SCM & ERP Software Implementation At Nike: from

Failure To Success

GR OUP - EARVIND ACHANTA

HARINI CHODAGAMMANISH KHURANA

MUDITA MEHROTRA NITHEEN PATRIC

PRATEEK BAJORIA SAKET KHANDELWAL

S P PARHISWATI

• Introduction: NIKE• Supply chain management• NIKE’S supply chain• i2’s debacle• Reasons for i2’s software failure• Implementing SAP AFS• Benefits • Conclusion

OVERVIEW OF THE CASE

Introduction: NIKE

• Founded in 1957 by Philip Knight.• Manufacture:

– Sports equipment– Sports wear– Apparels– Accessory products

• Products sold in over 140 countries.

SUPPLY CHAIN MANAGEMENT• SCM is a business network covering from buying,

making, moving, warehousing to selling

Selling

Buying

MakingMoving

Warehousing

NEED FOR SCM

NIKE’S SUPPLY CHAIN• In 1975, Nike introduced Future Program. Supply Chain Management was inadequate. 1998, Nike’s global operations were broadly divided

into 5 geographic regions. Nike’s profit dropped by 50% from US$ 798 million to

US$ 399 million.• Launched NSC Project. Initiative of “Shelley Dewey”, Vice President of Supply

Chain and Steele. Implement its ERP, Supply Chain, & CRM Software

onto a single SAP Platform.

NSC PROJECT

NSC IMPLEMENTATION STRATEGY

i2’s Software Implementation• First part of supply chain strategy.

• Cost of this project was US $40 million.

• To match supply with demand.

• To reduce the amount of raw material.

• Used it as a legacy system rather than as apart of SAP ERP project.

i2 Trade Matrix Plan SolutionSolution Objective Challenge Capability Benefit

Strategic Planning

Maximize profitability by optimally allocating resources

Unclear parameters Optimization Long term profitability

Demand management

Anticipate and influence demand

Accurate demand estimation is difficult

Demand planning, channel collaboration

Improved customer service

Supply planning Determine what to make and when and how to profitably distribute supply

Size and complexity of problem

Collaboration, optimization,Speed

Global visibility and coordination , fast reaction to changes

Production Determine what to produce and when

Managing material & capacity trade offs is complex

Fast finite material & capacity planning & scheduling

Reduced inventory,Improved due date performance

REASONS FOR i2’S SOFTWARE FAILURE

• Third party integrator.• Inexperience of i2.• Customization.• Trying to forecast too far out ahead.• Pilot test.

Continued. . .

•Problems in smooth integration. •Inadequate information.

•Changing market conditions.

•Complication of NSC project.

•Review meetings.

Implementing SAP Apparel and Footwear Solutions (AFS)

SAP ERP Project

R/3 Variant

Single Instance Strategy

Purchased in1998

Big Bang Approach

Continued. . .

Transition

Plan, Training

& Testing

Close

Partners-

hip

Built a

Global

TemplateIm

plementation

i2 Software

After Learning

the Lesson

Just Do It

The SAP AFS

BENEFITS

Measures to overcome demand forecasting problem

Importance of demand forecasting

• Determining the quantities.

• "make to stock" rather than "make to order“

• Reduces supply time.

• Efficient forecasting

Ways to avoid supply chain problems

Lessons Learned

Be Patient

Define a business Goal

Re-engineering Process

Just Do It Over

Keep your eye on the price

CONCLUSION

• Implementation is a complex process.

• Evaluating pros and cons.

• Continuous assessment.

• Adaptability

• Importance of pilot test.

Thank youJust do it