UNIT 2 ASSIGNMENT

NIKE

ALLEIA CROW

POST UNIVERSITY

BUS 320 SUPPLY CHAIN LOGISTICS MANAGEMENT

MELISSA FISHMAN

9/10/2023
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NIKE

Supply chain management is defined as the design and management of

seamless, value-added processes across organizational boundaries to meet the real

needs of the end customer. Nike currently has the typical supply chain managements in

effect, which consists of distribution from suppliers to factories, which then

connects to warehouses, and lastly to retailers, which helps to reach the customers. To

enhance their customer service, Nike retailers should offer charge sends for customers

who want to purchase items from stores that are unavailable online, from the comfort of

their home. This would help boost the customer experience scores because as they

increase the number of units they are selling, they can engage in a satisfactory and

ultimately memorable experience with the customer.

Control and measurement processes

Quality Control:

The Nike Company currently uses flow charts to depict step-by-step processes

when mapping out ideas for events such as new product launches or holiday traditions,

run (trend charts) to show what items are selling more/better in particular areas and

cause and effect (fishbone diagrams) to show the outcome of the selected reports or

ideas. Continuous improvement is used in the company so that it can continue to grow

and prosper. The use of opinions that customers send during customer service surveys

and their store visits helps keep the company aware of how to become the best in the

retail clothing market. Supplier certification and inspection when the goods are finished

are also used for review to ensure quality service. Nike also implements the Six Sigma

Practices in their routine when assessing the customer service aspect of the company.

Using customer surveys and customer feedback, the company can work on the weak
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areas that can be beneficial. (Planning and Control: Capacity, Inventory, Supply Chain

at Nike Case Solution and Analysis, HBR Case Study Solution & Analysis of Harvard

Case Studies, 2015)

Managing Quality:

Availability: The Nike products are available both within retail stores and online.

Customers can also customize equipment and footwear according to their color or style

specifications, and the effects can be shipped to the customer according to their

preference of delivery and arrival time.

Quality of Design: Nike provides top-of-the-line clothing and footwear that are

comfortable and reliable for the everyday commuter and the energetic athlete. Whether

producing a basketball or running shoe, they strive to meet customers' expectations and

continue to give 100% in doing so. Nike provides expensive, sporty, efficient products

that are stylish and easy to maintain and keep up. In the service area, Nike practices a

30-day policy for online and in-store unwashed, unworn items to be returned or

exchanged to meet the customers' requirements. They also train their employees so

that quick and courteous customer service can be guaranteed or given satisfactorily.

Nike also asks for customer feedback on purchases in-store and online, but only in-

store, offering the customers a chance to voice their opinions and simultaneously earn

discounts. This helps them to stay aware of what customers expect when being

serviced (quality of conformance). Nike currently has quality conformance service in

place, aiming to continue to market and produce reliable products for the customer

when desired. This also helps build the NIKE brand name. (Kotler et al. 165).

Service Process Design Nike's three elements of the service-product bundle.

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Tangible (Explicit Service) -Nike provides customers with various sporting

goods and apparel, which can be worn casually or used athletically. The clothes are

produced in multiple factories and sold by retailers worldwide. (Kotler et al 165).

Psychological (Implicit Service) -The look and feel of Nike's products. The

style type and design that the name brand gives. The personal mindset Nike gives to

the customer knowing that they have a high-quality product. (Kotler et al 165).

Physical (Facilitating Goods)- The clothing or equipment worn or used after

purchasing the items. The shirts, shoes, hats, sporting goods, pants, and all other

accessories Nike produces. (Kotler et al 165).

The cell Nike operates in on the service matrix. Nike would be located right

between Provider Routed and a Co-Routed company on the service because they

operate in mass-produced apparel. Still, they lean closer to a Co-branded company

because it has many styles to offer, including shoes with a customization feature

available. Nike also produces sports apparel, golf clubs, t-shirts, hats, and more. Nike

focuses on one industry but provides a flexible direction for all types of customers—

some types of customer contact Nike encounters and how they respond to it. Nike is a

Low-Contact company; face-to-face interaction is not required. Nike has efficient

processing and standardized products. Some problems Nike may encounter would

involve inventory and demand levels. They then must re-evaluate the demand for a

particular product and change processes based on the new needs of their customers.

