Supply Chain at Nike

Hi readers, I'm Arun R of second year MBA, from Amrita School of Business and this is my 8th blog. In this blog I'm going to talk about the supply chain of Nike. 

Nike is an American multinational corporations engaged in the design and development of sales of footwear, apparel , equipment, accessories and services. The company was founded in 1964 as Blue Ribbon Sports and officially became bike Inc. In 1971.  The company is headquartered in Oregon. Nike is the largest supplier of athletic shoes and apparel. The market share of Nike is 27% . Nike is also ranked 89 in the fortune 500 list of the largest United States corporations by revenue in 2018.

They are the most influential player in the modern textile industry. They have a complex supply chain which is the reason for them selling more than 100 of millions of shoes and other products. Delivery precision is an important one in Nike Inc. which improves the margin , lower inventory, minimize price and deliver right product to the customer on time. This success of Nike is credited to this complex supply chain management. They have 525 factories in 40+ countries and move products to several thousands of retailers.

The key principles of Nike’s supply chain are outsourcing, diversification and corporate social responsibility. Almost 100% of its manufacturing for footwear and apparel is done by independent suppliers. The management team of Nike’s supply chain managed the additional logistics complexity involved in this and significantly reduced cost. Outsourcing is a risky one but the success of Nike is that they do not give more than 10% of orders to one particular factory. The highest they give is 9%. This helps them to not rely heavily on one supplier and less vulnerable to unpredictable occurrences. Nike selects high quality raw materials and suppliers for their global procurement.

Sourcing from so many components have its own disadvantages and they are really tough and are a challenge to them. They focus more on quality and long-term agreement.  Nike makes continuous contact with the supplier to make sure that their products meet the required quality standards in each echelons of production. They also provide support to suppliers through tools and training in lean management framework and TQM approach.

Nike also has an efficient distribution system to cater to the need of the individual customers really faster. They have a faster distribution and logistics network that helps in faster shipment and quick response to the customer demand. This distribution and logistics centers also serve as critical touch points for thousands of Nike retail stores, online sales and individual customers. An example of Nike’s to respond quickly to customer is their opening of new distribution center in North America. This has improved Nike’s ability to deliver premium products to customers quickly and efficiently.

They also give more importance to the employee health and safety. Suppliers are judged based on their fair labor standards. Nike started to bring more corporate social responsibility to their operations. Nike has revamped its sourcing strategy and prioritize suppliers to show CSR and sustainability. Nike became the first company to publish the complete list of factories in its supply chain. Nike is also planning to outsource their products by 100% in the near future.