Introduction
Nike company background
NIKE Inc. became a corporation in September 1969. The company engages in the design, development, marketing and selling of apparel, athletic footwear, accessories, equipment and services. The company fosters the culture of innovation by creating products/services and customer experiences aimed at meeting the demands of today’s athletes while focusing on solutions for future challenges. NIKE Inc. believes in putting their energy where there is the most impact. The most impact occurs on the finished products manufacturing part; hence, the company strives in raising the bar of performance in apparel, footwear, and equipment manufacturer (NIKE, 2016). NIKE Inc. ranks in the first position in the sportswear equipment and apparel industry. The company has a brand value of $19 billion and a market cap of $83.6 billion. The success of NIKE Inc. comes from the implementation of highly competitive global business strategies (Soni, 2014).
Thesis statement: Implementing technology integration, manufacturing incentives and product innovations increases NIKE's sustainability in the global supply chain.
Nike’s Products/Services
Footwear
NIKE footwear products fall into the categories of men's shoes, women's shoes and kids' shoes. They include KD, KD VII PRM, Kobe, Kyrie, LBJ, Nike basketball, footballs, and tennis balls.
Apparel
NIKE apparel products include jackets, shorts, tees, pants, and jerseys.
Equipment
NIKE equipment includes backpacks, bags, caps, and socks.
Nike’s Global Supply Chain Management Process
Nike manufacturers
NIKE, Inc is always on the track towards meeting customer needs by having a dedicated team of manufacturers capable of meeting the world demand. The company always focuses on reshaping the future of its manufacturing units. NIKE has numerous retail stores located in different regions worldwide customers can comfortably buy its products. NIKE Inc. utilizes the industry-defined manufacturing outsourcing strategy. It uses different innovative strategies of manufacturing aimed at customizing produces to fit different consumer styles. The company has 785 contract companies, more than one million employees, and produces more than 500,000 different brands. Each of the manufacturing units operates in its independent environment. NIKE's footwear and apparel products manufacturing plants are located outside the United States while equipment, accessories, and other services are produced in the United States and abroad. The main manufacturing plants are found in Western Europe, North America, Central and Eastern Europe, Japan, China and other emerging markets (NIKE, 2016).
Key Manufacturing Thrust
NIKE Inc’s Corporate Responsibility team had experienced major challenges defining its brands both internally and externally. The company experienced a major thrust towards ending the challenge by establishing Corporate Standards and Practices programs that operate under three key areas (NIKE Inc, 2009). These are lean manufacturing, material consolidation, and manufacturing towards innovation and modernization.
Lean manufacturing
Presently, NIKE Inc has undergone a fundamental shift in the company's supply chain leading to the transformation of the footwear, apparel, and equipment industry. The company works with contract manufacturers to promote lean manufacturing to deliver high-quality products with minimum waste. The main approaches employed in NIKE's lean manufacturing include employee empowerment and working closely with manufacturers that led to a 0.15 percent savings on every unit manufactured. Additionally, the company managed to manufacture 85 percent of footwear products, and approximately 73 percent of the apparel by the end of the year 2013.
Material consolidation
NIKE Inc. focuses on reducing the cost of manufacturing in the supply chain by sourcing materials from few vendors and cutting on the volume of materials used in manufacturing products. A report by Kish (2014) reveals that NIKE lay-off more than 100,000 contract factory employees in the year 2013. The company made the move to automate certain parts of the manufacturing process to improve efficiency. Additionally, NIKE ended contracts with more than 125 factories to continue with the material consolidation (Kish, 2014).
Manufacturing innovation and modernization
NIKE Inc. actively engages in developing new technologies to improve its manufacturing business model by investing in innovations, modernization, and sustainability. Additionally, the company partnered with Flex, a world-class manufacturer, to improve its vision of advancing innovations and applying modern techniques to meet customer demands. The partnership has recorded new advancements in product manufacturing by introducing new capabilities and experiences in the footwear industry and creating future systems across the company’s global supply chain (NIKE Inc, 2015).
