Nike, the sneaker giant, has recently decided to speed-up its manufacturing and delivery process in the US. This announcement came soon after Adidas’s retro superstar became the top selling sneaker in the United States for 2016 – the first time in the last decade.
To accelerate the time Nike’s shoes spend in the supply chain before reaching customers, Nike needs tospeed-up the processes at each point (manufacturing, wholesaling, retailing etc.) in its supply chain. As we witnessed in the supply chain lab in class, if one person failed to catch up with other members of the supply chain, the whole process was delayed. The confusion arising from this delay at one stage of the chain caused further holdups until the whole supply chain became a complete chaos. In order to overcome process delays and confusion, Nike is redesigning its supply chain by shifting its manufacturing from Asia to Latin America. This shift will ensure less holdups in the supply chain and faster deliveries to customers in the United States. Furthermore, it has decided to use automation to keep costs low and produce products at a faster pace.
As we saw in the supply chain lab, the group which was able to keep its costs the lowest used communication throughout the chain to manage production and orders. Similarly, Nike has moved into a “near-shore, purpose built factory” with Flex, its manufacturing partner. Through this partnership, Nike plans to “produce tens of millions of pairs near shore” by 2023. Moreover, it has also decided to move away from a “futures order” strategy to a “responsive model” of prod
uction. The futures strategy meant that Nike only started production if the order had to be fulfilled within six months. By moving manufacturing close to United States, it can produce products in response to what costumers are actually buying. Nike’s CEO, Sprunk said that the partnership with Flex “allows us to take our standard time, from just manufacturing to market, from about 60 days to 10 days or less.” This redesigning of supply chain is likely to give Nike a competitive advantage in the market by reducing shipping expenses, import duties, and risks of making a large volume of shoes in advance.
Nike is not only adopting automation in its factories near North America, but it also has plans to install more than 1,200 automated machines at the factories of its suppliers to handle cutting, cementing, shoe assembly, and making soles. Thus, it is helping its suppliers innovate to develop a faster way of making labor-intensive sneaker soles. Therefore, redesigning of supply chain needs to take place at each stage to ensure company is able to reach its competitive priorities’ goal.
Do you all think Nike’s redesigning of supply chain efforts are sufficient to beat adidas in the race to achieve greatest market share? What other things can Nike do to have a greater competitive over its competitors in the industry?
Also here’s a really interesting Nike ad for you all!