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Nike Footwear
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Nike Footwear
Formerly known as Blue Ribbon Sports, and currently headquartered in Beaverton, Oregon, Nike, Inc. was founded in 1964 by Bill Rowerman and his student, Phil Knight. In 2018, Nike, Inc. generated 36.4 billion dollars in revenue, marking a 7% increase from the preceding rates. In the contemporary world of sports and footwear, it is regarded as the world leader and also influences many pre-eminent brands in American popular culture.
Firm and product’s profile
Nike, Inc. is internationally recognized as an important marketer and a widely acclaimed designer for producing comfortable and stylish footwear. The first store of the company was opened in Santa Monica in 1966 and soon after, the brand started to work on its promotional and expansionary strategies. Although the incorporation is providing a lot of products, for instance, clothing, footwear, and sports equipment and accessories, the most famous product of the brand are the Air Max sneakers. Nike, Inc. has 529 factories in more than 40 countries and currently it is investing a huge amount of its revenue in digital demand sensing. In the following sections of this paper, the supply chain management of Nike and other conceptualizations such as factors influencing the future demand and the role of forecasting in supply chain management will be discussed.
Nike’s approach
The employment of several activities that help to maintain the dominant niche of Nike, Inc. in the arenas of designer footwear is vital to the signature approach of this brand. A production system that is largely demand-driven influences future demand effectively. Nike, Inc. efficaciously exhibits a high degree of flexibility in its management and operations so that its position is maintained among fluid and dynamic markets CITATION Ram08 \l 1033 (Ramaswamy, 2008). A key strategy that is brought into action by the management is the achievement of updated shipment data which has considerably improved Nike’s supply chain management.
Supply chain management
Since the 1990s, Nike, Inc. has exhibited greater responsibility in improving its supply chain management through upgrading its environmental and social practices. After many claims of child and bonded labor uncovered by media, the President and CEO of the incorporation stressed upon the significance of sustainability in the 2011 corporate report in which Nike’s business and management practices were meticulously detailed CITATION Por13 \l 1033 (Porteous, 2013). The management installed a robust and dynamic system of auditing, supply monitoring, and mediation in the pursuit of solving innumerable complexities which the business had to face in recent years CITATION Dis16 \l 1033 (Distelhorst, 2016). The deliverance of lean manufacturing, training sessions, and company-wide promotion of innovation assisted in the betterment of supply chain management. The key factors for nearly transforming the supply chain are innovation, integration, and incentives. In addition to these factors, five major precursors are leading to changes in the brand's supply chain management and its logistics. These include technological advancement, the company's organizational consolidation, globalization, regulatory reforms by the state authorities, and empowerment expressed by the consumer base.
Factors influencing future demand
Past demand
The estimation of probable demand at Nike shoes is done by doing an in-depth analysis of the past demand.
Planned price discounts
Nike has successfully managed to differentiate its pricing strategies from its competitors by carefully planning its pricing discounts. After finding a target market for a particular product, Nike employs a premium pricing strategy and provides many discount plans in the pursuit of associating its prices with its customers. The planned price documents ultimately lead to the development of loyalty among customers. The planned price discounts also helped the customer base to choose Nike over its competitors in many points of time.
State of the economy
The distribution channels of Nike are divided into two categories. Firstly, it sells its products to various wholesale dealers that are based in the United States. Through this channel, Nike also ships its products in the international markets. Secondly, Nike also sells through factory outlets and e-commerce sales through a user-friendly and 24/7 active website.
Marketing or advertising plans
The marketing plans and advertising strategies of Nike utilize the approach of emotional branding. Word-of-mouth marketing also assists Nike in the propagation of its narrative towards its target market CITATION Mah15 \l 1033 (Mahdi, 2015). They sponsor some young athletes and team up with college communities who endorse the Air Max sneaker series. Nike is also involved in many philanthropist activities in addition to a lot of social and environmental outreach initiatives on a global scale, which helps expand the supply chain.
Lead time of product replenishment
As consumers have adopted new habits and they buy new products at the spur of a moment, therefore Nike has made its conventional retail calendar redundant and is striving to transform its e-commerce retail strategies. The management is also in the pursuit of automating every phase of the manufacturing chain. This chain includes pre-production, design, and stitching of the various products and apparel, and finally the assembly. Nike has also reduced the shelf time to a considerable degree to synchronize its production plans with the concerns of environmental activists. The logistics network is also being redesigned and there has been an improvement in the contract manufacturer relationships. At the end of last year, Nike installed almost a thousand new automated machines in the factories of its Asian suppliers to pursue a speedy shoe assembly and retail marketing. The experts in the footwear industry also predict that all these efforts will benefit the profit margins and Nike will be able to attain a greater and dominant share in the market.
Competitors’ actions
Reebok and Adidas have also introduced a lot of innovative strategies which are playing an instrumental role in their outreach and business expansion. Adidas has planned for the mass-production of 3-D printed shoes and recently it invested in speed factories, where robots working through the principles of artificial intelligence are involved in the production of customized shoes CITATION Kwo17 \l 1033 (Kwon, 2017).
Role of forecasting in Nike’s supply chain management
Forecasting plays a central role in any brand's supply chain management to determine future demand and it is the basis for all the planning decisions at work. Forecasting is utilized to push and pull processes. These processes are inclusive of scheduling of production, organization of inventory, promotions, allocation of the sales force, and introduction of new products. Forecasting is also done to meticulously plan the budget for the next quarter and it is instrumental for all the hiring and/or layoff decisions as well. As all of these decisions are inter-related, Nike also corroborates forecasting in its supply chain management and this is evident from many reports. The overall profitability of Nike essentially requires the right demand forecasting. In a recent report, the CEO of the company said that there is an "express lane" strategy in motion which will cut the lead replenishment time of all its products in half. It can be deduced that demand analysis from previous sales have paved the way for this strategy. The management and executive board of the brand also opined that demand forecasting would be chiefly dealt with technology so that the brand can quickly capitalize on the reduced lead times of product replenishment.
Conclusion
The evolution of Nike, Inc. from a footwear provider to a specific target market to an all-encompassing leading manufacturer in the sportswear industry is evident from the milestones it has achieved. If efficiency is maintained within the supply chain management, Nike, Inc. will attain global dominance in the next foreseeable future.
References
BIBLIOGRAPHY Distelhorst, G. H. (2016). Does lean improve labor standards? Management and social performance in the Nike supply chain. Management Science, 707-728.
Kwon, Y. M. (2017). Case study on 3D printing education in fashion design coursework. Fashion and Textiles, 26.
Mahdi, H. A. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 167-177.
Ramaswamy, V. (2008). "Co-creating value through customers' experiences: the Nike case.". Strategy & leadership, 9-14.
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