Study Case

Nike, Inc. is an American multinational corporation that is engaged in

the design, development, manufacturing and worldwide marketing and
selling of footwear, apparel, equipment, accessories and services. With its
vision To Bring inspiration and innovation to every athlete in the world
and
Mission, the service of human potential The company is
headquartered near Beaverton, Oregon, in the Portland metropolitan area.
It is one of the world's largest suppliers of athletic shoes and apparel and
a major manufacturer of sports equipment, with revenue in excess of
US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it
employed more than 44,000 people worldwide. In 2014 the brand alone
was valued at $19 billion, making it the most valuable brand among sports
businesses. (source: Wikipedia)
Wolfram, who was promoted in April to vice president and general
manager of the Asia-Pacific division, is all Nike. His complexion is ruddy,
his lips cracked from working out or working hard, or both. Hes casually
dressed, but with a typical Nike sharpness to his turtleneck and slacks, a
sharpness reflected also in his urgent, aggressive defense of his company
Nike pride that would seem arrogant were not the company so dominant
in its industry.
Wolfram calls the i2 problem software glitch that cost Nike more than
$100 million in lost sales, depressed its stock price by 20 percent,
triggered a flurry of class-action lawsuits, and caused its chairman,
president and CEO, Phil Knight, to lament famously, "This is what you get
for $400 million, huh?"?a "speed bump." Some speed bump. In the athletic
footwear business, only Nike, with a 32 percent worldwide market share
(almost double Adidas, its nearest rival) and a $20 billion market cap
thats more than the rest of the manufacturers and retailers in the
industry combined, could afford to talk about $100 million like that.
Nikes June 2000 problems with its i2 system reflect the double
whammy typical of high-profile enterprise computing failures. First, theres
a software problem closely tied to a core business process this case,
factory orders. Then the glitch sends a ripple through product delivery
that grows into a wave crashing on the balance sheet. The wave is big
enough that the company must reveal the losses at a quarterly
conference call with analysts or risk the wrath of the Securities and
Exchange Commission, shareholders or both. And thats when it hits the
pages of The Wall Street Journal, inspiring articles and white papers on the
general subject of ITs hubris, limitations, value and cost.
The idea that something so mundane as a computer glitch could affect
the performance of a huge company is still so novel that it makes
headlines. But what doesnt usually enter the analysis is whether the
problem was tactical (and fixable) or strategic (meaning the company
should never have bought the software in the first place and most likely
wont ever get any value from it). The latter is a goof worthy of a poster;
the former is a speed bump.

Nike claims that the problems with its i2 demand-planning software

were tactical and therefore fixable. It was too slow, didnt integrate well,
had some bugs, and Nikes planners were inadequately trained in how to
use the system before it went live. Nike says all these problems were fixed
by fall 2000. And the company asserts that its business wasnt affected
after that quarter. Indeed, at press time, Nike had just announced that its
third-quarter 2003 profit margins were its highest ever.
If there was a strategic failure in Nikes supply chain project, it was that
Nike had bought in to software designed to crystal ball demand. Throwing
a bunch of historical sales numbers into a program and waiting for a
magic number to emerge from the algorithm the basic concept behind
demand-planning software doesnt work well anywhere, and in this case
didnt even support Nikes business model. Nike depends upon tightly
controlling the athletic footwear supply chain and getting retailers to
commit to orders far in advance. Theres not much room for a crystal ball
in that scenario.
Indeed, Nike confirms that it stopped using i2s demand planner for its
short- and medium-range sneaker planning (its still used for Nikes small
but growing apparel business) in the spring of 2001, moving those
functions into its SAP ERP system, which is grounded more in orders and
invoices than in predictive algorithms. "This allows us to simplify some of
our integration requirements," says Nike CIO Gordon Steele.
Wolfram says Nikes demand-planning strategy was and continues to be a
mixture of art and technology. Nike sells too many products (120,000) in
too many cycles (four per year) to do things by intuition alone. "Weve
tuned our system so we do our runs against [historical models], and then
people look at it to make sure it makes sense," he says. The computer
models are trusted more when the product is a reliable seller (that is, just
about anything with Michael Jordans name on it) and the planners
intuition plays a bigger role in new or more volatile products. In this case,
says Wolfram, talking with retailers does more good than consulting the
system.
"Theres been a change in the technology for demand planning," says
AMR Research Vice President Bill Swanton, who declined to address the
Nike case specifically. "In the late 90s, companies said all we need is the
data and we can plan everything perfectly. Today, companies are trying to
do consensus planning rather than demand planning." That means moving
away from the crystal ball and toward sharing information up and down
the supply chain with customers, retailers, distributors and manufacturers.
"If you can share information faster and more accurately among a lot of
people, you will see trends a lot sooner, and thats where the true value of
supply chain projects are," Swanton says.

