Nike's Supply Chain Management: Essay On Production Planning, MRP System, And Demand Forecasting.

Key Flows of Supply Chain Management of Nike

Question:

Discuss about the Innovation Diffusion of Successive Generations.

The report focuses on the supply chain management of the Nike. It explains that how the company is using key flows of supply chain management to meet long-term objectives and goals within the organization. It describes production planning process and MRP system of the Nike. Further, it also explains the significance of the demand planning and forecasting to maintain a proper stock in near future (Qrunfleh & Tarafdar, 2014).

Nike Inc. is an American multinational company which is engaged in the development, design, manufacturing of footwear, equipment, accessories, apparel, and services. It’s headquartered is located in Washington, Oregon United States. It is one of the biggest suppliers of the apparel and athletic shoes and largest manufacturer of sports equipment. The company is increasing and enhancing its revenue and profit day by day. There are approx 62,600 employees employed in the company. The firm was founded on 25 January 1964. The main aim of the Nike is to achieve the long-term mission and vision of the firm by using effective and unique marketing strategies within the organization. The other objective of the firm is to increase and enhance the profit of the shareholders around the world. Nike is one of the biggest and well-known brands in the world (Swink, Melnyk, Cooper and Hartley, 2014).

A supply chain is a system of the people, organization, information, activities, and resources involved in moving a product, goods, and service from supplier to customer in the global market. Supply chain management helps to improve the customer relationship in the universal market. Through effective and unique supply chain management, the firm is able to gain the competitive advantages in the global market. There are various key flows of the supply chain management which have been described as below (Parmigiani, Klassen & Russo, 2011).

The product flow of the Nike is very good and unique. The production flow also includes the packaging and sample services. The product flow includes the movement and transfer of goods and products from suppliers to the customers. The product flow also includes the rejection and returns of the flow within the organization. The suppliers, distributors, wholesaler, manufacturer, consumers, and retailers include in the production flow. Nike Inc. is a growth company which looks for team members to explore and expand the business activities globally. The company has committed to employing a diverse labor force in the organization. A typical production flow system is used by the company to provide various athletic and sports products to the customers around the world. Along with this, it uses effective and unique strategies to reach its target audience globally.  In addition, it focuses on the supply strategies to reduce the prices of the products and it can also help to provide the products at appropriate prices. In addition, the firm uses cross docking techniques and methods in production flow to increase the revenue in the global market (Ross, 2013).

Production Planning Process and MRP System of Nike

The management information system is used by the Nike to provide several kinds of information to the customers in the market. The company uses various types of software to analyze and evaluate the data. The main aim of the information flow is to resolve the problems and queries of the customers. The company provides useful and appropriate information and knowledge by using of information system within the organization. Further, information system helps to collect and gather the feedback and reviews from the customers related to the Nike products and services around the world. Along with this, Nike uses effective technologies to maintain proper coordination and cooperation with customers in the world. Therefore, information flow plays a vital and integral role to attain the long-term success and growth within the organization (Tang, & Musa, 2011).

The company also maintains adequate and appropriate cash flow within the organization. To manage the cash flow, the company focuses on the cash payables and cash receivables effectively and wisely. Along with this, the firm also collects money from customers. The company is trying to increase the sale of the athletic products and apparel to attain the long-term vision and mission of the firm. It will also help to increase the cash flow of the Nike. Before buying the products of the Nike, the customer checks and evaluates the prices and quality of the products. Further, the firm has also extended the payment cycle period of the Nike. Gradually, the cash flow of the Nike is reducing day by day (Seuring, 2013).

Return flow is used by the Nike to reduce the risks and challenges of the market. The company uses return and reverse logistic technologies and methods to manage and control the return flow of the Nike products in the world. When the company is not able to produce the products as per the requirement and expectations of the consumers then the company have to return the products to the producer and stores. Further, the firm returns damage and defective products to the stores. In this way, the company shows loyalty and faith at the workplace to increase the number of customers globally (Swink, Melnyk,  Cooper & Hartley, 2014).

It has been recommended that Nike should improve the key flows supply chain management system to manage and control the various activities effectively and wisely. The company must promote information communication and technology system to maintain reciprocal cooperation with customers in the market. Along with this, return flow and cash flow must be managed and evaluated by the Nike to maximize the profit of the firm (Soosay, Fearne &Varsei, 2014).

