Nike's Supply Chain: Analysis, Challenges, and Improvement Programs

This report provides an in-depth analysis of Nike's supply chain management, examining key aspects such as supply analysis, operations, information flow, integration, and sustainability. It identifies challenges and opportunities within Nike's supply market, including ethical concerns, trade war impacts, and potential revenue reduction. The report explores Nike's sales market, forecasting techniques like the Nike Fit app, and inventory management strategies. It also addresses the bullwhip effect and proposes triple-A strategies for improvement. Furthermore, the report evaluates Nike's sustainability efforts and suggests improvement policies to enhance supply chain performance and achieve the company's strategic goals. This document is available on Desklib, where students can find a wealth of academic resources.

RUNNING HEAD: MANAGEMENT 1
NIKE
LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Student
5/27/2019

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Executive Summary
Sports are an important activity, which not only keeps us healthy but also makes us strong and
competitive. It boosts our confidence level. However, when consumers go out to purchase a
sportswear brand, they always look for something that gives them the utmost satisfaction and Nike is
one of the brands that has stood on their expectations. Nike is a no. 1 brand who is manufacturing
the comfortable and stylish sportswear for its customer. The company does not only produce
sportswear but also emerged successfully with other products such as casual footwear, apparel, and
sports equipment. Nevertheless, while fulfilling the needs of the customer Nike has analyzed various
loopholes in its system. Therefore, the focus of the report will on the analyzation of a problem in the
supply chain, marketing strategy and in supply chain sustainability and on how these problems can
be overcome.

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Contents
Introduction............................................................................................................................................5
JUST DO IT.......................................................................................................................................5
A. Supply Analysis:..........................................................................................................................6
i. Key Products:...........................................................................................................................7
ii. Supply Market, Suppliers and Its importance..........................................................................7
iii. Selection, Evaluation and development:..................................................................................8
iv. Challenges and Opportunities of Supply Market:...................................................................8
B. Operation Analysis:.....................................................................................................................9
i. Sales market and Key Customers:...........................................................................................9
ii. Forecasting Techniques used by Nike:..................................................................................11
iii. Inventory management techniques:.......................................................................................12
iv. Challenges..............................................................................................................................12
C. Information analysis:.................................................................................................................12
 Bullwhip effect causes and its remedies:...............................................................................12
D. Integration Analysis...................................................................................................................13
a. Diagram: CONSUMERS.......................................................................................................14
b. Triple-A Strategies:...............................................................................................................15
E. Sustainability Analysis..............................................................................................................15

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F. Improvement Policy:.................................................................................................................16
G. Achievement:.............................................................................................................................17
Conclusion...........................................................................................................................................18
Bibliography........................................................................................................................................19

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Introduction
JUST DO IT
This phrase empowers people “to run until you achieve your dreams”. Nike is the most renowned
sports brand, which has made a thousand dreams true. The company manufactures, develops and
supplies the best quality sports apparel, footwear and sports accessories for everyone. It believes
that anyone can attain sportsmanship if he has an athletic body and has nice shoes to wear. It is
known for the comfortable sole, innovative and stylish designs, high-quality clothing and value
for money (Nike, 2019).
Along with its subsidiaries company, it has made its mark in all the classes whether it is business
class or athletes. It is the largest supplier, which trades more than 900 million (Fact Shop,
2019)products on the global level on the annual basis, own retail outlets, and has chosen the
platform of e-commerce to connect and supply its product. To connect with masses, Nike has
collaborated with sports stars like Cristiano Ronaldo, Michael Jordan and LeBron James.
Launched in 1964 by Bill Bowerman and Phil Knight, Nike Company has shown exceptional
growth in the sports industry from production to endorsements (Anon., 2018).In 2018, as per the
Forbes “World’s most valuable sports brand” Nike holds the first position with a brand value of
worth $15,000,000,000 (Forbes, 2018). Moreover, it not only manufactures and designs sport
wears but also entered the market of casual footwear, clothing, and accessories with its
secondary companies that is Jumpman and Converse.

