Nike does not own any factories; it contracts with many different factories to produce its product. Thus Nike’s manufacturing vision is different than other corporation it stresses on cultivating strong, long term, trust-based relationships and interactions. Nike’s vast size presents multiple strategic which is difficulties in the concept, performance and evaluation of strategy, which is why Nike employs a four-pronged efficiency improvement methods on its supply chain. These include lean manufacturing, economic security and human resources development i.e. lean, green, equity and empowerment (Nike, Inc., 2011, pp. 33-37).
Lean manufacturing focus on the minimization of defects, non-value-adding activities, reduction of wastage, and scale diseconomies among others (Yusof, 2003, p. 28). Lean manufacturing encourages the company’s leadership ability and develops an empowered workforce through training, coaching, career development and technical assistance, and excellent compensation so that employees are best motivated and committed to the organization, which in turn reduces turnovers and the associated, costs and ensures that the employees have the environment to deliver absolute quality (Nike, Inc., 2011, p. 35). With employees performing at their best, the company can also create and deliver quality to the customers, which should translate into sustainable competitiveness.
The effect of greenhouse gasses on climate change, coupled by the growing realization of environmental effects of productive activities, firms have moved to limit their environmental footprint as far as possible. The green manufacturing strategy involves the reduction of the undesirable impacts of the production activities to the environment. By this strategy, the company expects its factories to make the products in the strictest compliance with the respective legal environment as well as the company’s ethical code of conduct. Nike has sought to adopt environmentally-friendly materials, minimize pollution to the environment and cooperate with its business partners to improve their management of energy, water, waste, toxic materials and water discharges” (Nike, Inc., 2011, p. 36).
The company believes that the wage concern among workers is an important issue to identify the factory audits, and an equitable supply chain can help Nike and its contract factories stimulate their employees’ potential values in the process of manufacturing through providing them equal status, not work machine (Nike, Inc., 2011, p. 36).
In addition, Nike states that its greatest impact to the world is through giving a voice to the millions of people, who work across its supply chain. To this end, the company has applied itself and its resources to impart knowledge and skills, while at once delegating decision making authority. It has offered its contract factories human resource management training since 2007, while at once assisting them to recruit better talents that in turn benefit the company (Nike, Inc., 2011, p. 37). Therefore, it is clear that Nike’s response to the increasing competitiveness, climate change and ethical business conduct is to use both total quality management (TQM) and Kaizen.
Total quality management seeks to develop constant sense of organizational purpose to bolster continuous improvement in quality, sustainability, efficiency and customer value delivery that is sustainable into the long term. It calls for the adoption of a novel philosophy that will inspire the organizational members to ensure that the organization manages change well (Yusof, 2003, p. 28). To this end, Nike has introduced a long term vision which is in line with the introduced the novel Materials sustainability index, footwear sustainability index, considered design ethos, and the manufacturing index. Other indices that have been introduced by the company include the country risk index, sourcing and manufacturing sustainability index, sustainability integration index and the innovation index. These indices ensure that every aspect of Nike’s performance can be evaluated and improved, which eventually makes for the easier improvement of the strategies to perfect any area, with the conclusion of increasing the overall performance of the organization. With these indices, the company can remove the variation between expected and realized performance, effectively facilitating the perpetual improvement effort according to TQM and Kaizen.
In addition, Nike has evolved to increase the screening and performance assessment of its suppliers and contract factories, on the basis of which it has sought to build a long term relationships with best performing contractors. This idea is come from Kaizen insistence on reduction the suppliers as against maintaining a large portfolio of shong term, transactional relationships with many suppliers (Yusof, 2003, p. 28). A look at the company’s suppliers shows a fast and regular reduction. In the Americas for instance, there were 161 suppliers in 2009, but by the close of 2011, there were only 47, in the same way that North Asia saw a reduction from 517 to only 98 during the same period (Nike, Inc., 2011, p. 31).
Further, both TQM and Kaizen are founded on capable leadership, as against managerial supervision. The two methods need employees that are without fear, but filled with confidence and gave authority to deliver results. Fear destroys the ability of the employees to work to their capacity or have a sense of belonging to the organization, to the detriment of their performance (Yusof, 2003, p. 19). Nike has focused on improving the leadership ability within the organization through human resources development and empowerment (Nike, Inc., 2011, p. 35). With such empowerment, the employees and contractors are able to make quality optimization decisions that eventually benefit the company.
