1. Nike shoes
Introduction
Nike was established in the year 1962 as Blue Ribbon Sports by the actual
CEO Phil Knight and the late Bill Bower man. Both started the company by
selling athletic shoes at track meets out of the back of their truck. In the year
1972, the company was named Nike (name derived after the Greek goddess
of victory). The company began to be known in the 1972 Olympics, when several
winning distance runners wore Nike shoes. In 1974, Bill Bower man invented the
and less weight. Nike’s success started and today Nike is the premiere seller of
athletic footwear and apparel in the world.
Note:
The report will be based on Nike’s strategies to compete on the local and Global market, with
its tactics to enhance its supply chain, through an efficient implementation of an
IT infrastructure, and strategies that supports the outsourcing of non critical activities to
achieve significant cost leverage in the industry.
The rise of competition in the late 1990, has forced NIKE Company to make
crucial decisions to overcome barriers, so as to stay in pace with its competitors.
Purpose of enhancing the Supply Chain
In the walk towards staying competitive, Nike Company adopted several strategies
in its Supply Chain Management. They came with a Project known as the NIKE
Supply Chain (NSC) Project, their plans was to
Create an IT Supply Chain Management solution
, which objectives were to:
Respond efficiently to changes in its Foot wear and Clothing Industry
Improve its Supply Chain to stay competitive
Lowering costs of Inventory
Sources of software’s

2. They used a grouping of different leading software’s companies, like:
Rent ax
Siebel
Global
Logistics Village These were incorporated into foundation software from SAP, and
afterwards the solution was integrated into Nike’s existing ERP and systems.
F irst outcomes
Despite negative results in May 2001, due to difficulties in its supply chain, where
sales were down to $100 millions, the company realized a profit of $261 million in
2004, due to the efforts of the NSC project.
Strategy in the supply chain
The company pursued their tactics to achieve their corporate goals and to obtain
the best level of investment in technology that will results in maximizing their ROI
(Return of Investment) by:
Incorporating IT in its Supply chain
Restructuring and implementing a virtual integration model
Reorganizing its supply chain, from Suppliers, Manufacturers to the end
consumers
Project Management
In spite of having a well organized IT department, the company relied on outside
software consultants to help in them, more precisely, the consultants from the
software’s company, where Nike purchased the software. For example, consultants
from SAP solution brought significant contribution to implement the solution; they
help Nike with training, and customization of their
Reduce risks
Deliver a richer customers¶ experience

3. Improving process, information and product quality
Provides a well-organized global supply chain with local implementation .The
implementation of the project was associated with some risks, due to the size and
complexity of the supply chain, and also to the inexperience of software’s vendors.
To counter these issues, they used several specialized teams of consultants from
different software companies.
The NSC Project phase
The project was divided into logically geographical segments
Canada was used as a µTest Ground¶ for every where products to fit the
company’s needs .The Company worked with consultants¶ teams from different
specialized software manufactures ,to support their internal team, like
SAP
Siebel
Rentrak
The NSC team devised a good methodology of operation, in implementing the
solution across the supply chain; they broke the project into the following logical
geographical components :Canada, United States, Europe, Global Operations,
Japan, Malaysia, Philippines, Singapore, and Thailand. The solution was first
implemented in Canada, which was used as a test case for all their operations
around the world. It was evident that each geographical area had its own
specialized software product.
Nikes IT infrastructure
Nike’s foundation software is SAP¶s Apparel and Footwear Solution, it is
obviously the backbone of the solution, where all software are built upon or
incorporated into. It allows users to obtain financial information, view orders, and
all logical data in the company’s supply
Chain .It will obviously; meet the objectives of the company, as it was designed for
the unique needs of its Apparel and footwear

4. The NSC solution comprises the following software: Foundation
Software from SAP, CRM Software from Siebel, Software from i2,
Online Order Tracking from Global Logistics Village, and Product Flow
Analysis from Rentrak .The Nike Supply Chain implemented solution to
assist the overall business, for example, they used Siebel customer
relationship management software, to support managers in delivering an
effective customer service to their 38,000 retailers across the world,
where the Nikes products are distributed .The solution enables accounts
managers in forecasting better sales volumes, reducing out of stocks, and
improving forecast accuracy, and also facilitates them to track
performance with customers and in the marketing programs
6
The NSC solution comprises the following software: Foundation Software from
SAP, CRM Software from Siebel, Software from i2, Online Order Tracking from
Global Logistics Village ,and Product Flow Analysis from Rentrak. Nike Supply
Chain implemented solution to assist the overall business, for example, they used
Siebel customer relationship management software, to support managers in
delivering an effective customer service to their 38,000 retailers across the world,
where the Nikes products are distributed. The solution enables accounts managers
in forecasting better sales volumes, reducing out of stocks, and improving forecast
accuracy, and also facilitates them to track performance with customers and in the
marketing programs.
he strategy of Nike using i2 software was to perform an effective business
planning, it enable them to detect and resolve any problems effectively, and
helping them in activities like long-range and short range demand and supply
planning. The i2 software provides visibility across the whole supply chain,
which includes the following activities:
Procurement
Manufacturing
Distribution
Warehousing The Global
Logistics Village software for online tracking of order shipments enables Nike
toknow whenever their orders fall behind schedule. They will be able to track

