UNIVERSITY OF ECONOMICS AND LAW

INTERNATIONAL ECONOCMICS RELATIONS

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ANALYSE THE LOGISTICS ISSUE OF NIKE

Lecturer: Th.S Chung Từ Bảo Như

Group 4:
Bùi Tiến Đạt
Nguyễn Ngọc Anh Khoa
Hoàng Tú Nam
Nguyễn Ái Nhi
Nguyễn Mạnh Tùng

Ho Chi Minh city, 6th December, 2018

 CONTENTS
1 EXECUTIVE SUMMARY ..................................................................................... 1
2 INTRODUTION OF NIKE INC., THE VISION, MISSION AND ITS
LOGISTICS SYSTEM .................................................................................................. 1
2.1 Introduction of Nike Inc................................................................................... 1
2.2 Nike’s Corporate Mission Statement .............................................................. 1
2.3 Nike’s Corporate Vission Statement ............................................................... 2
2.4 Logistics System ................................................................................................ 3
3 LOGISTICS MANAGEMENT OF NIKE ............................................................ 5
3.1 Contract suppliers ............................................................................................ 5
3.2 Manufacturer .................................................................................................... 6
3.3 Distributor ......................................................................................................... 8
3.4 Nike stores/ Retail stores/ Online stores ......................................................... 9
3.5 Reverse logistics .............................................................................................. 10
4 LOGISTICS OPERATIONS OF NIKE .............................................................. 11
4.1 INVENTORY ................................................................................................... 11
4.1.1 Inventory Philosophy ................................................................................... 11
4.1.2 Inventory Management ................................................................................ 11
4.1.3 Effectiveness of strategy ............................................................................... 11
4.1.4 Limitations and vulnerability ...................................................................... 12
4.1.5 Alternative Inventory Strategy ................................................................... 12
4.2 TRANSPORTATION .................................................................................... 13
4.3 WAREHOUSING ........................................................................................... 14
4.4 PACKAGING AND HANDING PROBLEMS ............................................ 15
 4.4.1 Packaging design .......................................................................................... 15
4.4.2 Packaging for Materials Handling Efficiency ........................................... 16
5 INFORMATION TECHNOLOGY USED IN CORPORATION .................... 18
5.1 Analyse important issues .................................................................................... 18
5.2 Potential Solutions .............................................................................................. 19
6 SUSTAINABILITY IN THE LOGISTICS SYSTEM OF NIKE ..................... 21
6.1 Nike Performance Products Reduce Waste and Water Use ....................... 21
6.2 Nike is Using Less Energy and Reducing Emissions ................................... 21
6.3 Nike is Invested in Transforming Manufacturing....................................... 22
6.4 Corporate Social Responsibility .................................................................... 22
6.5 Nike is Moving toward Zero Waste .............................................................. 22
CONCLUSION ............................................................................................................. 23
Abbreviations and notations

CRM
Customer Relationship Management

DC Distribution Center

POS Point-of-sale Point-of-sale

SCM Supply Chain Management

SKU Stock keeping unit

Quick response
QR

List of Illustrations

Figure 3.1 Logistics management 4

Figure 3.2 Areas of logistics management, contribute to an integrated approach

5
to logistics.

Figure 3.3 Total number of retail stores 9

Table 4.1: The shipping lines designated by Nike 13

Figure 4.2 NIKE FREE BOX. Design & Branding 14

Figure 4.3 The sorter system and machine controls 15

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1 EXECUTIVE SUMMARY
Nike has evolved from an organization from an organization that manufactures from
professional athletes to a company that is manufacturing for all ages, demographics and
fashion inclined too through technological innovations. Nike is an Ideology based on
pursuit of excellence, its not about shoes or clothes, it’s a way of life, its about selling
sports.
2 INTRODUTION OF NIKE INC., THE VISION, MISSION AND ITS
LOGISTICS SYSTEM
2.1 Introduction of Nike Inc.
Nike, Inc. is an American multinational corporation that is engaged in the design,
development, manufacturing, and worldwide marketing and sales of footwear, apparel,
equipment, accessories, and services. The company is headquartered near Beaverton,
Oregon, in the Portland metropolitan area. It is the world's largest supplier of athletic
shoes and apparel and a major manufacturer of sports equipment, with revenue in excess
of US$24.1 billion in its fiscal year 2012. As of 2017, the Nike brand is valued at $29.6
billion. Nike ranked No. 89 in the 2018 Fortune 500 list of the largest United States
corporations by total revenue.
The company was founded on January 25, 1964, as Blue Ribbon Sports, by Bill
Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1971. Nike
also owned Bauer Hockey (later renamed Nike Bauer) from 1995 to 2008, and previously
owned Cole Haan and Umbro. In addition to manufacturing sportswear and equipment,
the company operates retail stores under the Niketown name. Nike sponsors many high-
profile athletes and sports teams around the world, with the highly recognized
trademarks of "Just Do It" and the Swoosh logo.
2.2 Nike’s Corporate Mission Statement
Nike Inc.’s corporate mission is “to bring inspiration and innovation to every athlete in
the world.” This mission statement represents the company’s strategic goal of reaching
out to the global leisure and sports footwear, apparel and equipment market. The
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following main components are in Nike’s corporate mission statement: Inspiration;

