The notion of supply chain management has been long perceived as one of the major pillars of creating an efficient and successful business endeavor. In terms of supply chain relationships, various stakeholders emphasize different aspects of production, with some companies focusing on communication with consumers and others building a model of successful cooperation with the employees and suppliers. When speaking of Nike’s strategy, it becomes evident that over the last decade, the company has been pooling efforts in order to find a middle ground between the establishment of a trusting relationship with both consumers and suppliers. Being one of the most successful and recognized footwear enterprises in the world, Nike can no longer depend solely on the quality of the product. For this reason, one of the company’s primary strategies in terms of communication is the promotion of corporate social responsibility (CSR) in terms of raw material used for manufacturing, considerate use of outsourcing labor, and active participation in public and environmental initiatives.
One of the fundamental strategies of Nike’s supply chain relationship is the focus on manufacturing outsourcing to enterprises that are not owned by the headquarters company (Jiang, 2019). This strategy obtains a variety of benefits, such as the lack of need to focus on manufacturing and allocating resources to direct product management, marketing, and brand communication. However, on the other hand, such reliance on outsourcing techniques presents a challenge in terms of control over the quality and manufacturing process, delegating responsibility to hundreds of stakeholders all over the world.
As far as performance measures are concerned, it is vital to mention that Nike’s major strength is the establishment of its personalized performance metrics based on the company’s goals and values. Thus, having been presented in 2012, Nike is driven by the Manufacturing Index that is based upon four categories: sustainability performance (including labor practices), cost, quality, and on-time delivery (“Foundational sourcing expectations,” n.d.). The Manufacturing Index, in its turn, is composed with the help of the Sustainable Manufacturing & Sourcing Index, which serves as a great and transparent tool for combining quality manufacturing practices with the human resource environment and proper working conditions (Foundational sourcing expectations,” n.d.). Thus, it would be reasonable to conclude that such big enterprises as Nike have an implicit obligation to showcase responsible and compliant sourcing and labor practices. The company’s key strategy of transparency in communication is, by all means, a beneficial way to improve communication with both investors and consumers, thus securing balanced profits.
When it comes to risk management, it is necessary to outline two major characteristics of Nike’s performance. Firstly, the aforementioned outsourcing strategy serves as a part of the company’s risk management, as they delegate risk control to various manufacturing stakeholders. Secondly, the company chose a way of product transparency in order to diminish the risk of chain management interruption by the media’s disclosure of the financial and labor flow of the enterprise (Cunha et al., 2019). The recommendations in terms of strategic planning include the increase of social media interaction with consumers by the introduction of celebrity endorsements that promote social initiatives that draw attention to the product. Another recommendation would be to reconsider the company’s outsourcing strategy in terms of means to control the process, as the explicit announcement of sustainability within the enterprise is currently difficult to control. As a result, the disclosure of the slightest socially incompatible practices presents a major risk for the company’s revenue and brand reputation.
References
Cunha, L., Ceryno, P., & Leiras, A. (2019). Social supply chain risk management: A taxonomy, a framework and a research agenda. Journal of Cleaner Production, 220, 1101-1110.
Foundational sourcing expectations. (n.d.). Nike. Web.
Jiang, W. (2019). Sustainable development of supply chain in footwear industry – take Nike s the case. Asian Business Research, 4(3). Web.