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Mission and Vision:
Nike Company has flourished and is still improving because of its3 major principles:
 its Originality of products
 Boundless Zest to bring change in the market of the sportswear industry
 Moreover, it puts emphasis on the contribution to sustainable development.
The company goal is to inspire every sportsperson to play hard so that can discover his or her
athletic skills. Its objectives to bring various innovations in the field of sports so that the
individual to develop his/her potential. It trades its shoes, clothing, and sports kits around the
world, as Nike believes that if anyone has an athletic body, then he/she can become a sports
person. Moreover, it perception is to guide Nike so that it can create a sustainable environment
where the society, Earth and dividend are balanced. The mission and sight of the company are to
collaborate with the partners to re-conceptualize, mold, and examine the challenges.
However, while operating its functions Nike is facing issues in the supply chain management so
the objective behind this report is to identify various challenges that the company is facing and to
evaluate the possible ways through which a company can solve and improve its conditions.
A. Supply Analysis:
Nike is the best sportswear brand, which has tremendously managed its supply chain
management. From the procurement to the production, Nike depends upon its individual
supplier, who supports mechanism of the company. Nike cares for its products and clients and
does not compromise with the quality of its product. Therefore, to maintain the best quality of its
product, it evaluates and chooses the best raw material and supplier for the company. To procure

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the raw material for the company, Nike has assigned this role to the Global procurement team
who looks after the research and assembling of optimum materials and contractors.
i. Key Products:
Nike promotes its brand into six groups like Sportswear, The Jordan brand, football accessories
and equipment and Nike premium basketball. Besides this, it also advertises and supplies
products for the kid’s segment and puts emphasis on other popular sports (Benton, 2019).
However, The Global procurement team manages 3main Product areas of Nike:
 Footwear: The procurement team of Nike manages two categories of footwear that are sports
shoes and casual or lifestyle shoes.
 Apparel: The team focuses on the two product categories like sports apparel and casual wear.
 Sports accessories and sports equipment.
ii. Supply Market, Suppliers and Its importance
Nike is the most popular brand for sportswear and apparel. However, it does not own any
production house or factory. Nike has expanded its supply chain over the years. As per statistics
of2018, the products of the company are manufactured in 567 factories that are present in 42
countries and 1 million workers are employed from all over the world to make best, comfortable
and stylish shoes and apparel for the consumers (Duffy, 2018). In which there are about 328
apparel factories, which distribute and sold its products in the market. Vietnam, China and
Indonesia are the main footwear manufactures of Nike.
It is the most beneficial way of procuring things from other countries and suppliers as it gives a
cost advantage to Nike. Moreover, with the help of globalization, Nike is able to access the
developing market where there is a flexibility of moving the goods from factories to the main

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market, talented and skillful workers and funds are easily available. Due to Globalization, Nike
is able to make a positive impact on the economic conditions of the countries and attain the goal
of sustainability in the economy. Globalization has helped various countries in raising their
standard of living by giving employment opportunities and eradicating the poverty.
iii. Selection, Evaluation and development:
Nike selects and evaluates the performance of different factories and then hires them for the
production. For this process, Nike has a Global procurement team that looks after the acquisition
of eco-friendly raw material and the right suppliers for the products. The team focus on those
manufactures who can give benefits to Nike in long run, has leadership skills and understands
their corporate social responsibility towards everyone. The company expects its supplier to adopt
eco-friendly techniques in the manufacturing so it does not have any harmful impact on the
environment and perform their activities in an ethical way. Safety and diversity are two norms
that are promoted by the company.
iv. Challenges and Opportunities of Supply Market:
 In 2018, Nike faced very serious issues related to the working conditions. The suppliers of Nike
were not giving minimum wage to the labors to fulfill their necessities. According to the human
right association Nike suppliers was exploiting the labor. Moreover, to avoid such worse
working conditions Nike must understand its ethical responsibility towards its suppliers and pay
salary on time (Anon., 2018).
 . Due to the US and China trade war, Donald trump administration levied 25% duties on the
imports from the China. Therefore, Nike Company may have an issue of price increment in its
product (Anon., 2019).