Analysis
Menurut analisis kami kegagalan yang terjadi pada Nike, Inc. adalah
sebagi berikut:

1. Menurut buku Guide to Enterprise Architecture, The Information Inaccuracy

and Integrity Problem is the inability of core systems to support
information accuracy due to tactically planned business systems. Dari

penjelasan
tersebut
kami
menemukan
bahwa
sebelum
pengimplementasian sistem baru, NIKE, telah mengalami
permasalahan keakuratan informasi dan masalah integritas yang
terjadi karena 27 aplikasi manajemen order yang sulit terintegrasi
dengan pusat. Masalah tersebut mengakibatkan banyaknya barang
di gudang yang tidak diminati pasar tetap ada tanpa ada tindak
lanjut dari pusat karena tidak adanya integrasi. Kurangnya stok
barang yang diminati konsumen di gudang mengakibatkan
menurunnya keuntungan yang didapat. Kurangnya stok tersebut
terjadi karena tidak adanya kiriman stok dari pusat yang
diakibatkan oleh aplikasi yang ada di gudang retailer tidak
terhubung dengan aplikasi yang berada di pusat.
2. Menurut buku yang sama, The Problem of Incompatible
Technologies is
The IT environment does not interoperate effectively to provide
support for business processes. Dilihat dari kondisi Nike, Inc. pada
waktu itu, dapat dibuktikan bahwa kesabaran yang sama tidak
diperlihatkan Nike ketika mengimplementasi bagian awal dari
sistem SCM-nya, yakni modul aplikasi demand and supply
forecasting. Daripada menunggu instalasi software i2 sebagai
bagian dari proyek ERP SAP (karena menggunakan strategi
implementasi single instance), Nike dengan tak sabar lebih memilih
menginstal i2 pada awal 1999, sembari menggunakan
sistem legacy (warisan lama)-nya. Jadi, software i2 harus
dikustomisasi untuk bisa dioperasionalkan dengan
sistem legacy. Setidaknya butuh satu menit untuk setiap
kaliinput agar bisa dicatat oleh software lama itu. Dan karena
jumlah produk yang ditangani mencapai puluhan juta, maka sistem
itu sering crash.

Solutions
1. Pada permasalahan pertama, diketahui bahwa permasalahan
terdapat pada proses integrasi, sehingga solusi yang tepat adalah
pengintegrasian ditekankan pada upstream maupun downstream.
2. Dalam permasalahan kedua, Nike Inc. terlalu terburu-buru dalam
pengimplementasian i2s demand planner dengan harapan dapat
menyelesaikan masalah yang sebelumnya dimiliki oleh Nike dengan
27 aplikasi terdahulu. Namun hal tersebut malah membuat
kerugian besar dikarenakan ketidakcocokan software i2s demand
planner dengan SCM sebelumnya. Hal tersebut dapat diatasi
dengan implementasi secara perlahan yang di dalamnya terdapat

proses Unfreezing, yaitu mengubah kebiasaan perusahaan lama

secara perlahan Changing, merupakan masa transisi dari
Unfreezing ke Refreezing dengan cara telah meninggalkan
kebiasaan yang lama Refreezing, merupakan go live dari suatu
perusahaan yaitu terbentuknya kebiasaan perusahaan yang baru.