Operational and supply chain management

Of Nike Inc.
Poster Presentation
Award name: Rashika Raika Magar

Student ID: 7271295

Module name : Operational Logistic and management (OLM)

Module Tutor: Krishna Raj Bhandari

 Operation Logistic and supply chain management
Introduction
Nike is an American multinational corporation, that is engaged in
the development, globally selling and marketing of apparel,
accessories, footwear, equipment and services (Deuex, n.d). The
company lies in Portland metropolitan area which is headquarter
near Beawtor, Oregon (Deuex, n.d). The company was founded
by Bill Bowerwon as blue-Ribbon sports, and his former student
Phil Knight in 1964 ( Britannica, 2020). In 1966 they established
their first retail outlet and launched the Nike brand shoe in 1972.
In the early 21st centaury Nike had distributors and retail outlets
in more than 170 countries, and its logo curved check mark
which is called “swoosh” was recognized globally ( Britannica,
2018). It is the world largest supplier of apparel, athletic shoes
and crucial manufacturer of sports equipment. In the fiscal year
of 2020, the company had a revenue on excess of US $37.4
billion and it employed 76,700 people worldwide.
Supply Chain
According to article posted by Clenchain in 2019, Nike’s footwear
components were supplied in 12 countries by 112 different
factories, with no factory accounting for more than 10% of
branded footwear. Nike maintains frequent communication with
its suppliers, providing supports through training and tools to
initiate suppliers in its (TQM) Total quality management approach
and Lean management framework ( Wendy, 2020).
In 2019 Nike sourced 94% of its materials and products from
sustainably run factories and had its target of 100% by the end of
2020. the company has declined no of factories to reduce
overtime on their workers down to less than 25% ( Wendy, 2020).
Nike supply chain function around 3 core principle they are:
1. Outsourcing : save cost
2. Diversification: minimum risk
3. CSR: Manage impact on the world it works in
Of Nike. Inc
As one of the most recognizable brands all over the world, Nike sells each
year in a highly complex supply chain. Nikes dynamic proposal to supply
chain management has been attributed by many as contributor to its
exceptional success ( Wendy, 2020).
• Raw Material:
of theNike doesn’t own any factories. The company outsources its
manufacturing to third parties. Most of the raw materials of Nike supply
chain are sources in the manufacturing host country by independent
contractors (Singh,2019). Nike is one of the pioneers manufacturing
diversification and outsourcing strategy ( Singh, 2019).
• Manufacturing:
Nike’s footwear is manufactured overseas by independent contract
manufacturers that frequently operates in numerous factories. 334 apparel
factories operating in 36 countries supplied Nike in the fiscal year of 2019.
Thailand, Vietnam and china made about 10%, 22%, and 27% respectively
( Singh, 2019).
• Distribution centers:
The company has 6 primary distribution center in the US. In particularly four are
located in Tennessee and Memphis. Among those 4 two are leased and two are
owned. The other two are located in Indiana, Indianapolis and Tennessee, Dayton
(Singh, 2019). Nike equipment product and branded apparel ship from a
distribution center in Foothill Ranch, California. At the end of the fiscal year 2019,
Nike had 67 distribution centers outside the US.( Singh, 2019)
Sourcing Manufacturing Warehousing Distribution Return
Operational Challenges
• Nike is entirely dependent on this contract manufacturer for its
product. If the manufacturer ships defective product, didn’t ship
product at time, or go out of business, Nike could have no more
inventory left. This might describe why Nike depends on
hundreds of factories expand across many countries. The
incorporation executives are trying to decline the risk of the
supply chain disarrangement by depending on a broad base of
suppliers. (McLaughin,2020).
• An additional challenge of Nike Inc is that the original raw
material i.e., rubber for Nikes shoes is mainly cultivated in
southeast Asia. After that raw materials must be shipped to
factories, with the resulting product being shifted to seaports for
shipping. This makes the company extremely dependent upon
southeast Asia for its product, and a serious disturbance
example Tsunami could shipwreck havoc on Nike’s supply chain
( McLaugin, 2020).
• \
• Nike moved their supply chains in the middle of the pandemic to
serve their consumers at home after their institutions and offices
were force to close (Silver, 2021). Nikes physical store were
shut down in Europe, America and many Asian countries
( excluding china) and other regions during the quarter. The
digital sales incremented by 79% however, it brought only 30%
of Nikes total business ( Silver, 2021).
Recommendation
1. Embrace technology:
Disrupt market with unique innovations paving their smart product
lines to enhance people’s life digitally. E.g.: Virtual showroom.
2. Manufacturing process in home country:
Convenient, save time and cost during inconvenience situation like
lockdown depriving to be dependent on other countries (and
hinder the business).
 References
• Britannica, ( 2018). Nike. Inc American company. [Online] Available
from:https://www.britannica.com/topic/Nike-Inc [ Accessed April 9, 2018].
• Ye, Wang. (2020). How does nike supply chain work? [Online] Available form:
https://www.cleanchain.com/blog/how-does-nikes-supply-chain-work/ [ Accessed May 12, 2020].
• Pratap, R. ( 2018). Nike supply chain management. [Online] Available from:
https://notesmatic.com/2018/02/nike-supply-chain-management/ [ Accessed Feb 22, 2018].
• Singh, A. (2019). Nike manufacturing and supply chain strategies. [Online] Available from:
https://marketrealist.com/2019/10/nike-manufacturing-and-supply-chain-strategies/ [ Accessed Oct
17, 2019].
• McLaughin, M. (2020). Nike the challenges of global supply chain. [Online] Available from:
https://www.edspira.com/nike-the-challenges-of-a-global-supply-chain/
• Freddie, P. (2020). Nike to clean up supply chaina by 2020. [Online] Available from:
https://www.supplychaindigital.com/supply-chain-risk-management/nike-clean-supply-chain-2020
[ accessed Aug 23, 2020].