They must also keep various up-to-date quality products to keep customers coming

back. Nike uses self-service through the process of shopping and ordering online. It

also allows customers to design and create their own version of a specific pair of shoes.
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These examples show self-service being used by Nike, but most of Nike's business is

not self-service besides these two services. In the Nike retail store, technology is very

much an innovative tool. A computer-generated inventory control system is used to find

various sizes of merchandise in stock so that the sales associate can assist customers

quickly. This is so because the shipment boxes of merchandise are scanned before

processing into the system with a barcode reader after being unloaded from trucks.

Nike also uses focus operations to drive sales within the retail store and online.

Retail stores sometimes offer additional percentage discounts on specific active wear or

footwear to persuade the customer to buy more. Customer service scores are also

boosted along with sales when sales associates hand out mesh bags for the customers

to store their potential buys while browsing in the store. This is so because the customer

feels acknowledged, allowing them to pick up more. Special shipping discounts and

promotions are also offered online for the customer's convenience when the customer

spends a particular amount or buys a specific item. The Nike Company supports their

employees through their internal service quality. Since they value and appreciate their

hardworking and productive employees, their company continues to be one of

satisfaction and positivity. The refreshing and warm workplace environment, a furnished

lounge with many activities to keep employees' breaks well spent, and comfortable

uniforms that are universal for both men and women satisfy the employee. Nike

provided monetary bonuses and awards for employee performance and job recognition.

This helps employees stay happy with their jobs in addition to the company discount

they receive and can share with family and the employee-exclusive stores.
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Nike offers a return service policy of a 30-day refund or exchange with a receipt

of unwashed merchandise if the customer is unsatisfied. Items purchased online can be

returned online or within the store with the online transaction receipt. If the customer

does not possess a ticket and would like to return/exchange an item purchased at a

Nike retail store, they can be issued a store credit for the purchase price of the item.

Customers can also receive price adjustments within 14 days of the receipt date on

items purchased if they go on sale when presenting a purchase receipt at a retail

location.

quantitative data and qualitative outcomes of their customer service performance

Process Selection: Nike uses an assembly line flow. "A linear sequence of

operations characterizes an assembly line flow. The product moves from one step to the

next in a sequential matter from beginning to end." (Operations Management) They also

use a project flow for a small portion of the business. A project flow is used for unique or

creative products. Each unit is made individually and is different than any other unit. So,

for Nike, when an order comes in from the customer, each shoe will be made differently

from others, whether it be the color or style of the shoe. Nike uses a "Make to Stock"

customer order, which provides a fast service to customers from available stock. Make-

to-stock has a standardized product from the producer, not specified by the customer.

"Everything is keyed to producing inventory before actual demand to have proper

products in stock, for when the customers call (Operations Management)." In the make-

to-stock customer order process, products are not always readily available. Customers

can put orders through, but the effects can be on back order, and they will have to wait

until more of the product is produced. They also use "Maketo Order" because some
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customers customize their shoes online, and then Nike must make the orders as they

come in; they will not have them in stock.

Nike falls into the continuous and assembly line cell. This cell comprises order

type, product flow, product variety, market type, and volume. Nike has a large batch, a

sequenced flow of products, a high product variety, a mass market type, and a high

volume. The factors that influence their process selection are the fact that they have a

high volume and standardized product. They must produce a lot of shoes, and the

producers, not the consumers, make the shoes, so they are not made to order. They

are mostly always in stock. Nike has already adopted mass customization methods.

Inventory: Inventory is one of the most critical operations management

responsibilities of any company because it affects the delivery of goods to customers,

which controls the number of products a developed business makes. Nike Inc., a

company that focuses on distributing and selling finished goods, operates in footwear,

apparel, and sporting equipment. Working in various countries and states, the Nike

Company has many retail locations that house their store's stock supply of merchandise

on their grounds, keeping replenishment of materials to meet demands. The inventory

collections include merchandise in different sizes and colors to satisfy customer

preferences during regular shopping occasions and when there is a holiday rush for the