Innovation; Every athlete in the world.
The company’s slogan “Just Do It” represents this inspirational goal. Also, Nike’s
corporate mission statement emphasizes innovation. This component is applied through
the company’s strategy of continuous improvement of products through new
technologies, as included in Nike Inc.’s generic competitive strategy and intensive
growth strategies. The “every athlete in the world” component indicates that the
company’s corporate mission pushes the business to target every consumer in the world.
Thus, based on this corporate mission, Nike’s products are designed to attract and satisfy
a wide variety of market segments globally.
2.3 Nike’s Corporate Vission Statement
Nike Inc.’s corporate vision is “to remain the most authentic, connected, and distinctive
brand.” The company focuses on developing its brand. The following are the notable
components of Nike’s corporate vision statement: Authentic; Connected; Distinctive.
Nike’s vision statement uses the word “remain,” which indicates that the company
already considers its brand as the most authentic, connected, and distinctive in the global
market for sporting goods and related products. The “authentic” component of the
corporate vision statement shows that the company aims to make its products deliver
high performance to consumers. On the other hand, the “connected” component is about
ensuring consumers’ personal connection with the brand.
The company also maintains distinctiveness by delivering the best possible products to
the market. This corporate vision regards Nike Inc. as a leader in the industry, while
pushing the business to further separate itself from competitors. A notable point about
the company is it also develops connections with consumers through its vision for
corporate social responsibility: “to help NIKE, Inc. and our consumers thrive in a
sustainable economy where people, profit and planet are in balance.” This vision serves
as basis for Nike Inc.’s corporate social responsibility strategy and stakeholder
management approaches.
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2.4 Logistics System

From a pair of shoe is designed and generated to recycle and reuse, it involves in the
ecosystem and Nike’s value chain. The unique supply chain is integrated in seven parts.
Plan: The parts of plan include people, offices, brand and beyond. The plans are made to
decide the operations, organizations, co-operator. etc. Nike defines itself by “what we
do and how we do”.
- Design: The designers using technology, creativity and meaningful material
selection to produce. In Nike’s industry, materials manufacturers are considered “tire 2”
suppliers if they sell to the companies that make Nike’s product.
- Make: Work with more than 700 contracted factories in supply chain, establishing
long-term relationships to manufacture. “Code of Conduct” and “Code Leadership
standards” help establish labor and environmental practices within the beliefs.
- Move: Nike works with key logistic service providers moving millions of products
worldwide. They co-operate through contracts, including more adoption of cleaner
vehicles and fuel, wind turbine and solar installation. The distribution centers also must
promise to share the version of sustainability when work and deliver.
- Sell: Nike owns and operates more than 750 retail stores around the world, which in
leased spaces, ranging from free-standing locations to large shopping centers. Each
location shares version of sustainability share among each location.
- Use: Nike designs clothing made from better, lighter materials, allowing customers
to wash and dry bigger loads, increasing water and energy efficiency. They believe to
build the relationship with customers is the best to influence how customers use and care
for products.
- Reuse: Nike uses the fewest possible materials and assembles them into new
products. Furthermore, they also looking at ways to use the existing waste and used
products to make new product.
Globally, Nike ships more than 1 billion units of footwear, apparel and equipment every
year, which demands an agile, innovative and sustainable supply chain. Nike’s European
Logistics Campus aims to emphasize Nike’s vision for a low-carbon, closed-loop future
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in which sustainable innovation is embedded into the company’s growth strategy,

enabling it to maximize performance.
In 2016 Nike launched the latest expansion of its European Logistics Campus in
Belgium. This state-of-the-art centralized distribution facility in the center of Europe,
employs more than 3,000 people, and allows Nike to serve a vast network of retailers
and consumers not just on the continent, but across the world.
Key features of this new facility include:
- 100% use of renewable energy. The facility sources energy from five locally
generated sources: wind, solar, geothermal, hydroelectric and biomass. Six on-site wind
turbines produce enough electricity to power 5,000 households, and the on-site solar
panels cover the size of three soccer fields.
- The facility is fed by an infrastructure of canals, railways and highways. 99% of
inbound containers reach the local container park, by water, not road, saving 14,000
truck journeys a year. In addition, its Belgium location places it at the center of a 500km
radius in which 60% of Europe’s buying power is concentrated.
- Moving away from a traditional structure that requires more steel and concrete, the
warehouse is a rack-supported building, reducing waste and material used, thereby
minimizing its footprint.
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3 LOGISTICS MANAGEMENT OF NIKE

