strategy where it gets endorsed by athletes such as Mia Hamm, Tiger Wood, Michael Jordon,
etc. (THE POWER OF SPORT TO MOVE THE WORLD, 2020). It is the world's largest

supplier of apparel and athletic shoes as a major manufacturer of sports equipment. Its
primary mission is to drive everything possible to expand the potential of the human. It
creates ground-breaking sports innovation for developing the product more sustainably by
building up a more creative and diverse global team to make a positive impact on the
community. Nike Inc. work while viewing everybody as an athlete that is united in the joy of
movement. Whether the task is to design a sneaker or to code the revolutionary app, Nike
works over a single mission, i.e., "Bringing inspiration as well as innovation to every athlete
within the world" (THE POWER OF SPORT TO MOVE THE WORLD, 2020).
Puma: - It is a German multinational company that operates as a designer as well as a
manufacturer of casual and athletic footwear, accessories, and apparel. It is headquartered
within Herzogenaurach, Bavaria, Germany, and ranked as third-largest sportswear
manufacturer in the world (Gulden, 2018). Puma founded as one of the leading athletic
footwear, accessories, and apparel company within the world that began its operations within
the year 1924 when the founder of the company, i.e., Rudolph Dassler, started a
manufacturing company with his brother named as Adolf. At that time, it was a family
business that mainly produces slippers as well as outdoor shoes when they identified the need
for athletic shoes within the market. After this, during the year 1928 Olympics, Puma gained
national attention when nearly half of the participants of sports wore Dassler shoes (PUMA,
2020). Today, Puma maintains an impressive as well as a versatile collection of accessories,
apparel, and footwear. It offers a variety of products which include Basketball, Running,
Training, Football, Golf, Sport style, Motorsports, Fitness, etc. In the past time, it sponsored a
range of legendary athletes such as Pelé, Eusébio, Diego Maradona, Lothar Matthaus, Clyde
Frazier, Jim Hines, Boris Becker, Johan Cruyff, Colin Jackson, Heike Drechsler, Martina
Navratilova, Tommie Smith, Joe Namath, Linford Christie, and Michael Schumacher among
others.
1.3 Problem statement
The main problem over which current study focused is about the role of corporate
social responsibility which is to be followed while managing supply chain. This is so because
the organisations mainly performed CSR practices in several different area of a business but
mainly fails to involve supply chain management into it, which is a major concern within the
society. As there are number of channel members that plays a significant role within
manufacturing of products to its final consumption. These channel members perform range of
practices which may results into wastage that affect environment which may become a major

issue for the business. Therefore this study is conducted to study about this issue of corporate
social responsibility and its importance within footwear sector.
1.4 Value & Significance of Research
Multiple events have contributed to the scrutiny that has tormented the sportswear
apparel industry. The Rana Plaza incident in Bangladesh where five garment factories that
supply various global brands collapsed and killed and over a 100 people. The use of child
labour, poor working conditions and low minimum wages by some of the worldwide sporting
brands (Hunter, 2015). This all create a threat over several different players working within
the footwear industry which require them to strictly follow the standard and policies for
assuring that practices must be performed in ethical manner. Hence, this study holds value as
it provide an awareness regarding the importance of corporate social responsibility within
supply chain management.
1.5 Rationale
The main aim behind the conduct of this study is to determine the role of corporate
social responsibility in shaping up an effective supply chain and manner in which it supports
an organisation in its growth as well as success. This research is valuable as it helps the
organisations to determine how they can perform CSR practices at the end of the supply
chain and the benefit it offers to them. It will also support in determining the ways through
which CSR plays a significant role in shaping up an effective supply chain management that
might not benefit the society but allow an organisation to achieve higher profitability as well
as success in the marketplace. Additionally, the investigation holds value as it helps in
generating awareness among several other organisation in terms of performing CSR practices
at the supply chain by making them clear about the list of benefits that they will get from this.
1.6 Research Aims
This study about the importance of Corporate Social Responsibility in shaping supply
chain management. The case of sportswear apparel Nike and Puma
To explore the concept of CSR and why companies within the sportswear industry implement
it in their supply chain management
1.7 Research Objectives
 To study the evolution of CSR activities.

