The changes in Strategies over time of NIKEs Global Supply Chain

NIKE: Global Supply Chain Management
Student Name: xxxx
Student ID No.: xxxxx
Module Title: Global Supply Chain Management
Module Code: MGT4510
Module Leader: xxxxx
Assignment: Individual Report 1
Word count: 1698
1 | Page
Table of Contents
1. Introduction1
2. NIKEs International Business Strategy..2
3. NIKEs Global Supply Chain Strategy and its strategic fit with International
4. Elements of NIKEs Global Supply Chain……6
a. Facilities.7
b. Sourcing/Procurement7
c. Inventory…7
d. Transportation..8
e. Information Sharing.8
5. NIKEs Global Distribution Network..8
6. Recommendation9
List of References.10
NIKE Inc (NIKE) is a global brand which designs, develops, markets and sells athletic
footwear, apparel, equipment, accessories and services (MarketLine, 2020). NIKE
believes in creating innovative and sustainable products , build positive relationships
with its customers and entrusts an integrated marketplace with persuasive retail
experience (NIKE Inc, 2020).
This Report highlights the Global Supply Chain of NIKE Inc. It analyses NIKEs
International Strategy and Global Supply Chain Strategy, thereby evaluating its
strategic fit. It also emphasis on the elements of the Nikes Global Supply Chain and
how the elements are integrated together in the Global Distribution Network. Thus,
the report aims at analysing the gaps in the global supply chain of NIKE and to
provide some recommendations in order to improve the value chain.
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NIKEs International Business Strategy
There are four main broad types of International Business Strategies which provides
the trade-off between the pressure of the local responsiveness and the cost reduction.
They are as below:
1. International Strategy: In this, the pressure for local responsiveness as well as
pressure for cost reduction is low. Thus, it is used by the firms venturing abroad
for the first time to extend their economies of scales, distribution efficiencies
and brand positioning.
2. Localisation Strategy: In this, the pressure for local responsiveness is high but
the pressure for cost reduction is low. It is used to enter into the foreign market
to get locally adapted.
3. Global Standards Strategy: In this, the pressure for local responsiveness is low
but the pressure for cost reduction is high. This strategy relies on the
development and distribution of standardised products in order to get
maximum low-cost advantage.
4. Transnational Strategy: : In this, the pressure for local responsiveness as well
as pressure for cost reduction is high. This strategy has the best of both i.e. cost
efficient as well as locally responsive.
(Peng & Meyer, 2019)
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Exhibit 1: The changes in Strategies over time
Source: (Houghton Mifflin Company, 2020)
Initially NIKE started with the International Strategy where it entered the foreign
market by initiating global manufacturing outsourcing in Japan and other countries,
in the late 1960s. Later, it moved to after creating a
brand image in the market, where their innovative, sustainable, high quality products
were valued by the customers globally (Park & Kincade, 2010).
NIKEs strong operational network provides a platform for the future growth and
expansion and also enhances its supply chain activities. The footwear products are
manufactured by 112 factories outside the US, located in 12 different countries, by
independent contract manufacturers (Marketline, 2020).
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Exhibit 2: NIKEs Change of Strategy over Time
Source: (Author, 2020)
NIKEs Global Supply Chain Strategy and its strategic fit with International
Supply Chain Strategy starts with procurement of raw material till the distribution of
the product to the customers plus any customer services required for the product.
Also, it determines whether the above said processes will be outsourced or will be
performed in-house (Chopra and Meindl, 2015).
Exhibit 3: The Supply Chain of a company
Source: (Author, 2020)
Procument of Raw Material
Transportation of the Materials
Manufacturing/operations of the Products/Services
Distribution of the Products
Follow Up Services (if Required) NIKE
5 | Page
The International Business Strategy goals should be aligned with the goals of the
Supply Chain Strategy in order to achieve a Strategic Fit (Chopra and Meindl, 2015).
NIKE has an efficient and responsive supply chain trade off. To help retailer anticipate
the global shift of customer demand and to increase visibility in their supply chain
with reduce lead times, Nike won 2019’s Company of the Year award. With the
increase in demand of the product and to serve its customers at personal level, NIKE
is more focussed on customer behaviour, data optimization and insight driven.
Following their Lean Manufacturing Framework and continuous Innovation like 3 D
printing has helped the company to minimise the product lead times to 10 days from
60days (Forde, 2019).