Figure 3.1 Logistics management

Figure 3.2 Areas of logistics management, contribute to an integrated approach to

logistics.
3.1 Contract suppliers
For raw materials and manufacturing, Nike relies completely on external sources. Nearly
all its products are manufactured by independent contractors. It has a broad base of
suppliers that support its business and growth. However, quality is a very important
concern down its supply chain and therefore, Nike maintains great caution regarding the
selection of raw material and its suppliers. Most of ingredients must meet Nike standard,
from local supply or China-importing supply. There is a global procurement team at Nike
to obtain raw materials. It takes care of the entire procurement process from selecting to
contracting with the right suppliers for the right goods and services.
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What Nike has implemented into their system with outsourcing the production of raw
materials, has been done by many large apparel companies and is seen as something can
be highly profitable rather than producing the materials within the company. So what
Nike has done, is brought in contract suppliers from all over the world like Vietnam for
instance. To help visualize this part of the process, we must understand that the supplier
has its own supply chain and it ends with exporting the products to Nike.
Its products are made in 42 countries at 567 independent factories that employ more than
1 million workers. These independent factories produce virtually all of the products
marketed and sold by Nike. In the fiscal year 2017, only 5 of its contract manufacturers
accounted for around 69% of its total Nike Brand footwear production.
Recently, Nike has turned to a “pull system” which is focused around incentives for a
well carried out process from their contract suppliers. With this system in place, Nike is
closely watching the performance of their suppliers and rating them in colors with the
best being gold and descending from silver, bronze, yellow and red. Colors from bronze
to gold are seen as successful and are given benefits and opportunities that would not be
accessible to suppliers given a rating of yellow or red. These benefits and opportunities
are seen as incentives for these suppliers and form the system they have created for
managing sustainability.
Movement description of the raw materials from the contract suppliers to manufacturer.
This is usually done by either boat or plane and this step varies due to the fact that Nike's
manufacturing plants are located all over the world along with the suppliers. Nike closely
records each transaction and is in touch with the supplier and manufacturer to get the
best idea of how the transportation was carried out. These third party transporters are
rated in the same way as the suppliers and are given rewards for timely deliveries of
material.
3.2 Manufacturer
This is the stage in the supply chain where the raw materials brought in from the supplier
are made into a final product which was designed by management. This is an important
step in the cycle because this is where the ideas set by the research and development
team, which are influenced by the target demographic, are made into reality and are kept
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until further movement of the product. Instead of owning and operating its own factories,
Nike's footwear division solicits the services of independent contract manufacturers
located in fourteen countries around the world. The bulk of the independent factories —
96% — are in Vietnam, China, and Indonesia, though no single facility accounts for any
more than 5% of Nike's total footwear output. Beyond the manufacturing process itself,
Nike also relies heavily upon independent contractors to source the raw materials for its
shoes from the countries in which they're produced. This enables Nike to consolidate its
intermediate costs by limiting the number of vendors with whom it must negotiate
contracts.
Nike has also been known to use manufacturing plant from a third party. Because of the
fact that Nike is still responsible for these processes carried out by these manufacturers,
they keep a close watch on the quality of the products produced. This is a very important
part of the supply chain because it is where the product is built that will eventually be
sold to the customer so it is important for Nike to know that these manufacturers are
worth using. For measuring this, they have also been rating these manufacturers in the
same ways they rate their other third party contracts for the different parts of their supply
chain.
The second time that logistics comes into play is when the final product has to be moved
to a distributing warehouse. Finished goods are sent from manufacturing company to the
distribution center. In Vietnam, Damco is a 3PL logistics in charge of consolidating
products and sent it to Singapore DC then Kerry logistics take responsibility for shipment
delivery to import countries. This step also depends on the location of points A and B
for each situation due to how global the Nike Company has become. This transport of