 To determine the importance of CSR activities and Supply chain management for
Nike and Puma.
 To ascertain the benefits which Nike and Puma will get with a sustainable supply
chain.
 To discover the ways through which CSR can improve the Supply chain management
practices of Nike and Puma.
1.8 Research questions
 What is the evolution of CSR activities?
 What is the importance of CSR activities and Supply chain management for Nike and
Puma?
 What are several benefits that Nike and Puma will get with sustainable Supply Chain?
 What are the different ways through which CSR can improve the Supply chain
management practices of Nike and Puma?
 What is the extent to which Puma and Nike’s contracting capabilities affect the
Business to Business purchasing relationship?
CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
The literature review includes a comprehensive summary of the particular research and
its topic. The main aim of a literature review is to provide an insight over the nature of study
by exploring the already available information which is already researched previously (Vurro,
Russo and Perrini, 2009). It includes the use of various books, articles, online sites, and other
possible resources that provides a description, critical evaluation, and summary of research
work. The present research is associated with the “Importance of Corporate Social
Responsibility in shaping supply chain management,” a case study on Nike and PUMA.
Following is the literature review on various objectives of this research:
2.2 The evolution of corporate social responsibility (CSR) activities
CSR is associated with the activities that make an organisation and company more
socially accountable for itself, its stakeholders, the general public, and overall society and
environment. As per the viewpoint of Bostrom, 2014, various factors have contributed to the
evolution of CSR activities that includes a rapid change in social values and enhancement in
consumer demands for companies to remain on the right side of social justice (Gaur and
Vazquez-Brust, 2019). Besides this, the rising awareness about accounting scandals and other

unethical business operations has also led to the evaluation of CSR activities that are related
to risk management, cost savings, access to capital, customer relationships, talent
management, the capacity to innovate, etc. (Hombach and Sellhorn, 2019). The further right
approach of CSR activities and programs includes yielding and creating benefits for society
and both internal and external stakeholders of cooperation’s (Gualandris and Kalchschmidt,
2014) .
Apart from this, Runde 2020 is having a viewpoint that these are multinational
companies like Nike, Puma, etc. that is the main reason behind evaluation and enhancement
in the importance of CSR activities. In past times CSR activities and mainly concerned only
with the company's core business and aim at steaming or prevent criticism and were focused
on their development only but now the organisation have begun to make use of CSR
activities more strategically and aim at aligning their business project and models with
overall needs and expectation of the stakeholders and other associated parties together with
prevention of environment. Besides this, the effects of broader social problems associated
with inequalities are creating and leading harmful influence business organisations and also
hinders their overall success in the long-term, mainly at a global level (Khan and Yu, 2019).
Thus, the concept of corporate social responsibility is enhancing that have focused more than
ever on social responsibility and created accountability of business organisation towards a
wide range of stakeholders and lead to a continuing commitment by business to behave fairly
and responsibly, towards improving the quality of life of the workforce, families, the local
community, and society at large.
2.3 The importance of CSR activities and Supply chain management for Nike and Puma.
CSR activities play an essential role in demonstrating business operations towards
broader social issues together with their impact on brand image and overall society that
attracts a more extensive section of customers that have shared values towards sustainability.
As per the opinion of Doug Guthrie, 2020, the CSR activities and managing of the supply
chain help an organisation in increasing its prosperity by leading the way for supply chain
mapping and realising corporate social responsibility. A responsible and sustainable supply
chain management helps an organisation in improving collaboration with suppliers thus,
contributes to increasing productivity through the smooth and uninterrupted flow of raw
material and also reduce the cost of production together with improving product quality
(Yamoah, 2019). Besides this, the current global marketplace also has an emphasis on and

demands for a nimble and diffuse supply chain that must be responsive towards changing
priorities with the help of keeping costs in line, schedules on time and also providing room
for an organisation for achieving better growth and expansion in future.
But, according to the perception of Abhijeet Pratap, 2019, most of the big brands have
made a substantial investment towards social and environmental initiatives as it has been
observed that customers prefer those brands that create lower ecological impacts and fulfil
their CSR activities associated with effective management of supply chain. Nike is also
among those most popular brands invested a lot in CSR and sustainable businesses to
improve their image at the global level. Nike has made many efforts to reduce its negative
environmental impacts and is focusing on sustainable innovation for leading a better future
for the world (Balasubramanian and Sundarakani, 2019). Nike has faced many criticisms and
controversies related to child labour and ethics in the supply chain; thus, effective
management of supply chain and adopting and implementing CSR activities the best way for
Nike to improve and uphold its brand position in the global market. Thus, an important role is
played by CSR and supply management in enhancing overall reputation and achieving a
positive impact on society through managing its supply chain and adopting CSR activities
that include setting a code of conduct for its suppliers and keeps only those who are
compliant with rules and regulations.
Further, as per the opinion of Bjørn Gulden, 2018, sustainability and CSR activities
are considered as the critical value of PUMA that is deeply integrated with their business
operations and guides for PUMA to work faster and more effectively towards a sustainable
and better future. The CSR activities plays a vital role in leading and creating better
environmental, human rights, health and safety and governance matters within PUMA and
also facilitates effective management of supply chain that aim at reducing harm to
environment and follow all the ethical standards associated with quality, pricing and other
aspects of material (Chandler, 2019). Besides this, CSR activities and management of supply
chain are essential for PUMA as it facilitates an increase in customer satisfaction and
competitiveness in the business environment and enables an organisation to quickly deliver
products together with a better-quality product, faster services, and lower prices. Thus, based
on the above discussion, it can be evaluated that CSR activities and supply chain
management is essential for both Nike and PUMA. As for Nike, it leads to enhancing image
at a global level and provides a base to follow all ethical aspects of supply chain whereas for
PUMA effective management of CSR led to a critical principle that had provided guidance