Exhibit 4: Stages of NIKEs Value Chain
Source (NIKE Inc, 2020)
Nike Value Chain includes a total of nine tiers which is more than most of the other
industries. Thus, it is also a challenge to address each tier comprehensively, especially
in those sections over which NIKE does not have direct control or influence (NIKE Inc,
6 | Page
NIKE has setup a benchmark in defining manufacturing outsourcing strategy. Its key
manufacturing thrusts are lean manufacturing (i.e., better labour productivity with
reduce waste), innovation and modernization, lastly material consolidation (i.e.,
reducing number of vendors as well as material used in manufacturing) (Soni, 2014).
NIKE optimizes its manufacturing and production processes. The key to success is NIKEs
continual innovation and product quality. The lean manufacturing helps to improve
efficiency, optimizes production, and reduce down waste, thereby driving quality and
productivity (Singh, 2019).
NIKE also has a closed loop supply chain. To fulfil its goal to have environment
friendly image, Nike had a strategic alliance with NRC. The company help NIKE in
collection of old shoes in order to recycle them for producing raw materials like grind
rubber, foam and fluff. This strategy helped to strengthen its green image (Kumar &
Malegeant, 2006).
Exhibit 5: NIKEs Responsive vs Efficient Trade Off
Source:(Author, 2020)
Elements of NIKEs Global Supply Chain
NIKE has a robust supply chain management which is the backbone for its global
business. Its supply chain model has evolved over time. The brand is known for its
7 | Page
innovative and sustainable products and also for its continuous steps towards
environment footprint, quality of products and customer services. Thus, making its
supply chain agile, responsive as well as efficient (NIKE Inc, 2020).
a. Facilities: NIKE has a diversified store network that broadens customer
reach and deepens its market position. Nike sells its products through
retails shops, online websites and also through mobile applications. As per
the data for the year 2019, NIKE had 384 retail stores in the US and 768 stores
globally. Overall, globally it operates 865 NIKE Brand factory stores; 86
NIKE Brand in-line stores (includes employee-only stores); 172 Converse
stores (includes factory stores); and 29 Hurley stores (includes employeeonly and factory stores). It also had Converse and NIKE owned digital
commerce platforms in 45 countries outside the US (Marketline, 2020).
b. Sourcing/Procurement: In NIKE supply chain, the raw materials are sourced
from independent contractors in the manufacturing host country (Soni,
NIKE looks for ethically sound suppliers having transparency in their
system and are devoted to rise above the benchmarked standards. NIKE
focuses on quality, long-term sustainable supply agreements with very few
factories, that are committed to their strict code of conducts for the product
excellence. Also, in order to maintain its green image, NIKE seek suppliers
having expertise in minimising the environmental impacts, thereby
promoting a safe and developed culture for a valued workforce, which is a
part of their growth strategy too (NIKE Inc, 2020).
The selection and contracting with the right suppliers for the right goods
and services is done by the Nikes Global Procurement team, which
manages the whole procurement process (NIKE Inc, 2020).
c. Inventory: In year 2002, NIKE hired a consulting firm, Bristlecone Inc,
having an expertise in complex supply chain software implementations. Its
motive was to improve the performance by having a predictive analysis of
demand in order to have an efficient inventory management (PR Newswire,
8 | Page
d. Transportation: For all the transportation, NIKE rely on the logistics service
providers they had partnership with. Their Global Operations and Logistics
team has developed SCSI( Supply Chain Sustainability Index) which help
to maintain minimum but efficient and sustainable logistics providers. The
company has deployed SCSI with the inbound freights (includes air and
ocean) as well as outbound freights (includes small parcel and road) (NIKE
Inc, 2020).
e. Information Sharing: NIKE has made its supply chain transparent in the
year 2005, where one can get information about its current supplier through
an interactive map available on NIKEs website. The map outlines about the
location of the factories, number of workers along with the percentage of
male and female employees working and the type of products produced i.e.
raw material or finished goods (NIKE Inc, 2020)
NIKEs Global Distribution Network
NIKE has an efficient distribution network that caters the customers demands very
quickly. The company sell its products through various retail stores, online platforms
and through a blend of independent distributors, licensees and sales representatives
in virtually all countries globally (NIKE Inc, 2020).
It has a robust distribution and logistics network which help in a rapid shipment of
goods as well as prompt response to cater customer needs. These centres help to
deliver products to the various retail stores, digital sales and even to individual
customers. In US, Nike has 6 primary distribution centres, where four of them are
located in Memphis, Tennessee. These distribution centres are run by third party
logistics providers. As per the data of FY-19, NIKE had 67 distribution centres outside
the US. Thus, it makes NIKE supply chain efficient, sustainable, ethically focused as
well as provide strong infrastructure or platform for selling the products (Singh, 2019).