products is a crucial part in the flow of the chain to move the manufactured product to a
place where it can be stored.
Again, we are able to see the rating system built around incentives at work when we
analyze the logistics between the manufacturer and the distributor. It is highly possible
that both the distributor and manufacturer was third party companies used in Nike's
supply chain and so they have to be closely in tune with the two stages of the supply
chain as well as the transportation in between. For this reason they record timely
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deliveries of products and of course look for damage and inconsistencies that the
transportation company may be responsible for.
3.3 Distributor
This stage in the chain is composed of either Nike warehouses set up to store their
finished goods until it is demanded by a retail store or other vendor or a third party
distributor which would serve the same function. Oftentimes, a third party is used for
this step but this all depends on the most cost effective and logical method of distributing
the products at hand. The warehouse would hold the product for as long as it is needed
but due to how well measured out the manufacture of each product is carried out
compared to their well estimated demand for the product, it is usually moved fairly
quickly to continue the flow of the chain.
Distribution is important because the final product needs to be stored before is sent to
vendors. For this reason, Nike also works in monitoring the companies that work with
them for warehousing purposes. To do this they closely analyze the inventory of their
products being held at these distributors and make sure everything is kept by the books
and reported back to Nike. Nike has an efficient distribution system to cater to the needs
of its individual customers really faster. It has established a smarter distribution and
logistics network that helps with faster shipments and quicker response to customer
demands. These distribution and logistics centers also serve as critical touch points
serving to the needs of thousands of Nike retail stores, online sales and individual
customers. Three years ago, Nike opened its North America logistics campus in
Memphis, Tennesee. It is the largest of all distribution centers opened by Nike catering
to more than 2000 Nike stores in North America. NIKE has five primary distribution
centers in the US located in Memphis, Tennessee, three of which operate on a leased
basis. The company had 16 distribution centers outside the US at the end of fiscal year
2014. NIKE brand apparel and equipment products are also shipped from its distribution
center in Foothill Ranch, California. It has improved Nike's ability to deliver premium
products to the customers faster and more efficiently. This facility meets Nike's highest
standards of sustainability and helps cater to the increasing demands of the individual
consumers and wholesale customers. The logistics center offers higher cost efficiency
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by reducing shipping time and increasing service capabilities. Its European logistics
centers stretches across four locations in Belgium and meets its high sustainability
criteria. These regional logistics campuses or distribution centers have helped Nike
manage a faster and smarter supply and distribution chain.
For the third time in the logistics, Nike has to move their goods to another part of the
process. This time, the product has been stored in a distributing warehouse and is now
ready to move to a place where it would be available to the customer. This time, the
product has been stored in a distributing warehouse and is now ready to move to a place
where it would be available to the customer. In Vietnam, goods are moved to Geodis
warehouse in Binh Duong province. We have noted that the “pull” system in place for
rewarding third party companies on merit which serves as incentives are very much used
by Nike to handle their logistics. This is no exception with the transportation of the
finished goods from the distributor warehouse to the vendors. They are graded on the
condition of the products when they arrive to the vendor and how efficiently and timely
the delivery was just like in the other parts of the supply chain where transportation of
either materials or the finished product were needed.
3.4 Nike stores/ Retail stores/ Online stores
This is the first and only time in the cycle where the finished product becomes accessible
for the public. In today's world, there are many people whom shop online for most of
their needs so it is important to mention the distribution of the products to online vendors
such as Amazon whom keep the product in their own facility until it is ordered. Retail
stores are still a big part of this step because many purchases are still made in stores
around the world that are licensed to sell Nike products. Finally, there are specific Nike
outlet stores which get direct shipments from the distributor and exclusively sell Nike
products. From here, the products are purchased by the customer, but the cycle does not
end there.
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Figure 3.3 Total number of retail stores

