Essay: Nike's Supply Chain Management Case Study.

Discuss about the Supply Chain Management Case Study of Nike.

In the current scenario of competitive marketing supply chain management has a significant importance and requires a serious research, as the companies facing challenges with the requirement to meet the continuously increasing expectations of customers at a profitable cost. In practical, some companies based on supply chain management, (e.g., Nike, Samsung, Adidas, etc.) have been using a completely different tool for the performance management to support their supply chain management.

This case study shows the implementation of supply chain management system in the process to meet the expectations of customers maintaining the growth rate of company in terms of profit as well. NIKE is one of the brands which need no introduction. The founder of Nike, “Phil Knight” made his first ever shoes with a waffle iron, later he named it “a tiny operation of my mother’s laundry room”. By the year of 1992 Nike had become a company of $4.5 billion turnover.

Name of the company “NIKE” was first introduced in the year of 1972, and its sales had grown continuously as it was the new public enthusiasm for their fitness. In 1986 Reebok took over to the US market at the top of leadership board of US market. Accepting its defeat, NIKE got reinvented with the help sponsorships of famous sports stars like Michael Jordan, Andre Agassi and Eric Cantina to raise its position as a producer of athletic wear for top performances (Chibba & Rundquist, 2018).

The supply map is the overview of the planning for a product from its designing part to all over its marketing and sale in the market. Market works on the fundamental principle of demand and supply. Therefore, for the supply of any product there must a demand for the product. Process mapping is an overview of this complete cycle demand generation to the supply of the product. This map shows the overlook of systematic preferences to be followed during the whole process (Fourie & Umeh, 2017). 

Supply chai structure mainly consist of the three different elements which are as

• Physical Flow of the Goods.
• Information Management.
• Organisational Structure.

Physical flow of goods:

In the description of complete supply chain process movement of the goods with in the chain is most important to meet the timings of the production. A slightly wrong movement of the goods can affect the entire supply chain and causes a lot of troubles regarding time line targets. According to the given case study it is very clear that the complete timing of the delivery of product depends in the right movement of the goods throughout the complete cycle (Sreenivas & Srinivas, 2018).

Situation Analysis

Information management:

According to the case study, it is clear that the inter-organisational communication is much needed to enhance the product supply process. In the given case study to increase the company’s market internationally, information about the product demand and its growth was the essential tool to enhance the entire process of supply chain management. Information management is the process of collecting the data and utilising it for the analysis of possible market growth in the respective process. Given case study shows the importance of information to forecast the market growth in European market. This analysis also helps the company to plan a strategic plan to achieve the target forecasted in the study (Chen & Paulraj, 2018).

Organisational structures

The term in organisational structure stands for the elements on an entity and the way they are linked with each other. In the given case study this terms defines by the way NIKE communicate its sub units in different countries to establish its market in new countries. The case study describes how the market analysis done by the previously established subunits of the company helps to establish the Nike market in European countries. The establishment of the European market of Nike was done with the help of other established markets by the company on different countries (Roh, 2018).

Supply chain performance can be described in three main elements of it.

• Overall performance of supply chain.
• Relative performance.
• Performance of individual logistics functions.

Overall performance of supply chain:

In the given case study the overall performance of the supply chain system can be seen by the market growth of the company all around the world as an organisation. Overall performance of an organisation defines by the total growth of the market including all the sub units of organisation in different countries. Nike had a great overall growth the year of 1992 in its early stage. This growth was the growth of Nike individually as an organisation.

Relative performance:

In the case study relative performance of Nike can be seen in different years. Relative performance can be irrespective to other organisation or in different financial year. The case study states that in the year of 1986 the relative growth of Nike was way less than Reebok and so on Reebok overtook the market that particular year. Similarly in the year 1992 Nike had an exception growth related to previous few years and overtook the market again. This growth can be defined in the comparison of different organisation as well as the company’s individual growth with reference to the previous years (Brito et al., 2010).

Supply Chain Performance

Performance of individual logistics function:

The case study shows that in the forecasting of company’s growth in the year of1997was different of two different products. This study shows that different products can have their individual growth or stagnation regardless the other product (Brito et al., 2010).

Above charts show the country wise sales of the company for the two major products of the company. It shows that markets of France, Germany, and UK, with 68% of footwear and 77% of apparel by volume, dominate in the year of 1992. From all this data, total footwear sale was forecast to achieve a target of 31 million pairs out of this a total of 62% would be in the market of previously dominating countries.

Business context of any supply chain system deals with the strategies of marketing the product. The objective of marketing strategic plan can be focused internally or externally.

Internal policies- corporate & marketing strategy:

According to the case study Nike requires to analyse its internal policies to create a marketing strategy. In internal policies are made for the benefit of the company in the long term. Internal policies are important to create a brand value of organisation. These policies affect the entire marketing strategies and these are the policies which help in the process of creating a brand value of company (Habib, 2014).

External business environment;

In the given case study, in the year of 1986, the marketing strategy of Nike was not effecting the environment out there in the market. Therefore, in the time period on 1986-1991 company changed its strategy to recreate its market in the major countries (Kenneth et al., 2012).

During the planning for supply chain management there comes a lot of issues and problems arises in process of planning. In order to create an effective management system organisation needs to categories the issues and then priorities the categorised.