Furthermore, Nike realizes the urgent need to break away from watchword, and instead, the company is focusing on processes that inefficiency. It is important that the company moves the blame away from the individual employees and contractors, and instead focuses on the systemic errors that lead to the problems. TQM and Kaizen seek to end barriers among many different departments within the organization, and instead create a system that creates and delivers quality (Yusof, 2003, p. 28). Nike, Inc. has assumed responsibility for its contractors and even the industry, designing ethical codes, providing leadership and standards by which performance is to be gauged, to create quality (Nike, Inc., 2011, p. 31).
Nike’s product-creation teams make choices during designing their products which have major influence on the type and amount of waste which gets created at the time of manufacturing. Nike’s Index and its successors give a mechanism for scoring which shows designers the implications of waste due to their choices and provides them with solutions to design with less-wastefulness. Nike teams can earn high index scores by avoiding waste with “Pattern Efficiency”. Patterns which designers can use while using fabric options (dots or stripes) can help them in reducing waste as dots are cut with less waste in comparison to stripes. Pattern efficiency has helped Nike achieve 19% reduction in waste in their manufacturing of footwear (Nike, Inc., 2011, p. 64).
Contract Manufacturers and Material Vendors
Nike works with regularly with their contract manufacturers in assisting them to reduce waste. Nike has helped their manufacturers in optimizing manufacturing process, segregation of waste at source, measuring waste volumes and types and targeting reduction in high-volume waste materials. Nike has also developed six recycling centers in China, Vietnam and Indonesia in support of their closed-loop vision. Nike’s factory rating index is now providing incentives for material vendors and contract factories for participation in their waster-reducing certifications and activities. Factories and vendors which earn higher sustainability scores are better positioned to maintain business relations with Nike.
At Nike brand footwear manufacturing, they set a goal of 17% reduction on waste from FY 2006 to FY 2011 to be measured in gm of waste for every pair of shoes. This target was met by the FY 2009 and by FY 2011 waste reducing will reduce to 21% (Nike, Inc., 2011, p. 64).
NIKE, Inc. World Headquarters
At the headquarters of NIKE, Inc in Oregon, they have worked very hard for improvement in recycling rates. The total waste increased in FY 2011, as did the employee base, the waste diverted from landfills with composting and commingling increased from 54% in FY 2009 to 65% in FY 2011 (Nike, Inc., 2011, p. 64).
Logistics
At Nike’s distribution centers they have started to assess their waste, which mostly constitutes of corrugated cardboards which are mostly recycled. They have been thinking to reuse their inbound shipping boxes for purpose of outbound shipping to reduce their waste. This is being currently tested in Chinese distribution centre.
References
Corbett, C., & Klassen, R. (2006). Extending the horizons: environmental excellence as keyto improving operations. Manufacturing & Service Operations Management, 8 (1) , 5-22.
Nike, Inc. (2011). Sustainable Business Performance Summary. New York. Retrieved from http://www.nikeresponsibility.com/report/files/report/NIKE_SUSTAINABLE_BUSINESS_REPORT__FY10-11_FINAL.pdf: Nike, Inc.
Yusof, S. b. (2003). TOTAL QUALITY MANAGEMENT CRITICAL SUCCESS FACTORS FOR IMPLEMENTATION IN MANUFACTURING SMALL. University of Malysia , http://eprints.utm.my/2626/1/71663.pdf.
Mollenkopf, D., Stolze, H., Tate, W. L. and Ueltschy, M. (2010). Green, lean, and global supply chains. International Journal of PhysicalDistribution & Logistics Management, 40 (1/2), 14-41
Mindtools.com, (2013).Deming's 14-Point Philosophy.Retrieved from http://www.mindtools.com/pages/article/newSTR_75.htm
http://www.amazon.com/Out-Crisis-W-Edwards-Deming/dp/0262541157/ref=pd_rhf_se_s_cp_1_6W87?ie=UTF8&refRID=0NSX7M19J8Y1YPJ8XVKZ
Mindtools.com, (2013).Lean Manufacturing – Working More Efficiently. Retrieved from http://www.mindtools.com/pages/article/newSTR_44.htm