3.5 Reverse logistics
An important part of Nike's supply chain and business plan is being in tune with the
demands of their customers. This helps them to design new products that they hope will
sell efficiently because of the feedback they received from their target demographic. This
process is known as reverse logistics and can be implemented through blogs, ratings,
customer support, and other services set up by Nike for this purpose.
Reverse logistics is often seen as a costly activity in the supply chain management
process. However, today, many companies see this as a strategic activity that improves
supply chain competitiveness in the long term. Customers often observe the behavior of
the company and their credibility for the company can be enhanced through good
handling of return management. Some studies have shown that Nike recovers used and
remanufactured shoes into basketball courts and community runs as an effort to
contribute to society. The company believes that this activity will enhance the brand
value and create loyalty to customers.
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4 LOGISTICS OPERATIONS OF NIKE

4.1 INVENTORY
4.1.1 Inventory Philosophy
Nike’s inventory management system is based on long term future forecasts. Nike has
established a “future” program that rewards retailers with significant discounts if orders
are placed six months in advance. Nike uses these orders as a basis for global demand.
This demand information is used to set production levels at Nike’s various
manufacturing locations worldwide. The manufacturers will produce the demanded
quantity of goods and distribute them to the retailers within one month of the expected
delivery date.
4.1.2 Inventory Management
There are many limits and vulnerabilities with this strategy. Nike accepts all “future”
orders without considering their manufacturers production capacities and promises
delivery within one month of requested delivery date. Nike attempts to remedy this flaw
by ordering their manufacturers to produce up to 55% for the anticipated level of goods,
before any demand information is available and sometimes up to four months in advance
of receiving any orders. They then add to production when the “futures” information
becomes available. Unfortunately, if there has been an excess inventory of products
produced before the demand information is available, then Nike will have to pay its
manufacturers for the goods they produced or partly produced, even though there is no
demand for them.
4.1.3 Effectiveness of strategy
Nike’s current strategy for managing its ordering and inventory is not effective. Long
lead times associated with Nike’s order/inventory policies is a major vulnerability to
managing demand. Lead time for orders Nike places with its manufacturers is around
four months. In addition Nike pre-orders four months in advance because its
manufacturers cannot meet demand. Nike purposely does not meet demand on high end
shoes in hopes to encourage customers into newer models. Long lead times, poor
forecasts, and unmet demand add great variability to Nike’s supply chain.
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4.1.4 Limitations and vulnerability

The futures program creates significant variance because it requires production to begin
ten month’s in advance due to the fact that manufacturer’s capacity cannot meet demand
in six months. Variance in the supply chain increases further when retailers are
overstocked and permitted by Nike to cancel futures. With all this variance it is likely
excess inventory will remain, and not uncommon for Nike to hold excess inventory on
freight ships, docked and waiting for the necessary demand. Additional fluctuations in
demand are increased because designers do not base designs on past sales data. If high-
top sneakers were not in demand and designers did not know due to a lack of information,
they may develop another high-top sneaker that has no demand thus adding to the cost
and overall inefficiency of the supply chain.
4.1.5 Alternative Inventory Strategy
An alternative to this ineffective strategy would be to establish a POS information system
at all retail locations. This would help Nike create accurate short term forecasts of
demand that could be delivered to manufacturers in a timely manner. There is also a need
for Nike to establish a distribution network that will sustain a predetermined inventory
level. This will decrease the bullwhip effect that is inherent in the current supply chain.
Nike will have the ability to meet short term demand with their distribution centers while
accepting shipment from their manufacturers.
It would be advantageous for Nike to establish an ERP system to support this new
strategy. This effort should be coupled with the goal if integrating their many
independent manufacturers into their ERP system. This integration would give Nike
more control over the production process and better control of information. This
information control is imperative to the future success of the organization if Nike is to
manage the supply chain from the manufacturer to the retailer efficiently. If Nike were
able to easily retrieve information from each level of the supply chain in real-time, they
would be able to cut costs, and streamline their supply chain and manufactures could
begin production based on POS data gathered by way of the ERP system from retailers.
Supply chain integration is the key to the future success of Nike.
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4.2 TRANSPORTATION
 Nike has long-term contracts with global logistics companies. This is a company
that has many contracts with Vietnamese companies, but in terms of
transportation and logistics, Vietnamese companies cannot participate in the
negotiation process. Obviously, signing contract with Nike is too good for
Vietnam's big businessmen, not mentioning transport negotiations and logistics.
In fact, Nike is using two companies, Maersk Logistics and APL Logistics, to
provide logistics.
 Visibility is a factor that shippers appreciate when they choose their logistics
service provider. Companies such as APL Logistics and Maersk Logistics, chosen
by Nike as their service provider, are able to provide Nike visibility tools - at any
time, at any Nike site. They can also capture and can pull out any types of reports
related to their orders have been and will be made by the above companies. This
will help Nike calculate good forecasts, inventory control, timely response to
customer requirements at optimal cost.
 When it comes to transporting their sweatshirts and other products, Nike is
making progress in reducing their CO2 emission, reducing their “carbon
footprint”. According to one source (RankABrand), they were given a B (in terms
of grades), which in comparison to other athletic gear brands, was one of the better
ones. Reducing their CO2 emission also ties in with the production aspect of
things, where Nike is aiming to source 100% sustainable cotton before the year
2021. With the transportation side, they are getting creative in not only reducing
their carbon footprint, but also effectively saving money. According to a source
(Cargo), Nike made the decision to transport their products on cargo ships instead
of using airplanes. It claimed to have saved Nike $8 million in one year. By this
change in transportation, Nike projects their reduced carbon footprint to have
decreased by 30% in 2020.
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Table 4.1: The shipping lines designated by Nike

