Nike Final Ppd

7/27/2019 Nike Final Ppd

1/20

Supply Chain in Nike

Presented by

Group C6

Ashish Patodia(11127)

Chirag Gupta(11133)

Haniya Eram(11139)

Kaustubh Sinha(11145)

Naba Kumar Barman(11151)

Paul Joseph Fernandez(11157)


2/20

Introduction: NIKE

The Journey

NIKES supply chain Introduction of new supply chain system

Benefits

Reasons for i2s software failure Impact of failure in new system

Conclusion

OVERVIEW OF THE CASE


3/20

Introduction: NIKE

Founded in 1957 by Philip Knight.

Manufactures:

Sports equipment

Sports wear

Apparels

Accessory products

Products sold in over 140 countries.


4/20

The Journey

1960s-Phillip Knight(CEO) & William Bowerman

partnered to sell running shoes to athletes named

BRS Ltd.

The Glorious 1970s

Sales Grew from $10million to $270million.

Creation of new designs

Sales increased in Europe, Asia &Australia

In 1971 designed Swoosh Symbol

In 1972 BRS Ltd became Nike Inc.


5/20

Journey Contd..

The Successful 1980s

Public Issue of 2 million shares of common

stock

Sports Research & Development Lab was set up

Manufactured shoes in 11 countries and employed

more than 3000 people

Good hold on the overseas market New Punch Line adopted JUST DO IT


6/20

Journey Contd

The success story continues in 1990s Total revenue surpasses $3 billions

Opened a NIKETOWN in Chicago

Nike Asia was formed

Company implemented a SCM & CRM software

The turbulent beginning of 20th century

Company profits fall in third quarter of 2001 by almost 24%

Failure of NIKE SCM software that it implemented in June2000


7/20

Demand Management System

Nike were the first to introduce Futures booking

program.

In this orders were placed by retailers six months

ahead of the delivery dates.

These orders had to be forwarded to the factories

in Asia.

And the final product had to be shipped back. Started encountering problems with the orders due

to increasing demand , number of factories and

retailers.


8/20

New SCM and CRM System

Nike contracted i2, to install main system

and SAP AG and Siebel Systems Inc. for

CRM. Cost of i2 software is $40 million

Total cost of project is $400 million and

going to complete in 5 years


9/20

i2 Trade Matrix Plan SolutionSolution Objective Challenge Benefit

Strategic

Planning

Maximize profitability by

optimally allocating

resources

Unclear parameters Long term profitability

Demand management Anticipate and influence

demand

Accurate demand

estimation is difficult

Improved customer

service

Supply planning Determine what to make

and when and how to

profitably distribute

supply

Size and complexity of

problem

Global visibility and

coordination , fast

reaction to changes

Production Determine what to

produce and when

Managing material &

capacity trade offs is

complex

Reduced inventory,

Improved due date

performance


10/20

What benefits did the company expect to

achieve by implementing a new supply

chain system?

The IT overhaul was designed to streamline

communications with buyers and suppliers. Lower operating costs.

Reduce order to delivery time by 50 percent.


11/20

POSSIBLE REASONS FOR i2S

SOFTWARE FAILURE? Customization.

Trying to forecast too far out ahead.

Third party integrator.

Early implementation

Inexperience of i2. Pilot test.

Nike implemented two projects

simultaneously.


12/20

NIKEs Profit falls

Nikes profit falls by 24% in 3rd quarter of

2001

Trends are what make this industry so unpredictable. Not having the right

shoes in the stores in that short window of opportunity is disastrous

-John Shanley, an analyst at Wells Fargo Secur ities


13/20

How did the breakdown harm

Nike? Nikes share dropped from 48% to 39%.

A large number of unpopular models were producedand had to sold at high discounted rates.

Not enough quantity of popular models wereproduced.

Additional shipping costs incurred.

Liquidation of the excess inventory took Nike six toeight months.

Soured relations between Nike and major retailers.


14/20

Important elements while

implementing a new system in

organization?

Use of third party integrators.

Taking up one project at a time. Using the system after it has developed

completely.

Testing the system before implementing.


15/20

Mistakes made by Nike and i2

Both took hasty decisions without any

cautionary measures.

Before testing the system, it was alreadyimplemented in all the Nike outlets.

Third party integrators were not there.


16/20

Comments on the future of Nikes

supply chain system In 2003 the company could closely monitor the

movement of goods from raw materials throughfactories to retailers.

Reduced its inventory levels. Gross margins and profits increased form 41% to

43%.

Before almost 30% of Nikes orders were based on

guesswork, in 2003 it reduced to 3% of guesswork. Future orders increased by 10% over the previousyears.


17/20

Measures to overcome demand

forecasting problemWell equipped and competent

system

Continuous interaction with thecustomer

Proper analysis of data

Supplier and retailer feedback


18/20

BENEFITS


19/20

CONCLUSION

Implementation is a complex process.

Evaluating pros and cons.

Continuous assessment.

Adaptability

Importance of pilot test.


20/20

Thank you

Just do it

Documents

Nike Final Ppd