Demand Forecasting and Planning in Nike

The company manufactures its products in more than 600 factories with an effective and unique workforce in approx 46 countries. Nike follows vertically integrated model for producing the apparel and footwear. Along with this, transformation process can be used by the company. In addition, the company uses effective production planning strategy to do effective and efficient planning for producing new products in the market. In production planning process, the company needs to focus on the material, stocks, location and period of production etc. The company makes effective plans to understand and evaluate the future outcomes and results (Ranganathan, Teo & Dhaliwal, 2011). The main aim of the production planning process is to predict the types of resources which are required in an organization for manufacturing the products worldwide. The four major activities involved in production planning processes such as sequencing, loading, scheduling, control, and monitoring. Along with this, the company needs to look after the machines, and material to gain and maximize the profit of the Nike. Apart from this, the company also focuses on the marketing mix strategy to overcome on the competitors around the world. Furthermore, the production planning process also includes packaging and annual sales and operation process of the Nike. Through effective and unique production planning process, the company is able to produce a variety of the shoe with different color and designs to attain long-term goals and targets of the company. During production planning process, Nike focuses on the needs and requirements of the children’s and women (Kreng & Wang, 2013).

The material requirement planning system and process play a vital role in Nike. It provides various types of information about the manufacturing needs and requirements as well as information about the inventory level. Mainly, material requirement planning process focuses on the utilizing inventory. MRP is the scheduling, planning and inventory control system to manage and control the manufacturing process and procedure within the organization. MRP is the computer-based system which is used by the Nike to coordinate and communicate manufacturing, purchasing, and delivery within the organization. Apart from this, the company uses bills of material in the material requirement planning process to produce the specific goods and products at reasonable prices in the organization. A bill of material includes the data and information related to the raw material and suppliers in the market (Christopher, Christopher, Holweg & Holweg, 2017).

Although effective material requirement planning process is used by the company still some improvements are needed within the organization to accomplish the goals and objectives of the Nike. The company should maintain effective ERP system within the organization. Effective communication and collaboration must be maintained by the firm to expand and explore the business activities globally. Furthermore, the firm should improve the production process and MRP system to maintain a good image in the world. The firm must also an effective advertisement and promotional strategies to promote the athletic products globally. In this way, the company can improve and enhance the level of satisfaction of the consumers (Chen & Notteboom, 2012).

Conclusion

The supply chain forecasting helps to maintain a balance between supply and demand of customers within the organization. Nike uses supply chain forecasting technique to estimate the demand and supply of the athletic products and apparel globally (Boldt, Vinayagamoorthy, Winder, Schnittger, Ekran, Mukkamala & Vatrapu, 2016).

Demand planning and demand forecasting are the important concepts of the supply chain management. Technology plays an integral role to develop and enhance the supply chain within the organization. The company uses the effective information system to gather the information related to the stores and shops to sell the products of the Nike. Further, the company uses various methods to evaluate and analyze the demand of the customers such as survey methods, Delphi methods, and market experiment method. Along with this qualitative and quantitative approaches are used by the company to determine the demand of the customers within the organization. In addition, data warehousing model is implemented by the company to estimate the demand and behavior of the consumers. Nike also uses the forecasting evaluation and accuracy techniques and methods to analyze and evaluate the future demand of the customers and to find out the accuracy of the records which have been maintained by the company. Furthermore, it uses mean squared error, mean deviation and absolute mean deviation methods to identify and evaluate the demand of the consumers. In this way, the company is able to identify and evaluate the demand of the target market in the world. The company makes effective planning and forecasting to measure the demand and requirements of the customers. The employees focus on the feedbacks which are received from the customers to improve the quality and design of the products (Sabbaghi & Sabbaghi, 2011).

Now it recommended that the Nike must use the CPFR (collaborative, planning, forecasting, and replenishment) policies and strategies to meet the long-term targets worldwide. Along with this, the company must use the ERP system and MRP system within the organization to ensure the maximum utilization of resources in the organization. Apart from this, the company should maintain a good and reciprocal relationship with suppliers, vendors, customers, and manufacturer etc to enhance and increase the growth and success of the company. Furthermore, Nike should motivate and encourage employees to do work effectively and efficiently for increasing the productivity and revenue of the company. The company must use effective inventory management to maintain an appropriate inventory level within the organization (Kang, 2015). 

Conclusion

On the above discussion, it has been evaluated that Nike plays a vital and significant role in order to attain the long-term success and growth within the organization. Furthermore, the company uses effective supply chain management and ERP system to fulfill the requirements and desires of the customers in the organization. In addition, effective and successful production planning process and MRP system are used by the company in order to beat the competitors and to maintain sustainability within the organization. Apart from this, the company is also improving its demand forecasting model to increase the sales of the customers within the organization. Nike uses various key flows of the supply chain management to manage and handle the activities of the business. Nike must improve its strategies, plans, and policies to gain competitive advantages in the global market (Acar & Gardner, 2012).

References

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