4.3 WAREHOUSING
Strategic Warehousing
In spite of having traditional centralized model, Nike is planning to have satellite centers.
In this new distribution model inventory will be managed through both the central
warehouse and the satellites. This process is mostly used in European logistics
organizations for each market channel. However, this needs central coordination of
stocking policies for the individual satellites. The management of Nike realized that full
supply chain visibility is highly important for the organization where central warehouse
will be able to view stock levels, original demand and sales forecast for each satellite
facility. This type of visibility will help Nike to continuously optimize order delivery.
This can be done either by direct deliveries to customers from the central warehouse or
by deliveries from satellite facilities. It will also help Nike to optimize its inventory
continuously through location or relocation of products and stock among central
warehouse and local satellites. This type of visibility will help Nike to facilitate cross-
docking and combine-in-transit activities at all warehouse locations. It will also help to
strengthen the tracking and tracing of goods and orders across the total supply chain. It
will allow Nike management to easily perform and maintain control over the flow of
goods.
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4.4 PACKAGING AND HANDING PROBLEMS

4.4.1 Packaging design
Nike strives to maintain a sense of importance and modernity. Their packaging and
design are catered towards the active and sporty crowd. They tend to use warm colors
like orange, browns, blacks, and different versions of white. In recent times, they have
heavily focused on orange backgrounds. Their boxes focus on a minimalist style that
showcase important features of a specific shoe, the Nike Swoosh, and basic color
patterns.

Figure 4.2 NIKE FREE BOX. Design & Branding

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4.4.2 Packaging for Materials Handling Efficiency

Figure 4.3 The sorter system and machine controls

The sortation process starts with cartons being unloaded from trucks in the receiving area
and then stacked on pallets. The pallets are then moved into the very narrow aisle (VNA)
warehouse area.
As required, pallet loads of cartons are selected from the VNA racking and transferred
onto a conveyor that merges the cartons onto a line sorter. The line sorter delivers the
cartons to three possible destinations depending on whether the goods are to be shipped
in batches or made up into new cartons containing a number of different items:

 Whole cartons for onward shipment are delivered to the shipping sorter

 Cartons with items ordered in whole-carton batches go to the pre-sorter induction

area

 Cartons containing items that will be collated into mixed-item shipments are sent
to the storage
Items unpacked from the cartons are placed into storage racks from which operators pick
and place the individual items into plastic totes. The conveyor transports the totes,
containing the individual items, to a conveyor on Level 2 of the building. These totes
and whole cartons containing batches of the same item are then merged before being
emptied and items are manually placed onto the cross-belt pre-sorter. This automatically
sorts the items in the totes into pre-defined hoppers, which are emptied at the hopper
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tipping area, from where a system of belt conveyors transports them to manual inductions
for loading onto the final sorter.
The final sorter is a second cross-belt, which automatically distributes the individual
items into chutes that have been specially designed for the NIKE CLC to reduce the
footprint of the sorting area. The chutes feature dividers that rise following the delivery
of a complete batch, thereby separating it for packing into a single carton by the operator
below. The carton is then pushed onto a roller conveyor for delivery to a Crisplant LS-
4000E tilt-tray shipping sorter.
The sorter system and machine controls are integrated with NIKE’s Warehouse
Management System. The ability to combine precise control of individual machines,
with system-wide visibility of workflows, enables continual optimization of the system
and the avoidance of bottlenecks for faster throughput and higher productivity. To ensure
uptime, NIKE entered into a three-year service agreement with Crisplant under which
service engineers are stationed on-site for support and preventive maintenance of all
material handling equipment, including management of the on-site spare-parts inventory.
This arrangement enables the systems to be updated as new sorter technologies and
software controls are introduced.
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5 INFORMATION TECHNOLOGY USED IN CORPORATION