NIKE Footwear Manufacturers
As stated earlier, NIKE Inc employs the industry-defined manufacturing outsourcing strategy to produce its footwear products. NIKE contracts independent manufacturers located outside U.S. to produce and supply footwear products for the company. In the year 2013, NILE received 365 million pairs of athletic shoes manufactured from different factories outside the U.S. The company had contact with more than 600 factories globally by May 2015. About 98 percent of NIKE line workers operate in emerging markets and great China (Nike Manufacturers, 2015).
Apparel Manufacturers
NIKE Inc. also outsources all manufacturing process for the apparel products in factories outside U.S. 430 apparel factories operating in more than 40 countries supply the company with apparel products. The key apparel manufacturing factories contracted by NIKE are Vietnam, Thailand, Indonesia, Pakistan, Malaysia, and China. The NIKE outsourcing of apparel manufacturers accounted for approximately 34 percent of the total apparel products delivered to the company in the fiscal year 2014 (Nike Inc., 2014).
Third-party Licenses
NIKE Inc. enjoys the privilege of being the largest marketers and sellers of athletics footwear, apparel, and equipment across the world. All NIKE products are sold through NIKE-owned retail centers and stores and through internet sales. The company also sells products through licensed distributors located in more than 170 countries worldwide. The company enters into license agreements with other third parties to permit them manufacture and sell specific electronic devices, apparel and other equipment used in sports activities using NIKE-owned trademarks (NIKE INC (NKE), 2010).
Nike Distribution Centers
NIKE operates five primary distribution centers in U.S. The centers are located in Tennessee, Memphis and other three leased centers. The Memphis distribution center is the largest in the world. The center was opened in June 2015 covering an area of 2.8 square foot and holds all three product lines under one roof. According to NIKE’s Chief Operating Officer, the Memphis distribution center was build to help the company meet its increasing customers’ demands in a quick and efficient manner. Moreover, NIKE operated an additional 16 distribution centers located in regions outside U.S. by the end of the year 2014 (NIKE Inc., 2015).
Nike Global Supply Chain Management Strategy
Manufacturers have engaged in sourcing for quality products at the lowest cost by expanding their supply chain to different regions worldwide. The ability to contain the impact of supply chain distribution acts as one of the most significant strategy that helps firms overcome challenges of global supply chain operations (Chopra and Sodhi, 2014). NIKE Inc. as a multinational corporation is utilizing global supply chain management strategies to maintain its position as the largest marketer and seller of athlete footwear products, apparel and equipment globally. Nike global supply chain management strategy involves three primary elements; integration, incentives, and innovation. The company must maintain sustainability in the changing global market.
NIKE has embarked into making numerous changes to overcome impacts of global supply chain distribution. These include transiting into a more integrated organization structure, developing new supplier incentive scheme, and establishing a lean manufacturing process. The integration of the company’s organization structure involves implementing changes at the company level with suppliers. The company changed its organizational structure to promote sustainability following traditional corporate functions. Second, NIKE invested in products innovation and process design. The strategy helps the company improve the supply incentive structure by focusing on collaborative goods and process design innovations. Innovations at NIKE have made a significant difference in the global supply chain by allowing the company to address numerous challenges facing customers today. Finally, NIKE improved its global supply chain position by creating incentives in the manufacturing process. The lean manufacturing process uses modern technologies to produce high-quality products at minimal costs. Additionally, the manufacturing process encounters less wastage of raw materials leading to a reduction in the cost of manufacturing (Porteous and Rammohan, 2013).
Nike Global Supply Chain Management Schematic Chart
Conclusion
NIKE Inc. has managed to sustain the global supply chain network and overcome many competitors through implementing modern technologies in manufacturing, promoting product innovations, and introducing global management incentives. Multinational corporations use unique global supply chain management strategies to win the competitive advantage in the fast-growing global market. Advancements in technologies and changes in customer demands have made organizations engage in deep research and development of unique products and services capable of attracting diverse customers from different cultures and regions. NIKE’s global supply chain management strategies can sustain the company’s competitive advantage to the future under effective management and control.
References
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Kish, M. (2014, May 19). Consolidation of Nike’s manufacturing operations continues. Portland
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http://www.nikeresponsibility.com/report/content/chapter/business-overview
NIKe Inc. (2015, October 14). NIKE's manufacturing revolution accelerated by new partnership
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http://www.nikebiz.com/crreport/content/pdf/documents/en-US/full-report.pdf
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