"last minute" and "perfect gift." Corporate offices determine the various points of an

inventory structure, item cost, ordering cost, holding charge, and stock-out costs after

reviewing the store's ability to meet annual profit goals and the store's regional

geography. These headquarters also view records that show statistics of items that are

more popular in sales. This helps to determine the amount of a particular product to
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create a shipment schedule for each store. In this retail market, the demand is

independent because it is influenced by market conditions outside of the control of

operations. In this operation, various shoes, clothing, and sporting equipment materials

are replenished before they run out. This also helps the company from a customer

service aspect because they can deliver a product promptly to each shopper. (Planning

and Control: Capacity, Inventory, Supply Chain at Nike Case Solution and Analysis,

HBR Case Study Solution & Analysis of Harvard Case Studies, 2015)

Filling the orders: Nike also overhauled its supply-chain system, which often left

retailers either desperately awaiting delivery of hot shoes or struggling to get rid of the

duds. The old jerry-built compilation strung together 27 different computer systems

worldwide, most of which couldn't talk with the others. Under Denson's direction, Nike

has spent $500 million to build a new system. The percentage of shoes it makes without

a firm order from a retailer has fallen from 30% to 3%, while the lead time for getting

new sneaker styles to market has been cut to six months from nine. Meanwhile, Nike

has started paying serious attention to its handful of acquisitions, once treated as more

of an afterthought. After buying Cole Haan almost 15 years ago, Nike struggled to add

value to the dress-shoe outfit. But lately, Nike managers have figured out that by giving

their acquired brands some independence, they can achieve better results rather than

forcing Nike's testosterone-laced corporate culture on them. Nike doesn't break out

results for each sub-brand, but the group's sales grew 51% to $1.4 billion last year.

Nike enjoys a strong brand, well-managed distribution processes, and a

compelling product offering. However, with new competitive entrants, better service, and
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lead time, and even fashion brands moving into their market space, supply chain

excellence has been elevated in the past few years and is viewed as a competitive

weapon. Nike's "Just Do It" motto has affected the company's mentality, and the

transformation agenda calls for change. Their new Process Excellence mantra calls for

process innovation (do it differently), continuous improvement (do it better), and

execution discipline (do it right). In support of this philosophy, their transformation

initiative is defined as the five pillars of the supply chain house: achieve delivery

precision through disciplined end-to-end execution, enable category consumer focus w/

multiple supply chains, and speed to market think and act like a retailer, because we are

focused on the customer maintain pull-market through disciplined inventory optimize

cost &infrastructure to drive profitable growth. In meeting the primary objective of

improving customer satisfaction, this supply chain transformation is focused on the

customer - meeting customer product requirements, enhancing customer relationships,

improving requested delivery performance, and reducing claims and cancellations to

lower inventory holding costs. Focused on actual point-of-sale demand, processes are

being transformed from the retail shelf backward to achieve a level of product flow

throughout the supply chain. Demand planning processes are also being redesigned

from the retail perspective, and “retail reality" is incorporated into product design. Their

delivery precision roadmap includes a playbook of prioritized initiatives, with executive

sponsorship, including demand/supply matching, improving sales catalog accuracy,

streamlining distribution center operations, and optimizing processes globally. They

have also created a governance board that sets the strategies, prioritizes the initiatives,

and drives company-wide execution based on standardized procedures and platforms.

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Several overarching principles of Nike's supply chain transformation include focusing on

the vital few, prioritizing investments aligned with business strategy and return,

simplifying end-to-end, driving out waste & complexity from the process first, then

enabling avoiding customization: standardizing solutions to improve processes, copy-

pasting companywide: replicate best practices across business units, regions, and

brands. Lead the change: invest in project & transition management, accelerate the

pace, respond quickly to new business needs, and deliver business results: finish what

we start through business benefits.

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References

Planning and control: capacity, inventory, supply chain at Nike Case Solution And Analysis,

HBR Case Study Solution & Analysis of Harvard Case Studies. (2015).

Thecasesolutions.com. https://www.thecasesolutions.com/planning-and-control-capacity-

inventory-supply-chain-at-nike-25490

https://docplayer.net/101275785-Quality-control-1-quality-control-nike-inc-
quality-control-nike-inc-introduction.html
http://panmore.com/nike-inc-operations-management-10-decisions-areas-
productivity

Kotler Porter, Keller Kevin Lane and Suzan Burton. Marketing Management. Melbourne:

Pearson/Prentice-Hall, 2008.
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