5.1 Analyse important issues
In the year 2000, Nike took the decision of implementing a unique management of
supply chain with the ability to forecast demand in the market so that the company can
quickly meet with these requirements. This was also the time when the organization also
was in the SAP ERP system implementation process but the company found that the
forecasted demand was not adequate to the requirements at that particular situation. This
made the company to adopt and choose the software named as I2 in order to enable the
organization to quickly respond to the changes in the market of shoes, scheduled of
planned productions with newer requirements and start to produce new products within
a week instead of waiting for a whole month as the company did before. However, if
successful then this strategy could have been a very fruitful one for Nike and the
company would have been easily able to decrease the unwanted products from being
produced, decreased inventory system and increase the shoe styles production rising the
required demand.
The particular demand planning software instance is known as the software of I2 which
was the main factor that led towards major problems in the company. The company of
Nike failed in properly evaluating the way in which this new software of planning
demand will be integrated within the system legacy. The company rushed in
implementing the software prior to their main package of SAP which was not ready to
be deployed causing the system failure of I2 within the supply chain of Nike. The issue
in this was the fact that the company did not every know whether the ordered sneakers
in Nike's store will be fashionable in the next 9 months when the same will be delivered
to the stores. The company's fashion designers and the planners of demand did not
acutely interpret the way in which order with such a high leading time should be placed
and the company totally depended on the brand name of Nike for selling its new
products. In the shoe market a short order shipment of products is always demanded
from the stores and this forced Nike to be under competitive pressure for getting their
system of supply to perform in the next 6 months. The challenge of not being able to get
the SCM in position led towards opening the company to lose out on the share in the
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market especially because of the fierce market competency. Therefore, when I2 system
was implemented at Nike and the system lost the capability of holding up urgent and
vigorous requirements of the 9 month cycle planning, the company began to lose out and
the forecasted information also completely was thrown off resulting in making the supply
chain to cost the company 100 million dollars from damages directly.
5.2 Potential Solutions
The implementation of ERP, CRM and SCM systems at the same time and all together
made Nike to experience benefits in multitude. These advantages were linked with the
system of I2 management resulting in a better collaborative aspect with the factories of
Nike in the far eastern area. This in turn resulted in reducing the pre building time amount
needed for every shoe to be manufactured.
Bristlecone developed and deployed planner DA and SC Policy Manager, composite pre-
configured applications that allowed Nike to enforce higher level supply chain policies
without having to deal with voluminous SKU Level demand and supply information.
The composite apps bridged the gaps between Nike's existing ERP and SCM systems.
Business Impact:
 Better ROI from existing ERP and SCM solutions
 Improved visibility into supply and demand
 Planners empowered to better align supply with demand
The major change hinges on the need to be more demand-driven. Point-of-sale [POS]
technology has progressed significantly in recent years, and POS information is more
readily available – and also a lot cleaner – than it was in the past. At this point, it is up
to company to figure out how to use that information to become much more responsive
to the needs of our customers and deliver the products at a best suitable procedure and
creates the value for time.
Wireless Technology and RFID are used by Nike at a minimum level. Efforts are taken
to widely utilize it across its factories. The usage of RFID however raised some privacy
concerns and hence Nike is striving hard to resolve such issues and trying to make use
of the technology in the best possible way.
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RFID will no doubt help Nike in a number of ways for continous improvement of supply
chain management .RFID is being used to identify inbound and outbound product. RFID
is being used in the warehouse to locate product. It is being used in manufacturing and
processing industries to track and locate WIP (Work in Progress) and finished goods.
RFID is being used to monitor and track product in transit, and RFID is being used to
ensure store shelves are replenished. RFID understands that the Supply Chain requires
more than one type of RFID technology to satisfy all these different requirements and
has developed different solutions for tracking as well locating.But they believe that it
has the potential to build more demand responsiveness into supply chain.
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6 SUSTAINABILITY IN THE LOGISTICS SYSTEM OF NIKE

6.1 Nike Performance Products Reduce Waste and Water Use
Since 2010, more than three billion plastic bottles have been diverted from landfills and
converted into recycled polyester for Nike performance products, such as new Nike
Vapor football kits with Aeroswift technology. Meanwhile, the company’s ColorDry
technology, which dyes fabric using zero water, has saved more than 20 million liters of
water, and its Reuse-A-Shoe program has recycled approximately 30 million pairs of
shoes.
6.2 Nike is Using Less Energy and Reducing Emissions
Since 2008, the company’s contract footwear manufacturers have cut energy use per unit
by around 50%. That means today it takes about half the energy and generates around
half the emissions to make Nike shoes as it did eight years ago. Looking to FY25, Nike
aims to use 100% renewable energy in its owned and operated facilities, and has already
implemented on-site renewable energy generation at some of its largest facilities. But it
goes far deeper than merely calculating the carbon cost and asking its transport providers
to try to cut emissions. This is a company well ahead of the curve in sustainability. If its
vision of the future comes to pass, then logistics providers seriously need to take note.
As part of its CSR programme, Nike’s slogan is “better world”. Working with Damco,
Nike set out to understand, and ultimately calculate, its carbon footprint. It worked first
on the inbound flows, and is now applying the same techniques to its outbound. There
will of course, still be freight. But that freight must be used in the most efficient way
possible. Nike discovered that packaging makes up 22% of the waste in its value chain.
So it has been reducing the packaging weight of its boxes while retaining the function.
In that way, Best pointed out, the company can fit more shoes into a container.
“Rethinking the box” is how Nike puts it. Nike’s aim is to minimise volumes while
maximising speed. It wants a “lean and mean” supply chain, and it is prepared to invest
in it.
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6.3 Nike is Invested in Transforming Manufacturing

