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,

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unplanned production, and unachievable futuristic goals Due to an unsystematic working in the
supply chain. Nike suffered huge loss due to their uncontrolled problem of inventory, inflated
transportation and shipment cost and underused machinery and equipment. The system of Nike
also suffered from fluctuations and various uncertainties as they did not planned and forecasted
about the future contingencies. Major impact of Bullwhip effect was seen on Nike when it was
introducing new IT technologies in their supply chain. However, due to some problems in the
functioning of the technology, IT not only sent the incorrect data to the producers but also placed
the excessive demand for the products from the factory. The outcome of such confusion was that
the company faced the problem of insufficiency in the management. While introducing I2
technology Nike suffered from the same situation but its impact was unexpected for the
company. Due to the flawed information, the factory manufactured the excessive amount of
sneakers, which the company sold on the huge discount prices. To deal which such menace, in
2009, Nike had worked on the project called Rewire, which is a process of integrating the
analysis of the activities in the supply chain. Thus, project has helped in bringing the evolution in
the overall performance of the supply chain. This has helped the management in planning,
organizing and controlling the activities with full coordination and by providing professional
training to the employees. Moreover, due to Rewire, Company is now developing futuristic
goals, which are attainable, and focusing to develop the working environment where they, can
achieve sustainability with full integrity.
D. Integration Analysis

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a. Diagram: CONSUMERS
RETAILERS
SUPPLIERS/MANUFACTURES
PRODUCTION
INVENTORY
MANGEMENT
FROM WHERE
THE
DISTRIBUTION
TAKES
PLACE :

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TRANSPORTATION
b. Triple-A Strategies:
 Since 2015, Nike had adopted AAA strategies in the supply chain to fulfill the wants of the
customer by giving them the best services and quality good. It also helps in securing the interest
of its employees who have worked hard and contributed in the success of Nike. Nike knows that
if it wants to grow on the global, then it is very important for the company to understand the
culture, needs and preference of the consumers. When Nike was introduced in, the market it
majorly focused was the sport wears shoes and apparels. However, with the shift in the demand
of its consumers the company started manufacturing casual shoes, apparel and sports
equipment’s. Nike then put emphasized on the market of the single product and launched many
stylish products. To become a largest brand, Nike followed the strategy of Triple Double
(2X).Nike through the application of the master plan, twice their speed, started putting more
efforts in the innovation and it is working on the market strategies so that it can reach to its
customers in the most effective way.
 Aggregation is another A that is used by Nike in its system of supply chain so that they can
compare the demographic area of two places and found the similarities in them.
Nike is become most known and valuable brand. Nike does not produce its products rather than
hires many factories that work under the company that functions like a supply chain. Nike adopts
this method because it gives them advantage as compared to the US were the manufacturing is
very costly.
E. Sustainability Analysis
Nike has been employing less energy and discharging harmful gases. Company has been
following this sustainability since 2008. By the year, 2025 the goal of Nike is to conduct its

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operations by employing the 100% recycled energy (Anon., 2018). Nike goals are to achieve the
quality standards while focusing on sustainable development of society. Therefore, it hires those
suppliers who possess the quality of good leadership and who fulfills corporate social
responsibility. To grow and bring a change in the society Nike wants to work with those
suppliers, who perform their activities in an ethical way and oppose human trafficking activities.
The company expects that the suppliers must contribute in the development of environment and
should encourage its employs to work with full capacities. Nike is against all such activity where
the proper wage is not given to the workers and unknowingly they are bonded by the contracts or
they are deceived and the workers are unnecessary exploited by the suppliers. In 2018, Nike has
introduced various reforms in its rulebook like safety measures for worker, prohibition of
discrimination against women.
F. Improvement Policy:
i. By the end of 2023, the goals of Nike are to collaborate with Flex so that they can together
manufacture 10 million pair of shoes. Nike is doing various modifications in the machine so that
it can be utilize to the full. It has adopted the business strategy to decrease the supply of its
products by 25% so that company can launch new styles and the consumers can shift their focus
from other brands.
ii. In the sales and operations, Nike is re-launching Hoka One that will make available in vibrant
colors, like yellow and other neon colors. It is being launched with amazing features like fluffy
cushions, foot stabilizer (Slowtwicth, 2019).
iii. From the last 6 years, Nike has been utilizing the reusable polyester material in the production of
the sportswear. Thus it is creating a positive impact in the on the society. With the

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implementation of renewable polyester, there has been reduction in the usage of raw materials in
the production, which is resulted in the depletion of harmful discharge of gases by 30%.
iv. Nike also contributes in the development of society. In 2018, Nike had contributed around 9
million for motivating and inspiring people towards sports. The workers of Nike donated in more
than 3,610 in community-oriented institutions (Anon., 2016).
G. Achievement:
 By applying various policies, Nike has reached very close to its mission. As per the annual
report, Nike has attained 100% re- useable energy in the northern part of America and in EU and
will be focusing to achieve this on the global level. Nike has started working with Global
Fashion Agenda and UNFCCC so that it can make people aware and encourage them to raise
their voices against the exploitation of environment. Nike has done commendable improvement
in the usage of renewable stock, employing the right amount of water, and used the energy in the
right manner.
 In the supply chain, Nike has tried to maintain transparency. It contributes to the greater level of
accountability among the suppliers and take care the interest of society in the end.
 It also contributes in the welfare of the society and in 2018, Nike had organized sports programs
in the society, which became worldwide famous and has inspired 16.5 million kids on the global
level (SGB Media, 2019).

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Conclusion
From the above analysis, it can be said Nike is a famous brands who are always ready to give
best to its customers. It not only cares for its customers but also looks after the interest of the
workers who are the nervous system of an organization. Nike is known for its stylish and
innovative sportswear. However, the company had faced many challenges related its supply
chain, dynamic market, and sustainability issues. To deal with them Nike has adopted various
strategies and once again, it has secured a first place as the most valuable sports brand.
.

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