Categorise

In order to over-come the issues, categorising of the issues is must. Company need to identify the issues and categorise them in a right way to minimise them in a systematic way. In the give case study Nike had categories the issues in its supply chain system to resolve them in an effective way and implemented the necessary execution to overcome these (Kampstra et al., 2018).

Priorities

Once issues got categorised, they need to be priorities to minimize the time of compilation and execution of their alternatives. Issues affecting the most market of a product must come first in the priority list. This makes the plan effective to execute.

The Business Context

After prioritising the issues now there comes the process of generating the solutions for issues. For the solution of issues organisation has to perform this activity in two stages discussed as follows

• Brainstorm ideas.
• Select two realistic alternatives and evaluate.

Brainstorm ideas

In order to resolve the issues company need some really creative ideas from the think tank of the company. The think tank is responsible to provide some effective ideas for the issues. This task is so important that sometimes organisations have their separate department for these tasks.

Once the company comes up with some alternatives, it has to pick any two realistic ideas which are practically possible. Now company cannot apply two alternatives at a time so both the alternative need to be evaluated for the profit of company.

Description

According to the study once the company identify the appropriate solution for the problems raised in the supply chain system a complete description is required in order to understand the issue and its solution before its implementation. Only after complete understanding of the alternative, an effective implementation is possible (Habib, 2014).

Justification

The alternative of any issue must be justified to be the best solution. Justification of any alternative is necessary to minimize the efforts of company for its implementation as well as to get the maximum possible profit for the company.

Implementation

Implementation of the appropriate alternatives is a complete process followed in three steps

• Timing

In the process of implementation of any alternative organisation need to get some resources to meet the requirements of the alternative. These are the raw material resources for the product including some human resources if any needed. A proper resourcing is necessary to star the production or to overcome the issues in the supply chain system.

Once the resources are done the effectiveness of an alternative depends on the timing of operation needed to be performed on the solutions. According to the case study of Nike it is very clear that all the issues related to the downfall of the company’s market needed to be resolved in a particular time period to regain its market value (Sharma et al., 2012).

Monitoring of the implementation process requires proper allocation of resources and providing a routine in the service training activities. Monitoring will be considered effective if the regular feedback is provided and the results of all these feedbacks are applied on a routine basis (Health, 2015).

In 1992 Nike decided to something new in Europe and established its own distributers there. This makes company to reach over $1 billion of market in Europe. A logistics professional with lot of experience “Roger Tragesser” was sent to Europe to analyse the European logistics market of Nike. After meetings with consultants in Europe, Roger came up to rethink for Nike’s European logistics from the scratch. Then he made a full process map for the European market of Nike.

Conclusion

In this report we have seen the importance of supply chain management in different operations of an organisation through the given case study of Nike. The case study helped us to develop an understanding in the complete process of the supply chain system. The analysis team of Nike collected all the data for the expected sale of the year 1992 and also forecasts for 1997. In this forecasting they represented a doubling the market around $2 billion of sale. All the analysis and implementation of supply chain system effectively made the company to recover its market in the major countries. Therefore, it can be concluded from the above report that implementation of supply chain management is an important tool to establish the market value for an organisation.

References 

Brito, M.P.d., Erwin, A. & Laan, V.d., 2010. Supply Chain Management and Sustainability: Procrastinating Interation in Manistream Research. [Online] Available at: https://www.mdpi.com/2071-1050/2/4/859/htm.

Chen, I.J. & Paulraj, A., 2018. The Role of Information Technology in Supply Chain Integration. [Online] Available at: https://pdfs.semanticscholar.org/dbf6/740817d1e3a5865eeb9f8697594dcb5d9bcb.pdf.

Chibba, A. & Rundquist, J., 2018. Mapping Flows - An Analysis of the Information Flows withih the Integrsted Supply Chain. In 16th Annual Conference for Nordic Researchers in Logistics. Sweden, 2018.

Fourie, C.J. & Umeh, N.E., 2017. Applications of Lean Tools in the Supplyn Chain of A Maintinance Environment. South African Journal of Industrial Engineering, 28(1), pp.176-89.

Habib, M., 2014. Supply Chain Management (SCM): Its Future Implecations. Open Journal of Social Sciences., pp.238-46.

Health, M.o., 2015. Importance of Supply Chain Monitoring and Supervision at DHMT and SDP Levels. Bostwana: Ministry of Health.

Kampstra, R.P., Ashayeri, J. & Gattorna, J.L., 2018. Realities of Supply Shain Collaboration. The INternational Journal of Logistics Management, pp.1-15.

Kenneth , W.G.J., Whitten, D. & Inman, R.A., 2012. Aligning marketing strategies throughout the supply chain to enhance performance. Industrial Marketing Management, pp.1008-18.

Roh, J.A., 2018. The Supply Chain Management Organisation within The Global Firm: A Structural Change Perspective. [Online] Available at: https://www.google.co.in/search?q=The+Supply+Chain+Management+Organisation+within+The+Global+Firm%3A+A+Structural+Change+Perspective.&rlz=1C1CHBF_enIN788IN789&oq=The+Supply+Chain+Management+Organisation+within+The+Global+Firm%3A+A+Structural+Change+Perspe.

Sharma, A., Garg, D. & Agarwal, A., 2012. Quality Management in Supply Chains: The Litrature Review. International Journal for Quality Research., pp.193-206.

Sreenivas, M. & Srinivas, T., 2018. The Role of TRansportation in Logistics Chain. [Online] Available at: https://www.siam.org/journals/plagiary/1814.pdf.