Nike is working with fewer, better contract factories that are committed to transforming
their businesses beyond a foundation of compliance to be lean, green, equitable and
empowering for workers. And factories are showing progress – 86% of Nike’s contract
factory base has reached a performance rating that demonstrates their commitment to
valuing workers and improving environmental standards. By 2020, Nike’s aim is for
100% of contract factories to reach this level. Nike is also investing in pilot research
programs aimed at uncovering how services, technology and changes to compensation
and benefits systems can positively impact workers inside and outside their workplaces.
Best pointed to the example of a new shoe that Nike has recently developed, the FlyKnit.
Made in the same way that a sock is, it’s effectively a technical product ie, produced not
through labour, but through technology. Best acknowledged that Nike has, in the past,
moved its production to wherever the cheapest labour is. But through the use of
technology in manufacturing, it will be able to near-shore much more effectively.
6.4 Corporate Social Responsibility
Operating 566 factories, employing over a million workers, Nike is responsible for the
well-being of those workers and the communities they live in. In the late 90s, the
company suffered from negative allegations regarding harsh labor and factory
conditions. Since then, Nike has made one of the greatest image turnarounds in the recent
decade. And focus on sustainability has been the means to achieve it. The company
revamped its management tools – one such example includes the Sourcing &
Manufacturing Sustainability Index (SMSI), a tool used to evaluate factories on health,
safety, and environmental dimensions. By 2020, Nike targets to have 100% of its
factories improve to the highest required SMSI scores.
6.5 Nike is Moving toward Zero Waste
By FY20 Nike aims to have zero waste from contracted footwear manufacturing sent to
landfill or incineration without energy recovery. Another example of Nike’s work to
reduce waste and move toward a closed-loop model is Nike Grind, a palette of premium
recycled and regenerated materials created from original materials and products. For
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example, Nike transforms old shoes and manufacturing scrap into high-performance
Nike footwear and apparel as well as high-quality sports and play surfaces, including
courts, tracks and more. Today, Nike Grind materials are used in 71% of Nike footwear
and apparel products, in everything from apparel trims to soccer kits to Flyknit yarns.

CONCLUSION

Through completing the assignment for the Logistics course, we could gain more
knowledge on Logistics system of Nike. With the purpose to understand the in-class
knowledge on Logistics and apply this through analyzing an organization and advising
on improvements, we tried our best to opt for indicating the most major current issues of
Nike as well as offering some recommendations for the company. Although there were
many shortcomings in the execution of this assignment, we hope that it would achieve
some good results, then we could avoid these mistakes in next writings.
During our journey, we learned how to better support ideas by integrating sources the
best way that we could in our writing. With access to large databases of enormous
amounts of documents, academic articles, popular articles, newspapers, books, etc.,
choosing and integrating relevant, meaningful, credible, sources to help make our
argument stronger was a tool we learned to use effectively. Throughout this assignment,
we was able to weed out sources that were irrelevant information and focus solely on
what supported our argument in the most effective way possible.
We want to give many thanks to the help of professors – Mrs. Như and Mr. Dũng in
whole course and hope to receive feedback for our assignment.
REFERENCE
1. Essays, UK. (November 2013). Supply chain management process at nike.
Retrieved from https://www.ukessays.com/essays/management/nike.php?vref=1
2. Nike, Inc. 2011. Sustainable Business Performance Summary. Available at
http://www.nikeresponsibility.com/report/files/report/NIKE_SUSTAINABLE_
BUSINESS_REPORT__ FY10-11_FINAL.pdf
3. Paine, LS, Hsieh, N., Adamsons, L. 2013. Governance and Sustainability at Nike.
Harvard Business School Teaching Case.
4. Porteous, AH, Cohen, SA, Lee, HL, Rammohan, S., V. 2012. Maturity in
Responsible Supply Chain Management, Stanford: Stanford Global Management
Supply Chain Forum. Available at: http://www.gsb.stanford.edu/scforum/sisscr
5. Schifrin, D., Carroll, G., Brady, D. 2013. Nike: Sustainability and Labor Practices
1998-2013. Stanford Graduate School of Business Teaching Case.
6. https://www.youtube.com/watch?v=MiwEjoY47N8
7. https://help-en-us.nike.com/app/answer/article/supply-
chain/a_id/20878/country/us
8. http://manufacturingmap.nikeinc.com/
9. https://about.nike.com/pages/doing-business-with-nike