Nike Rebounds: How

(and Why) Nike

Recovered from Its
Supply Chain Disaster
Presented By
Group 5

Agenda

Introduction
Main issues
Implication of problem
Nike robust business case
Why i2 went wrong
Workarounds
Learnings
What Nike earned from Investment

Introduction
Nike Inc. is a major publicly traded sportswear
and equipment supplier based in USA.
World Leading supplier of athletic shoes with
32 percent worldwide market share(almost
double Adidas, its nearest rival).
Market cap of $20 billion.

Main issues
I2 problem
Software Glitch
Problem tied to core business process- factory
orders
Send ripple through product delivery-crashing
on the balance sheet
Duplicated and deleted orders
Slow, it didnt integrate well and had some bugs
Inadequately trained planners who didnt know
how to use it before the system went live

Implications of problem

100 million lost in sales.

Stock prices decreased by 20%
Caused lawsuit flights
Hard to recall factory orders

Nike Robust business case

To gain control over its nine month manufacturing
cycle, Nike decided it needed system as centralized as
its planning process
ERP software
SAPs R/3 software- Bedrock of Nike strategy
I2 software- supply demand collaboration planner
software application
Siebels CRM software knitted into the overall
system using middleware from STC

Why I2 went wrong

Nike installed i2 software before implementation of
SAP ERP project.
It used different business rules and stored data in
different formats making it difficult to integrate
Overwhelmed by the tens of millions of product
numbers, it led to crash the system.
Demand planner deleted the ordering data in 6-8
weeks after entry making planners impossible to
recall what company asked to produce.
Nike was in false sense that i2 installation was
small project and it was easy but it turned out to be
complicated.

Workarounds
Data from i2 demand predictor had to be
downloaded and manually reloaded into supply
chain planner by occupying programmers,
quality assurance personnel and businesspeople
weekly.
Consultants were brought in to build database to
bypass portions of i2 applications and custom
bridges were constructed to enable the i2
demand and supply planner application to share

Learning's from problem

Not rushing the SAP installation.
Nike avoided to make each rollout of SAP so
specific to region that would require specialized
support.
Created a global template for SAP processes,
with all the regions agreeing on the minutiae of
business.
Employees are locked out of the system until
they complete the full training course of 140 to
180 hours.

What Nike earned from Investment

Better collaboration with Far East factories has
reduced the amount of Nikes shoes from 30% of
Nikes total manufacturing units to around 3%.
The lead time of shoes has gone from nine months
to six.
Inventory levels have been reduced by cutting
Nikes factory order interval time from one month
to a week in some cases.
Direct benefit of ERP
Improved financial visibility
Cash flow management
Revenue forecasting
Advantage from shifting exchange rates.

Thank
You !