Nike's Procurement And Supply Chain Management Essay. (55 Characters)

Discuss about the Procurement and Supply Chain Management for Nike.

The mission of Nike is ensuring that every athlete in the world is inspired and acts in an innovative manner while performing in the field.

The vision statement of the company is to assist Nike Incorporated and the customers to thrive in a sustainable environment. The sustainable economy is aimed at creating a balance between profit, people and planet.

The strategic goal of Nike is to believe in the partnership that has been formed and provide value to work with every stakeholder in a cordial manner by sharing the best practices (Nike.com, 2018). 

The procurement department of Nike needs to manage the different types of footwear that are manufactured by Nike. The key products of the company are the various types of footwear that are manufactured. These need to be managed so that the company can conduct itself properly in the competitive environment.

The key suppliers of Nike include Pou Chen Corporation, PT Pan Brothers TBK, Fulgent Sun International Holding Company and so on. These suppliers are famous worldwide and serve the company in every geographic location. According to Fernie and Sparks (2014), Nike has a worldwide reputation and the company is spread in every geographical dispersion.

Currently, the supply market of Nike has lost its charm in the international market. Issues have been seen in some of the shoes that the company manufactures have had certain wear and tear issues (Nike.com, 2018). Sourcing services or items can help Nike to analyse its cost structure and remain competitive in the small and large business markets.

The suppliers of Nike are selected as per the cost it provides for selling the products. The reputation of the suppliers along with its loyalty towards the company plays a major role in being selected for supplying shoes to Nike. The development practises and programs of Nike include analysing the competitors with which the suppliers are involved.

Some of the challenges faced by Nike include lack of diligence, cost and ability to address the immediate needs of the customers. However, the opportunities of Nike include gaining industry benefit and improve its resilience. 

The market in which Nike sells its products is a wide area, as the company is reputed all over the world. Nike has its branches in every country and accordingly the geographical dispersion of the company is spread in various areas in the world. This is important for the company as it provides global recognition and scope of further expansion.

Findings of supply analysis

The demand forecasting technique adopted by Nike is the survey method. Based on the analysis of the market and the responses of the customers, Nike can make future strategies that can address the drawbacks of the company. According to Beske and Seuring (2014), Nike uses a different approach for the sales market. This can help the company cross-examine the responses of the customers by comparing the techniques used.

Nike uses the Just In Time approach to managing the inventory. This assists the company in gaining the products required at the right time. However, one drawback to this technique is that failure of the suppliers may pose problems for the company in meeting its target. The application of this particular strategy needs to be accurate so that Nike does not lose customers in the business market.

The challenges faced by Nike over its inventory management are that the company despite its high revenue is caught up in spending the cash properly. This can be a huge challenge as spending cash on inventory may prevent the company to spend more on other important aspects (Brindley, 2017).

The bullwhip effect is considered as a distribution channel by which the supply chain inefficiencies can be determined (Padmanabhan et al., 2009). The causes and remedies of the bullwhip effect for Nike may include analysing the shift in the demand of customers due to the supply chain of the company. This can influence the organisation by enhancing the supply chain capabilities and ensuring that the supply chain is brought about keeping in mind the remedial factors of the company.

As stated by Stevenson and Sum (2015) information technology has a huge impact on the success of business in the modern organisation. Hence, the information technology tool that can be used by Nike for improving its supply chain includes engaging in conference method online. This can help in increasing the supply chain management of Nike as the managers can demonstrate the manner in which supply chain need to be conducted by the organisation. Thus, the capabilities of the supply chain are enhanced by the application of this information technology tool.

Nike can improve the collaboration with the suppliers and the customers by starting with the basics. The company can form foundations with both the stakeholders and gain opportunities for improvement and expansion. However, certain challenges may be faced in getting to influence every people about the products offered by the company. This can also have a positive impact on the supply chain of the company as the collaboration with the suppliers can help in improving the sales of products. 

Findings of operations analysis

Nike follows a partnership with the suppliers and it has been seen that the company has its inventory management system. The key suppliers of the company are some of the best suppliers in the footwear market and the application of technology allows the company to excel in the modern supply chain management. It has also been seen that the application of the Just In Time for the company may prove as a risky strategy for the company.

Pagell and Wu (2017) contributed to the supply chain management of Nike by stating that based on the 9-step framework; the level of integration of Nike is placed in the third level. The third level of the framework can help Nike validate the baseline of the supply chain model. The two levels help in analysing the different possibilities that Nike may achieve in order to gain a competitive advantage in the business market. At the same time, the Triple-A approach can also be used for analysing the effectiveness.

The analysis of the Triple-A model shows that Nike is agile as it takes only 72-96 hours for the delivery of products. It has managed to adapt with the change in time and have been the pioneer of adapting to the social norms of business (Nike.com, 2018). At the same time, Nike has aligned itself with the third party logistics to ensure proper delivery of products on time. These three approaches have helped in improving the social status of Nike and have made it in to a global name in the world.

Cratty (2018) stated that in the era of sustainability, it is necessary that every company ensure that the environment is protected. In the case of Nike, the company has focused its activities on the sustainable delivery of the products. This includes identifying the best possible way by which the organisation can manufacture products. The manufacturing of shoes emits fuels and smog and at the same time, the slaughtering of animals for the manufacturing of the shoes is unsustainable. Nike ensures that the sustainability of the company can help it to maintain its position in the market and have managed to provide a strong culture of safety for the people (Pagell & Wu, 2009).