5. down any problemsthat may arise, resolve them or communicate it to Nike¶s
customers, thus improving customer service.The Rentrax solution allows Nike
Company to analyze its product flow from start to the end, andhelps to manage
data used in business operations like invoicing products, securing materials,
andtracking orders. It was easy to customized and meet the business needs.The
solutions have helped the company to establish a global purchase ordering for all
its manufacturers, which resulted in remarkable changes at the speed in which the
company operates. The strategies bear the expected fruits, as stated by Nike’s
Chief Financial Officer Donald Blair, that in spite of some minor problem in the
implementation of the project, the Company had are mark able improvement in the
inventory level and they realized a profit of $ 261 million, in September 2003.
( Nike annual Report 2004)
Virtual supply chain
The ability of Phil Knight, CEO of Nike Company in building a virtual supply
chain, making productive use of its resources, has helped them to achieve the
desired results. The characteristics of the solution applied by the NSC Project team
are
Its Web-based architecture, IT SCM solution
The Product
Development Stage, joining up collaborative input from partners¶ at pre production
stage, enabling its suppliers to provide input into design for manufacturability, thus
reducing costs at an early phase in the Supply Chain.
Sourcing stage: Efforts to minimize costs from suppliers, and ensuring that
materials meet quality and specifications
The Production Stage: The ability to help reducing stock of raw material and work
in process inventory
Company’s Supply Chain
The Company is located in Beaverton, Oregon, but almost all of their production is
carried out abroad. The sales growths outside the Unites States exceed its domestic
sales, (according to its Annual report in 2003).
Outsourcing

6. Nike Company is also involved on design, development and marketing worldwide,
they strategically make use of contract manufacturers, externally, to make their
products. Its Apparel and equipment manufacturing are produced locally and
abroad, but virtually all shoes are manufactured outside the country.
Materials used in its production
The Company takes most of its materials from local suppliers, based in the
manufacturing locations, but other specialized materials which are not available
locally, are imported.
Nike Shoes
:Leather, Rubber, Plastic compounds, Foam, Cushion materials, Nylon,
Polyurethane films and Canvas Threads, Metal Hardware, specialized performance
fabrics and, natural and synthetic fabrics materials
Distributions process
NIKE¶s finishing products are sent to all
Distributions centers worldwide. The locations of
Distribution centers in the US are:
Memphis
Wilsonville
Oregon
Tennessee
New Hampshire
Greenland
Costa Messt
California
Overseas Distribution centers:
The company controls 24

7. Distribution Centers across the Globe, in Europe, Australia, Africa, Asia, Canada
and the Latin America. Apart from these Distribution Centers, the Company deals
through independent Distributors and licensees, they also have branches outside
the country
The company’s supply chain takes more or less 6 months process, from the
starting point to the end. The product shelf-life is on average around three months,
and there a risk of shortage of product supply, replenishment usually takes long
time, before the product comes out of style.
(Ref: Nike spokeswoman Joana Kilos)
The Company reaches about 18,000 retailers in the domestic market, and about
30,000 retailers worldwide, whilst focusing on the different retailers needs, due
to various cultures.
R isk/Business strategy
Like many other businesses, Nike Company faces strong competition from other
competitors¶ brands, driven by continuous changes in technology, new design and
styles of clothing and footwear. Nike Company has the capability to counter these
issues, with the NSC, which is specifically designed to bring changes and
implement new design and styles of products, and also speed the time of products
to market. There also risks associated with improper inventory control, in 2003,
the inventory costs at this level was more than $ 1.5 billion, shrinkage from theft
and fierce competitions are linked with the costs. This lead to the decision for Nike
to review its strategy, to have a more effective visibility all along its supply chain.
The NSC provides the corporate level with reliable information, about the
functioning of the Supply Chain, which enables them to take appropriate decisions
for any improvements in the chain. The implementation of the NSC solution was
also intended to trim down the quantity of materials required to produce Nike
shoes, and its objective was to increase the company’s profitability
Complexity of the project
The implementation of the project to meet the corporate goal, was confronted with
lots of obstacles, the team faced difficulties due to the complexity of the supply
chain and the size of the company. The size and complexity of Nike Company
required more attention, to implement the solutions across the supply chain. The
nature of the industry renders their job more difficult, as it was a matter of colors,
styles and its extensive sizes, which required specialized software. It was vital to
locate expert software manufacturers, and link them into the supply chain, as Nike
Company deals with several products, such as:

8. * The Bauer Skates
* Cole Han dress shoes
* Hurley skateboarding clothing
* Sunglasses
* Bags
* Electronic equipment
* Sports equipment etc
Subcontract
As mentioned earlier, the Company turned towards the subcontracting of most
Nike’s manufacturing business.
Costs/Packaging Strategy
Nike contributed in reducing the CO2 emissions, whilst directing its objectives
towards reducing its costs; they strategically installed new roofing systems on three
distribution centers, thus reducing 15% in energy consumption and costs. Nike
launched a new product design philosophy, known as the µConsidered
Design ’s, that incorporate principles of environmental sustainability, the product
innovation team has educated designers on the new guidelines
From manufacturing to transportation, the company emphasized on
environmental issues, it was like a tool that contributed to reduce costs, with
particular focus related with Packaging, and these were associated across a range
of materials used