In FY-17, NIKE unveiled its Triple Double Strategy for its distribution network
which can be divided into two parts:
9 | Page
1. Direct-to consumer network (DTC) which includes all the retail and outlet
shops along with the digital platform like NIKE Direct or through ecommerce companies like Amazon.
2. Wholesale distribution partners globally.
This Strategy helped company to double its innovation and also its speed (Danziger,
Exhibit 6: NIKEs Distribution Strategy
Source: (Siso, 2015)
In the year 2004, NIKE used MSI (an information technology to improve supply chain)
with the goal to integrate all its operations for long term forecasting to the delivery of
the products to its customer. Thus, it aimed to streamline its global supply chain (PR
As per the manufacturing map disclosed by NIKE, its manufacturing operations are
concentrated in Asian countries due to low production cost, among which China is
the largest supplier (NIKE Inc, 2020). Due to increasing labour cost in China as well as
current ongoing trade war and protectionist actions between US-China, it can hit
10 | Page
NIKEs supply chain (Singh, 2019). Thus, NIKE can diversify its supplier more in
other countries in order to keep its supply chain effective and efficient.
NIKE should enter into robotics which may makes its manufacturing more efficient
and the company will be less dependent on the workforce which in turn will result in
low production costs on a long-term basis (Bissell-Linsk, 2017).
NIKE has a powerful pricing of its products as it is valued by the customers which in
turn increases the supply chain surplus. Despite in the increase in gross profit, selling
and administrative costs have been on the rise (31.2% of its revenue). Also, a lot of
investment is required for continuous innovation, marketing, digital platform, etc.,
therefore NIKE has to be more careful regarding its cost of products (Singh, 2019).
List of References
i. Bissell-Linsk, J., 2017. NikeS Focus On Robotics Threatens AsiaS Low-Cost
Workforce. [online] Available at:
[Accessed 19 June 2020].
ii. Chopra, S. and Meindl, P. (2015) Supply Chain Management: Strategy,
Planning, and Operation, Global Edition. Available at: (Accessed: 16 June 2020).
iii. Danziger, P., 2018. Nike’s New Consumer Experience Distribution Strategy Hits
The Ground Running. [online] Forbes. Available at:
<> [Accessed 20 June 2020].
iv. Forde, M., 2019. Company Of The Year: Nike. [online] Supply Chain Dive.
Available at: <> [Accessed 17 June 2020].
11 | Page
v. Houghton Mifflin Company, 2020. Changes In Strategies Over Time. [image]
Available at: <> [Accessed 14 June
vi. Kumar, S. and Malegeant, P. (2006) Strategic alliance in a closed-loop
supply chain, a case of manufacturer and eco-non-profit
organization, Technovation. Elsevier Ltd, 26(10), pp. 11271135. doi:
vii. MarketLine Company Profile: NIKE Inc (2020) NIKE, Inc. MarketLine
Company Profile, pp. 159. Available at:
=bth&AN=142670986&site=ehost-live&scope=site (Accessed: 12 June
viii. NIKE Inc, 2020. Nike Purpose: Purpose Moves Us. [online] Available at:
<> [Accessed 20 June 2020].
ix. Park, H. and Kincade, D.H., 2010. Historical analysis of apparel marketers
strategies: Evidence from a Nike case. Journal of Global Fashion
Marketing, 1(3), pp.182-193.
x. Peng, M. W. and Meyer, K. (2019) International business . 3rd ed. Australia:
Cengage Learning.
xi. PR Newswire (2002) Bristlecones plannerDA(TM) and SC Policy Manager
Enhance Nikes Supply Chain, 4 November.
xii. PR Newswire (2004) MSIs Executive Series Highlights Nike Supply Chain
Innovation, 9 March.
xiii. Singh, A., 2019. Nike Manufacturing And Supply Chain Strategies. [online]
Market Realist. Available at: <> [Accessed 18 June 2020].
xiv. Siso, A., 2015. Nike: Channel Of Distribution. [image] Available at:
[Accessed 20 June 2020].
xv. Soni, P., 2014. An Overview Of NIKES Supply Chain And Manufacturing
Strategies. [online] Available at:
12 | Page
<> [Accessed 14 June 2020].

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