The application of the model proposed by Triggers, it could be said that Nike is at the signal factor. The three factors of Trigger’s model consist of the facilitator, spark and signal. In the words of Seuring and Müller (2008) each of the three factors defines two characteristics based on which a product or company is perceived. In the case of Nike, the signal factor denotes the high rate of motivation for the employees and a high rate of ability to pursue competitiveness in the organisations. Therefore, the internal and external factors of Nike can be analysed by analysing the model. The high motivation factor indicates satisfaction among employees, which in turn enhances the abilities of the employees. 

Findings of information analysis

The supply chain analysis of Nike sheds light on the fact that the company is in a partnership with the suppliers. The place or region of the company provides for developing a partnership with the suppliers and ensure that the customer satisfaction is met. In this regard, it can be said that Nike ensures that the products manufactured are delivered to the suppliers efficiently from which the further supply of materials is done. Each of the suppliers of Nike is involved in the supply chain and the products are delivered from the place of interception of the suppliers (Sunhowe & Musgrave, 2017).

At the same time, it is seen that Nike maintains a heavy collaboration with the customers. This can help the company understand their needs and ensure that the products are manufactured based on the requirements of the customers. Thus, with the application of the survey method of forecasting the demand, Nike can understand the design the products based on the buying behaviour of the customers. This can help the company to avoid any debacle that occurred during the manufacturing of Jersey shoes (Nike.com, 2018). Hence, to analyse the supply chain the application of dynamic assignment model can be used.

Gunn (2015) stated that in order to succeed in the current market, it is necessary that organisations maintain two things. One is the continuous improvement of the products and services and the other is aligning the leaders and managers with the strategies. This is considered as the dynamic alignment based on which companies such as Nike get to align their supply chain management. The dynamic alignment model consists of four parts that are applied to understand the supply chain. These parts include an architect, enable, unlock and elevate. According to Gattorna (2015), the dynamic alignment is necessary for Nike to understand the level of interaction it has with the partners.

The analysis of the dynamic alignment suggests that Nike follows all the four parts required for effective supply chain management. The reason behind this is that Nike is an architect in terms of strategic planning and establishing clear organisational goals. The accountabilities of the company help in driving the performance of the company. Christopher, Harrison and van Hoek (2016) stated that the company enables employees to continue with the strategy through flexibility and participative systems. This supports evidence of the fact that the Nike is a high motivator for the employees and is situated at the top of the model proposed by Trigger. At the same time, the company can unlock workforce potential and sustain the ability of the employees in an appropriate manner.

Findings of integration analysis

Lee, Padmanabhan and Whang (2015) stated that the cause and remedy of the bullwhip effect suggest that the enthusiasm of the employees of Nike ensures that the leaders meet the required achievement of the company. This can help in elevating the leadership and ensure that the leaders value the model that promotes a culture driven by a partnership. The partnership of the company with the suppliers and customers suggest that Nike belongs to a mid-way hierarchical group that focuses on the effectiveness of the supply chain management. Thus, a process of improvement can be suggested so that Nike can maintain its stronghold in the business market.

Figure: Dynamic alignment model

(Source: Jabbarzadeh, Fahimnia & Seuring, 2014)

Some of the challenges faced by Nike in its supply chain include trying to foster a society that develops a strong culture. The cultural foundation of the company is such that it can help in maintaining the values and ensure that Nike develops a sustainable business practice. The focus on sustainability in terms of delivering the products is a huge step that has been taken by the company. As such, it can be said that the certain improvement process can be considered for the development of the company.

The strategies that have been adopted by Nike can help the company to continue its effectiveness in the market. As stated by Carbonara and Pellegrino (2017) the improvement program of the company is that the products manufactured by Nike need to be based on the sustainability practices and the manner in which these practices can be utilised. The manufacturing of the shoes emit fluids that can be harmful to the community. Thus, the company need to tone down such a method to ensure that the sustainability is maintained. This can be done by maintaining supply chain management that can assist Nike to understand the effectiveness of the sustainability development (Montabon, Pagell & Wu, 2016).

At the same time, Nike needs to ensure that the company have enough opportunities to continue its production in the industry and reduce the flaws. Benchmarking can be considered as an option to understand the manner in which Nike can continue effective manufacturing of products without having to pollute the environment.

The analysis of the supply chain management suggests that the improvement program may help Nike be a successful leader in the business market. Lee et al. (2014) stated that Nike needs to ensure that major changes are not made that might hamper its progress in the business market. Hence, it is necessary that Nike keep in mind the mission, vision and strategic goals so that the company can attain its improved program by maintaining the effectiveness of its goals. The strategic goals of the company can be attained by developing a new strategic policy that can help Nike to continue with sustainable development in the business.

Findings of sustainability analysis

Ntabe et al. (2015) also opined that the change program could help Nike to attain the vision by ensuring that the customers remain aware of the type of product sold by the company. The improvement program can help Nike to improve its inventory management and likewise, Nike can manipulate the mission and vision as per the need of the organisation.

Wang and Disney (2016) stated that the benchmarking process could help Nike to analyse the competitors and develop the products better than the competitors. This can help Nike to develop strategies required for implementing new systems in the organisation and ensure that the strategic goals are aligned with the mission and vision.

Conclusion

The conclusion can be made based on the analysis of the supply chain management followed by Nike. It has been seen that the supply chain management is one of the most important aspects that every business organisation need to keep in mind. In the case of Nike, the company boasts superiority in terms of maintaining a proper supply chain management. Hence, it needs to continue with the strategic development and ensure that the vision of the company is attained. This can help Nike to continue its dominance in the footwear industry. 

Reference

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