Nike Inc.’s Supply Chain in Footwear Industry

Introduction

Supply chain management is one of the core business processes used by leading organizations in the current unpredictable global market to balance environmental impacts, services and cost factors. One such company with lean management is Nike Inc. It has factored solutions that impact on sales and distribution of its footwear products among other real time logistic benefits. Lan and Unhelkar (2006, p. 173) indicate that through leveraging its logistics platform, a company can be effective in excelling to greater heights in footwear products.

A brief overview of Nike Inc.

Nike Inc. is a leading producer, marketer and designer of authentic equipment, apparel, footwear and accessories related to fitness and variety of sports activities (Collier & Evans 2011). The company is based in Beaverton, Ore. It produces the world’s best hockey equipment from its Bauer NIKE Hockey Inc. subsidiary and a line of high quality casual shoes and dresses for men and women from its Cole Haan subsidiary. Mangan, Lalwani and Butcher (2012, p. 135) indicate that effective balance between an organization’s mission and objectives with the effective supply chain management have been crucial by creating a platform for the company to increase its productivity and maintain sustainability.

Logistics at Nike Inc.-Footwear

Nike Inc. has one of the most complex logistic operations (Collier & Evans 2011). Its line of products is sports equipment and variety of apparel and footwear. Its footwear products are distributed to customers and other companies in over 143 destinations worldwide (Collier & Evans 2011). This is made possible through its logistics service network group that manages orders in all four regions.

It is worth mentioning that Nike has worked with ocean consolidators to distribute footwear products for over 20 years. Cai and Yang (2008, p.60) indicate that its supply chain has been very efficient since it works with one courier, five ocean carriers, two ocean consolidators namely Maersk Logistics and APL Logistics and four airfreight forwarders (Collier & Evans 2011).

It is imperative to note that Nike Inc. has practiced in-sourcing to distribute footwear products to various markets (Collier & Evans 2011). Through in-sourcing, the company has enjoyed the benefits of flexibility and capacity. Carter and Rogers (2008, p. 362) point out that the in-sourcing method implemented by Nike Inc. has offered it with unmatched flexibility it needs in carrying out its supply functions. In the rapidly changing business environment, it has aided it to respond faster to circumstances and policies that keep changing, without being tied to procedures that can be expensive to alter.

Prevailing social-economic contexts

Globalization

Globalization has become an important standardized process characterized by the collaboration of nations, increased competition, trade integration, investments and technology. Studies reveal that numerous factors have contributed to globalization. some of these factors include international agreements used in minimizing costs of business operations in foreign countries, commercial groupings, high levels of economic activities, mass movement and migration of people, sophisticated transportation services, technologies and refines communication systems (McKenna & Walker, 2008).

Nike Inc. has massively benefited from globalization through massive competition that has created opportunities to manufacture a variety of footwear in order to meet the high demand in the markets (Collier & Evans 2011). The international trade has offered the company with numerous options to distribute its products across all the continents of the world.

Technologies

Christopher (2000, p. 42) argues that the use of technology is still one of the most important factors that facilitate logistics objectives through reduction of carbon emission. Besides, in using modern technology, Nike Inc. production system and logistics have become highly precise and have ultimately eliminated delays caused by human errors (Collier & Evans 2011). Its programmed system has made it quite easy to deliver high quality and standardized measures for its footwear products.

Technological improvements have further increased efficiencies in fuel consumption which cuts down major production costs (McKenna & Walker 2008). At every stage of the production of footwear products, vast energy is required to enhance quality and logistics. Improved technology will therefore reduce the overall energy demand without negatively affecting the overall production.

International economic integration

According to Brege, Brehmer and Lindskog (2010, p. 145), regional and international economic integration has been of numerous benefits to both small businesses and large multinationals. Regionalism has brought a new impetus that has seen greater need for strengthening international businesses emerging in the last two decades of this century. This has been linked to new understanding of benefits attached to it. Presently, Nike Inc. has used this opportunity to distribute its footwear products and to facilitate high products quality and acceptable labor operations.

Economic integration provides businesses with an equal competing platform, a factor that has been linked to the fast growth and development businesses (McKenna & Walker 2008). Due to this, emphasis has largely been centered on producing high quality products to win the international market. Notably, Nike Inc. has always emphasized on fast assumption of new technology and economies of scale in the manufacture of footwear products while enjoying reduced import and export taxes as well as trade barriers (Collier & Evans 2011).

Challenges and opportunities

Cost

One of the major challenges facing Nike Inc. is cost issues. Analysts agree that cost is a major source of problems in many logistic operations performed by a firm (McKenna & Walker 2008). The need to reach the global market and distribute effectively may put a business at the losing end due to incurred overhead expenses. Shipping footwear products to the four regions has been challenged by the need to ensure that expected profit exceeds the actual shipping cost.

Rushton, Baker and Croucher (2010, p. 231) indicate that increased effectiveness and efficiency in logistics performance a factor that has a close relationship with cost. To counter this, Nike Inc. has majored on in-sourcing has an important key driver of long-term approach to saving current cost challenges on supply functions facing it. Nike’s cost effectiveness has been demonstrated through lean thinking, a factor that has seen it reengineer its services with an aim of increasing productivity (Collier & Evans 2011).

As such, it has maintained service quality and reduced expenditure. It is important to note that in the present business environment, in-sourcing decisions have been lauded by many analysts as the best strategies for driving business efficiency on a long-term basis.

Geographical location

The effective management of logistics has been affected by the nature of geographical location a business is distributing its products to (McKenna & Walker 2008). Nike Inc. has endeavored to ensure that its footwear market is not too remote. Indeed, a remote global poses the challenge of accessibility. The company’s logistic management team handles this issue by conducting a feasibility study to determine which areas are easily accessible.

Barnes and Lea-Greenwood (2006, p. 260) indicate that a shift to accessible areas for many distribution activities form one of the most progressive moves that predict a business’ increased market share colonization and profitability. This has been the case over the last decade as Nike Inc. has come to appreciate the hidden potential it holds in the footwear markets.

Carbon emissions

Carbon emission has been a major problem facing chain supply logistics in the distribution of Nike footwear (Collier & Evans 2011). Its production and distribution modes have played a role in the production of greenhouse gases responsible for global warming. Nike Inc. supply chain management has embarked on the use of appropriate technology to curb the emission of carbon in its logistics practice. Outbound logistics should be used by a line manager to bring the external perceptions of a company’s effectiveness in satisfy consumers and maintaining the correct corporate social responsibility. Bakker and Kamann (2007, p. 310) explain that the sole business of a company is to produce products that will increase value to consumers.

Key solutions to this problem according to Asta (2005, p. 930) include setting out immediate targets and short-term goals to help in assessing progress of all line management aspects. A logistics manager should establish particularistic targets for inbound logistics, operations, outbound logistics and marketing. This can be by determining the maximum production capacities and relate different areas personnel potentials in tandem with the expected output margin. At Nike Company, a clear flow of production should be effectively realized through short-term departmental goals and objectives (Collier & Evans 2011).

Conclusions

As it came out in the challenges and opportunities facing Nike Inc., it was clear that the company has managed to assimilate vast changes so as to achieve its current status via specific commitment and strategizing of the supply chain management. While factoring in the local, regional, and international demands, a competitive niche has been curved in the distribution and sale of its footwear products.

References

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