and directed this organisation towards achievement of sustainability and ethical growth
through leading better customers satisfaction and competitive strength.
2.4 To ascertain the benefits which Nike and Puma will get with sustainable supply Chain
The benefits that are associated with a sustainable supply chain include protection
against reputation damage, improving continuity of supply, reducing environmental impacts
and costs, creating partnerships, or global industry standards together with innovating
products and services. Besides this, a sustainable and ethical supply chain facilitates a
reduction in cost and also enhances efficiency and productivity through yielding an improved
quality and reliable supply chain network (Tokar and Swink, 2019). As per the viewpoint of
Jessica Lyons Hardcastle, 2019, the sustainable supply chain is a key that leads to trust and
commitment among the organisation, suppliers, and customers and creates a more profitable
and reliable supplier relationship that ensures timely availability of raw materials and
products. One of the vital benefits and factor that has to lead more emphasis on management
and adoption of a sustainable supply chain is associated with reducing corporate greenhouse
emissions that help in reducing adverse impacts on the environment together with the saving
of money. Besides this, a sustainable supply chain leads to an improvement in continuity of
supply, which is necessary for an organisation to have an uninterrupted and free flow of
production line to maintain its integrity and productivity. Together with this, the sustainable
supply chain has also lead to the creation of partnerships and global industry standards with
the help of a shared commitment that provide direction to industry towards the achievement
of the target of zero discharge of hazardous chemicals for protection and conservation of the
environment (Hombach and Sellhorn, 2019). Besides all these benefits, sustainable supply
chain facilitates a productive relation between suppliers and organisation that helps a
suppliers to understand a company's long term plans and vision thus; supplier can make
useful suggestion for up-gradation of product quality and other related processes that create
an improvement in operations and product and lead to accomplishment of innovation goals of
an organisation.
Further, according to the opinion of Mark Nutburn, 2019, the company's supply chain
accounts for around 80% of its total greenhouse gas emissions that creating many climatic
changes and adverse impacts on the environment. Thus, the organisation must make efforts
towards the adoption of a sustainable supply chain to address and solve various

environmental, economic, social, and other legal concerns from the overall supply chain
process and networking. With the adoption of Sustainable supply chain organisation like
Nike and PUMA can take a holistic way and approach that leads to a reduction in waste and
environmental footprints and at the same time also facilitates improvement in labourers
conditions and health and safety through conducting a check on worker exploitation (Yeoman
and Mueller Santos, 2019). Further, with adopting a sustainable supply chain, both Nike and
PUMA can reduce environmental impacts by reducing the emission of waste and increasing
the efficiency of buildings, vehicles, and machinery to have better profits and savings. It has
been seen that, with making changes in its supply chain and making modifications in
manufacturing and other processes, Nike has achieved a reduction in its labour costs by up to
50% and reduction in material usage by 20%, which has improved its profit margin by
0.25%. Apart from this improvement in continuity of supply is the most significant benefit of
sustainable supply chain for both Nike and PUMA that has led to avoidance in over-reliance
and dependency on a single link and provide an effective networking of multiple suppliers to
improve the continuity and availability of product and prevents and safeguards organisation
from costly downtime and reputation damage.
2.5 To ascertain the ways through which CSR can improve the Supply chain management
practices of Nike and Puma.
Corporate social responsibility plays a crucial role in establishing an ethical and
strategic atmosphere in the organisation for improving the earnings in long run and
shareholders trust through creating a positive public relations and high ethical standards to
reduce business and legal risk by taking responsibility for corporate actions (Stekelorum,
Laguir, and Elbaz, 2019). Thus, this ethical atmosphere also creates a better framework for
improvement in supply chain management practices, which should also follow all the
standards, principal, and ethics of supply chain management. As per the viewpoint of Ellie
Collier, 2018, corporate social responsibility facilitates an ethical and sustainable way that
makes an organisation able to effectively deal with its environmental and social impacts and
carefully consider human rights, environment, community and society in which it operates
thus, creates a framework and outline for a sustainable supply chain. Supply chain success
depends upon the information available to consumers in the scenario of of e-commerce,
therefore, appropriate CSR strategy is the key for success of company and it doesn't affects
the goodwill of company, millions of dollars in lost sales, and even penalization by watchdog
groups.