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 Another problem realized by the company that the sales revenue of the company might be
reduced by -2.38% as compared to the previous year sales (Anon., 2019).
B. Operation Analysis:
i. Sales market and Key Customers:
Nike targets its customers according to their age, profession and sexual category. The most
demanding customers of Nike vary from 15 to 40 years old. Nike operates with its subsidiary
companies like Jordon, Converse and Hurley international. Michael Jordon endorses sports
apparels and accessories in the Jordon Brand. In the Converse Nike, company promotes casual
sneakers, apparel and sports accessories. Jumpman logo of Nike sells Air Jordon brand on the
name famous sports game that is basketball and other accessories. Under the Hurley brand of
Nike supplies young generation lifestyle clothing, accessories. Nike it is own emblem promotes
digital gadgets. According to the figures of global market of Nike 2018, Nike markets its
products through more than1.182 retail stores (Anon., 2019). While being a Top choice in the
market of sneakers (Richter, 2019), Nike has achieved an enormous sales growth with $22.3
billion in the market of footwear. It is expected that the worldwide market of sports brand Nike
might increase to 34.44 % in 2024.

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Source: (statista, 2019)
Source: (Warner, 2018)

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Source: (Warner, 2018)
ii. Forecasting Techniques used by Nike:
 It has been observed that 60% population are jogging and walking in the ill-fitted shoes. They
majorly complain about picking the unfit shoes for them. To find the solution of this issue Nike
has introduced new device that is Nike fit. Through the application of this app, customers can
search and select the best size of shoes for them in which they can walk and exercise
comfortably. Moving ahead with time has definitely helped Nike in retaining their no. 1 position
in the in the sports industry. Nike has applied special features in the app like scanning of the foot
size, and modern technology like artificial intelligence so that the customers can get the right and
exact shoes for them. This app can be downloaded freely and is available on apple and android
gadgets (Anon., 2019).
 To empower the growth of the company, Nike has launched a new Plus app that will give a best
buying experience to the customers. This app provides exclusive services to its members like
personal workouts; no delivery charge and one-month trail process and they will also receive
VIP treatments (Danzigor, 2018).
.

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iii. Inventory management techniques:
Inventory Management means stock management. It is a procedure of managing the usage of
inventories in an organization. Inventory is an important asset, which influences the decisions of
an organization. Therefore, it is necessary to maintain the correct amount of inventory to fulfill
the demand of the consumers (Anon., 2018). This management is very crucial in the companies
like Nike who are always ready to bring something stylish and innovative changes in their
products. Hence, Nike has introduced Sand R department in their factory outlet. It is a
department that looks after the production, transportation distribution and inventory
management. The factory outlets of the company utilize the S and R room for keeping the
inventory. Many a times the stock of Nike is greatly influenced by the market conditions.
Therefore, it is necessary for the company to maintain the enough stock to meet the requirements
of the consumers (Aniyruddh & kumar. , 2018,).
iv. Challenges
Due to the lack skills in the management of the inventory in an organization, Nike faced huge
financial problems and the matter become so worse that the company was on the verge of
closure. The main reason behind such chaos was the excessive inventory stored in the factory.
C. Information analysis:
 Bullwhip effect causes and its remedies:
Bullwhip effect means any observation, which depicts the minor fluctuations in the supply chain
that may result into big oscillation in the requirement (Lee et al., 1997). This might create the
problem of demand form the procurement of raw material to the distribution. The reasons of such
fluctuations are excessive stock, bad customer after services due non-availability of goods,